8-K
SMARTFINANCIAL INC. (SMBK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of earliest event reported: April 24, 2023
SMARTFINANCIAL, INC.
(Exact name of registrant as specified in its charter)
| Tennessee | 001-37661 | 62-1173944 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 5401 Kingston Pike , Suite 600 | |
|---|---|
| Knoxville , Tennessee | 37919 |
| (Address of Principal Executive Offices) | (Zip Code) |
| ( 865 ) 437-5700 **** |
|---|
| (Registrant’s telephone number, including area code) |
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | | Trading<br>Symbol(s) | | Name of Exchange on which Registered |
|---|---|---|---|---|
| Common Stock, par value $1.00 per share | | SMBK | | The Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On April 24, 2023, SmartFinancial, Inc. (“SmartFinancial”) issued a press release (the “Press Release”) reporting earnings results for its first quarter ending March 31, 2023. A copy of the Press Release is attached hereto as Exhibit 99.1.
In accordance with General Instructions B.2 of Form 8K, the information in Item 2.02 of this report (including Exhibit 99.1) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 7.01 | Regulation FD Disclosure. |
|---|
SmartFinancial is filing an investor slide presentation that it intends to review in conjunction with its earnings release conference call on April 24, 2023. The slides are attached hereto as Exhibit 99.2.
In accordance with General Instructions B.2 of Form 8K, the information in Item 7.01 of this report (including Exhibit 99.2) shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | | Financial Statements and Exhibits |
|---|---|---|
| | | |
| Exhibit No. | Description | |
| 99.1 | | Press release announcing first quarter 2023 financial results dated April 24, 2023 |
| 99.2 | | First quarter 2023 investor presentation |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SMARTFINANCIAL, INC. | |
|---|---|
| Date: April 24, 2023 | |
| /s/ William Y. Carroll, Jr. | |
| William Y. Carroll, Jr. | |
| President & Chief Executive Officer |
Exhibit 99.1
1Q 2023
SmartFinancial Announces Results for the First Quarter 2023
Highlights for the First Quarter of 2023
| ● | Operating earnings^1^ of $11.5 million, or $0.68 per diluted common share |
|---|---|
| ● | Operating earnings^1^ increase of 34% compared to the same prior year quarter |
| --- | --- |
| ● | Deposit growth of $152.4 million – 15% annualized quarter-over-quarter |
| --- | --- |
| ● | Net organic loan and lease growth of $53.0 million - 7% annualized quarter-over-quarter increase^2^ |
| --- | --- |
| ● | Credit quality remains solid with nonperforming assets to total assets of 0.11% |
| --- | --- |
KNOXVILLE, TN – April 24, 2023 - SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $11.5 million, or $0.68 per diluted common share, for the first quarter of 2023, compared to net income of $8.3 million, or $0.49 per diluted common share, for the first quarter of 2022, and compared to prior quarter net income of $13.0 million, or $0.77 per diluted common share. Operating earnings^1^, which excludes securities gains and merger related and restructuring expenses, net of tax adjustments, totaled $11.5 million, or $0.68 per diluted common share, in the first quarter of 2023, compared to $8.6 million, or $0.51 per diluted common share, in the first quarter of 2022, and compared to $12.9 million, or $0.76 per diluted common share, in the fourth quarter of 2022.
Billy Carroll, President & CEO, stated: “I am extremely pleased with our start to 2023, especially considering the volatile banking environment we experienced during the quarter. The stability of our balance sheet and solid earnings performance through such an unpredictable period not only reaffirmed the strength of our company, but also the fortitude of our associates. The loyalty of our client base has been outstanding as demonstrated by our quarterly deposit growth. We look forward to showing that same loyalty back to our clients as we continue to support their future financial needs.”
SmartFinancial's Chairman, Miller Welborn, concluded: "We could not be prouder of the grit and determination our associates showed this quarter. The company’s solid performance would not have been possible without management’s steady stewardship and our associates’ calm handling of client relationships. Our continued balance sheet growth with no wholesale fundings or borrowings is a tremendous testament to our effective client focused business model and the professionals in this organization."
Net Interest Income and Net Interest Margin
Net interest income was $36.0 million for the first quarter of 2023, compared to $37.6 million for the prior quarter. Average earning assets totaled $4.43 billion, an increase of $156.8 million from the prior quarter. The increase in average earnings assets was primarily driven by an increase average loans and leases of $108.0 million and average interest-earning cash of $55.3 million. Partially offsetting the increase in average earning assets was a decrease in average securities of $6.4 million. Average interest-bearing liabilities increased $260.5 million from the prior quarter, attributable to an increase in average deposits of $261.9 million, offset by a decrease in average borrowings of $1.5 million.
The tax equivalent net interest margin was 3.31% for the first quarter of 2023, compared to 3.51% for the prior quarter. The tax equivalent net interest margin was negatively impacted by the continued rise in the cost of interest-bearing liabilities from rising Federal Reserve rates and increased pricing competition. The yield on interest-earning assets for the quarter was positively impacted by $1.4 million in deferred fees from the payoff of an acquired loan.
^1^ Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation
^2^7% annualized organic loan growth based on Q1 ’23 net balance loan growth of $53 million divided by Q4 ’22 loans of $3.25 billion less a $24.6 million loan participation included in the Q4 ’22 loan balance that was subsequently removed on 1/1/23.
The cost of total deposits for the first quarter of 2023 was 1.56% compared to 0.85% in the prior quarter. The cost of interest-bearing liabilities increased to 2.12% for the first quarter of 2023 compared to 1.27% for the prior quarter. The cost of average interest-bearing deposits was 2.05% for the first quarter of 2023 compared to 1.18% for the prior quarter, an increase of 87 basis points, primarily attributable to both the impact of rising Federal Reserve rates and increased pricing competition.
The following table presents selected interest rates and yields for the periods indicated:
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | | | ||
| | | Mar | | Dec | | Increase | |
| Selected Interest Rates and Yields | | 2023 | | 2022 | | (Decrease) | |
| Yield on loans and leases | | 5.57 | % | 5.05 | % | 0.52 | % |
| Yield on earning assets, on a fully tax equivalent basis (FTE) | | 4.88 | % | 4.41 | % | 0.47 | % |
| Cost of interest-bearing deposits | | 2.05 | % | 1.18 | % | 0.87 | % |
| Cost of total deposits | | 1.56 | % | 0.85 | % | 0.71 | % |
| Cost of interest-bearing liabilities | | 2.12 | % | 1.27 | % | 0.85 | % |
| Net interest margin, FTE | | 3.31 | % | 3.51 | % | (0.20) | % |
Provision for Loan and Lease Losses and Credit Quality
At March 31, 2023, the allowance for credit losses was $32.3 million. The allowance for credit losses to total loans and leases was 0.98% as of March 31, 2023, compared to 0.72% as of December 31, 2022. The increase of 26 basis points is primarily the result of the adoption of ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”). ASU 2016-13 was adopted on January 1, 2023, and resulted in an increase of $8.7 million to the allowance for credit losses.
The following table presents detailed information related to the provision for loan and lease losses for the periods indicated (dollars in thousands):
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Three Months Ended | | | | | ||||
| | | | | Mar | | | Dec | | | | |
| | Provision for Loan and Lease Losses Rollforward | | | 2023 | | | 2022 | | | Change | |
| | Beginning balance | | $ | 23,334 | | $ | 22,769 | | $ | 565 | |
| | Adoption of ASU 2016-13 | | | 8,655 | | | - | | | 8,655 | |
| | Adjusted beginning balance | | | 31,989 | | | 22,769 | | | 9,220 | |
| | Charge-offs | | | (315) | | | (331) | | | 16 | |
| | Recoveries | | | 55 | | | 108 | | | (53) | |
| | Net charge-offs | | | (260) | | | (223) | | | (37) | |
| | Provision | | | 550 | | | 788 | | | (238) | |
| | Ending balance | | $ | 32,279 | | $ | 23,334 | | $ | 8,945 | |
| | | | | | | | | | | | |
| | Allowance for credit losses to total loans and leases, gross | | | 0.98 | % | | 0.72 | % | | 0.26 | % |
Nonperforming loans and leases as a percentage of total loans and leases was 0.10% as of March 31, 2023, an increase of 1 basis point from the 0.09% reported in the fourth quarter of 2022. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.11% as of March 31, 2023, as compared to 0.10% as of December 31, 2022.
2
The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):
| | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Three Months Ended | | | | | ||||
| | | | | Mar | | | Dec | | | Increase | |
| | Credit Quality | | | 2023 | | | 2022 | | | (Decrease) | |
| | Nonaccrual loans and leases | | $ | 3,247 | | $ | 2,808 | | $ | 439 | |
| | Loans and leases past due 90 days or more and still accruing | | | - | | | 143 | | | (143) | |
| | Total nonperforming loans and leases | | | 3,247 | | | 2,951 | | | 296 | |
| | Other real estate owned | | | 1,708 | | | 1,436 | | | 272 | |
| | Other repossessed assets | | | 66 | | | 422 | | | (356) | |
| | Total nonperforming assets | | $ | 5,021 | | $ | 4,809 | | $ | 212 | |
| | | | | | | | | | | | |
| | Nonperforming loans and leases to total loans and leases, gross | | | 0.10 | % | | 0.09 | % | | 0.01 | % |
| | Nonperforming assets to total assets | | | 0.11 | % | | 0.10 | % | | 0.01 | % |
Noninterest Income
Noninterest income decreased $200 thousand to $6.9 million for the first quarter of 2023 compared to $7.1 million for the prior quarter. During the first quarter of 2023, the primary components of the changes in noninterest income were as follows:
| ● | Decrease in other, primarily related to decreased fees from capital markets activity. |
|---|
The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | | | ||||
| | | | Mar | | | Dec | | | Increase |
| Noninterest Income | | | 2023 | | | 2022 | | | (Decrease) |
| Service charges on deposit accounts | | $ | 1,445 | | $ | 1,477 | | $ | (32) |
| Gain (loss) on sale of securities, net | | | - | | | 144 | | | (144) |
| Mortgage banking income | | | 172 | | | 77 | | | 95 |
| Investment services | | | 1,005 | | | 958 | | | 47 |
| Insurance commissions | | | 1,259 | | | 1,233 | | | 26 |
| Interchange and debit card transaction fees | | | 1,383 | | | 1,328 | | | 55 |
| Other | | | 1,661 | | | 1,908 | | | (247) |
| Total noninterest income | | $ | 6,925 | | $ | 7,125 | | $ | (200) |
Noninterest Expense
Noninterest expense increased $113 thousand to $27.5 million for the first quarter of 2023 compared to $27.4 million for the prior quarter. During the first quarter of 2023, the primary components of the changes in noninterest expense were as follows:
| ● | Increase in salaries and employee benefits as a result of higher employee taxes due to seasonality; |
|---|---|
| ● | Increase in occupancy and equipment as a result of new branch facilities and relocation expenses; |
| --- | --- |
| ● | Decrease in professional services, related to lower audit and consulting expenses; and |
| --- | --- |
| ● | Decrease in other, related to lower operational cost and decreased fees related to capital markets activity. |
| --- | --- |
3
The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | | | ||||
| | | | Mar | | | Dec | | | Increase |
| Noninterest Expense | | | 2023 | | | 2022 | | | (Decrease) |
| Salaries and employee benefits | | $ | 16,742 | | $ | 16,384 | | $ | 358 |
| Occupancy and equipment | | | 3,208 | | | 3,015 | | | 193 |
| FDIC insurance | | | 541 | | | 650 | | | (109) |
| Other real estate and loan related expenses | | | 572 | | | 517 | | | 55 |
| Advertising and marketing | | | 355 | | | 308 | | | 47 |
| Data processing and technology | | | 2,163 | | | 2,097 | | | 66 |
| Professional services | | | 807 | | | 981 | | | (174) |
| Amortization of intangibles | | | 659 | | | 688 | | | (29) |
| Merger related and restructuring expenses | | | - | | | (45) | | | 45 |
| Other | | | 2,482 | | | 2,821 | | | (339) |
| Total noninterest expense | | $ | 27,529 | | $ | 27,416 | | $ | 113 |
Income Tax Expense
Income tax expense was $3.3 million for the first quarter of 2023, a decrease of $201 thousand, compared to $3.5 million for the prior quarter.
The effective tax rate was 22.44% for the first quarter of 2023 and 21.35% for the prior quarter.
Balance Sheet Trends
Total assets at March 31, 2023 were $4.77 billion compared to $4.64 billion at December 31, 2022. The $132.3 million increase is primarily attributable to increases in securities of $75.4 million, cash and cash equivalents of $40.5 million and loans and leases of $28.2 million. Asset increases were offset by an increase in the allowance for credit losses of $8.9 million, primarily for the one-time adjustment of $8.7 million related to the adoption of ASU 2016-13 on January 1, 2023.
Total liabilities increased to $4.33 billion at March 31, 2023 from $4.21 billion at December 31, 2022. The increase of $121.4 million was primarily from organic deposit growth of $152.4 million, offset by a decrease in borrowings of $25.3 million and other liabilities of $5.8 million, related to a decrease in loan related swaps. The decrease in other liabilities was offset by $3.1 million in additional reserve for unfunded lending commitments related to the adoption of ASU 2016-13.
Shareholders' equity at March 31, 2023 totaled $443.4 million, an increase of $10.9 million, from December 31, 2022. The increase in shareholders' equity was primarily driven by net income of $11.5 million for the three months ended March 31, 2023, and the positive change in accumulated other comprehensive income (loss) of $6.7 million, offset by the impact of the adoption of ASU 2016-13 on January 1, 2023, of $6.6 million (net of taxes), and dividends paid of $1.4 million. Tangible book value per share^1^ was $19.66 at March 31, 2023, compared to $19.09 at December 31, 2022. Tangible common equity^1^ as a percentage of tangible assets^1^ was 7.17% at March 31, 2023, compared with 7.13% at December 31, 2022.
The following table presents selected balance sheet information for the periods indicated (dollars in thousands):
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | Mar | | Dec | | Increase | | |||
| Selected Balance Sheet Information | | 2023 | | 2022 | | (Decrease) | | |||
| Total assets | | $ | 4,769,805 | | $ | 4,637,498 | | $ | 132,307 | |
| Total liabilities | | | 4,326,406 | | | 4,205,046 | | | 121,360 | |
| Total equity | | | 443,399 | | | 432,452 | | | 10,947 | |
| Securities | | | 845,194 | | | 769,842 | | | 75,352 | |
| Loans and leases | | | 3,281,787 | | | 3,253,627 | | | 28,160 | |
| Deposits | | | 4,229,546 | | | 4,077,100 | | | 152,446 | |
| Borrowings | | | 16,546 | | | 41,860 | | | (25,314) | |
^1^ Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation
4
Conference Call Information
SmartFinancial issued this earnings release for the first quarter of 2023 on Monday, April 24, 2023, and will host a conference call on Tuesday, April 25, 2023, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 320998. A replay of the conference call will be available through June 24, 2023, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 383016. Conference call materials will be published on the Company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call.
About SmartFinancial, Inc.
SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and the Florida Panhandle. Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.
| | |
|---|---|
| Source | |
| SmartFinancial, Inc. | |
| | |
| Investor Contacts | |
| Billy Carroll | |
| President & CEO | |
| (865) 868-0613 billy.carroll@smartbank.com | |
| | |
| Ron Gorczynski | |
| Executive Vice President, Chief Financial Officer | |
| (865) 437-5724 ron.gorczynski@smartbank.com | |
| | |
| Media Contact | |
| Kelley Fowler | |
| Senior Vice President, Public Relations & Marketing | |
| (865) 868-0611 kelley.fowler@smartbank.com | |
| | |
5
Non-GAAP Financial Measures
Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures, including: (i) operating earnings, (ii) operating return on average assets, (iii) operating pre-tax pre-provision return on average assets, (iv) operating return on average shareholders' equity, (v) return on average tangible common equity, (vi) operating return on average tangible common equity, (vii) operating efficiency ratio, (viii) operating noninterest income, (ix) operating pre-tax pre-provision earnings (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value; (xiv) tangible assets; and ratios derived therefrom, in its analysis of the company's performance. Operating earnings excludes the following from net income: securities gains and losses and merger related and restructuring expenses. Operating return on average assets is the annualized operating earnings (Non-GAAP) divided by average assets. Operating pre-tax pre-provision return on average assets is the annualized operating pre-tax pre-provision income earnings (Non-GAAP) by average assets. Operating return on average shareholders' equity is the annualized operating earnings (Non-GAAP) divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity (Non-GAAP). Operating return on average tangible common equity is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP). The operating efficiency ratio includes an adjustment for taxable equivalent yields and excludes securities gains and losses and merger related and restructuring expenses from the efficiency ratio. Operating noninterest income excludes the following from noninterest income: securities gains and losses. Operating pre-tax pre-provision earnings is net interest income plus operating noninterest income (Non-GAAP) less operating noninterest expense (Non-GAAP). Operating noninterest expense excludes the following from noninterest expense: prior year adjustments to salaries, merger related and restructuring expenses and certain franchise tax true-up expenses. Tangible common equity (Non-GAAP) and average tangible common equity (Non-GAAP) excludes goodwill and other intangible assets from shareholders' equity and average shareholders' equity, respectively. Tangible book value (Non-GAAP) is tangible common equity (Non-GAAP) divided by common shares outstanding. Tangible assets (Non-GAAP) excludes goodwill and other intangibles from total assets. Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers. Management believes these Non-GAAP financial measures also enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.
6
Forward-Looking Statements
This news release may contain statements that are based on management’s current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and can generally be identified by such words as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “may,” “estimate,” and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively; (2) claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters; (3) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize; (4) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships; (5) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank; (6) changes in management’s plans for the future; (7) prevailing, or changes in, economic or political conditions, particularly in our market areas, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing; (8) a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the debt ceiling and the federal budget; (9) credit risk associated with our lending activities; (10) changes in loan demand, real estate values, or competition; (11) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; (12) changes in accounting principles, policies, or guidelines; (13) changes in applicable laws, rules, or regulations; (14) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic and related variants; (15) potential impacts of the recent adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; (16) significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities; (17) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; and (18) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.
7
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Ending Balances | |||||||||||||
| | | Mar | Dec | Sep | Jun | Mar | |||||||||
| | | 2023 | | 2022 | | 2022 | | 2022 | | 2022 | |||||
| Assets: | | | | | | | | ||||||||
| Cash and cash equivalents | | $ | 306,934 | | $ | 266,424 | | $ | 543,029 | | $ | 654,945 | | $ | 763,968 |
| Securities available-for-sale, at fair value | | 560,418 | | 483,893 | | 519,723 | | 524,864 | | 540,483 | |||||
| Securities held-to-maturity, at amortized cost | | | 284,776 | | | 285,949 | | | 287,104 | | | 288,363 | | | 289,532 |
| Other investments | | 14,059 | | 15,530 | | 15,528 | | 16,569 | | 16,499 | |||||
| Loans held for sale | | 3,324 | | 1,752 | | 2,742 | | 1,707 | | 5,894 | |||||
| Loans and leases | | 3,281,787 | | 3,253,627 | | 3,099,116 | | 2,994,074 | | 2,806,026 | |||||
| Less: Allowance for loan and lease losses | | (32,279) | | (23,334) | | (22,769) | | (21,938) | | (20,078) | |||||
| Loans and leases, net | | 3,249,508 | | 3,230,293 | | 3,076,347 | | 2,972,136 | | 2,785,948 | |||||
| Premises and equipment, net | | 92,190 | | 92,511 | | 91,944 | | 89,950 | | 84,793 | |||||
| Other real estate owned | | 1,708 | | 1,436 | | 1,226 | | 1,612 | | 1,612 | |||||
| Goodwill and other intangibles, net | | 109,114 | | 109,772 | | 110,460 | | 104,582 | | 105,215 | |||||
| Bank owned life insurance | | 81,938 | | 81,470 | | 81,001 | | 80,537 | | 80,074 | |||||
| Other assets | | 65,836 | | 68,468 | | 67,807 | | 52,848 | | 44,561 | |||||
| Total assets | | $ | 4,769,805 | | $ | 4,637,498 | | $ | 4,796,911 | | $ | 4,788,113 | | $ | 4,718,579 |
| Liabilities: | | | | | | ||||||||||
| Deposits: | | | | | | ||||||||||
| Noninterest-bearing demand | | $ | 989,753 | | $ | 1,072,449 | | $ | 1,186,209 | | $ | 1,162,843 | | $ | 1,093,933 |
| Interest-bearing demand | | 989,738 | | 965,911 | | 962,901 | | 999,893 | | 975,272 | |||||
| Money market and savings | | 1,761,847 | | 1,583,481 | | 1,663,355 | | 1,607,714 | | 1,573,101 | |||||
| Time deposits | | 488,208 | | 455,259 | | 467,944 | | 511,182 | | 549,047 | |||||
| Total deposits | | 4,229,546 | | 4,077,100 | | 4,280,409 | | 4,281,632 | | 4,191,353 | |||||
| Borrowings | | 16,546 | | 41,860 | | 18,423 | | 12,549 | | 36,713 | |||||
| Subordinated debt | | 42,036 | | 42,015 | | 41,994 | | 41,973 | | 41,952 | |||||
| Other liabilities | | 38,278 | | 44,071 | | 41,374 | | 31,532 | | 28,519 | |||||
| Total liabilities | | 4,326,406 | | 4,205,046 | | 4,382,200 | | 4,367,686 | | 4,298,537 | |||||
| Shareholders' Equity: | | | | | | | | | | | |||||
| Common stock | | 17,004 | | 16,901 | | 16,888 | | 16,898 | | 16,893 | |||||
| Additional paid-in capital | | 294,930 | | 294,330 | | 293,907 | | 293,815 | | 293,376 | |||||
| Retained earnings | | 160,085 | | 156,545 | | 144,723 | | 134,362 | | 125,329 | |||||
| Accumulated other comprehensive income (loss) | | (28,620) | | (35,324) | | (40,807) | | (24,648) | | (15,556) | |||||
| Total shareholders' equity | | 443,399 | | 432,452 | | 414,711 | | 420,427 | | 420,042 | |||||
| Total liabilities & shareholders' equity | | $ | 4,769,805 | | $ | 4,637,498 | | $ | 4,796,911 | | $ | 4,788,113 | | $ | 4,718,579 |
8
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands except share and per share data)
| | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Three Months Ended | |||||||||||||
| | Mar | Dec | Sep | Jun | Mar | |||||||||
| | 2023 | | 2022 | | 2022 | | 2022 | | 2022 | |||||
| Interest income: | | | | | | |||||||||
| Loans and leases, including fees | $ | 44,728 | | $ | 40,082 | | $ | 35,127 | | $ | 31,530 | | $ | 29,643 |
| Investment securities: | | | | | ||||||||||
| Taxable | 3,651 | | 3,337 | | 3,135 | | 2,908 | | 2,418 | |||||
| Tax-exempt | 353 | | 797 | | 561 | | 441 | | 368 | |||||
| Federal funds sold and other earning assets | 4,446 | | 3,098 | | 3,474 | | 1,430 | | 486 | |||||
| Total interest income | 53,178 | | 47,314 | | 42,297 | | 36,309 | | 32,915 | |||||
| Interest expense: | | | | | ||||||||||
| Deposits | 16,346 | | 8,844 | | 4,866 | | 2,504 | | 2,014 | |||||
| Borrowings | 224 | | 232 | | 97 | | 117 | | 157 | |||||
| Subordinated debt | 626 | | 626 | | 626 | | 626 | | 626 | |||||
| Total interest expense | 17,196 | | 9,702 | | 5,589 | | 3,247 | | 2,797 | |||||
| Net interest income | 35,982 | | 37,612 | | 36,708 | | 33,062 | | 30,118 | |||||
| Provision for loan and lease losses | 550 | | 788 | | 974 | | 1,250 | | 1,006 | |||||
| Net interest income after provision for loan and lease losses | 35,432 | | 36,824 | | 35,734 | | 31,812 | | 29,112 | |||||
| Noninterest income: | | | | | ||||||||||
| Service charges on deposit accounts | 1,445 | | 1,477 | | 1,611 | | 1,446 | | 1,319 | |||||
| Gain (loss) on sale of securities, net | — | | 144 | | — | | — | | — | |||||
| Mortgage banking | 172 | | 77 | | 170 | | 471 | | 834 | |||||
| Investment services | 1,005 | | 958 | | 1,051 | | 1,065 | | 1,070 | |||||
| Insurance commissions | 1,259 | | 1,233 | | 864 | | 598 | | 901 | |||||
| Interchange and debit card transaction fees | 1,383 | | 1,328 | | 1,356 | | 1,467 | | 1,284 | |||||
| Other | 1,661 | | 1,908 | | 1,198 | | 2,182 | | 1,703 | |||||
| Total noninterest income | 6,925 | | 7,125 | | 6,250 | | 7,229 | | 7,111 | |||||
| Noninterest expense: | | | | | ||||||||||
| Salaries and employee benefits | 16,742 | | 16,384 | | 16,317 | | 15,673 | | 15,046 | |||||
| Occupancy and equipment | 3,208 | | 3,015 | | 3,167 | | 2,793 | | 3,059 | |||||
| FDIC insurance | 541 | | 650 | | 705 | | 676 | | 641 | |||||
| Other real estate and loan related expense | 572 | | 517 | | 565 | | 636 | | 729 | |||||
| Advertising and marketing | 355 | | 308 | | 288 | | 327 | | 369 | |||||
| Data processing and technology | 2,163 | | 2,097 | | 1,872 | | 1,728 | | 1,586 | |||||
| Professional services | 807 | | 981 | | 822 | | 745 | | 1,242 | |||||
| Amortization of intangibles | 659 | | 688 | | 650 | | 633 | | 637 | |||||
| Merger related and restructuring expenses | — | | (45) | | 87 | | 81 | | 439 | |||||
| Other | 2,482 | | 2,821 | | 2,757 | | 2,634 | | 1,970 | |||||
| Total noninterest expense | 27,529 | | 27,416 | | 27,230 | | 25,926 | | 25,718 | |||||
| Income before income taxes | 14,828 | | 16,533 | | 14,754 | | 13,115 | | 10,505 | |||||
| Income tax expense | 3,328 | | 3,529 | | 3,211 | | 2,900 | | 2,246 | |||||
| Net income | $ | 11,500 | | $ | 13,004 | | $ | 11,543 | | $ | 10,215 | | $ | 8,259 |
| Earnings per common share: | | | | | ||||||||||
| Basic | $ | 0.69 | | $ | 0.78 | | $ | 0.69 | | $ | 0.61 | | $ | 0.49 |
| Diluted | $ | 0.68 | | $ | 0.77 | | $ | 0.68 | | $ | 0.61 | | $ | 0.49 |
| Weighted average common shares outstanding: | | | | | ||||||||||
| Basic | 16,791,406 | | 16,758,706 | | 16,749,255 | | 16,734,930 | | 16,718,371 | |||||
| Diluted | 16,896,494 | | 16,884,253 | | 16,872,022 | | 16,867,774 | | 16,858,288 |
9
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | |||||||||||||||||||||||
| | | March 31, 2023 | | December 31, 2022 | | March 31, 2022 | |||||||||||||||||||
| | Average | | | Yield/ | Average | | | Yield/ | Average | | Yield/ | ||||||||||||||
| | | Balance | | Interest | | Cost | | Balance | | Interest | | Cost | | Balance | | Interest | | Cost | |||||||
| Assets: | | | | | | | | ||||||||||||||||||
| Loans and leases, including fees^1^ | | $ | 3,258,452 | | $ | 44,728 | 5.57 | % | $ | 3,150,493 | | $ | 40,082 | 5.05 | % | $ | 2,728,096 | | $ | 29,643 | 4.41 | % | |||
| Taxable securities | | 723,540 | | 3,651 | 2.05 | % | 701,787 | | 3,337 | 1.89 | % | 612,980 | | 2,418 | 1.60 | % | |||||||||
| Tax-exempt securities^2^ | | 65,547 | | 447 | 2.77 | % | 93,721 | | 958 | 4.06 | % | 105,516 | | 533 | 2.05 | % | |||||||||
| Federal funds sold and other earning assets | | 378,253 | | 4,446 | 4.77 | % | 322,970 | | 3,098 | 3.81 | % | 775,834 | | 486 | 0.25 | % | |||||||||
| Total interest-earning assets | | 4,425,792 | | 53,272 | 4.88 | % | 4,268,971 | | 47,475 | 4.41 | % | 4,222,426 | | 33,080 | 3.18 | % | |||||||||
| Noninterest-earning assets | | 359,996 | | | | | 372,864 | | | 381,807 | | | |||||||||||||
| Total assets | | $ | 4,785,788 | | | | | | | $ | 4,641,835 | | | $ | 4,604,233 | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Shareholders’ Equity: | | | | | | | | | |||||||||||||||||
| Interest-bearing demand deposits | | $ | 944,132 | | 4,227 | | 1.82 | % | $ | 924,320 | | 3,141 | 1.35 | % | $ | 921,835 | | 446 | 0.20 | % | |||||
| Money market and savings deposits | | 1,820,455 | | 10,381 | | 2.31 | % | 1,587,688 | | 4,855 | 1.21 | % | 1,523,188 | | 859 | 0.23 | % | ||||||||
| Time deposits | | 469,361 | | 1,738 | | 1.50 | % | 459,996 | | 848 | 0.73 | % | 561,207 | | 709 | 0.51 | % | ||||||||
| Total interest-bearing deposits | | 3,233,948 | | 16,346 | | 2.05 | % | 2,972,004 | | 8,844 | 1.18 | % | 3,006,230 | | 2,014 | 0.27 | % | ||||||||
| Borrowings | | 16,858 | | 224 | | 5.39 | % | 18,309 | | 232 | 5.03 | % | 69,769 | | 157 | 0.91 | % | ||||||||
| Subordinated debt | | 42,022 | | 626 | | 6.04 | % | 42,002 | | 626 | 5.90 | % | 41,938 | | 626 | 6.05 | % | ||||||||
| Total interest-bearing liabilities | | 3,292,828 | | 17,196 | | 2.12 | % | 3,032,315 | | 9,702 | 1.27 | % | 3,117,937 | | 2,797 | 0.36 | % | ||||||||
| Noninterest-bearing deposits | | 1,015,670 | | | | | | 1,146,374 | | | 1,028,298 | | | ||||||||||||
| Other liabilities | | 44,908 | | | | | | 43,109 | | | 30,053 | | | ||||||||||||
| Total liabilities | | 4,353,406 | | | | | | 4,221,798 | | | 4,176,288 | | | ||||||||||||
| Shareholders' equity | | 432,382 | | | | | | 420,037 | | | 427,945 | | | ||||||||||||
| Total liabilities and shareholders' equity | | $ | 4,785,788 | | | | | | | $ | 4,641,835 | | | $ | 4,604,233 | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income, taxable equivalent | | | | | $ | 36,076 | | | | | $ | 37,773 | | | $ | 30,283 | | ||||||||
| Interest rate spread | | | | | | 2.76 | % | | 3.14 | % | | 2.82 | % | ||||||||||||
| Tax equivalent net interest margin | | | | | | 3.31 | % | | 3.51 | % | | 2.91 | % | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Percentage of average interest-earning assets to average interest-bearing liabilities | | | | | | 134.41 | % | | 140.78 | % | | 135.42 | % | ||||||||||||
| Percentage of average equity to average assets | | | | | | 9.03 | % | | 9.05 | % | | 9.29 | % |
^1^Includes average balance of $3.1 million, $3.3 million, and $54.0 million in PPP loans for the quarters ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.
^2^Yields computed on tax-exempt instruments on a tax equivalent basis include $94 thousand, $161 thousand, and $165 thousand of taxable equivalent income for the quarters ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.
10
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | As of and for The Three Months Ended | ||||||||||||||
| | Mar | Dec | Sep | Jun | Mar | |||||||||||
| | | 2023 | | 2022 | | 2022 | | 2022 | | 2022 | ||||||
| Composition of Loans and Leases: | | | | | | | | | | | ||||||
| Commercial real estate: | | | | | | | | | | | ||||||
| owner occupied | | $ | 764,166 | | $ | 765,041 | | $ | 714,734 | | $ | 684,250 | | $ | 612,675 | |
| non-owner occupied | | 871,368 | | 862,720 | | 822,317 | | 850,338 | | 863,181 | | |||||
| Commercial real estate, total | | 1,635,534 | | 1,627,761 | | 1,537,051 | | 1,534,588 | | 1,475,856 | | |||||
| Commercial & industrial | | 571,153 | | 551,867 | | 514,280 | | 483,588 | | 461,153 | | |||||
| Construction & land development | | 386,253 | | 402,501 | | 405,007 | | 364,368 | | 314,654 | | |||||
| Consumer real estate | | 606,343 | | 587,977 | | 562,408 | | 533,582 | | 483,229 | | |||||
| Leases | | | 67,701 | | | 67,427 | | | 64,798 | | | 63,264 | | | 59,892 | |
| Consumer and other | | 14,803 | | 16,094 | | 15,572 | | 14,684 | | 11,242 | | |||||
| Total loans and leases | | $ | 3,281,787 | | $ | 3,253,627 | | $ | 3,099,116 | | $ | 2,994,074 | | $ | 2,806,026 | |
| | | | | | | | | | | | | | | | | |
| Asset Quality and Additional Loan Data: | | | | | | | | | | | ||||||
| Nonperforming loans and leases | | $ | 3,247 | | $ | 2,951 | | $ | 3,379 | | $ | 3,413 | | $ | 3,342 | |
| Other real estate owned | | 1,708 | | 1,436 | | 1,226 | | 1,612 | | 1,612 | | |||||
| Other repossessed assets | | | 66 | | | 422 | | | — | | | 17 | | | 27 | |
| Total nonperforming assets | | $ | 5,021 | | $ | 4,809 | | $ | 4,605 | | $ | 5,042 | | $ | 4,981 | |
| Restructured loans and leases not included in nonperforming loans and leases | | $ | 97 | | $ | 101 | | $ | 108 | | $ | 678 | | $ | 625 | |
| Net charge-offs to average loans and leases (annualized) | | 0.03 | % | 0.03 | % | 0.02 | % | (0.09) | % | 0.04 | % | |||||
| Allowance for loan and leases losses to loans and leases | | 0.98 | % | 0.72 | % | 0.73 | % | 0.73 | % | 0.72 | % | |||||
| Nonperforming loans and leases to total loans and leases, gross | | 0.10 | % | 0.09 | % | 0.11 | % | 0.11 | % | 0.12 | % | |||||
| Nonperforming assets to total assets | | 0.11 | % | 0.10 | % | 0.10 | % | 0.11 | % | 0.11 | % | |||||
| Acquired loan and lease fair value discount balance | | $ | — | | $ | 13,128 | | $ | 14,465 | | $ | 14,737 | | $ | 14,913 | |
| Accretion income on acquired loans and leases | | — | | 1,396 | | 148 | | 225 | | 389 | | |||||
| PPP net fees deferred balance | | | 114 | | | 122 | | | 140 | | | 301 | | | 972 | |
| PPP net fees recognized | | | 8 | | | 17 | | | 163 | | | 669 | | | 1,066 | |
| | | | | | | | | | | | | | | | | |
| Capital Ratios: | | | | | | | | | | | ||||||
| Equity to Assets | | 9.30 | % | 9.33 | % | 8.65 | % | 8.78 | % | 8.90 | % | |||||
| Tangible common equity to tangible assets (Non-GAAP)^1^ | | 7.17 | % | 7.13 | % | 6.49 | % | 6.74 | % | 6.82 | % | |||||
| | | | | | | | | | | | | | | | | |
| SmartFinancial, Inc.^2^ | | | | | | | | | | | ||||||
| Tier 1 leverage | | 7.91 | % | 7.95 | % | 7.40 | % | 7.48 | % | 7.41 | % | |||||
| Common equity Tier 1 | | 9.91 | % | 9.65 | % | 9.65 | % | 9.95 | % | 10.30 | % | |||||
| Tier 1 capital | | 9.91 | % | 9.65 | % | 9.65 | % | 9.95 | % | 10.30 | % | |||||
| Total capital | | 11.73 | % | 11.40 | % | 11.44 | % | 11.80 | % | 12.22 | % | |||||
| | | | | | | | | | | | | | | | | |
| SmartBank | | **** | Estimated^3^ | | | | | | | | | | ||||
| Tier 1 leverage | | 8.87 | % | 8.90 | % | 8.27 | % | 8.33 | % | 8.24 | % | |||||
| Common equity Tier 1 | | 11.12 | % | 10.82 | % | 10.78 | % | 11.08 | % | 11.46 | % | |||||
| Tier 1 capital | | 11.12 | % | 10.82 | % | 10.78 | % | 11.08 | % | 11.46 | % | |||||
| Total capital | | 11.81 | % | 11.44 | % | 11.41 | % | 11.72 | % | 12.08 | % |
^1^Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.
^2^All periods presented are estimated.
^3^ Current period capital ratios are estimated as of the date of this earnings release.
11
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands except share and per share data)
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | As of and for The | | |||||||||||||
| | Three Months Ended | ||||||||||||||
| | Mar | Dec | Sep | Jun | Mar | ||||||||||
| | 2023 | | 2022 | | 2022 | | 2022 | | 2022 | | |||||
| Selected Performance Ratios (Annualized): | | | | | | | |||||||||
| Return on average assets | | 0.97 | % | | 1.11 | % | | 0.95 | % | | 0.87 | % | | 0.73 | % |
| Return on average shareholders' equity | | 10.79 | % | | 12.28 | % | | 10.77 | % | | 9.76 | % | | 7.83 | % |
| Return on average tangible common equity¹ | | 14.45 | % | | 16.65 | % | | 14.36 | % | | 13.02 | % | | 10.39 | % |
| Noninterest income / average assets | | 0.59 | % | | 0.61 | % | | 0.52 | % | | 0.62 | % | | 0.63 | % |
| Noninterest expense / average assets | | 2.33 | % | | 2.34 | % | | 2.25 | % | | 2.21 | % | | 2.27 | % |
| Efficiency ratio | | 64.16 | % | | 61.28 | % | | 63.39 | % | | 64.35 | % | | 69.08 | % |
| | | | | | | | | | | | | | | | |
| Operating Selected Performance Ratios (Annualized): | | | | | | | | | | | |||||
| Operating return on average assets^1^ | | 0.97 | % | | 1.10 | % | | 0.96 | % | | 0.88 | % | | 0.76 | % |
| Operating PTPP return on average assets^1^ | | 1.30 | % | | 1.46 | % | | 1.30 | % | | 1.23 | % | | 1.05 | % |
| Operating return on average shareholders' equity^1^ | | 10.79 | % | | 12.15 | % | | 10.83 | % | | 9.82 | % | | 8.14 | % |
| Operating return on average tangible common equity^1^ | | 14.45 | % | | 16.47 | % | | 14.44 | % | | 13.09 | % | | 10.80 | % |
| Operating efficiency ratio^1^ | | 64.02 | % | | 61.36 | % | | 62.93 | % | | 63.88 | % | | 67.60 | % |
| Operating noninterest income / average assets^1^ | | 0.59 | % | | 0.60 | % | | 0.52 | % | | 0.62 | % | | 0.63 | % |
| Operating noninterest expense / average assets^1^ | | 2.33 | % | | 2.35 | % | | 2.24 | % | | 2.21 | % | | 2.23 | % |
| | | | | | | | | | | | | | | | |
| Selected Interest Rates and Yields: | | | | | | | | | | | |||||
| Yield on loans and leases | | 5.57 | % | | 5.05 | % | | 4.59 | % | | 4.40 | % | | 4.41 | % |
| Yield on earning assets, FTE | | 4.88 | % | | 4.41 | % | | 3.79 | % | | 3.39 | % | | 3.18 | % |
| Cost of interest-bearing deposits | | 2.05 | % | | 1.18 | % | | 0.62 | % | | 0.33 | % | | 0.27 | % |
| Cost of total deposits | | 1.56 | % | | 0.85 | % | | 0.45 | % | | 0.24 | % | | 0.20 | % |
| Cost of interest-bearing liabilities | | 2.12 | % | | 1.27 | % | | 0.70 | % | | 0.42 | % | | 0.36 | % |
| Net interest margin, FTE | | 3.31 | % | | 3.51 | % | | 3.29 | % | | 3.08 | % | | 2.91 | % |
| | | | | | | | | | | | | | | | |
| Per Common Share: | | | | | | | |||||||||
| Net income, basic | $ | 0.69 | | $ | 0.78 | | $ | 0.69 | | $ | 0.61 | | $ | 0.49 | |
| Net income, diluted | 0.68 | | 0.77 | | 0.68 | | 0.61 | | 0.49 | | |||||
| Operating earnings, basic¹ | 0.69 | | 0.77 | | 0.69 | | 0.61 | | 0.51 | | |||||
| Operating earnings, diluted¹ | 0.68 | | 0.76 | | 0.69 | | 0.61 | | 0.51 | | |||||
| Book value | 26.08 | | 25.59 | | 24.56 | | 24.88 | | 24.86 | | |||||
| Tangible book value¹ | 19.66 | | 19.09 | | 18.02 | | 18.69 | | 18.64 | | |||||
| Common shares outstanding | 17,004,092 | | 16,900,805 | | 16,887,555 | | 16,898,405 | | 16,893,282 | |
¹Non-GAAP measure. See reconciliation of Non-GAAP measures.
12
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | ||||||||||||||
| | Mar | Dec | Sep | Jun | Mar | |||||||||||
| | | 2023 | | 2022 | | 2022 | | 2022 | | 2021 | | |||||
| Operating Earnings: | | | | | | | ||||||||||
| Net income (GAAP) | | $ | 11,500 | | $ | 13,004 | | $ | 11,543 | | $ | 10,215 | | $ | 8,259 | |
| Noninterest income: | | | | | | | ||||||||||
| Securities gains (losses), net | | — | | (144) | | — | | — | | — | | |||||
| Noninterest expenses: | | | | | | | | | | | | |||||
| Merger related and restructuring expenses | | — | | (45) | | 87 | | 81 | | 439 | | |||||
| Income taxes: | | | | | | | | | | | | |||||
| Income tax effect of adjustments | | — | | 49 | | (22) | | (21) | | (113) | | |||||
| Operating earnings (Non-GAAP) | | $ | 11,500 | | $ | 12,864 | | $ | 11,608 | | $ | 10,275 | | $ | 8,585 | |
| Operating earnings per common share (Non-GAAP): | | | | | | | ||||||||||
| Basic | | $ | 0.69 | | $ | 0.77 | | $ | 0.69 | | $ | 0.61 | | $ | 0.51 | |
| Diluted | | 0.68 | | 0.76 | | 0.69 | | 0.61 | | 0.51 | | |||||
| | | | | | | | | | | | | | | | | |
| Operating Noninterest Income: | | | | | | | ||||||||||
| Noninterest income (GAAP) | | $ | 6,925 | | $ | 7,125 | | $ | 6,250 | | $ | 7,229 | | $ | 7,111 | |
| Securities gains (losses), net | | — | | (144) | | — | | — | | — | | |||||
| Operating noninterest income (Non-GAAP) | | $ | 6,925 | | $ | 6,981 | | $ | 6,250 | | $ | 7,229 | | $ | 7,111 | |
| Operating noninterest income (Non-GAAP)/average assets^1^ | | 0.59 | % | 0.60 | % | 0.52 | % | 0.62 | % | 0.63 | % | |||||
| | | | | | | | | | | | | | | | | |
| Operating Noninterest Expense: | | | | | | | ||||||||||
| Noninterest expense (GAAP) | | $ | 27,529 | | $ | 27,416 | | $ | 27,230 | | $ | 25,926 | | $ | 25,718 | |
| Merger related and restructuring expenses | | — | | 45 | | (87) | | (81) | | (439) | | |||||
| Operating noninterest expense (Non-GAAP) | | $ | 27,529 | | $ | 27,461 | | $ | 27,143 | | $ | 25,845 | | $ | 25,279 | |
| Operating noninterest expense (Non-GAAP)/average assets^2^ | | 2.33 | % | 2.35 | % | 2.24 | % | 2.21 | % | 2.23 | % | |||||
| | | | | | | | | | | | | | | | | |
| Operating Pre-tax Pre-provision ("PTPP") Earnings: | | | | | | | | | | | | | | | | |
| Net interest income (GAAP) | | $ | 35,982 | | $ | 37,612 | | $ | 36,708 | | $ | 33,062 | | $ | 30,118 | |
| Operating noninterest income (Non-GAAP) | | | 6,925 | | | 6,981 | | | 6,250 | | | 7,229 | | | 7,111 | |
| Operating noninterest expense (Non-GAAP) | | | (27,529) | | | (27,461) | | | (27,143) | | | (25,845) | | | (25,279) | |
| Operating PTPP earnings (Non-GAAP) | | $ | 15,378 | | $ | 17,132 | | $ | 15,815 | | $ | 14,446 | | $ | 11,950 | |
| | | | | | | | | | | | | | | | | |
| Non-GAAP Return Ratios: | | | | | | | ||||||||||
| Operating return on average assets (Non-GAAP)^3^ | | 0.97 | % | 1.10 | % | 0.96 | % | 0.88 | % | 0.76 | % | |||||
| Operating PTPP return on average assets (Non-GAAP)^4^ | | | 1.30 | % | | 1.46 | % | | 1.30 | % | | 1.23 | % | | 1.05 | % |
| Return on average tangible common equity (Non-GAAP)^5^ | | 14.45 | % | 16.65 | % | 14.36 | % | 13.02 | % | 10.39 | % | |||||
| Operating return on average shareholders' equity (Non-GAAP)^6^ | | 10.79 | % | 12.15 | % | 10.83 | % | 9.82 | % | 8.14 | % | |||||
| Operating return on average tangible common equity (Non-GAAP)^7^ | | 14.45 | % | 16.47 | % | 14.44 | % | 13.09 | % | 10.80 | % | |||||
| | | | | | | | | | | | | | | | | |
| Operating Efficiency Ratio: | | | | | | | ||||||||||
| Efficiency ratio (GAAP) | | 64.16 | % | 61.28 | % | 63.39 | % | 64.35 | % | 69.08 | % | |||||
| Adjustment for taxable equivalent yields | | (0.14) | % | (0.22) | % | (0.25) | % | (0.27) | % | (0.31) | % | |||||
| Adjustment for securities gains (losses) | | — | % | (0.20) | % | — | % | — | % | — | % | |||||
| Adjustment for merger related income and costs | | — | % | 0.50 | % | (0.21) | % | (0.20) | % | (1.17) | % | |||||
| Operating efficiency ratio (Non-GAAP) | | 64.02 | % | 61.36 | % | 62.93 | % | 63.88 | % | 67.60 | % |
^1^Operating noninterest income (Non-GAAP) is annualized and divided by average assets.
^2^Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.
^3^Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.
^4^Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets.
^5^Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).
^6^Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average equity.
^7^Operating return on average tangible common equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).
13
SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | |||||||||||||
| | Mar | Dec | Sep | Jun | Mar | ||||||||||
| | | 2023 | | 2022 | | 2022 | | 2022 | | 2021 | |||||
| Tangible Common Equity: | | | | | | ||||||||||
| Shareholders' equity (GAAP) | | $ | 443,399 | | $ | 432,452 | | $ | 414,711 | | $ | 420,427 | | $ | 420,042 |
| Less goodwill and other intangible assets | | 109,114 | | 109,772 | | 110,460 | | 104,582 | | 105,215 | |||||
| Tangible common equity (Non-GAAP) | | $ | 334,285 | | $ | 322,680 | | $ | 304,251 | | $ | 315,845 | | $ | 314,827 |
| | | | | | | | | | | | | | | | |
| Average Tangible Common Equity: | | | | | | ||||||||||
| Average shareholders' equity (GAAP) | | $ | 432,382 | | $ | 420,037 | | $ | 425,365 | | $ | 419,726 | | $ | 427,945 |
| Less average goodwill and other intangible assets | | 109,537 | | 110,206 | | 106,483 | | 104,986 | | 105,617 | |||||
| Average tangible common equity (Non-GAAP) | | $ | 322,845 | | $ | 309,831 | | $ | 318,882 | | $ | 314,740 | | $ | 322,328 |
| | | | | | | | | | | | | | | | |
| Tangible Book Value per Common Share: | | | | | | | | | | | | | | | |
| Book value per common share (GAAP) | | $ | 26.08 | | $ | 25.59 | | $ | 24.56 | | $ | 24.88 | | $ | 24.86 |
| Adjustment due to goodwill and other intangible assets | | | (6.42) | | | (6.50) | | | (6.54) | | | (6.19) | | | (6.23) |
| Tangible book value per common share (Non-GAAP)^1^ | | $ | 19.66 | | $ | 19.09 | | $ | 18.02 | | $ | 18.69 | | $ | 18.64 |
| | | | | | | | | | | | | | | | |
| Tangible Common Equity to Tangible Assets: | | | | | | | | | | | | | | | |
| Total Assets | | $ | 4,769,805 | | $ | 4,637,498 | | $ | 4,796,911 | | $ | 4,788,113 | | $ | 4,718,579 |
| Less goodwill and other intangibles | | | 109,114 | | | 109,772 | | | 110,460 | | | 104,582 | | | 105,215 |
| Tangible Assets (Non-GAAP): | | $ | 4,660,691 | | $ | 4,527,726 | | $ | 4,686,451 | | $ | 4,683,531 | | $ | 4,613,364 |
| Tangible common equity to tangible assets (Non-GAAP) | | | 7.17% | | | 7.13% | | | 6.49% | | | 6.74% | | | 6.82% |
^1^Tangible book value per share (Non-GAAP) is computed by dividing total stockholder's equity, less goodwill and other intangible assets by common shares outstanding.
14
Exhibit 99.2
| 1<br>INVESTOR CALL<br>1Q 2023<br>April 25, 2023, 10:00am ET<br>Webcast: www.smartbank.com<br>(Investor Relations)<br>Audio Only: 1<br>-833<br>-470<br>-1428<br>Access Code: 320998<br>Miller Welborn<br>Chairman of the Board<br>Billy Carroll<br>President & CEO<br>Ron Gorczynski<br>CFO |
|---|
| DISCLOSURES<br>2<br>Forward-Looking Statements<br>This presentation may contain statements that are based on management’s current estimates<br>or expectations of future events or future results, and that may be deemed to constitute<br>forward-looking statements as defined under the Private Securities Litigation Reform Act of<br>1995. These statements on SmartFinancial Inc.’s (“SmartFinancial”) business and financial<br>results and conditions, are not historical in nature and can generally be identified by such<br>words as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “may,” “estimate,” and<br>similar expressions. All forward-looking statements are subject to risks, uncertainties, and other<br>factors that may cause the actual results of SmartFinancial to differ materially from future<br>results expressed or implied by such forward-looking statements. Such risks, uncertainties, and<br>other factors include, among others, (1) the risk of litigation and reputational risk associated<br>with historic acquisition activity; (2) the risk that cost savings and revenue synergies from<br>recently completed acquisitions may not be realized or may take longer than anticipated to<br>realize; (3) disruption from recently completed acquisitions with customer, supplier, employee,<br>or other business relationships; (4) our ability to successfully integrate the businesses acquired<br>as part of previous acquisitions with the business of SmartBank; (5) changes in management’s<br>plans for the future; (6) prevailing, or changes in, economic or political conditions, particularly in<br>our market areas, including the effects of declines in the real estate market, high<br>unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic<br>growth, as well as the financial stress on borrowers as a result of the foregoing; (7) a<br>deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S.<br>government may take to avoid exceeding the debt ceiling, or uncertainties surrounding the<br>debt ceiling and the federal budget; (8) credit risk associated with our lending activities; (9)<br>changes in loan demand, real estate values, or competition; (10) developments in our mortgage<br>banking business, including loan modifications, general demand, and the effects of judicial or<br>regulatory requirements or guidance; (11) changes in accounting principles, policies, or<br>guidelines; (12) changes in applicable laws, rules, or regulations; (13) adverse results from<br>current or future litigation, regulatory examinations or other legal and/or regulatory actions,<br>including as a result of the Company’s participation in and execution of government programs<br>related to the COVID-19 pandemic and related variants; (14) potential impacts of the recent<br>adverse developments in the banking industry highlighted by high-profile failures, including<br>impacts on customer confidence, deposit outflows, liquidity and the regulatory response<br>thereto; (15) significant turbulence or a disruption in the capital or financial markets and the<br>effect of a fall in stock market prices on our investment securities; (16) the effects of war or<br>other conflicts including the impacts related to or resulting from Russia’s military action in<br>Ukraine; and (17) other general competitive, economic, political, and market factors, including<br>those affecting our business, operations, pricing, products, or services. These and other factors<br>that could cause results to differ materially from those described in the forward-looking<br>statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly<br>reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to<br>the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website<br>(www.sec.gov). Undue reliance should not be placed on forward-looking statements.<br>SmartFinancial disclaims any obligation to update or revise any forward-looking statements<br>contained in this release, which speak only as of the date hereof, whether as a result of new<br>information, future events, or otherwise.<br>Non-GAAP Financial Measures<br>Statements included in this presentation include Non-GAAP financial measures and should be<br>read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial<br>measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP<br>financial measures, including: (i) operating revenue, (ii) operating earnings, (iii) operating return<br>on average assets, (iv) operating return on average shareholders’ equity, (v) return on average<br>tangible common equity, (vi) operating return on average tangible common equity, (vii)<br>operating efficiency ratio; (viii) tangible common equity; (ix) average tangible common equity; (x)<br>tangible book value; (xi) operating pre-tax pre-provision earnings; (xii) operating noninterest<br>income; (xiii) operating noninterest expense; (xiv) tangible assets; and ratios derived therefrom,<br>in its analysis of the company's performance. Operating revenue includes the earnings from net<br>interest income and operating noninterest income (Non-GAAP). Operating earnings excludes<br>the following from net income: securities gains and losses, merger related and restructuring<br>expenses, and the income tax effect of adjustments. Operating return on average assets is the<br>annualized operating earnings (Non-GAAP) divided by average assets. Operating return on<br>average shareholders’ equity is the annualized operating earnings (Non-GAAP) divided by<br>average equity. Return on average tangible common equity is the annualized net income divided<br>by average tangible common equity (Non-GAAP). Operating return on average tangible<br>common equity is the annualized operating earnings (Non-GAAP) divided by average tangible<br>common equity (Non-GAAP). The operating efficiency ratio includes an adjustment for taxable<br>equivalent yields and excludes securities gains and losses and merger related and restructuring<br>expenses from the efficiency ratio. Tangible common equity and average tangible common<br>equity exclude goodwill and other intangible assets from shareholders’ equity and average<br>shareholders’ equity. Tangible book value excludes goodwill and other intangible assets less<br>shareholders’ equity divided by common shares outstanding. Operating pre-tax pre-provision<br>earnings is net interest income plus operating noninterest income (Non-GAAP) less operating<br>noninterest expense (Non-GAAP). Operating noninterest income excludes the following from<br>noninterest income: securities gains and losses. Operating noninterest expense excludes the<br>following from noninterest expense: prior year adjustments to salaries, merger related and<br>restructuring expenses and certain franchise tax true-up expenses. Tangible assets excludes<br>goodwill and other intangibles from total assets. Management believes that Non-GAAP financial<br>measures provide additional useful information that allows investors to evaluate the ongoing<br>performance of the company and provide meaningful comparisons to its peers. Management<br>believes these non-GAAP financial measures also enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating<br>results excluding the impact of items that are not reflective of the underlying operating<br>performance. Non-GAAP financial measures should not be considered as an alternative to any<br>measure of performance or financial condition as promulgated under GAAP, and investors<br>should consider SmartFinancial's performance and financial condition as reported under GAAP<br>and all other relevant information when assessing the performance or financial condition of the<br>company. Non-GAAP financial measures have limitations as analytical tools, and investors<br>should not consider them in isolation or as a substitute for analysis of the results or financial<br>condition as reported under GAAP. |
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| $0.49<br>$0.77<br>$0.68<br>$0.51<br>$0.76<br>$0.68<br>1Q22 4Q22 1Q23<br>GAAP EPS Diluted Operating EPS<br>$24.86 $25.59 $26.08<br>$18.64 $19.09 $19.66<br>1Q22 4Q22 1Q23<br>BV Per Share TBV Per Share<br>0.73%<br>1.11%<br>0.97%<br>0.76%<br>1.10%<br>0.97%<br>1Q22 4Q22 1Q23<br>GAAP ROAA Operating ROAA<br>10.4%<br>16.7%<br>14.4%<br>10.8%<br>16.5%<br>14.4%<br>1Q22 4Q22 1Q23<br>GAAP ROATCE Operating ROATCE<br>AOCI Impact<br>3<br>Unless otherwise indicated, financial data as of or for the three months ended 3/31/23<br>1) Non-GAAP financial measure - for a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>2) QoQ: Quarter-over-Quarter<br>3) “Loans” for purposes of this presentation includes all SmartFinancial loans and leases<br>4) Organic loan growth excludes Paycheck Protection Program (PPP) Loans<br>5) AOCI: Accumulated Other Comprehensive Income<br>6) 7% annualized organic loan growth based on Q1 ’23 net balance loan growth of $53 million divided by Q4 ’22 loans of $3.25 billion less a $24.6 million loan participation included in the Q4 ’22 loan balance that was subsequently removed on 1/1/23<br>QUARTERLY HIGHLIGHTS: FIRST QUARTER 2023<br>3%<br>QoQ2 Annualized<br>Tang. Book Value<br>Per Share Growth<br>(Excluding AOCI)1<br>$0.68<br>Diluted Operating<br>EPS1<br>0.97%<br>Operating Return on<br>Average Assets1<br>14.4%<br>Operating Return<br>Average Tang.<br>Common Equity1<br>64%<br>Operating Efficiency<br>Ratio1<br>15%<br>QoQ Annualized<br>Deposit Growth<br>7%<br>QoQ Annualized<br>Organic Loan3<br>Growth4,6<br>78%<br>Loan / Deposit<br>Ratio<br>0.11%<br>Non-Performing<br>Assets / Assets<br>$4.8<br>Billion in Total<br>Assets<br>Diluted Earnings Per Share Book Value Per Share<br>Return on Average Assets<br>Return on Average Tangible<br>Common Equity<br>1<br>1 1<br>1<br>1,5<br>$21.34<br>$19.66<br>$21.18<br>$19.09 |
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| 4<br>SMARTFINANCIAL: EXPANDING SOUTHEAST FRANCHISE<br>$4.8<br>Billion in Total<br>Assets<br>$3.3<br>Billion in Total<br>Loans<br>We are building a culture<br>where Associates thrive and<br>are empowered to be leaders.<br>The core values that we have<br>established as a company help<br>us operate in unison and have<br>become a critical part of our<br>culture. Our Associates are key<br>to SmartBank’s success.<br>$4.2<br>Billion in Total<br>Deposits<br>42<br>Total Branches<br>Nashville Knoxville<br>Huntsville<br>Tuscaloosa<br>Mobile<br>Pensacola<br>Birmingham<br>Auburn<br>Tallahassee<br>Dothan<br>Montgomery<br>SmartBank Branch Offices<br>Chattanooga<br>Balance sheet and branch count represent 3/31/23 balances<br>1) Knox News Sentinel Top Workplaces survey<br>Panama City<br>1 |
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| <br>$2.0<br>$2.1<br>$2.4 $2.3<br>$2<br>$2<br>$2<br>$2<br>$2<br>$2<br>$2<br>12/31/20 12/31/21 12/31/22 3/31/23 SMBK Loans<br>$2.5<br>$3.5 $3.4 $3.5<br>$-<br>$1<br>$1<br>$2<br>$2<br>$3<br>$3<br>$4<br>$4<br>$5<br>12/31/20 12/31/21 12/31/22 3/31/23<br>SMBK Deposits<br>$0.4<br>$0.6<br>$0.9 $1.0<br>$-<br>$0<br>$0<br>$1<br>$1<br>$1<br>$1<br>12/31/20 12/31/21 12/31/22 3/31/23 SMBK Loans<br>$0.3<br>$0.5<br>$0.7 $0.8<br>$-<br>$0<br>$0<br>$0<br>$0<br>$1<br>$1<br>$1<br>$1<br>$1<br>12/31/20 12/31/21 12/31/22 3/31/23<br>SMBK Deposits<br>SmartBank Branch Offices<br>Expanding Market Area<br>Legacy Market Area<br>Urban area Density<br>MARKET AREA: TARGETING INDUSTRY RICH GROWTH MARKETS<br>5<br>► Total Population: 2.8 Million<br>► Total Deposits: $72 Billion<br>► Median Income: $63 Thousand<br>Legacy Markets<br>1) Legacy Markets include Chattanooga, TN, Clarke, AL, Cleveland, TN, Crossville, TN, Cookeville, TN, Fentress, TN, Huntsville, AL, Knoxville, TN, Sevierville, TN, Tullahoma, TN and Tuscaloosa, AL MSAs<br>2) Expanding Markets include Auburn, AL, Birmingham, AL, Dothan, AL, Fairhope, AL, Fort Walton/Destin, FL, Montgomery, AL, Mobile, AL, Nashville, TN, Panama City, FL, Pensacola, FL and Tallahassee, FL<br>Source: S&P Market Intelligence; https://www.forbes.com/best-places-for-business<br>Note: Expanding and Legacy market statistics based on the weighted average of the MSAs included in each area based on population; Legacy market area includes settlement and corporate balances<br>Expanding Markets<br>► Total Population: 5.9 Million<br>► Total Deposits: $211 Billion<br>► Median Income: $68 Thousand<br>Legacy Markets1<br>: Strong Relationships / Deep Market Penetration<br>Expanding Markets2<br>: Building Talent / Growing Brand Awareness<br>Forbes<br>Top 200<br>Best Places<br>for Business and<br>Careers<br>Knoxville: #86<br>Huntsville: #93<br>Chattanooga: #116<br>Mobile: #184<br>Forbes<br>Top 200<br>Best Places<br>for Business and<br>Careers<br>Nashville: #15<br>Tallahassee: #103<br>Pensacola: #105<br>Birmingham: #165<br>Montgomery: #191<br>CAGR: 7%<br>$ in Billions, unless otherwise indicated<br>CAGR: 15%<br>CAGR: 48%<br>CAGR: 52% |
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| 22% 23% 23% 24% 23%<br>31% 28% 27% 27% 27%<br>15% 16% 16%<br>17% 17%<br>11%<br>12% 13%<br>12% 12%<br>17%<br>18%<br>18%<br>$2,806 18% 18%<br>$2,994<br>$3,099<br>$3,254 $3,282<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>CRE, OO CRE, NOO PPP Loans C&I<br>C&D Consumer RE Leases & Other<br>6<br>LOAN PORTFOLIO: SOLID MARKETS PROVIDING OPPORTUNITY<br>Total Loans<br>CAGR of 16% Since 2018<br>$ in Millions, unless otherwise indicated<br>Average Loan Yield<br>Loan Composition<br>History of Driving Strong Organic Growth<br>$1,775<br>$1,897<br>$2,382<br>$2,693<br>$3,254 $3,282<br>5.72%<br>5.49%<br>4.89%<br>4.67% 4.63%<br>5.57%<br>3. 00%<br>4. 00%<br>5. 00%<br>6. 00%<br>7. 00%<br>8. 00%<br>9. 00%<br>10. 00%<br>$-<br>$500<br>$1, 000<br>$1, 500<br>$2, 000<br>$2, 500<br>$3, 000<br>$3, 500<br>2018Y 2019Y 2020Y 2021Y 2022Y 1Q23 |
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| 1-4 Family<br>(NOO)<br>28%<br>Resi/Comm<br>Land Dev.<br>12%<br>Resi/Comm<br>Land<br>16%<br>Multifamily<br>8%<br>CRE (OO)<br>12%<br>CRE (NOO)<br>16%<br>Multifamily<br>19%<br>Hotel &<br>Hospitality<br>33%<br>Retail<br>Space<br>14%<br>Office Space<br>14%<br>Misc.<br>10%<br>7<br>LOAN CONCENTRATION: WELL BALANCED EXPOSURE<br>Non-Owner Occupied CRE<br>Exposure By Segment<br>Highly Diversified with<br>Seasoned Client Base<br>Construction &Development<br>Exposure By Type1<br>Closely Monitored with No<br>Concentration Concerns<br>1) 1-4 Family (OO) includes owner-occupied primary and secondary residence construction loans; 1-4 Family (NOO) includes speculative and investment property residential construction loans; Resi/Comm Land Dev. includes primary, secondary, investment and<br>commercial land development loans; Resi/Comm Land includes residential and commercial improved and unimproved land loans; Multifamily includes 5 or more residential property loans; CRE (OO) includes construction loans for owner-occupied commercial<br>real estate including hotel & hospitality, retail, office, industrial & warehouse, self storage and other commercial real estate; CRE (NOO) includes construction loans for non owner-occupied commercial real estate including hotel & hospitality, retail, office,<br>industrial & warehouse, self storage and other commercial real estate<br>$883 Million - 27% of Total Loans $389 Million - 12% of Total Loans |
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| $4,981 $5,042<br>$4,605 $4,808 $5,021<br>0.11% 0.11% 0.10% 0.10% 0.11%<br>- 0.10%<br>0.10%<br>0.30%<br>0.50%<br>0.70%<br>0.90%<br>1.10%<br>1.30%<br>1.50%<br> $-<br> $2, 000<br> $4, 000<br> $6, 000<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Nonperforming Loans OREO & Other Repos Nonperforming Assets / Total Assets<br>$5,738<br>$6,588 $6,398 $6,744<br>$8,343<br>0.20% 0.22% 0.21% 0.21% 0.25%<br>- 0.10%<br>0.10%<br>0.30%<br>0.50%<br>0.70%<br>0.90%<br>1.10%<br>1.30%<br>1.50%<br>1.70%<br> $-<br> $2, 000<br> $4, 000<br> $6, 000<br> $8, 000<br> $10, 000<br> $12, 000<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Total Delinquent & Nonaccrual Loans & Leases<br>Total Delinquent & Nonaccrual Loans & Leases / Total Loans & Leases<br>0.31%<br>0.29%<br>0.22% 0.22%<br>0.26%<br>0.04%<br>-0.09%<br>0.02% 0.03% 0.03%<br>- 0.10%<br>- 0.05%<br>0.00%<br>0.05%<br>0.10%<br>0.15%<br>0.20%<br>0.25%<br>0.30%<br>0.35%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Classified Loans and Leases / Total Loans & Leases Net Chargeoffs<br>304% 303% 301% 294% 288%<br>81%<br>90% 98% 94% 88%<br>0%<br>50%<br>100%<br>150%<br>200%<br>250%<br>150%<br>170%<br>190%<br>210%<br>230%<br>250%<br>270%<br>290%<br>310%<br>330%<br>350%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>CRE Loans / Capital C&D Loans / Capital<br>8<br>Credit Quality<br>Nonperforming Assets Delinquent and Nonaccruals / Total Loans<br>Commercial Real Estate Concentration<br>ASSET QUALITY: STRONG UNDERWRITING PAYS DIVIDENDS<br>$ in Thousands, unless otherwise indicated |
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| $20,078<br>$21,938 $22,769 $23,334<br>$32,279<br>0.74% 0.74% 0.75% 0.72%<br>0.98%<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>2.00%<br> $-<br> $2, 000<br> $4, 000<br> $6, 000<br> $8, 000<br> $10, 000<br> $12, 000<br> $14, 000<br> $16, 000<br> $18, 000<br> $20, 000<br> $22, 000<br> $24, 000<br> $26, 000<br> $28, 000<br> $30, 000<br> $32, 000<br> $34, 000<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Allowance for Credit Losses (ACL) ACL / Loans HFI<br>9<br>ALLOWANCE FOR CREDIT LOSSES: Q1 ’23 CECL ADOPTION<br>$ in Thousands, unless otherwise indicated<br>12/31/22 Balance<br>+ Day 1 CECL Impact<br>Beginning 1/1/23 Balance<br>- Net Charge-Offs<br>+ Q1 Provision<br>3/31/23 Balance<br>1) Fannie Mae (FNMA) / Federal Open Market Committee (FOMC)<br>Current Expected Credit Loss (CECL) Allowance Reconciliation<br>Assumptions and Impact<br>FNMA / FOMC1<br>3-Year Forecast / 2-Year Unemployment<br>$8.7 Million Day 1 Impact<br>$0 Economic / Mix Adjustment During Q1 ’23<br>0.98% ACL / Loans Held for Investment (HFI)<br>$23,334<br>8,655<br>$31,989<br>260<br>550<br>$32,279<br>Allowance % of Loans<br>0.72%<br>0.27%<br>0.99%<br>0.01%<br>0.02%<br>0.98% |
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| 10<br>DEPOSIT PORTFOLIO: DEFENDING DEPOSIT MARKET SHARE<br>Total Deposits<br>Loans to Deposits Ratio of 78%<br>$ in Millions, unless otherwise indicated<br>Average Total Deposit Cost<br>Deposit Composition<br>Higher Rates Driving Mix Shift<br>26% 27% 28% 26% 23%<br>23% 23% 22%<br>24% 23%<br>38%<br>38% 39%<br>39% 42%<br>13%<br>12% 11%<br>11%<br>12%<br>$4,191 $4,282 $4,280<br>$4,077<br>$4,230<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Noninterest Demand Interest-Bearing Demand<br>Money Market and Savings Time Deposits<br>$1,922<br>$2,047<br>$2,805<br>$4,022 $4,077<br>$4,230<br>0.86%<br>1.12%<br>0.55%<br>0.27%<br>0.44%<br>1.56%<br>0. 00%<br>1. 00%<br>2. 00%<br>3. 00%<br>4. 00%<br>5. 00%<br>$-<br>$500<br>$1, 000<br>$1, 500<br>$2, 000<br>$2, 500<br>$3, 000<br>$3, 500<br>$4, 000<br>$4, 500<br>2018Y 2019Y 2020Y 2021Y 2022Y 1Q23 |
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| Commercial<br>34%<br>Consumer<br>37%Brokered<br>11<br>DEPOSIT GRANULARITY: DIVERSIFIED CLIENT BASE<br>1) Uninsured deposits includes all deposit balances greater than $250 thousand excluding public funds secured by pledged collateral, reciprocal deposits and brokered CDs<br>2) Average account balances exclude reciprocal deposits and brokered CDs<br>3) $964 million Includes all public funds including those placed in a reciprocal deposit program<br>4) Commercial and consumer portfolios exclude deposits from public funds sources and exclude reciprocal deposits and brokered CDs<br>5) Reciprocal deposits include those utilizing the CDARS and ICS programs. CDARS: Certificate of Deposit Account Registry Service, ICS: IntraFi Cash Service<br>$4.2 Billion<br>26%<br>~18 Thousand<br>Uninsured1<br>:<br>Deposits:<br>Avg. Balance2<br>:<br>Deposit Portfolio Statistics Deposit Portfolio Segmentation<br>Consumer Accts:<br>Commercial Accts:<br>Public Funds3<br>:<br>$39 Thousand<br>$964 Million<br>~69 Thousand |
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| 107%<br>98%<br>Peer Average SMBK<br>88%<br>78%<br>Peer Average SMBK<br>12<br>LIQUIDITY OVERVIEW: PRUDENTLY MANAGING LIQUIDITY<br>1) Peer average based on most recently reported period results for each peer; peers include major exchange traded banks in the Southeast with assets between $2.0 billion and $8.0 billion<br>2) FRB discount window borrowing amount shown as of April 12, 2023<br>Source: S&P Global<br>Loan + Securities / Deposit Ratio<br>(Most Recent Quarter Period End)<br>Loan / Deposit Ratio<br>(Most Recent Quarter Period End)<br>Other Liquidity Sources<br>Ample Access to a Variety of Funding<br>Robust Liquidity on Hand<br>Methodical Cash Deployment Now Proving Sensible<br>$1.6 Billion in Untapped Liquidity Sources<br>$701 Million in Cash Equivalents on Hand<br>1.4x Liquidity to Uninsured Deposit Ratio<br>1 1<br>$ in Millions, unless otherwise indicated<br>Total Amount Net<br>Available Used Availability<br>Current On-Balance Sheet:<br>Cash & Cash Equiv. $307 $0 $307<br>Unpledged Securities 394 0 394<br>Available Sources of Liquidity:<br>Fed Funds 89 0 89<br>FHLB 592 4 588<br>FRB Disc. Window2 181 0 181<br>HC LoC 35 13 23<br>Total Liquidity $1,598 $16 $1,582 |
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| $434<br>$176<br>$3 $26 $20 $45 $49 $65<br>$33<br> $-<br> $100<br> $200<br> $300<br> $400<br> $500<br> $600<br> $700 UST/Agency MBS Fixed ARM CMO Fixed CMO Float Agen CMBS Small Bus Municipal Corporate $10 $20 $9 $209 $59 $15 $10 $11 $10 $9 $28<br>36%<br>39%<br>42%<br>46%<br> $-<br> $50<br> $100<br> $150<br> $200<br> $250<br> $300<br>0%<br>10%<br>20%<br>30%<br>40%<br>50%<br>60%<br>70%<br>80%<br>Q2 '23 Q4 '23 Q2 '24 Q4 '24 Q2 '25 Q4 '25<br>Quarterly Principal Cumulative Principal Returned as % of Total<br>13<br>SECURITIES DETAIL: STRUCTURED FOR LIQUIDITY<br>$ in Millions, unless otherwise indicated<br>Portfolio Summary Principal Cashflow Schedule<br>$307 Million Maturing by Q2 ‘24<br>Portfolio Mix by Par Value<br>Risk Adverse Portfolio Designed for Liquidity<br>$880 Million Book Value<br>2.34% Book Yield<br>($59) Million Unrealized Loss<br>• ($37) Million in Available-for-Sale Securities (AFS)<br>• ($22) Million in Held-to-Maturity (HTM)<br>4.6 Year Average Life<br>3.1 Year Effective Duration<br>69% / 31% (AFS / HTM) |
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| $764<br>$655<br>$543<br>$266<br>$307<br>$830 $813 $807<br>$770<br>$845<br>17.6% 17.0% 16.8% 16.6%<br>17.7%<br>0.0%<br>5.0%<br>10.0%<br>15.0%<br>20.0%<br>25.0%<br>30.0%<br>35.0%<br>40.0%<br>45.0%<br>50.0%<br> $-<br> $200<br> $400<br> $600<br> $800<br> $1, 000<br> $1, 200<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Cash and Cash Equiv. Securities (AFS/HTM) Securities (AFS/HTM) / Total Assets<br>$30,118<br>$33,062<br>$36,708<br>$37,612<br>$35,982<br>$7,111<br>$7,229<br>$6,250<br>$6,981<br>$6,925<br>$37,229<br>$40,291<br>$42,958<br>$44,593<br>$42,907<br>2.91%<br>3.08%<br>3.29%<br>3.51%<br>3.31%<br> $18, 000<br> $23, 000<br> $28, 000<br> $33, 000<br> $38, 000<br> $43, 000<br>2.00%<br>2.50%<br>3.00%<br>3.50%<br>4.00%<br>4.50%<br>5.00%<br>5.50%<br>6.00%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Net Interest Income Operating Noninterest Income Net Interest Margin (FTE)<br>14<br>LIQUIDITY MANAGEMENT: MANAGING MARGIN PRESSURE<br>Cash and Securities<br>Strong Cash & Liquid Securities Position<br>Margin / Operating Revenue2<br>Maintaining Revenue Despite<br>Challenging Margin Environment<br>$ in Thousands<br>1) Based on the weighted average of the AFS/HTM securities portfolio. Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%<br>2) Non-GAAP financial measure - for a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>2<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Cash Yield 0.25% 0.91% 2.34% 3.81% 4.77%<br>Sec. Yield (AFS/HTM)1 1.67% 1.73% 1.87% 2.15% 2.11%<br>Loans (less Accr./PPP Fees) 4.18% 4.27% 4.55% 4.86% 5.20%<br>Loan Fees 0.22% 0.13% 0.04% 0.19% 0.37%<br>Loan Yield (incl. Fees) 4.40% 4.40% 4.59% 5.05% 5.57%<br>IE Asset Yield 3.18% 3.39% 3.79% 4.41% 4.88%<br>NIM (FTE) 2.91% 3.08% 3.29% 3.51% 3.31%<br>$ in Millions, unless otherwise indicated |
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| $2,587 , 1.9%<br>$(2,520), -1.9%<br>$(5,190), -3.9% Interest Income % Change<br>Shock -100bps Shock +100bps Shock +200bps<br>$1,267 , 0.9%<br>$(1,069), -0.8% Interest Income % Change $(2,289), -1.7%<br>Ramp -100bps Ramp +100bps Ramp +200bps<br>$1,835<br>57%<br>$587<br>18%<br>$799<br>25%<br>Fixed Rate LT Variable ST Variable<br>15<br>INTEREST RATE SENSITIVITY<br>Fixed vs. Variable Rate Loans Static Shock / Rate Ramp Analysis1<br>1) Based on 12-month static rate shock and ramp analysis as of 3/31/23. These estimates of changes in SmartFinancial’s net interest income require us to make certain assumptions including loan and mortgage-related investment prepayment speeds,<br>reinvestment rate, deposit maturities and decay rates. These assumptions are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on net interest income. Although our analysis provides an indication of<br>our interest rate risk exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates and will differ from actual results.<br>$1.8 Billion Fixed Rate Loans<br>$1.4 Billion Variable Rate Loans<br>• $799 Million Short-Term Variable Rate (1 - 3 Month Reset)<br>• $587 Million Long-Term Variable Rate (> 3 Month Reset)<br>$ in Millions, unless otherwise indicated $ in Thousands |
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| 16<br>NONINTEREST REVENUE DETAILS: GROWING FEE INCOME<br>Operating Noninterest Income1<br>Focused on Recurring Fee Income<br>1) Non-GAAP financial measure - for a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>Differentiated Revenue Streams<br>Building a Family of Diversified Revenue Generators<br>$7,111 $7,229<br>$6,250<br>$6,981 $6,925<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Service Charges on Deposit Accounts Mortgage Banking Income<br>Investment Services Income Insurance Commissions<br>Interchange Fees Other Noninterest Income<br>$ in Thousands, unless otherwise indicated |
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| 68%<br>64%<br>63%<br>61%<br>64%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Operating Efficiency Ratio<br>$25,279 $25,845<br>$27,143 $27,461 $27,529<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Salaries & Benefits Occupancy & Equipment<br>Data Processing & Technology Professional Services<br>Amortization of Intangibles Other Noninterest Expense<br>17<br>1) Non-GAAP financial measure - for a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>OPERATING EXPENSE: INVESTING WITH AN EYE ON EFFICIENCIES<br>Operating Efficiency Ratio1<br>Executing on Expansion Opportunities<br>Operating Noninterest Expense1<br>Disciplined Focus on Expense Containment<br>1<br>$ in Thousands, unless otherwise indicated |
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| $14.64<br>$16.82<br>$17.92<br>$19.26 $19.09<br>$19.66<br>$14.84<br>$16.80<br>$17.77<br>$19.17<br>$21.18 $21.34<br> $8. 00<br> $10. 00<br> $12. 00<br> $14. 00<br> $16. 00<br> $18. 00<br> $20. 00<br> $22. 00<br> $24. 00<br>2018Y 2019Y 2020Y 2021Y 2022Y 1Q23<br>TBV Per Share Adj. TBV Per Share (Ex. AOCI)<br>6.8% 6.7% 6.5%<br>7.1% 7.2%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>10.3% 10.0% 9.6% 9.7% 9.9%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>7.4% 7.5% 7.4%<br>8.0% 7.9%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>12.2% 11.8% 11.4% 11.4% 11.7%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>CAPITAL: WELL CAPITALIZED – BUILDING BOOK VALUE<br>1) Non-GAAP financial measure - for a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix 18<br>Note: Capital ratio data as of the most recent period ended 3/31/23<br>TCE / TA1<br>CET1 Ratio Total Capital Ratio<br>Leverage Ratio<br>Basel III Regulatory Capital Minimum To Be Considered “Well Capitalized”<br>Building Shareholder Value<br>Tangible Book Value Per Share (TBVPS)1<br>$6.50 TBVPS1 Created 2018 – 2023<br>(Excluding Accumulated Other Comprehensive Income)<br>$0.08 2023 Per Share Quarterly Dividend<br>5%<br>Well<br>Capitalized<br>10%<br>Well<br>Capitalized<br>6.5%<br>Well<br>Capitalized<br>1 1 |
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| WHY SMARTBANK: INVESTMENT HIGHLIGHTS<br>19<br>Franchise Scarcity Value – Building Southeast Density<br>Engaged Management Team<br>Stable Markets Experiencing Population Expansion<br>Low-Cost Deposit Base<br>Growing Business Lines with Revenue Diversification<br>Solid Credit Quality and Underwriting<br>History of Defending Book Value and Delivering Shareholder Value<br>$ |
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| APPENDIX<br>20 |
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| 21<br>Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix; percentage change may differ due to rounding<br>INCOME STATEMENT: DETAILED FIRST QUARTER RESULTS<br>4Q22 1Q22<br>($ in thousands, except per share data) 1Q23 4Q22 1Q22 % Chg. % Chg.<br>Net Interest Income $ 35,982 $ 37,612 $ 30,118 (4%) 19%<br>Provision for Loan & Lease losses 550 788 1,006<br>Noninterest Income 6,925 7,125 7,111 (3%) (3%)<br>Noninterest Expense 27,529 27,416 25,718 0% 7%<br>Income Tax Expense 3,328 3,529 2,246<br>Net Income (GAAP) $ 11,500 $ 13,004 $ 8,259 (12%) 39%<br>Non-GAAP Reconciliations<br>Noninterest Income - (144) -<br>Noninterest Expense - (45) 439<br>Income Tax Effect Of Adjustments - 49 (113)<br>Operating Earnings (Non-GAAP) $ 11,500 $ 12,864 $ 8,585 (11%) 34%<br>Operating PTPP Earnings (Non-GAAP) $ 15,378 $ 17,132 $ 11,950 (10%) 29%<br>4Q22 1Q22<br>Non-GAAP Performance Metrics 1Q23 4Q22 1Q22 % Chg. % Chg.<br>Diluted Operating Earnings Per Share $ 0.68 $ 0.76 $ 0.51 (11%) 34%<br>Tangible Book Value Per Common Share $ 19.66 $ 19.09 $ 18.64 3% 5%<br>Operating Return on Average Assets 0.97% 1.10% 0.76%<br>Operating PTPP Return on Average Assets 1.30% 1.46% 1.05%<br>Operating Return on Average Tang. Common Equity 14.4% 16.5% 10.8%<br>Operating Efficiency Ratio 64.0% 61.4% 67.6%<br>1Q23 vs.<br>1Q23 vs. |
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| NON-GAAP RECONCILIATION<br>22<br>1. Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.<br>2. Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets.<br>3. Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).<br>4. Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average shareholder equity.<br>5. Operating return on average tangible common equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).<br>$ in Thousands, unless otherwise indicated<br>1Q23 4Q22 3Q22 2Q22 1Q22<br>Operating Earnings<br>Net Income (GAAP) $ 11,500 $ 13,004 $ 11,543 $ 10,215 $ 8,259<br>Noninterest Income:<br>Securities (Gains) Losses - (144) - - -<br>Noninterest Expenses:<br>Merger Related And Restructuring Expenses - (45) 87 81 439<br>Income Taxes:<br>Income Tax Effect Of Adjustments - 49 (22) (21) (113)<br>Operating Earnings (Non-GAAP) $ 11,500 $ 12,864 $ 11,608 $ 10,275 $ 8,585<br>Operating Earnings Per Common Share (Non-GAAP):<br>Basic $ 0.69 $ 0.77 $ 0.69 $ 0.61 $ 0.51<br>Diluted 0.68 0.76 0.69 0.61 0.51<br>Operating Noninterest Income<br>Noninterest Income (GAAP) $ 6,925 $ 7,125 $ 6,250 $ 7,229 $ 7,111<br>Securities (Gain) Losses - (144) - - -<br>Operating Noninterest Income (Non-GAAP) $ 6,925 $ 6,981 $ 6,250 $ 7,229 $ 7,111<br>Operating Noninterest Expense<br>Noninterest Expense (GAAP) $ 27,529 $ 27,416 $ 27,230 $ 25,926 $ 25,718<br>Merger Related And Restructuring Expenses - 45 (87) (81) (439)<br>Operating Noninterest Expense (Non-GAAP) $ 27,529 $ 27,461 $ 27,143 $ 25,845 $ 25,279<br>Operating Revenue<br>Net Interest Income (GAAP) $ 35,982 $ 37,612 $ 36,708 $ 33,062 $ 30,118<br>Operating Noninterest Income (Non-GAAP) 6,925 6,981 6,250 7,229 7,111<br>Operating Revenue (Non-GAAP) 42,907 44,593 42,958 40,291 37,229<br>Operating Pre-Tax Pre-Provison ("PTPP") Earnings<br>Operating Revenue (Non-GAAP) $ 42,907 $ 44,593 $ 42,958 $ 40,291 $ 37,229<br>Operating Noninterest Expense (Non-GAAP) (27,529) (27,461) (27,143) (25,845) (25,279)<br>Operating PTPP Earnings (Non-GAAP) $ 15,378 $ 17,132 $ 15,815 $ 14,446 $ 11,950<br>Non-GAAP Return Ratios<br>Operating Return On Average Assets (Non-GAAP)(1) 0.97% 1.10% 0.96% 0.88% 0.76%<br>Operating PTPP Return On Average Assets (Non-GAAP)(2) 1.30% 1.46% 1.30% 1.23% 1.05%<br>Return On Average Tangible Common Equity (Non-GAAP)(3) 14.45% 16.65% 14.36% 13.02% 10.39%<br>Operating Return On Average Shareholders' Equity (Non-GAAP)(4) 10.79% 12.15% 10.83% 9.82% 8.14%<br>Operating Return On Average Tangible Common Equity (Non-GAAP)(5) 14.45% 16.47% 14.44% 13.09% 10.80%<br>Operating Efficiency Ratio<br>Efficiency Ratio (GAAP) 64.16% 61.28% 63.39% 64.35% 69.08%<br>Adjustment For Taxable Equivalent Yields (0.14%) (0.22%) (0.25%) (0.27%) (0.31%)<br>Adjustment For Securities Gains (Losses) - (0.20%) - - -<br>Adjustment For Merger Expenses - 0.50% (0.21%) (0.20%) (1.17%)<br>Operating Efficiency Ratio (Non-GAAP) 64.02% 61.36% 62.93% 63.88% 67.60% |
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| NON-GAAP RECONCILIATION<br>23<br>1. Book value per share is computed by dividing total stockholders’ equity by common shares outstanding. Tangible book value per share (Non-GAAP) is computed by dividing total stockholders’ equity, less<br>goodwill and other intangible assets by common shares outstanding<br>2. Totals may not add due to rounding<br>1Q23 4Q22 3Q22 2Q22 1Q22<br>Tangible Common Equity:<br>Shareholders' Equity (GAAP) $ 443,399 $ 432,452 $ 414,711 $ 420,427 $ 420,042<br>Less Goodwill And Other Intangible Assets 109,114 109,772 110,460 104,582 105,215<br>Tangible Common Equity (Non-GAAP) $ 334,285 $ 322,680 $ 304,251 $ 315,845 $ 314,827<br>Average Tangible Common Equity:<br>Average Shareholders' Equity (GAAP) $ 432,382 $ 420,037 $ 425,365 $ 419,726 $ 427,945<br>Less Goodwill And Other Intangible Assets 109,537 110,206 106,483 104,986 105,617<br>Average Tangible Common Equity (Non-GAAP) $ 322,845 $ 309,831 $ 318,882 $ 314,740 $ 322,328<br>Tangible Book Value Per Common Share:<br>Book Value Per Common Share (GAAP) $ 26.08 $ 25.59 $ 24.56 $ 24.88 $ 24.86<br>Adjustment Due To Goodwill And Other Intangible Assets (6.42) (6.50) (6.54) (6.19) (6.23)<br>Tangible Book Value Per Common Share (Non-GAAP)(1) $ 19.66 $ 19.09 $ 18.02 $ 18.69 $ 18.64<br>Tangible Common Equity To Tangible Assets:<br>Total Assets $ 4,769,805 $ 4,637,498 $ 4,796,911 $ 4,788,113 $ 4,718,579<br>Less Goodwill And Other Intangibles 109,114 109,772 110,460 104,582 105,215<br>Tangible Assets (Non-GAAP) $ 4,660,691 $ 4,527,726 $ 4,686,451 $ 4,683,531 $ 4,613,364<br>Tangible Common Equity To Tangible Assets (Non-GAAP): 7.17% 7.13% 6.49% 6.74% 6.82%<br>1Q23 4Q22 3Q22 2Q22 1Q22<br>Tangible Common Equity (Excluding AOCI):<br>Shareholders' Equity (GAAP) $ 443,399 $ 432,452 $ 414,711 $ 420,427 $ 420,042<br>Less Goodwill And Other Intangible Assets 109,114 109,772 110,460 104,582 105,215<br>Tangible Common Equity (Non-GAAP) $ 334,285 $ 322,680 $ 304,251 $ 315,845 $ 314,827<br>Less Adjustment Due to AOCI (Loss) (28,620) (35,324) (40,807) (24,648) (15,556)<br>Tangible Common Equity (Excl. AOCI) (Non-GAAP) $ 362,905 $ 358,004 $ 345,058 $ 340,493 $ 330,383<br>Tangible Book Value Per Common Share (Excluding AOCI):<br>Book Value Per Common Share (GAAP) $ 26.08 $ 25.59 $ 24.56 $ 24.88 $ 24.86<br>Adjustment Due To Goodwill And Other Intangible Assets (6.42) (6.50) (6.54) (6.19) (6.23)<br>Tangible Book Value Per Common Share (Non-GAAP)(1) $ 19.66 $ 19.09 $ 18.02 $ 18.69 $ 18.64<br>Less Adjustment Due to AOCI (Loss) (1.68) (2.09) (2.42) (1.46) (0.92)<br>Tangible Book Value Per Common Share (Excl. AOCI) (Non-GAAP)(1)(2) $ 21.34 $ 21.18 $ 20.43 $ 20.15 $ 19.56<br>$ in Thousands, unless otherwise indicated |
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| CONTACT<br>24<br>Billy Carroll<br>President & CEO<br>865.868.0613<br>Billy.Carroll@smartbank.com<br>Miller Welborn<br>Chairman<br>423.385.3067<br>Miller.Welborn@smartbank.com<br>5401 Kingston Pike, Suite 600<br>Knoxville, TN 37919<br>Ron Gorczynski<br>Chief Financial Officer<br>865.437.5724<br>Ron.Gorczynski@smartbank.com |
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