8-K - SMBK - Equibles

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: October 20, 2020

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 (see General Instruction A.2. below):

☐ 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 October 20, 2020, SmartFinancial, Inc. (“SmartFinancial”) issued a press release (the “Press Release”) reporting earnings results for its third quarter ending September 30, 2020. 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 October 21, 2020. 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 third quarter 2020 financial results dated October 20, 2020
99.2		Third quarter 2020 investor presentation

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: October 20, 2020
	/s/ William Y. Carroll, Jr.
	William Y. Carroll, Jr.
	President & Chief Executive Officer

Exhibit 99.1

3Q 2020

SmartFinancial Announces Results for the Third Quarter 2020

KNOXVILLE, TN – October 20, 2020 - SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $6.4 million, or $0.42 per diluted common share, for the third quarter of 2020, compared to net income of $6.2 million, or $0.41 per diluted common share for the second quarter of 2020. Operating earnings (Non-GAAP), which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $6.6 million, or $0.44 per diluted common share, in the third quarter of 2020, compared to $7.3 million, or $0.48 per diluted common share, in the second quarter of 2020.

Highlights for the Third Quarter of 2020

●	Net income of $6.4 million and operating earnings of $6.6 million (Non-GAAP)
●	Tangible book value per share (Non-GAAP) of $17.27, a 5.5% year-over-year increase
---	---
●	Deposits increased by $604.8 million or 29.5% from December 31, 2019
---	---
●	COVID loan modifications declined 62.1% from prior quarter
---	---
●	Total nonperforming assets to total assets improved to 0.18% for the quarter, as compared to 0.28% in the prior quarter
---	---

Billy Carroll, President & CEO, stated: "We are extremely pleased with our results on another very solid quarter. Our credit metrics continue to be outstanding and our projections on loan modifications have been right on target and reducing as we have planned. This tremendous asset quality, coupled with the work we are doing on growth in our noninterest income and improvement in efficiency give us reason to feel very good regarding the outlook for our company.”

SmartFinancial's Chairman, Miller Welborn, concluded: “The quarter was, once again, strong and right on plan for SmartFinancial. Our Board is extremely happy with the continued progress and improvements that we are making every day. 2020 has certainly been a challenge, but our team has executed superbly.”

Net Interest Income and Net Interest Margin

Net interest income increased $297 thousand to $26.0 million for the third quarter of 2020, compared to $25.7 million for the second quarter of 2020, due to a higher balance of interest-earning assets at lower yields supplemented by increased balances of interest-bearing liabilities at lower costs. Average earning assets totaled $3.1 billion, an increase of $205.8 million, which reflects a $51.1 million increase in average loans, a $12.4 million increase in average securities and a $141.1 million increase in average other earning assets. Average interest-bearing liabilities increased by $137.0 million to $2.3 billion, driven by an increase of $54.9 million in average interest-bearing deposits and an increase of $82.1 million in average borrowings.

The tax equivalent net interest margin was 3.39% for the third quarter of 2020, compared to 3.63% for the second quarter of 2020. The tax equivalent net interest margin was impacted by a 34 basis point decline in the average yield on interest-earning assets offset by a 12 basis point decline in the rate on interest-bearing liabilities over the last quarter. The excess liquidity realized during the third quarter, which is reflected in the increases in the average balance of Federal funds sold and other earning assets, had a negative impact on the tax equivalent net interest margin of 15 bps. The tax equivalent net interest margin, less discount accretion was 3.26% for the third quarter of 2020, a decrease from 3.50% for the second quarter of 2020.

The tax equivalent average yield on interest-earning assets was 3.88% for the third quarter of 2020, a decrease from 4.22% for the second quarter of 2020. The yield on average loans was 4.71% for the third quarter of 2020, compared to 4.87% for the second quarter of 2020. Included in the yield on average loans for the third quarter of 2020 was $1.8 million of the Payroll Protection Program (“PPP”) fee accretion and $960 thousand of discount accretion on acquired loans, compared to $1.9 million of PPP fee accretion and $888 thousand of discount accretion recognized in the second quarter of 2020.

The yield on interest-bearing liabilities decreased to 0.65% for the third quarter of 2020 when compared to 0.77% for the second quarter of 2020. The cost of average interest-bearing deposits was 0.59% for the third quarter of 2020 compared to 0.71% for the second quarter of 2020, a decrease of 12 basis points. The lower cost of average deposits was attributable to the maturing and repricing of time deposits, with average costs decreasing 20 basis points. The cost of total deposits for the third quarter of 2020 was 0.44%.

The following table presents selected interest rates and yields for the periods indicated:


	Three Months Ended
	Sep		Jun		Increase
Selected Interest Rates and Yields	2020		2020		(Decrease)
Yield on loans	4.71	%	4.87	%	(0.17)	%
Yield on earning assets, FTE	3.88	%	4.22	%	(0.34)	%
Cost of interest-bearing deposits	0.59	%	0.71	%	(0.12)	%
Cost of total deposits	0.44	%	0.54	%	(0.10)	%
Cost of interest-bearing liabilities	0.65	%	0.77	%	(0.12)	%
Net interest margin, FTE	3.39	%	3.63	%	(0.24)	%

Provision for Loan Loss and Credit Quality

Provision for loan losses was $2.6 million in the third quarter of 2020, compared to $2.9 million in the second quarter of 2020. At September 30, 2020, the allowance for loan losses was $18.8 million. The allowance for loan losses to total loans was 0.78% as of September 30, 2020, compared to 0.67% as of June 30, 2020. For the Company’s originated loans, the allowance for loan losses to originated loans, less PPP loans, was 1.00% as of September 30, 2020, compared to 0.89% as of June 30, 2020. The remaining discounts on the acquired loan portfolio totaled $15.1 million, or 3.53% of acquired loans as of September 30, 2020. The increase in the allowance for loan losses for the third quarter is primarily attributable to the ongoing economic uncertainties related to the COVID-19 pandemic. Also, during the quarter, the Company refined the qualitative factors of the allowance for loan loss calculation to include additional granularity related to the hospitality and restaurant industries which are most impacted by the pandemic within our footprint at this time.

As of June 30, 2020, the Company had modified loans totaling $615.7 million, or 25.6%, of the loan portfolio. As of September 30, 2020, $383.2 million of those modifications had resumed their normal payment schedule leaving $232.5 million, or 9.7%, still under modification plans.

The following table presents detailed information related to the provision for loan losses for the periods indicated (dollars in thousands):


	Three Months Ended
		Sep			Jun
Provision for Loan Losses Rollforward		2020			2020			Change
Beginning balance	$	16,254		$	13,431		$	2,823
Charge-offs		(174)			(75)			(99)
Recoveries		103			48			55
Net charge-offs		(71)			(27)			(44)
Provision		2,634			2,850			(216)
Ending balance	$	18,817		$	16,254		$	2,563

Allowance for loan losses to total loans, gross		0.78	%		0.67	%		0.11	%

The Company is not required to implement the provisions of the CECL accounting standard until January 1, 2023 and is continuing to account for the allowance for loan losses under the incurred loss model.

Nonperforming loans as a percentage of total loans was 0.09% as of September 30, 2020, a decrease of seven basis points from the 0.16% reported in the second quarter of 2020. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and other real estate owned) as a percentage of total assets was 0.18% as of September 30, 2020, as compared to 0.28% as of June 30, 2020.

The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):


	Three Months Ended
		Sep			Jun			Increase
Credit Quality		2020			2020			(Decrease)
Nonaccrual loans	$	2,248		$	2,899		$	(651)
Loans past due 90 days or more and still accruing		-			877			(877)
Total nonperforming loans		2,248			3,776			(1,528)
Other real estate owned		3,932			5,524			(1,592)
Total nonperforming assets	$	6,180		$	9,300		$	(3,120)

Nonperforming loans to total loans, gross		0.09	%		0.16	%		(0.07)	%
Nonperforming assets to total assets		0.18	%		0.28	%		(0.10)	%

Noninterest Income

Noninterest income increased $610 thousand to $4.1 million for the third quarter of 2020 compared to $3.5 million for the second quarter of 2020. During the third quarter of 2020, the primary components of the changes in noninterest income were as follows:

●	Increase in service charges on deposit accounts of $183 thousand, primarily related to increased volume;
●	Increase in mortgage banking income of $98 thousand, continued to experience high volume during the quarter; and
---	---
●	Increase in interchange and debit card transaction fees of $360 thousand, includes a $130 thousand one-time credit from vendor.
---	---

The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):


	Three Months Ended
		Sep		Jun		Increase
Noninterest Income		2020		2020		(Decrease)
Service charges on deposit accounts	$	892	$	709	$	183
Gain (loss) on sale of securities, net		(9)		16		(25)
Mortgage banking income		1,029		931		98
Investment services		359		363		(4)
Insurance commissions		560		473		87
Interchange and debit card transaction fees		868		508		360
Other		422		511		(89)
Total noninterest income	$	4,121	$	3,511	$	610

Noninterest Expense

Noninterest expense was $19.2 million for the third quarter of 2020 compared to $18.8 million for the second quarter of 2020. During the third quarter of 2020, the primary components of the changes in noninterest expense were as follows:

●	Salaries and employee benefits increased $675 thousand, increase is primarily attributable to the deferred salary cost in the second quarter related to the origination of PPP loans;
●	FDIC insurance increased $354 thousand related to increase in assets due to overall asset growth stemming from our recent acquisition, deposit growth and production of PPP loans;
---	---
●	Other real estate and loan related expenses increased $297 thousand, primarily attributable to increased activity in loan related production and a $90 thousand evaluation adjustment on other real estate owned;
---	---
●	Professional services decreased $274 thousand, due to a lower volume of expenses;
---	---
●	Decrease of $1.2 million in merger related and restructuring expenses; and
---	---
●	Other noninterest expenses increased $282 thousand, due to overall franchise growth.
---	---

The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):


	Three Months Ended
		Sep		Jun		Increase
Noninterest Expense		2020		2020		(Decrease)
Salaries and employee benefits	$	11,032	$	10,357	$	675
Occupancy and equipment		2,186		1,996		190
FDIC insurance		534		180		354
Other real estate and loan related expenses		643		346		297
Advertising and marketing		253		202		51
Data processing		558		594		(36)
Professional services		594		868		(274)
Amortization of intangibles		402		405		(3)
Software as service contracts		573		561		12
Merger related and restructuring expenses		290		1,477		(1,187)
Other		2,102		1,820		282
Total noninterest income	$	19,167	$	18,806	$	361

Income Tax Expense

Income tax expense was $2.0 million for the third quarter of 2020, an increase of $541 thousand, compared to $1.4 million for the second quarter of 2020.

For the third quarter of 2020, the effective tax rate was 23.5% compared to 18.8% for the second quarter of 2020. The lower effective tax rate during the second quarter of 2020 included an additional tax benefit from the Company’s overall reconciliation of the tax rates from operations, and the final effects of the CARES Act legislation.

Balance Sheet Trends

Total assets at September 30, 2020, were $3.39 billion compared with $2.45 billion at December 31, 2019. The increase of $938.5 million is primarily attributable to assets acquired from the acquisition of Progressive Financial Group (“PFG”) of approximately $308.2 million, increase in cash and cash equivalents of $301.8 million and the origination of $300.8 million of PPP loans.

Total liabilities increased to $3.04 billion at September 30, 2020 from $2.14 billion at December 31, 2019. The increase of $901.4 million was primarily from deposit growth of $332.8 million, acquired deposits from the acquisition of PFG in the amount of $272.0 million, and an increase in borrowings of $287.8 million.

Shareholders' equity at September 30, 2020, totaled $349.8 million, an increase of $37.0 million, from December 31, 2019. The increase in shareholders' equity was primarily from the issuance of common stock for the acquisition of PFG of $24.5 million, net income of $15.3 million for the nine months ended September 30, 2020 and a net change in accumulated other comprehensive income of $844 thousand, which was offset by the repurchase of the Company's common stock of $2.1 million and $2.2 million of dividends paid. Tangible book value per share (Non-GAAP) was $17.27 at September 30, 2020, an increase from $16.82 at December 31, 2019. Tangible common equity (Non-GAAP) as a percentage of tangible assets (Non-GAAP) was 7.97% at September 30, 2020, compared with 9.93% at December 31, 2019.

The following table presents selected balance sheet information for the periods indicated (dollars in thousands):


	Sep		Dec		Increase
Selected Balance Sheet Information	2020		2019		(Decrease)
Total assets	$	3,387,588	$	2,449,123	$	938,465
Total liabilities		3,037,799		2,136,376		901,423
Total equity		349,789		312,747		37,042
Securities available-for-sale, at fair value		214,634		178,348		36,286
Loans		2,404,057		1,897,392		506,665
Deposits		2,652,023		2,047,214		604,809
Borrowings		319,391		31,623		287,768

Conference Call Information

SmartFinancial issued this earnings release for the third quarter of 2020 on Tuesday, October 20, 2020, and will host a conference call on Wednesday, October 21, 2020, at 10:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 9589795. A replay of the conference call will be available through October 21, 2021, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10148910. Conference call materials will be published on the Company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 am 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 36 branches across East and Middle 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	Ron Gorczynski
President & CEO	Executive Vice President, Chief Financial Officer
(865) 868-0613 billy.carroll@smartbank.com	(865) 437-5724 ron.gorczynski@smartbank.com

Media Contact
Kelley Fowler
Senior Vice President, Public Relations & Marketing
(865) 868-0611 kelley.fowler@smartbank.com

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 shareholder' 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 income (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value, (xiv) tax equivalent net interest margin, (xv) tax equivalent average yield in earning 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, expenses related to the termination of an Alabama Department of Economic and Community Affairs (“ADECA”) loan program, merger termination fee of $6.4 million in the second quarter of 2019, merger related and restructuring expenses. Operating return on average assets is the annualized operating earnings divided by average assets. Operating pre-tax pre-provision return on average assets is the annualized operating pre-tax pre-provision income divided by average assets. Operating return on average shareholders' equity is the annualized operating earnings divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity. Operating return on average tangible common equity is the annualized operating earnings 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, expenses related to the termination of the ADECA loan program and the merger termination fee of $6.4 million in the second quarter of 2019. Operating pre-tax pre-provision income is net interest expense plus operating noninterest income less operating noninterest expense. 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 and average tangible common equity excludes goodwill and other intangible assets from shareholders' equity and average shareholders' equity, respectively. Tangible book value is tangible common equity divided by common shares outstanding. Tax equivalent net interest margin is the annualized net interest income plus tax equivalent income divided by average interest earning assets. Tax equivalent average yield in earning assets is the annualized interest income plus tax equivalent income divided by average interest earning 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.

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, including statements regarding the potential effects of the COVID-19 pandemic on the Company’s business and financial results and conditions, 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) risks related to the completed acquisition of PFG; (7) the risk that the anticipated benefits from the completed acquisition of PFG may not be realized in the time frame anticipated; (8) changes in management’s plans for the future; (9) prevailing, or changes in, economic or political conditions, particularly in our market areas; (10) credit risk associated with our lending activities; (11) changes in interest rates, loan demand, real estate values, or competition; (12) changes in accounting principles, policies, or guidelines; (13) changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to COVID-19; (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; (15) the impact of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (16) potential increases in the provision for loan losses resulting from the COVID-19 pandemic; and (17) 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.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)


	Ending Balances
	Sep		Jun		Mar		Dec		Sep
	2020		2020		2020		2019		2019
Assets:
Cash and cash equivalents	$	541,815	$	399,467	$	309,089	$	183,971	$	170,934
Securities available-for-sale, at fair value		214,634		219,631		201,002		178,348		171,507
Other investments		14,829		14,829		14,113		12,913		12,913
Loans held for sale		11,292		6,330		6,045		5,856		3,068
Loans		2,404,057		2,408,284		2,139,247		1,897,392		1,864,679
Less: Allowance for loan losses		(18,817)		(16,254)		(13,431)		(10,243)		(9,792)
Loans, net		2,385,240		2,392,030		2,125,816		1,887,149		1,854,887
Premises and equipment, net		73,934		73,868		73,801		59,433		58,386
Other real estate owned		3,932		5,524		5,894		1,757		1,561
Goodwill and core deposit intangibles, net		86,710		86,327		86,503		77,193		77,534
Bank owned life insurance		31,034		30,853		30,671		24,949		24,796
Other assets		24,168		37,126		20,781		17,554		14,899
Total assets	$	3,387,588	$	3,265,985	$	2,873,715	$	2,449,123	$	2,390,485
Liabilities:
Deposits:
Noninterest-bearing demand	$	669,733	$	645,650	$	431,781	$	364,155	$	365,024
Interest-bearing demand		534,128		479,212		444,141		380,234		351,474
Money market and savings		871,098		762,246		730,392		623,284		634,934
Time deposits		577,064		652,581		735,616		679,541		646,641
Total deposits		2,652,023		2,539,689		2,341,930		2,047,214		1,998,073
Borrowings		319,391		318,855		131,603		31,623		29,828
Subordinated debt		39,325		39,304		39,283		39,261		39,240
Other liabilities		27,060		24,649		24,699		18,278		17,304
Total liabilities		3,037,799		2,922,497		2,537,515		2,136,376		2,084,445
Shareholders' Equity:
Common stock		15,233		15,217		15,222		14,008		13,958
Additional paid-in capital		254,626		254,396		254,356		232,732		232,573
Retained earnings		78,918		73,283		67,869		65,839		59,806
Accumulated other comprehensive income (loss)		1,012		592		(1,247)		168		(297)
Total shareholders' equity		349,789		343,488		336,200		312,747		306,040
Total liabilities & shareholders' equity	$	3,387,588	$	3,265,985	$	2,873,715	$	2,449,123	$	2,390,485

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)


	Three Months Ended										Nine Months Ended
	Sep		Jun		Mar		Dec		Sep		Sep		Sep
	2020		2020		2020		2019		2019		2020		2019
Interest income:
Loans, including fees	$	28,621	$	28,663	$	26,434	$	25,398	$	25,515	$	83,718	$	75,768
Securities available-for-sale:
Taxable		546		589		679		698		748		1,813		2,591
Tax-exempt		364		416		283		345		338		1,064		1,173
Federal funds sold and other earning assets		327		277		602		587		743		1,206		2,059
Total interest income		29,858		29,945		27,998		27,028		27,344		87,801		81,591
Interest expense:
Deposits		2,897		3,366		4,754		5,271		5,605		11,016		16,644
Borrowings		334		249		89		70		15		674		250
Subordinated debt		584		584		584		584		584		1,751		1,757
Total interest expense		3,815		4,199		5,427		5,924		6,204		13,441		18,651
Net interest income		26,043		25,746		22,571		21,104		21,140		74,360		62,940
Provision for loan losses		2,634		2,850		3,200		685		724		8,683		1,914
Net interest income after provision for loan losses		23,409		22,896		19,371		20,419		20,416		65,677		61,026
Noninterest income:
Service charges on deposit accounts		892		709		770		773		767		2,370		2,129
Gain (loss) on sale of securities, net		(9)		16		—		—		1		6		34
Mortgage banking		1,029		931		584		374		518		2,544		1,192
Investment services		359		363		437		261		260		1,159		684
Insurance commissions		560		473		269		—		—		1,302		—
Interchange and debit card transaction fees		868		508		276		163		148		1,652		467
Merger termination fee		—		—		—		—		—		—		6,400
Other		422		511		482		1,269		502		1,417		1,405
Total noninterest income		4,121		3,511		2,818		2,840		2,196		10,450		12,311
Noninterest expense:
Salaries and employee benefits		11,032		10,357		10,006		10,278		9,072		31,395		26,357
Occupancy and equipment		2,186		1,996		1,911		1,749		1,635		6,093		4,967
FDIC insurance		534		180		180		—		(219)		894		140
Other real estate and loan related expense		643		346		545		253		335		1,535		1,067
Advertising and marketing		253		202		198		166		263		653		817
Data processing		558		594		538		530		273		1,689		1,465
Professional services		594		868		711		652		573		2,172		1,724
Amortization of intangibles		402		405		362		340		341		1,169		1,027
Software as service contracts		573		561		470		500		560		1,604		1,696
Merger related and restructuring expenses		290		1,477		2,096		427		73		3,863		2,792
Other		2,102		1,820		1,776		1,157		1,802		5,699		5,045
Total noninterest expense		19,167		18,806		18,793		16,052		14,708		56,766		47,097
Income before income taxes		8,363		7,601		3,396		7,206		7,904		19,361		26,240
Income tax expense		1,968		1,427		664		473		1,941		4,059		6,425
Net income	$	6,395	$	6,174	$	2,732	$	6,733	$	5,963	$	15,302	$	19,815
Earnings per common share:
Basic	$	0.42	$	0.41	$	0.19	$	0.48	$	0.43	$	1.03	$	1.42
Diluted	$	0.42	$	0.41	$	0.19	$	0.48	$	0.42	$	1.02	$	1.41
Weighted average common shares outstanding:
Basic		15,160,579		15,152,768		14,395,103		13,965,877		13,955,859		14,903,757		13,949,325
Diluted		15,210,611		15,202,335		14,479,679		14,066,269		14,053,432		14,965,455		14,038,414

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS


	Three Months Ended
	September 30, 2020						June 30, 2020						September 30, 2019
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest^1^		Cost^1^		Balance		Interest^1^		Cost^1^		Balance		Interest^1^		Cost^1^
Assets:
Loans, including fees^2^	$	2,410,173	$	28,508	4.71	%	$	2,359,101	$	28,590	4.87	%	$	1,842,007	$	25,471	5.49	%
Loans held for sale		8,048		113	5.57	%		6,868		73	4.28	%		4,189		44	4.17	%
Taxable securities		132,642		546	1.64	%		122,135		589	1.94	%		118,955		748	2.49	%
Tax-exempt securities		88,129		515	2.32	%		86,227		570	2.66	%		56,598		448	3.14	%
Federal funds sold and other earning assets		438,785		327	0.30	%		297,696		277	0.37	%		135,444		743	2.18	%
Total interest-earning assets		3,077,777		30,009	3.88	%		2,872,027		30,099	4.22	%		2,157,193		27,454	5.05	%
Noninterest-earning assets		262,764						260,089						191,940
Total assets	$	3,340,541					$	3,132,116					$	2,349,133

Liabilities and Stockholders’ Equity:
Interest-bearing demand deposits	$	509,999		199	0.16	%	$	453,795		148	0.13	%	$	343,827		511	0.59	%
Money market and savings deposits		833,022		704	0.34	%		748,673		614	0.33	%		637,290		1,829	1.14	%
Time deposits		615,714		1,994	1.29	%		701,390		2,604	1.49	%		640,679		3,265	2.02	%
Total interest-bearing deposits		1,958,735		2,897	0.59	%		1,903,858		3,366	0.71	%		1,621,796		5,605	1.37	%
Borrowings^3^		319,265		334	0.42	%		237,143		249	0.42	%		13,310		15	0.45	%
Subordinated debt		39,311		584	5.91	%		39,290		584	5.98	%		39,226		584	5.91	%
Total interest-bearing liabilities		2,317,311		3,815	0.65	%		2,180,291		4,199	0.77	%		1,674,332		6,204	1.47	%
Noninterest-bearing deposits		649,489						587,322						353,315
Other liabilities		25,834						24,642						18,286
Total liabilities		2,992,634						2,792,255						2,045,933
Shareholders' equity		347,907						339,861						303,200
Total liabilities and shareholders' equity	$	3,340,541					$	3,132,116					$	2,349,133

Net interest income, taxable equivalent			$	26,194					$	25,900					$	21,250
Interest rate spread					3.22	%					3.44	%					3.58	%
Tax equivalent net interest margin					3.39	%					3.63	%					3.91	%

Percentage of average interest-earning assets to average interest-bearing liabilities					132.82	%					131.73	%					128.84	%
Percentage of average equity to average assets					10.41	%					10.85	%					12.91	%

^1^Taxable equivalent

^2^Includes average balance of $295,045 and $208,814 in PPP loans for the quarters ended September 30, 2020 and June 30, 2020, respectively.

^3^ Includes average balance of $237,780 and $108,082 in Paycheck Protection Program Liquidity Facility (“PPPLF”) funding for the quarters ended September 30, 2020 and June 30, 2020, respectively.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS


	Nine Months Ended
	September 30, 2020							September 30, 2019
	Average				Yield/			Average				Yield/
	Balance		Interest^1^		Cost^1^			Balance		Interest^1^		Cost^1^
Assets:
Loans, including fees^2^	$	2,252,075	$	83,487		4.95	%	$	1,823,523	$	75,645	5.55	%
Loans held for sale		6,409		231		4.81	%		3,589		123	4.58	%
Taxable securities		123,895		1,813		1.95	%		134,230		2,591	2.58	%
Tax-exempt securities		81,604		1,486		2.43	%		55,585		1,512	3.64	%
Federal funds sold and other earning assets		296,449		1,206		0.54	%		102,528		2,056	2.68	%
Total interest-earning assets		2,760,432		88,223		4.27	%		2,119,455		81,927	5.17	%
Noninterest-earning assets		248,293							205,984
Total assets	$	3,008,725						$	2,325,439

Liabilities and Stockholders’ Equity:
Interest-bearing demand deposits	$	451,074		782		0.23	%	$	326,764		1,397	0.57	%
Money market and savings deposits		749,316		2,707		0.48	%		658,358		6,131	1.25	%
Time deposits		667,303		7,527		1.51	%		635,986		9,116	1.92	%
Total interest-bearing deposits		1,867,693		11,016		0.79	%		1,621,108		16,644	1.37	%
Borrowings^3^		203,202		674		0.44	%		18,377		250	1.82	%
Subordinated debt		39,290		1,751		5.95	%		39,205		1,757	5.99	%
Total interest-bearing liabilities		2,110,185		13,441		0.85	%		1,678,690		18,651	1.49	%
Noninterest-bearing deposits		537,860							336,895
Other liabilities		23,826							14,509
Total liabilities		2,671,871							2,030,094
Shareholders' equity		336,854							295,345
Total liabilities and shareholders' equity	$	3,008,725						$	2,325,439

Net interest income, taxable equivalent			$	74,782						$	63,276
Interest rate spread						3.42	%					3.68	%
Tax equivalent net interest margin						3.62	%					3.99	%

Percentage of average interest-earning assets to average interest-bearing liabilities						130.81	%					126.26	%
Percentage of average equity to average assets						11.20	%					12.70	%

^1^Taxable equivalent

^2^Includes average balance of $169,617 in PPP loans for the nine months ended September 30, 2020

^3^ Includes average balance of $115,734 in PPPLF funding for the nine months ended September 30, 2020

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)


	As of and for The Three Months Ended
	Sep			Jun			Mar			Dec			Sep
	2020			2020			2020			2019			2019
Composition of Loans:
Commercial real estate
owner occupied	$	467,569		$	464,073		$	473,398		$	429,269		$	422,363
non-owner occupied		563,082			552,958			535,637			476,038			468,099
Commercial real estate, total		1,030,651			1,017,031			1,009,035			905,307			890,462
Commercial & industrial		644,498			637,450			377,173			337,075			341,207
Construction & land development		275,172			279,216			253,445			227,626			219,751
Consumer real estate		440,310			459,861			482,728			417,481			402,463
Consumer and other		13,426			14,726			16,866			9,903			10,796
Total loans	$	2,404,057		$	2,408,284		$	2,139,247		$	1,897,392		$	1,864,679

Asset Quality and Additional Loan Data:
Nonperforming loans	$	2,248		$	3,776		$	3,069		$	3,350		$	3,166
Other real estate owned		3,932			5,524			5,894			1,757			1,561
Total nonperforming assets	$	6,180		$	9,300		$	8,963		$	5,107		$	4,727
Restructured loans not included in nonperforming loans	$	8		$	9		$	9		$	61		$	61
Net charge-offs to average loans (annualized)		0.01	%		—	%		—	%		0.01	%		0.01	%
Allowance for loan losses to loans		0.78	%		0.67	%		0.63	%		0.54	%		0.53	%
Nonperforming loans to total loans, gross		0.09	%		0.16	%		0.14	%		0.18	%		0.17	%
Nonperforming assets to total assets		0.18	%		0.28	%		0.31	%		0.21	%		0.20	%
Acquired loan fair value discount balance	$	15,141		$	16,187		$	17,237		$	15,348		$	16,784
Accretion income on acquired loans		960			888			1,841			1,375			1,246
PPP net fees deferred balance		6,348			8,582			—			—			—
PPP net fees recognized		1,812			1,909			—			—			—

Capital Ratios:
Equity to Assets		10.33	%		10.52	%		11.70	%		12.77	%		12.80	%
Tangible common equity to tangible assets (Non-GAAP)^1^		7.97	%		8.09	%		8.96	%		9.93	%		9.88	%

SmartFinancial, Inc.^2^
Tier 1 leverage		8.78	%		8.83	%		10.28	%		10.34	%		10.02	%
Common equity Tier 1		11.33	%		10.92	%		10.87	%		11.61	%		11.54	%
Tier 1 capital		11.33	%		10.92	%		10.87	%		11.61	%		11.54	%
Total capital		13.82	%		13.25	%		13.13	%		14.02	%		13.98	%

SmartBank	****	Estimated^3^
Tier 1 leverage		9.74	%		9.82	%		11.42	%		11.41	%		11.22	%
Common equity Tier 1		12.57	%		12.14	%		12.05	%		12.81	%		12.71	%
Tier 1 risk-based capital		12.57	%		12.14	%		12.05	%		12.81	%		12.71	%
Total risk-based capital		13.37	%		12.82	%		12.62	%		13.31	%		13.19	%

^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.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)


	As of and for The															As of and for The
	Three Months Ended															Nine Months Ended
	Sep			Jun			Mar			Dec			Sep			Sep			Sep
	2020			2020			2020			2019			2019			2020			2019
Selected Performance Ratios (Annualized):
Return on average assets		0.76	%		0.79	%		0.43	%		1.12	%		1.01	%		0.68	%		1.14	%
Return on average shareholders' equity		7.31	%		7.31	%		3.33	%		8.65	%		7.80	%		6.07	%		8.97	%
Return on average tangible common equity¹		9.72	%		9.80	%		4.41	%		11.55	%		10.52	%		8.10	%		12.22	%
Noninterest income / average assets		0.49	%		0.45	%		0.44	%		0.47	%		0.37	%		0.46	%		0.71	%
Noninterest expense / average assets		2.28	%		2.41	%		2.96	%		2.68	%		2.48	%		2.52	%		2.71	%
Efficiency ratio		63.54	%		64.28	%		74.02	%		67.04	%		63.03	%		66.93	%		62.59	%

Operating Selected Performance Ratios (Annualized):
Operating return on average assets^1^		0.79	%		0.93	%		0.67	%		1.08	%		1.02	%		0.81	%		0.98	%
Operating PTPP return on average assets^1^		1.35	%		1.53	%		1.37	%		1.31	%		1.47	%		1.42	%		1.41	%
Operating return on average shareholders' equity^1^		7.57	%		8.58	%		5.22	%		8.34	%		7.87	%		7.20	%		7.75	%
Operating return on average tangible common equity^1^		10.06	%		11.51	%		6.90	%		11.12	%		10.61	%		9.60	%		10.56	%
Operating efficiency ratio^1^		62.25	%		58.95	%		65.46	%		64.95	%		62.42	%		62.07	%		64.07	%
Operating noninterest income / average assets^1^		0.49	%		0.45	%		0.44	%		0.35	%		0.37	%		0.46	%		0.34	%
Operating noninterest expense / average assets^1^		2.25	%		2.23	%		2.63	%		2.56	%		2.47	%		2.35	%		2.55	%

Selected Interest Rates and Yields:
Yield on loans		4.71	%		4.87	%		5.35	%		5.36	%		5.49	%		4.95	%		5.55	%
Yield on earning assets, FTE		3.88	%		4.22	%		4.83	%		4.92	%		5.05	%		4.27	%		5.17	%
Cost of interest-bearing deposits		0.59	%		0.71	%		1.10	%		1.29	%		1.37	%		0.79	%		1.37	%
Cost of total deposits		0.44	%		0.54	%		0.91	%		1.06	%		1.13	%		0.61	%		1.14	%
Cost of interest-bearing liabilities		0.65	%		0.77	%		1.20	%		1.39	%		1.47	%		0.85	%		1.49	%
Net interest margin, FTE		3.39	%		3.63	%		3.90	%		3.84	%		3.91	%		3.62	%		3.99	%

Per Common Share:
Net income, basic	$	0.42		$	0.41		$	0.19		$	0.48		$	0.43		$	1.03		$	1.42
Net income, diluted		0.42			0.41			0.19			0.48			0.42			1.02			1.41
Operating earnings, basic¹		0.44			0.48			0.30			0.46			0.43			1.22			1.23
Operating earnings, diluted¹		0.44			0.48			0.30			0.46			0.43			1.21			1.22
Book value		22.96			22.57			22.09			22.33			21.93			22.96			21.93
Tangible book value¹		17.27			16.90			16.40			16.82			16.37			17.27			16.37
Common shares outstanding		15,233,227			15,216,932			15,221,990			14,008,233			13,957,973			15,233,227			13,957,973

¹See reconciliation of Non-GAAP measures

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS


	Three Months Ended															Nine Months Ended
	Sep			Jun			Mar			Dec			Sep			Sep			Sep
	2020			2020			2020			2019			2019			2020			2019
Operating Earnings:
Net income (GAAP)	$	6,395		$	6,174		$	2,732		$	6,733		$	5,963		$	15,302		$	19,815
Noninterest income:
Securities gains (losses), net		9			(16)			—			—			(1)			(6)			(34)
ADECA termination proceeds		—			—			—			(720)			—			—			—
Merger termination fee		—			—			—			—			—			—			(6,400)
Noninterest expenses:
Salaries - prior year adjustment		—			—			—			603			—			—			—
Merger related and restructuring expenses		290			1,477			2,096			427			73			3,863			2,792
Other - prior year franchise tax true-up		—			—			—			(312)			—			—			—
Income taxes:
Tax benefit - prior year amended return		—			—			—			(304)			—			—			—
Income tax effect of adjustments		(77)			(382)			(548)			60			(19)			(1,009)			955
Operating earnings (Non-GAAP)	$	6,617		$	7,253		$	4,280		$	6,487		$	6,016		$	18,150		$	17,128
Operating earnings per common share (Non-GAAP):
Basic	$	0.44		$	0.48		$	0.30		$	0.46		$	0.43		$	1.22		$	1.23
Diluted		0.44			0.48			0.30			0.46			0.43			1.21			1.22

Operating Noninterest Income:
Noninterest income (GAAP)	$	4,121		$	3,511		$	2,818		$	2,840		$	2,196		$	10,450		$	12,311
Securities gains (losses), net		9			(16)			—			—			(1)			(6)			(34)
ADECA termination proceeds		—			—			—			(720)			—			—			—
Merger termination fee		—			—			—			—			—			—			(6,400)
Operating noninterest income (Non-GAAP)	$	4,130		$	3,495		$	2,818		$	2,120		$	2,195		$	10,444		$	5,877
Operating noninterest income (Non-GAAP)/average assets^1^		0.49	%		0.45	%		0.44	%		0.35	%		0.37	%		0.46	%		0.34	%

Operating Noninterest Expense:
Noninterest expense (GAAP)	$	19,167		$	18,806		$	18,793		$	16,052		$	14,708		$	56,766		$	47,097
Salaries - prior year adjustment		—			—			—			(603)			—			—			—
Merger related and restructuring expenses		(290)			(1,477)			(2,096)			(427)			(73)			(3,863)			(2,792)
Other - prior year franchise tax true-up		—			—			—			312			—			—			—
Operating noninterest expense (Non-GAAP)	$	18,877		$	17,329		$	16,697		$	15,334		$	14,635		$	52,903		$	44,305
Operating noninterest expense (Non-GAAP)/average assets^2^		2.25	%		2.23	%		2.63	%		2.56	%		2.47	%		2.35	%		2.55	%

Operating Pre-tax Pre-provision ("PTPP") Earnings:
Net interest income (GAAP)	$	26,043		$	25,746		$	22,571		$	21,104		$	21,140		$	74,360		$	62,940
Operating noninterest income		4,130			3,495			2,818			2,120			2,195			10,444			5,877
Operating noninterest expense		(18,877)			(17,329)			(16,697)			(15,334)			(14,635)			(52,903)			(44,305)
Operating PTPP earnings (Non-GAAP)	$	11,296		$	11,912		$	8,692		$	7,890		$	8,700		$	31,901		$	24,512

Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)^3^		0.79	%		0.93	%		0.67	%		1.08	%		1.02	%		0.81	%		0.98	%
Operating PTPP return on average assets (Non-GAAP)^4^		1.35	%		1.53	%		1.37	%		1.31	%		1.47	%		1.42	%		1.41	%
Return on average tangible common equity (Non-GAAP)^5^		9.72	%		9.80	%		4.41	%		11.55	%		10.52	%		8.10	%		12.22	%
Operating return on average shareholder equity (Non-GAAP)^6^		7.57	%		8.58	%		5.22	%		8.34	%		7.87	%		7.20	%		7.75	%
Operating return on average tangible common equity (Non-GAAP)^7^		10.06	%		11.51	%		6.90	%		11.12	%		10.61	%		9.60	%		10.56	%

Operating Efficiency Ratio:
Efficiency ratio (GAAP)		63.54	%		64.28	%		74.02	%		67.04	%		63.03	%		66.93	%		62.59	%
Adjustment for taxable equivalent yields		(0.32)	%		(0.34)	%		(0.34)	%		(0.33)	%		(0.30)	%		(0.33)	%		(0.28)	%
Adjustment for securities gains (losses)		0.02	%		(0.04)	%		—	%		—	%		—	%		(0.01)	%		(0.03)	%
Adjustment for merger related income and costs		(0.99)	%		(4.95)	%		(8.21)	%		(1.76)	%		(0.31)	%		(4.52)	%		1.79	%
Operating efficiency ratio (Non-GAAP)		62.25	%		58.95	%		65.46	%		64.95	%		62.42	%		62.07	%		64.07	%

^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 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).

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS


	Three Months Ended										Nine Months Ended
	Sep		Jun		Mar		Dec		Sep		Sep		Sep
	2020		2020		2020		2019		2019		2020		2019
Tangible Common Equity:
Shareholders' equity (GAAP)	$	349,789	$	343,488	$	336,200	$	312,747	$	306,040	$	349,789	$	306,040
Less goodwill and other intangible assets		86,710		86,327		86,503		77,193		77,534		86,710		77,534
Tangible common equity (Non-GAAP)	$	263,079	$	257,161	$	249,697	$	235,554	$	228,506	$	263,079	$	228,506

Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	347,907	$	339,861	$	329,692	$	308,772	$	303,200	$	336,854	$	295,345
Less average goodwill and other intangible assets		86,206		86,484		80,370		77,400		78,222		84,361		78,563
Average tangible common equity (Non-GAAP)	$	261,701	$	253,377	$	249,322	$	231,372	$	224,978	$	252,493	$	216,782

Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	22.96	$	22.57	$	22.09	$	22.33	$	21.93	$	22.96	$	21.93
Adjustment due to goodwill and other intangible assets		(5.69)		(5.67)		(5.69)		(5.51)		(5.56)		(5.69)		(5.56)
Tangible book value per common share (Non-GAAP)^1^	$	17.27	$	16.90	$	16.40	$	16.82	$	16.37	$	17.27	$	16.37

Tangible Common Equity to Tangible Assets:
Total Assets	$	3,387,588	$	3,265,985	$	2,873,715	$	2,449,123	$	2,390,485	$	3,387,588	$	2,390,485
Less goodwill and other intangibles		86,710		86,327		86,503		77,193		77,534		86,710		77,534
Tangible Assets (Non-GAAP):	$	3,300,878	$	3,179,658	$	2,787,212	$	2,371,930	$	2,312,951	$	3,300,878	$	2,312,951
Tangible common equity to tangible assets (Non-GAAP)		7.97%		8.09%		8.96%		9.93%		9.88%		7.97%		9.88%

^1^Tangible book value per share is computed by dividing total stockholder's equity, less goodwill and other intangible assets by common shares outstanding.

Exhibit 99.2

INVESTOR CALL<br>3Q 2020<br>October 21, 2020, 10:00 am<br>Webcast: www.smartbank.com<br>(Investor Relations)<br>Audio Only: 888-317-6003<br>Confirmation #: 9589795<br>Miller Welborn<br>Chairman of the Board<br>Billy Carroll<br>President & CEO
Legal Disclaimer 2<br>Forward-Looking Statements<br>This presentation may contain statements that are based on management’s current<br>estimates or expectations of future events or future results, and that may be deemed to<br>constitute forward-looking statements as defined under the Private Securities Litigation<br>Reform Act of 1995. These statements, including statements regarding the potential effects<br>of the COVID-19 pandemic on the SmartFinancial’s business and financial results and<br>conditions, are not historical in nature and can generally be identified by such words as<br>“expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “may,” “estimate,” and similar<br>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,<br>and other factors include, among others, (1) the risk of litigation and reputational risk<br>associated with historic acquisition activity;(2) the risk that cost savings and revenue<br>synergies from recently completed acquisitions may not be realized or may take longer than<br>anticipated to realize;(3) disruption from recently completed acquisitions with customer,<br>supplier, employee, or other business relationships;(4) our ability to successfully integrate<br>the businesses acquired as part of previous acquisitions with the business of SmartBank;(5)<br>risks related to the completed acquisition of Progressive Financial Group, Inc.(“PFG”);(6) the<br>risk that the anticipated benefits from the completed acquisition of PFG may not be realized<br>in the time frame anticipated;(7) changes in management’s plans for the future;(8)<br>prevailing, or changes in, economic or political conditions, particularly in our market areas;<br>(9) credit risk associated with our lending activities;(10) changes in interest rates, loan<br>demand, real estate values, or competition;(11) changes in accounting principles, policies, or<br>guidelines;(12) changes in applicable laws, rules, or regulations, including changes to<br>statutes, regulations or regulatory policies or practices as a result of, or in response to,<br>COVID-19;(13) adverse results from current or future litigation, regulatory examinations or<br>other legal and/or regulatory actions, including as a result of the Company’s participation in<br>and execution of government programs related to the COVID-19 pandemic;(14) the impact<br>of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial<br>condition, liquidity, prospects and results of operations;(15) potential increases in the<br>provision for loan losses resulting from the COVID-19 pandemic; and (16) other general<br>competitive, economic, political, and market factors, including those affecting our business,<br>operations, pricing, products, or services. These and other factors that could cause results to<br>differ materially from those described in the forward-looking statements can be found in<br>SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q,<br>and current reports on Form 8-K, in each case filed with or furnished to the Securities and<br>Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue<br>reliance should not be placed on forward-looking statements. SmartFinancial disclaims any<br>obligation to update or revise any forward-looking statements contained in this release,<br>which speak only as of the date hereof, whether as a result of new information, future<br>events, or otherwise.<br>Non-GAAP Financial Measures<br>Statements included in this presentation include Non-GAAP financial measures and should be read<br>along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures<br>to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures,<br>including:(i) operating earnings, (ii) operating return on average assets, (iii) operating return on<br>average shareholder equity, (iv) return on average tangible common equity, (v) operating return on<br>average tangible common equity, (vi) operating efficiency ratio;(vii) tangible common equity;(viii)<br>average tangible common equity;(ix) tangible book value;(x) operating pre-tax pre-provision<br>earnings;(xi) operating noninterest income;(xii) operating noninterest expense; and ratios derived<br>therefrom, in its analysis of the company's performance. Operating earnings excludes the following<br>from net income: securities gains and losses, merger termination fee of $6.4 million in the second<br>quarter of 2019, merger related and restructuring expenses, tax benefit from director options<br>previously exercised, and the income tax effect of adjustments. Operating return on average assets is<br>the annualized operating earnings (Non-GAAP) divided by average assets. Operating return on<br>average shareholder equity is the annualized operating earnings (Non-GAAP) divided by average<br>equity. Return on average tangible common equity is the annualized net income divided by average<br>tangible common equity (Non-GAAP). Operating return on average tangible common equity is the<br>annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).<br>The operating efficiency ratio includes an adjustment for taxable equivalent yields and excludes<br>securities gains and losses and merger related and restructuring expenses from the efficiency ratio.<br>Tangible common equity and average tangible common equity excludes goodwill and other intangible<br>assets from shareholders’ equity and average shareholders’ equity. Tangible book value excludes<br>goodwill and other intangible assets less shareholders’ equity divided by common shares outstanding.<br>Operating pre-tax pre-provision earnings is net interest income plus operating noninterest income<br>(Non-GAAP) less operating noninterest expense (Non-GAAP). Operating noninterest income excludes<br>the following from noninterest income: securities gains and losses, expenses related to the<br>termination of the ADECA loan program and the merger termination fee of $6.4 million in the second<br>quarter of 2019. Operating noninterest expense excludes the following from noninterest expense:<br>prior year adjustments to salaries, merger related and restructuring expenses and certain franchise<br>tax true-up expenses. Management believes that Non-GAAP financial measures provide additional<br>useful information that allows investors to evaluate the ongoing performance of the company and<br>provide meaningful comparisons to its peers. Management believes these non-GAAP financial<br>measures also enhance investors' ability to compare period-to-period financial results and allow<br>investors and company management to view our operating results excluding the impact of items that<br>are not reflective of the underlying operating performance. Non-GAAP financial measures should not<br>be considered as an alternative to any measure of performance or financial condition as promulgated<br>under GAAP, and investors should consider SmartFinancial's performance and financial condition as<br>reported under GAAP and all other relevant information when assessing the performance or financial<br>condition of the company. Non-GAAP financial measures have limitations as analytical tools, and<br>investors 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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Overview of SmartFinancial 3<br>▪ SmartFinancial, Inc. (Nasdaq: SMBK) is a $3.4 billion asset<br>bank holding company headquartered in Knoxville,<br>Tennessee<br>▪ Operates one subsidiary bank, SmartBank, which was founded in<br>January 2007<br>▪ Located primarily in attractive, high-growth markets throughout<br>East/Mid Tennessee, Alabama and the Florida Panhandle<br>▪ 464 full-time employees<br>▪ Balance Sheet (9/30/20)<br>▪ Assets: $3.4 billion<br>▪ Gross Loans: $2.4 billion<br>▪ Deposits: $2.7 billion<br>▪ Shareholders’ Equity / Tangible Common Equity (Non-GAAP): $349.8<br>million / $263.1 million<br>▪ Profitability (Q3 ’20)<br>▪ Net Income / Operating Earnings (Non-GAAP): $6.4 million / $6.6<br>million<br>▪ Operating Pre-Tax Pre-Provision Earnings (Non-GAAP): $11.3 million<br>▪ ROAA / Operating ROAA (Non-GAAP): 0.76% / 0.79%<br>▪ ROATCE (Non-GAAP) / Operating ROATCE (Non-GAAP): 9.72% / 10.06%<br>▪ Efficiency Ratio / Operating Efficiency Ratio (Non-GAAP): 63.5% / 62.3%<br>▪ Asset Quality<br>▪ Superior asset quality and proven credit culture<br>▪ NPAs / Total Assets of 0.18%<br>▪ Reserves / Loans: 0.78%<br>▪ Regularly Quarterly Dividend<br>▪ Declared quarterly cash dividend of $0.05 per share<br>Financial data as of or for the three months ended 9/30/20<br>Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>Footprint:<br>36 full service<br>branches<br>2 LPOs
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Culture 4<br>We are building a culture where Associates thrive and<br>are empowered to be leaders. The core values that<br>we have established as a company help us operate in<br>unison and have become a critical part of our culture.<br>Our Associates are key to SmartBank’s success.<br>POSITIONING STATEMENT<br>At SmartBank, delivering unparalleled value to our<br>Shareholders, Associates, Clients and the Communities<br>we serve drives every decision and action we take.<br>Exceptional value means being there with smart<br>solutions, fast responses and deep commitment<br>every single time. By doing this, we will create the<br>Southeast’s next, great community banking franchise.
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COVID-19 Update 5<br>COVID-19 Actions<br>• Pandemic Response Team meets regularly to share latest COVID updates or impacts that we are<br>seeing in all regions across our footprint.<br>• Continue to evaluate markets on a case by case basis as to bank operations or any changes that<br>need to be made to protect associates and clients.<br>• Ongoing communication shared with associates on best practices regarding a safe work<br>environment.<br>• Provided all branches with acrylic counter-shields to be used in teller stations and pods to create<br>space between client and associate.<br>• Provided all locations with social distance floor markers.<br>• Provided all locations with marketing collateral (signage posters/tent cards) with tips to promote a<br>healthy & safe working environment.
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Third Quarter Financial Highlights
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Quarterly Highlights 7<br>Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>($ in thousands, except per share data) 3Q20 2Q20 Change<br>Net interest income 26,043 $ 25,746 $ 297 $<br>Provision for loan losses 2,634 2,850 (216)<br>Noninterest income 4,121 3,511 610<br>Noninterest expense 19,167 18,806 361<br>Income tax expense 1,968 1,427 541<br>Net income 6,395 6,174 221<br>Non-GAAP Reconciliations<br>Noninterest income 9 (16) 25<br>Noninterest expense 290 1,477 (1,187)<br>Income taxes (77) (382) 305<br>Operating earnings (Non-GAAP) 6,617 $ 7,253 $ (636) $<br>Operating Pre-Tax Pre-Provision Earnings (Non-GAAP) 11,296 $ 11,912 $ (616) $<br>Non-GAAP Performance Metrics<br>Diluted operating earnings per share 0.44 $ 0.48 $ (0.04) $<br>Tangible book value per share 17.27 16.90 0.37<br>Operating return on average assets 0.79% 0.93% (0.14%)<br>Operating PTPP return on average assets 1.35% 1.53% (0.18%)<br>Operating return on average tangible common equity 10.06% 11.51% (1.45%)<br>Operating efficiency ratio 62.25% 58.95% 3.30%
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Operating PTPP Earnings 8<br>Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>$6,770<br>$8,786<br>$8,039 $7,772<br>$8,700<br>$7,890<br>$8,692<br>$11,912<br>$11,296<br>$0<br>$2,000<br>$4,000<br>$6,000<br>$8,000<br>$10,000<br>$12,000<br>$14,000<br>3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20<br>Operating PTPP Earnings (Non-GAAP)<br>($ in thousands)<br>Operating PTPP Earnings, Less Accretion & PPP Fees Accretion PPP fees
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Performance Trends 9<br>$2,051<br>$2,274 $2,354 $2,391 $2,390 $2,449<br>$2,874<br>$3,266 $3,388<br>$0<br>$500<br>$1,000<br>$1,500<br>$2,000<br>$2,500<br>$3,000<br>$3,500<br>$4,000<br>3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20<br>Total Assets, Loans, and Deposits<br>($ in millions)<br>Assets Loans Deposits
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Performance Trends 10<br>(1) Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>1.02 % 1.08 %<br>0.67 %<br>0.93 %<br>0.79 %<br>1.47 %<br>1.31 % 1.37 %<br>1.53 %<br>1.35 %<br>—%<br>0.20 %<br>0.40 %<br>0.60 %<br>0.80 %<br>1.00 %<br>1.20 %<br>1.40 %<br>1.60 %<br>1.80 %<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>ROAA (%): Reported, Operating, Operating PTPP ROAA<br>ROAA Operating ROAA ⁽¹⁾ Operating PTPP ROAA ⁽¹⁾<br>10.6 % 11.1 %<br>6.9 %<br>11.5 %<br>10.1 %<br>—%<br>2.0 %<br>4.0 %<br>6.0 %<br>8.0 %<br>10.0 %<br>12.0 %<br>14.0 %<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>ROATCE (%)<br>ROATCE ⁽¹⁾ Operating ROATCE ⁽¹⁾
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Performance Trends 11<br>(1) Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>$21.93 $22.33 $22.09 $22.57 $22.96<br>$16.37 $16.82 $16.40 $16.90 $17.27<br>$15.00<br>$18.00<br>$21.00<br>$24.00<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Book Value per Share<br>Book Value Tangible Book Value ⁽¹⁾<br>63.0 %<br>67.0 %<br>74.0 %<br>64.3 % 63.5 %<br>45.0 %<br>50.0 %<br>55.0 %<br>60.0 %<br>65.0 %<br>70.0 %<br>75.0 %<br>80.0 %<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Efficiency Ratio (%)<br>Efficiency Ratio Operating Efficiency Ratio ⁽¹⁾
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Net Interest Income 12<br>3Q20 2Q20 Change<br>Loans, less accretion & PPP fees 4.10% 4.25% (0.15%)<br>Accretion 0.16% 0.15% 0.01%<br>PPP Fees 0.30% 0.47% (0.17%)<br>Loans including fees 4.71% 4.87% (0.16%)<br>Loans held for sale 5.57% 4.28% 1.29%<br>Taxable securities 1.64% 1.94% (0.30%)<br>Tax-exempt securities (FTE) 2.32% 2.66% (0.34%)<br>Federal funds and other investments 0.30% 0.37% (0.07%)<br>Interest earning asset yields 3.88% 4.22% (0.34%)<br>Total interest-bearing deposits 0.59% 0.71% (0.12%)<br>Borrowings 0.42% 0.42% -<br>Subordinated debt 5.91% 5.98% (0.07%)<br>Total interest-bearing liabilities 0.65% 0.77% (0.12%)<br>Net interest margin (FTE) 3.39% 3.63% (0.24%)<br>Net interest margin (FTE - Less accretion) 3.26% 3.50% (0.24%)<br>Cost of funds 0.51% 0.61% (0.10%)<br>($ in thousands)<br>Net interest income (FTE) 26,194 $ 25,900 $ 294 $<br>Average earning assets 3,077,777 2,872,027 205,750<br>Average Yields and Rates<br>3.91% 3.84% 3.90% 3.63% 3.39%<br>5.48% 5.36% 5.35%<br>4.87% 4.71%<br>0.00%<br>1.00%<br>2.00%<br>3.00%<br>4.00%<br>5.00%<br>6.00%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Net Interest Margin<br>Net Interest Margin (FTE) Loan Yield<br>Cost of Funds Interest Bearing Liabilities<br>($mm)<br>3Q20 2Q20 Change<br>Cash and cash equivalents 541.8 $ 399.5 $ 142.3 $<br>Unpledged investment securities 139.7 140.2 (0.5)<br>Correspondent Banks 69.6 69.6 -<br>FRB discount window 166.0 165.6 0.4<br>FHLB 43.6 53.1 (9.5)<br>Holding company line of credit 25.0 25.0 -<br>Total 985.7 $ 853.0 $ 132.7 $<br>Liqudity Funding Sources
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Operating Noninterest Income (Non-GAAP) 13<br>Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>$2,195 $2,120<br>$2,818<br>$3,495<br>$4,130<br>$0<br>$500<br>$1,000<br>$1,500<br>$2,000<br>$2,500<br>$3,000<br>$3,500<br>$4,000<br>$4,500<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Operating Noninterest Income (Non-GAAP)<br>($ in thousands)<br>Other noninterest income<br>Interchange fees<br>Investment services income<br>Insurance commissions<br>Mortgage banking income<br>Service charges on deposit accounts
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Operating Noninterest Expense (Non-GAAP) 14<br>Note: For a reconciliation of Non-GAAP financial measures to their most directly comparable GAAP measures, see the Appendix<br>$14,635 $15,334<br>$16,697 $17,329<br>$18,877<br>$0<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>$20,000<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Operating Noninterest Expense (Non-GAAP)<br>($ in thousands)<br>Other<br>Professional services<br>Amortization of intangibles<br>Data processing<br>Occupancy<br>Salaries & benefits
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Attractive Deposit Mix 15<br>Noninterest demand<br>25%<br>Interest-bearing demand<br>20%<br>Money market and savings<br>33%<br>Time deposits<br>22%<br>Deposit Compostion (9/30/20)<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>2.00%<br>2.50%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Historical Cost of Deposits<br>Cost of Deposits<br>Fed Funds Target<br>Cost of Interest Bearing Liabilities<br>$1,998 $2,047<br>$2,342<br>$2,540 $2,652<br>$0<br>$500<br>$1,000<br>$1,500<br>$2,000<br>$2,500<br>$3,000<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Historical Deposit Compostion ($mm)<br>Noninterest demand Interest-bearing demand<br>Money market and savings Time deposits
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Overview of Loan Portfolio 16<br>C&I<br>27%<br>C&D<br>11%<br>CRE, Owner<br>Occupied<br>20%<br>CRE, Non Owner<br>Occupied<br>23%<br>Consumer RE<br>18%<br>Other<br>1%<br>Loan Composition (9/30/20)<br>$1,865 $1,897<br>$2,139<br>$2,408 $2,404<br>$0<br>$500<br>$1,000<br>$1,500<br>$2,000<br>$2,500<br>$3,000<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Historical Loan Composition ($mm)<br>C&I C&D CRE, Owner Occupied CRE, Non Owner Occupied Consumer RE Other<br>275.3%<br>89.0%<br>0%<br>100%<br>200%<br>300%<br>400%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>CRE Ratios<br>CRE C&D
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Asset Quality 17<br>$5,388<br>$7,156<br>$15,821<br>$9,005<br>$6,089<br>0.29% 0.38%<br>0.74%<br>0.37% 0.25%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>1.20%<br>1.40%<br>1.60%<br>1.80%<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Delinquent and Nonaccruals / Total Loans<br>($ in thousands)<br>Total Delinquent and Nonaccrual Loans<br>Total Delinquent and Nonaccrual Loans / Total Loans<br>$4,727 $5,107<br>$8,963 $9,300<br>$6,180<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>1.20%<br>1.40%<br>1.60%<br>1.80%<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Nonperforming Assets<br>($ in thousands)<br>OREO Total Nonperforming Assets / Total Assets<br>0.31% 0.27%<br>0.39%<br>0.27% 0.29%<br>0.01% 0.01% 0.00% 0.00% 0.01%<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>0.40%<br>0.45%<br>0.50%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Credit Quality<br>Classified Loans / Total Loans Net Chargeoffs<br>• NPAs have been managed down to pre-merger<br>levels at 3Q 2020<br>• Delinquencies at lowest levels since 2017<br>• Asset quality improved quarter over quarter by<br>0.10% with nonperforming assets to total<br>assets of 0.18%<br>• Classified loans to total loans remains flat<br>• Loan pipeline activity regaining momentum<br>across all markets
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COVID-19 Modified Loans 18<br>Source: Company information<br>Note: As of September 30, 2020<br>78.5%<br>20.4%<br>1.0%<br>9.7%<br>1.6% 0.03%<br>0.0%<br>10.0%<br>20.0%<br>30.0%<br>40.0%<br>50.0%<br>60.0%<br>70.0%<br>80.0%<br>90.0%<br>October November December<br>Remaining COVID Modification Maturities<br>% Number of Remaining Modified Loans Total O/S Balance of Modifications / Total Loan Portfolio<br>Industries with Modifications O/S Balance<br>% of Total<br>Loan Portfolio<br>% of Total<br>Modified Loans<br>2nd Modification<br>O/S Balance<br>Hospitality 56,223 $ 2.3% 24.2% 2,442 $<br>Restuarants 30,380 1.3% 13.1% 1,749<br>CRE Retail 20,065 0.8% 8.7% -<br>Religious Organizations 18,430 0.8% 7.9% -<br>Amusement 11,720 0.5% 5.0% -<br>Manufacturing 11,587 0.5% 5.0% -<br>Lessors of Nonresidential Buildings 10,870 0.5% 4.7% -<br>Overnight Rentals 9,506 0.4% 4.1% -<br>Construction 7,459 0.3% 3.2% -<br>Medical 4,773 0.2% 2.1% -<br>Transportation 2,351 0.1% 1.0% -<br>All Other Miscellaneous Industries 49,101 2.0% 21.0% 19<br>Total Modifications 232,465 9.7% 100.0% 4,210 $<br>Total Loan Portfolio 2,404,057 $ 100.0%<br>($ in thousands)
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Modified Hospitality Loans 19<br>Source: Company information<br>Note: As of September 30, 2020<br>($ in thousands)<br>Region O/S Balance % Exposure by Region Average LTV<br>Alabama 25,648 $ 45.6% 35.0%<br>FL Panhandle 693 1.1% 62.4%<br>Northeast TN 15,498 27.6% 46.1%<br>Middle TN 13,741 24.6% 64.0%<br>Southeast TN 643 1.1% 40.9%<br>Total Modifications 56,223 100.0% 46.7%<br>Total Hotel Portfolio 151,970 $<br>% Modified of Total 37.0%<br>Modified Hospitality Loans By Region<br>($ in thousands, except # of loans)<br>Product # of Loans O/S Balance Average LTV<br>C & I 1 39 $ 0.3%<br>CRE NOO 13 54,954 50.8%<br>C & D 2 1,230 43.3%<br>Total 16 56,223 $ 46.7%<br>Modified Hospitality Loans by Product<br>81.3%<br>18.7%<br>0.0%<br>10.0%<br>20.0%<br>30.0%<br>40.0%<br>50.0%<br>60.0%<br>70.0%<br>80.0%<br>90.0%<br>October November<br>Remaining Hospitality Modification Expiration by<br>Month<br>Alabama<br>46%<br>FL Panhandle<br>1%<br>Northeast TN<br>27%<br>Middle TN<br>25%<br>Southeast TN<br>1%<br>% Exposure by Region<br>Alabama FL Panhandle Northeast TN Middle TN Southeast TN
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Modified Restaurant Loans 20<br>Source: Company information<br>Note: As of September 30, 2020<br>($ in thousands)<br>Region O/S Balance % Exposure by Region<br>Alabama 155 $ 0.5%<br>FL Panhandle 18,405 60.6%<br>Northeast TN 231 0.8%<br>Middle TN 3,474 11.3%<br>Southeast TN 8,115 26.8%<br>Total Modifications 30,380 100.0%<br>Total Restaurant Portfolio 83,222 $<br>% Modified of Total 36.5%<br> Modified Restaurant Loans by Region<br>($ in thousands, except # of loans)<br>Category # of Loans O/S Balance<br>Full-Service 13 16,597 $<br>Limited-Service 7 6,716<br>Drinking Places 2 6,858<br>Other 2 209<br>Total 24 30,380 $<br>Modified Loans by Restaurant Type<br>Alabama<br>0%<br>FL Panhandle<br>61%<br>Northeast TN<br>1%<br>Middle TN<br>11%<br>Southeast TN<br>27%<br>% Exposure by Region<br>Alabama FL Panhandle Northeast TN Middle TN Southeast TN 75.0%<br>16.7%<br>8.3%<br>0.0%<br>10.0%<br>20.0%<br>30.0%<br>40.0%<br>50.0%<br>60.0%<br>70.0%<br>80.0%<br>October November December<br>Remaining Restaurant Modification Expiration by<br>Month
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Paycheck Protection Program 21<br>Client, 67.8%<br>Non-Client, 32.2%<br>Total PPP Loans: Client vs. Non-Client<br>($ in thousands)<br>Source: Company information<br>Note: As of September 30, 2020<br>State Loan Amount Loan Count<br>Client Loan<br>Amount<br>Non-Client<br>Loan Amount<br>Alabama $59,253 557 40,174 $ 19,079 $<br>Florida 21,729 207 14,732 6,997<br>Georgia 9,163 78 6,213 2,950<br>Tennessee 200,159 2,065 135,708 64,451<br>Other 10,485 50 7,109 3,376<br>Total $300,789 2,957 203,936 $ 96,853 $<br>Total PPP Loans<br>Level Loan Amount Loan Count % of Total Count<br>$50,000 and less 33,074 $ 1,877 63.5%<br>Greater than $50,000 267,715 1,080 36.5%<br>Total 300,789 $ 2,957 100.0%<br>PPP Loan Forgiveness
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Reserve Reconciliation 22<br>($ in thousands) 3Q19 4Q19 1Q20 2Q20 3Q20<br>Allowance for Loan Losses - Originated 9,674 $ 9,969 $ 12,412 $ 14,590 $ 16,704 $<br>Allowance for Loan Losses - Acquired 118 274 1,019 1,664 2,113<br>Acquired Loan Fair Value Discounts 16,784 15,348 17,237 16,187 15,141<br>Total Reserves 26,576 $ 25,591 $ 30,668 $ 32,441 $ 33,958 $<br>Originated Loans 1,433,524 $ 1,521,364 $ 1,621,128 $ 1,639,805 $ 1,673,985 $<br>SBA PPP Loans - - - 292,774 300,788<br>Acquired Loans 431,155 376,028 518,119 475,705 429,284<br>Total Loans 1,864,679 $ 1,897,392 $ 2,139,247 $ 2,408,284 $ 2,404,057 $<br>Allowance / Total Loans 0.53% 0.54% 0.63% 0.67% 0.78%<br>Allowance / Total Loans, less PPP Loans - - - 0.77% 0.89%<br>Allowance / Originated Loans, less PPP Loans 0.67% 0.66% 0.77% 0.89% 1.00%<br>Allowance / Acquired Loans 0.03% 0.07% 0.20% 0.35% 0.49%<br>Discount / Acquired Loans 3.89% 4.08% 3.33% 3.40% 3.53%<br>Total Reserves / Total Loans 1.43% 1.35% 1.43% 1.35% 1.41%<br>Total Reserves / Total Loans, less PPP Loans 1.43% 1.35% 1.43% 1.53% 1.61%<br>0.00%<br>0.30%<br>0.60%<br>0.90%<br>$0<br>$5<br>$10<br>$15<br>$20<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>Total Reserves ($mm)<br>Allowance for Loan Losses Acquired Loan Fair Value Discounts Allowance for Loan Losses / Total Loans
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Current Capital Position 23<br>Note: Data as of the three months ended each respective quarter<br>Basel III Regulatory Capital Minimum To Be Considered “Well Capitalized”<br>9.88% 9.93% 8.96% 8.09% 7.97%<br>0.0%<br>4.0%<br>8.0%<br>12.0%<br>16.0%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>10.02% 10.34% 10.28%<br>8.83% 8.78%<br>0.0%<br>4.0%<br>8.0%<br>12.0%<br>16.0%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>11.54% 11.61% 10.87% 10.92% 11.33%<br>0.0%<br>4.0%<br>8.0%<br>12.0%<br>16.0%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>13.98% 14.02% 13.13% 13.25% 13.82%<br>0.0%<br>4.0%<br>8.0%<br>12.0%<br>16.0%<br>3Q19 4Q19 1Q20 2Q20 3Q20<br>TCE/TA (%) Leverage Ratio (%)<br>CET1 Ratio (%) Total Risk-Based Capital Ratio (%)<br>Well Cap.<br>5%<br>Well Cap.<br>6.5%<br>Well Cap.<br>10%
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Appendix
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Non-GAAP Reconciliations 25<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 shareholder 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>6. Note: “ADECA” represents a program administered by the Alabama Department of Economic and Community Affairs<br>($ in thousands, except per share data) 3Q20 2Q20 1Q20 4Q19 3Q19<br>Operating Earnings<br>Net income (GAAP) $ 6,395 $ 6,174 2,732 $ 6,733 $ 5,963 $<br>Noninterest income:<br>Securities (gains) losses 9 (16) - - (1)<br>ADECA termination proceeds - - - (720) -<br>Merger termination fee - - - - -<br>Noninterest expense:<br>Salaries - prior year adjustment - - - 603 -<br>Merger related and restructuring expenses 290 1,477 2,096 427 73<br>Other - prior year franchise tax true-up - - (312) -<br>Income taxes:<br>Tax benefit - prior year amended return - - (304) -<br>Income tax effect of adjustments (77) (382) (548) 60 (19)<br> Operating earnings (Non-GAAP) $ 6,617 $ 7,253 4,280 $ 6,487 $ 6,016 $<br>Operating earnings per common share:<br>Basic $ 0.44 $ 0.48 $ 0.30 $ 0.46 $ 0.43<br>Diluted 0.44 0.48 0.30 0.46 0.43<br>Operating Noninterest Income<br>Noninterest income (GAAP) $ 4,121 $ 3,511 2,818 $ 2,840 $ 2,196 $<br>Securities (gain) losses 9 (16) - - (1)<br>ADECA termination proceeds(6) - - - (720) -<br>Merger termination fee - - - - -<br>Operating noninterest income (Non-GAAP) $ 4,130 $ 3,495 2,818 $ 2,120 $ 2,195 $<br>Operating Noninterest Expense<br>Noninterest expense (GAAP) $ 19,167 $ 18,806 18,793 $ 16,052 $ 14,708 $<br>Salaries - prior year adjustment - - - (603) -<br>Merger related and restructuring charges (290) (1,477) (2,096) (427) (73)<br>Other - prior year franchise tax true-up - - - 312 -<br>Operating noninterest expense (Non-GAAP) $ 18,877 $ 17,329 16,697 $ 15,334 $ 14,635 $<br>Operating Pre-Tax Pre-Provison ("PTPP") Income<br>Net interest income (GAAP) $ 26,043 25,746 $ 22,571 $ 21,104 $ 21,140 $<br>Operating noninterest income (Non-GAAP) 4,130 3,495 2,818 2,120 2,195<br>Operating noninterest expense (Non-GAAP) (18,877) (17,329) (16,697) (15,334) (14,635)<br> Operating PTPP income (Non-GAAP) $ 11,296 11,912 $ 8,692 $ 7,890 $ 8,700 $<br>Non-GAAP Return Ratios<br>Operating return on average assets (Non-GAAP)(1) 0.79% 0.93% 0.67% 1.08% 1.02%<br>Operating PTPP return on average assets (Non-GAAP)(2) 1.35% 1.53% 1.37% 1.31% 1.47%<br>Return on average tangible common equity (Non-GAAP)(3) 9.72% 9.80% 4.41% 11.55% 10.52%<br>Operating return on average shareholder equity (Non-GAAP)(4) 7.57% 8.58% 5.22% 8.34% 7.87%<br>Operating return on average tangible common equity (Non-GAAP)(5) 10.06% 11.51% 6.90% 11.12% 10.61%<br>Operating Efficiency Ratio<br>Efficiency ratio (GAAP) 63.54% 64.28% 74.02% 67.04% 63.03%<br>Adjustment for taxable equivalent yields (0.32%) (0.34%) (0.34%) (0.33%) (0.30%)<br>Adjustment for securities gains (losses) 0.02% (0.04%) ---<br>Adjustment for merger expenses (0.99%) (4.95%) (8.21%) (1.76%) (0.31%)<br>Operating efficiency ratio (Non-GAAP) 62.25% 58.95% 65.46% 64.95% 62.42%
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Non-GAAP Reconciliations 26<br>1. Book value per share is computed by dividing total stockholders’ equity by common shares outstanding. Tangible book value per share is computed by dividing total<br>stockholders’ equity, less goodwill and other intangible assets by common shares outstanding<br>($ in thousands) 3Q20 2Q20 1Q20 4Q19 3Q19<br>Tangible Common Equity:<br>Shareholders' equity (GAAP) $ 349,789 $ 343,488 336,200 $ 312,747 $ 306,040 $<br>Less goodwill and other intangible assets 86,710 86,327 86,503 77,193 77,534<br>Tangible Common Equity (Non-GAAP) $ 263,079 $ 257,161 249,697 $ 235,554 $ 228,506 $<br>Average Tangible Common Equity:<br>Average shareholders' equity (GAAP) $ 347,907 $ 339,861 329,692 $ 308,772 $ 303,200 $<br>Less goodwill and other intangible assets 86,206 86,484 80,370 77,400 78,222<br>Average Tangible Common Equity (Non-GAAP) $ 261,701 $ 253,377 249,322 $ 231,372 $ 224,978 $<br>Tangible Book Value per Common Share:<br>Book value per common share (GAAP) $ 22.96 $ 22.57 $ 22.09 $ 22.33 $ 21.93<br>Adjustment due to goodwill and other intangible assets (5.69) (5.67) (5.69) (5.51) (5.56)<br>Tangible book value per common share (Non-GAAP)(1) $ 17.27 $ 16.90 $ 16.40 $ 16.82 $ 16.37<br>Tangible Common Equity to Tangible Assets:<br>Total Assets $ 3,387,588 $ 3,265,985 $ 2,873,715 $ 2,449,123 $ 2,390,485<br>Less goodwill and other intangibles 86,710 86,327 86,503 77,193 77,534<br>Tangible Assets (Non-GAAP): $ 3,300,878 $ 3,179,658 $ 2,787,212 $ 2,371,930 $ 2,312,951<br>Tangible common equity to tangible assets (Non-GAAP): 7.97% 8.09% 8.96% 9.93% 9.88%
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Investor Contact 27<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
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