EX-99.1 2 smbk-20210420xex99d1.htm EX-99.1

Exhibit 99.1

​

​

1Q 2021

​

SmartFinancial Announces Results for the First Quarter 2021

​

KNOXVILLE, TN – April 20, 2021 - SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $9.8 million, or $0.65 per diluted common share, for the first quarter of 2021, compared to net income of $9.0 million, or $0.59 per diluted common share for the fourth quarter of 2020. Operating earnings (Non-GAAP), which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $9.8 million, or $0.65 per diluted common share, in the first quarter of 2021, compared to $9.2 million, or $0.61 per diluted common share, in the fourth quarter of 2020.

​

Highlights for the First Quarter of 2021

​

| ● | Net income and operating earnings (non-GAAP) of $9.8 million, or $0.65 per diluted share

| ● | Tangible book value per share (Non-GAAP) of $18.39, a 10.5% annualized quarter-over-quarter increase

| ● | Organic loan growth of over $60 million, a 10.4% annualized quarter-over-quarter increase

| ● | Originated 1,231 of Paycheck Protection Program (“PPP”) loans totaling $119.5 million

| ● | Successfully completed a lift-out of an experienced banking team in the Gulf Coast Region

| ● | Announced on April 14, 2021 the proposed acquisition of Sevier County Bancshares, Inc.

​

Billy Carroll, President & CEO, stated: “We had an outstanding first quarter. Our team continues to build a great franchise and this quarter highlights their efforts. Organic loan growth coupled with PPP production has been strong to start the year. We are also very excited about what our Gulf Coast Region lift-out and the Sevier County Bank acquisition will do for our company’s growth and profitability.”

​

SmartFinancial's Chairman, Miller Welborn, concluded: “We are incredibly excited about where we are as a company. Our team continues to execute with precision and our latest quarterly results is a perfect example of their commitment to continually raise the bar. The goals and targets of our Strategic Plan are very clear and the progress we made during the first quarter of 2021 is impressive.”

​

Net Interest Income and Net Interest Margin

​

Net interest income was $26.3 million for the first quarter of 2021, compared to $26.5 million for the fourth quarter of 2020. Average earning assets totaled $3.1 billion, an increase of $110.0 million, primarily driven by an increase in average cash and cash equivalents of $68.0 million, an increase in average securities of $17.2 million and an increase in average loans of $27.1 million. Average interest-bearing liabilities increased $94.5 million, directly related to continued deposit growth.

​

The tax equivalent net interest margin was 3.48% for the first quarter of 2021, compared to 3.57% for the fourth quarter of 2020. The tax equivalent net interest margin was negatively impacted by a 13 basis point decrease in the average yield on interest-earning assets and offset by a 6 basis point decline in the rate on interest-bearing liabilities over the prior quarter. Lower market interest rates continue to negatively impact earning asset yields, but these declines have been largely mitigated by a lower cost of funds. The primary drivers of the yield decrease on interest-earning assets during the first quarter of 2021 was an overall decline in loan yields and a decrease in loan fees. The decrease of $612 thousand in loan fees during the quarter is attributable to $2.4 million of the PPP fee accretion and $454 thousand of other loan fees compared to $2.2 million of PPP fee accretion, and $1.3 million of other loan fees recognized in the fourth quarter of 2020. The decrease was offset by an increase of $867 thousand in acquired loan discount accretion. The Company continues to carry excess liquidity on the balance sheet that resulted from significant deposit growth during the first quarter of 2021 and the fourth quarter of 2020.

​

The yield on interest-bearing liabilities decreased to 0.54% for the first quarter of 2021 when compared to 0.60% for the fourth quarter of 2020. The cost of average interest-bearing deposits was 0.44% for the first quarter of 2021 compared to 0.50% for the fourth quarter of 2020, a decrease of 6 basis points. The lower cost of average deposits was attributable to the maturing and repricing of time deposits, with average costs decreasing 14 basis points. The cost of total deposits for the first quarter of 2021 was 0.33%.

​

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

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | ​ | ​
​ | ​ | Mar | ​ | Dec | ​ | Increase | ​
Selected Interest Rates and Yields | ​ | 2021 | ​ | 2020 | ​ | (Decrease) | ​
Yield on loans | ​ | 4.67 | % | 4.72 | % | (0.05) | %
Yield on earning assets, FTE | ​ | 3.88 | % | 4.01 | % | (0.13) | %
Cost of interest-bearing deposits | ​ | 0.44 | % | 0.50 | % | (0.06) | %
Cost of total deposits | ​ | 0.33 | % | 0.38 | % | (0.05) | %
Cost of interest-bearing liabilities | ​ | 0.54 | % | 0.60 | % | (0.06) | %
Net interest margin, FTE | ​ | 3.48 | % | 3.57 | % | (0.09) | %

​

Provision for Loan Loss and Credit Quality

​

The provision for loan losses during the first quarter of 2021 was $67 thousand, compared to no provision for the fourth quarter of 2020. At March 31, 2021, the allowance for loan losses was $18.4 million. The allowance for loan losses to total loans was 0.74% as of March 31, 2021, compared to 0.77% as of December 31, 2020. For the Company’s originated loans, the allowance for loan losses to originated loans, less PPP loans, was 0.93% as of March 31, 2021, compared to 0.96% as of December 31, 2020. The remaining discounts on the acquired loan portfolio totaled $13.0 million, or 3.60% of acquired loans as of March 31, 2021.

​

As of March 31, 2021, the Company had COVID related modified loans totaling $1.7 million, or 0.07%, of the loan portfolio, as compared to $17.2 million or 0.7%, of the loan portfolio on December 31, 2020.

​

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

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Three Months Ended | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Mar | ​ | ​ | Dec | ​ | ​ | ​ | ​
​ | Provision for Loan Losses Rollforward | ​ | ​ | 2021 | ​ | ​ | 2020 | ​ | ​ | Change | ​
​ | Beginning balance | ​ | $ | 18,346 | ​ | $ | 18,817 | ​ | $ | (471) | ​
​ | Charge-offs | ​ | ​ | (120) | ​ | ​ | (520) | ​ | ​ | 400 | ​
​ | Recoveries | ​ | ​ | 77 | ​ | ​ | 49 | ​ | ​ | 28 | ​
​ | Net charge-offs | ​ | ​ | (43) | ​ | ​ | (471) | ​ | ​ | 428 | ​
​ | Provision | ​ | ​ | 67 | ​ | ​ | - | ​ | ​ | 67 | ​
​ | Ending balance | ​ | $ | 18,370 | ​ | $ | 18,346 | ​ | $ | 24 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Allowance for loan losses to total loans, gross | ​ | ​ | 0.74 | % | ​ | 0.77 | % | ​ | (0.03) | %

​

The Company is not required to implement the provisions of the Current Expected Credit Losses (“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 0.25% as of March 31, 2021, an increase of one basis point from the 0.24% reported in the fourth 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 0.29% as of March 31, 2021, as compared to 0.31% as of December 31, 2020.

​

​

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 | ​ | ​ | 2021 | ​ | ​ | 2020 | ​ | ​ | (Decrease) | ​
​ | Nonaccrual loans | ​ | $ | 4,739 | ​ | $ | 5,633 | ​ | $ | (894) | ​
​ | Loans past due 90 days or more and still accruing | ​ | ​ | 1,495 | ​ | ​ | 149 | ​ | ​ | 1,346 | ​
​ | Total nonperforming loans | ​ | ​ | 6,234 | ​ | ​ | 5,782 | ​ | ​ | 452 | ​
​ | Other real estate owned | ​ | ​ | 3,946 | ​ | ​ | 4,619 | ​ | ​ | (673) | ​
​ | Total nonperforming assets | ​ | $ | 10,180 | ​ | $ | 10,401 | ​ | $ | (221) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Nonperforming loans to total loans, gross | ​ | ​ | 0.25 | % | ​ | 0.24 | % | ​ | 0.01 | %
​ | Nonperforming assets to total assets | ​ | ​ | 0.29 | % | ​ | 0.31 | % | ​ | (0.02) | %

​

Noninterest Income

​

Noninterest income increased $715 thousand to $5.7 million for the first quarter of 2021 compared to $5.0 million for the fourth quarter of 2020. During the first quarter of 2021, the primary components of the changes in noninterest income were as follows:

​

| ● | Increase in investment services of $124 thousand, stemming from increased production;

| ● | Increase in insurance commissions of $918 thousand, primarily due to commissions of $815 thousand from the placement of life insurance policies;

| ● | Decrease in mortgage banking income of $192 thousand, related to continuing seasonality; and

| ● | Decrease in other of $191 thousand, is primarily attributable to $465 thousand of non-recurring income recognized in the prior quarter, partially offset by an increase in the cash surrender value of bank owned life insurance income of $189 thousand.

​

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 | ​ | ​ | 2021 | ​ | ​ | 2020 | ​ | ​ | (Decrease)
Service charges on deposit accounts | ​ | $ | 1,009 | ​ | $ | 1,032 | ​ | $ | (23)
Mortgage banking income | ​ | ​ | 1,139 | ​ | ​ | 1,331 | ​ | ​ | (192)
Investment services | ​ | ​ | 531 | ​ | ​ | 407 | ​ | ​ | 124
Insurance commissions | ​ | ​ | 1,466 | ​ | ​ | 548 | ​ | ​ | 918
Interchange and debit card transaction fees | ​ | ​ | 839 | ​ | ​ | 760 | ​ | ​ | 79
Other | ​ | ​ | 707 | ​ | ​ | 898 | ​ | ​ | (191)
Total noninterest income | ​ | $ | 5,691 | ​ | $ | 4,976 | ​ | $ | 715

​

​

​

​

3

Noninterest Expense

​

Noninterest expense was $19.5 million for the first quarter of 2021 compared to $20.0 million for the fourth quarter of 2020. During the first quarter of 2021, the primary components of the changes in noninterest expense were as follows:

​

| ● | Salaries and employee benefits declined $647 thousand, primarily attributable to the deferral of salary cost related to the origination of PPP loans;

| ● | Data processing and technology increased $197 thousand, primarily due to implementation of new contactless chip cards and tier pricing adjustments from our core system provider;

| ● | Merger related and restructuring expense decreased $599 thousand: and

●Other increased $578 thousand, primarily from an investment in a start-up fintech company.

​

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 | ​ | ​ | 2021 | ​ | ​ | 2020 | ​ | ​ | (Decrease)
Salaries and employee benefits | ​ | $ | 10,869 | ​ | $ | 11,516 | ​ | $ | (647)
Occupancy and equipment | ​ | ​ | 2,341 | ​ | ​ | 2,256 | ​ | ​ | 85
FDIC insurance | ​ | ​ | 371 | ​ | ​ | 297 | ​ | ​ | 74
Other real estate and loan related expenses | ​ | ​ | 602 | ​ | ​ | 516 | ​ | ​ | 86
Advertising and marketing | ​ | ​ | 190 | ​ | ​ | 181 | ​ | ​ | 9
Data processing and technology | ​ | ​ | 1,379 | ​ | ​ | 1,182 | ​ | ​ | 197
Professional services | ​ | ​ | 641 | ​ | ​ | 786 | ​ | ​ | (145)
Amortization of intangibles | ​ | ​ | 444 | ​ | ​ | 571 | ​ | ​ | (127)
Merger related and restructuring expenses | ​ | ​ | 103 | ​ | ​ | 702 | ​ | ​ | (599)
Other | ​ | ​ | 2,524 | ​ | ​ | 1,946 | ​ | ​ | 578
Total noninterest expense | ​ | $ | 19,464 | ​ | $ | 19,953 | ​ | $ | (489)

​

Income Tax Expense

​

Income tax expense was $2.7 million for the first quarter of 2021, an increase of $165 thousand, compared to $2.5 million for the fourth quarter of 2020.

For the first quarter of 2021, the effective tax rate was 21.5% compared to 21.7% for the fourth quarter of 2020.

​

Balance Sheet Trends

​

Total assets at March 31, 2021 were $3.56 billion compared with $3.30 billion at December 31, 2020. The increase of $252.1 million is primarily attributable to increases in cash and cash equivalents of $75.0 million, securities available-for-sale of $35.3 million, loans of $104.9 million, which consisted of organic loan growth of $61.0 million and net increase in PPP loans of $49.3 million, and bank owned life insurance of $40.4 million.

​

Total liabilities increased to $3.19 billion at March 31, 2021 from $2.95 billion at December 31, 2020. The increase of $245.3 million was primarily from organic deposit growth of $243.0 million.

​

Shareholders' equity at March 31, 2021 totaled $364.1 million, an increase of $6.9 million, from December 31, 2020. The increase in shareholders' equity was primarily from net income of $9.8 million for the quarter ended March 31, 2021, which was offset by a net change in accumulated other comprehensive income of $1.1 million, repurchase of the Company's common stock of $1.2 million and $907 thousand of dividends paid. Tangible book value per share (Non-GAAP) was $18.39 at March 31, 2021, an increase from $17.92 at December 31, 2020. Tangible common equity (Non-GAAP) as a percentage of tangible assets (Non-GAAP) was 8.00% at March 31, 2021, compared with 8.41% at December 31, 2020.

​

​

​

​

​

​

​

​

4

​

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

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Mar | ​ | Dec | ​ | Increase | ​
Selected Balance Sheet Information | ​ | 2021 | ​ | 2020 | ​ | (Decrease) | ​
Total assets | ​ | $ | 3,557,203 | ​ | $ | 3,304,949 | ​ | $ | 252,254 | ​
Total liabilities | ​ | ​ | 3,193,145 | ​ | ​ | 2,947,781 | ​ | ​ | 245,364 | ​
Total equity | ​ | ​ | 364,058 | ​ | ​ | 357,168 | ​ | ​ | 6,890 | ​
Securities available-for-sale, at fair value | ​ | ​ | 250,937 | ​ | ​ | 215,634 | ​ | ​ | 35,303 | ​
Loans | ​ | ​ | 2,487,129 | ​ | ​ | 2,382,243 | ​ | ​ | 104,886 | ​
Deposits | ​ | ​ | 3,048,213 | ​ | ​ | 2,805,215 | ​ | ​ | 242,998 | ​
Borrowings | ​ | ​ | 82,642 | ​ | ​ | 81,199 | ​ | ​ | 1,443 | ​

​

Conference Call Information

​

SmartFinancial issued this earnings release for the first quarter of 2021 on Tuesday, April 20, 2021, and will host a conference call on Wednesday, April 21, 2021, at 10:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 6293687. A replay of the conference call will be available through April 20, 2022, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10154896. 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 35 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 | ​
​ | ​

​

​

​

​

​

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 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 earnings (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value; and ratios derived therefrom, in its analysis of the company's performance. Operating earnings excludes the following from net income: securities gains and losses, proceeds related to the termination of an Alabama Department of Economic and Community Affairs (“ADECA”) loan program, 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 earnings 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, proceeds related to the termination of the ADECA loan program. Operating pre-tax pre-provision earnings is net interest income 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. Tangible assets 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, including statements regarding the 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 proposed acquisition of Sevier County Bancshares, Inc. (“SCB”); (7) the risk that the anticipated benefits from the proposed acquisition of SCB 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.

​

​

​

7

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Ending Balances
​ | ​ | Mar |  | Dec |  | Sep |  | Jun |  | Mar
​ | ​ | 2021 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​ | 2020
Assets: | ​ | ​ | ​ |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Cash and cash equivalents | ​ | $ | 556,701 | ​ | $ | 481,719 | ​ | $ | 541,815 | ​ | $ | 399,467 | ​ | $ | 309,089
Securities available-for-sale, at fair value | ​ |  | 250,937 | ​ |  | 215,634 | ​ |  | 214,634 | ​ |  | 219,631 | ​ |  | 201,002
Other investments | ​ |  | 14,728 | ​ |  | 14,794 | ​ |  | 14,829 | ​ |  | 14,829 | ​ |  | 14,113
Loans held for sale | ​ |  | 7,870 | ​ |  | 11,721 | ​ |  | 11,292 | ​ |  | 6,330 | ​ |  | 6,045
Loans | ​ |  | 2,487,129 | ​ |  | 2,382,243 | ​ |  | 2,404,057 | ​ |  | 2,408,284 | ​ |  | 2,139,247
Less: Allowance for loan losses | ​ |  | (18,370) | ​ |  | (18,346) | ​ |  | (18,817) | ​ |  | (16,254) | ​ |  | (13,431)
Loans, net | ​ |  | 2,468,759 | ​ |  | 2,363,897 | ​ |  | 2,385,240 | ​ |  | 2,392,030 | ​ |  | 2,125,816
Premises and equipment, net | ​ |  | 72,697 | ​ |  | 72,682 | ​ |  | 73,934 | ​ |  | 73,868 | ​ |  | 73,801
Other real estate owned | ​ |  | 3,946 | ​ |  | 4,619 | ​ |  | 3,932 | ​ |  | 5,524 | ​ |  | 5,894
Goodwill and core deposit intangibles, net | ​ |  | 86,350 | ​ |  | 86,471 | ​ |  | 86,710 | ​ |  | 86,327 | ​ |  | 86,503
Bank owned life insurance | ​ |  | 71,586 | ​ |  | 31,215 | ​ |  | 31,034 | ​ |  | 30,853 | ​ |  | 30,671
Other assets | ​ |  | 23,629 | ​ |  | 22,197 | ​ |  | 24,168 | ​ |  | 37,126 | ​ |  | 20,781
Total assets | ​ | $ | 3,557,203 | ​ | $ | 3,304,949 | ​ | $ | 3,387,588 | ​ | $ | 3,265,985 | ​ | $ | 2,873,715
Liabilities: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Deposits: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Noninterest-bearing demand | ​ | $ | 777,968 | ​ | $ | 685,957 | ​ | $ | 669,733 | ​ | $ | 645,650 | ​ | $ | 431,781
Interest-bearing demand | ​ |  | 683,887 | ​ |  | 649,129 | ​ |  | 534,128 | ​ |  | 479,212 | ​ |  | 444,141
Money market and savings | ​ |  | 1,073,941 | ​ |  | 919,631 | ​ |  | 871,098 | ​ |  | 762,246 | ​ |  | 730,392
Time deposits | ​ |  | 512,417 | ​ |  | 550,498 | ​ |  | 577,064 | ​ |  | 652,581 | ​ |  | 735,616
Total deposits | ​ |  | 3,048,213 | ​ |  | 2,805,215 | ​ |  | 2,652,023 | ​ |  | 2,539,689 | ​ |  | 2,341,930
Borrowings | ​ |  | 82,642 | ​ |  | 81,199 | ​ |  | 319,391 | ​ |  | 318,855 | ​ |  | 131,603
Subordinated debt | ​ |  | 39,367 | ​ |  | 39,346 | ​ |  | 39,325 | ​ |  | 39,304 | ​ |  | 39,283
Other liabilities | ​ |  | 22,923 | ​ |  | 22,021 | ​ |  | 27,060 | ​ |  | 24,649 | ​ |  | 24,699
Total liabilities | ​ |  | 3,193,145 | ​ |  | 2,947,781 | ​ |  | 3,037,799 | ​ |  | 2,922,497 | ​ |  | 2,537,515
Shareholders' Equity: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Common stock | ​ |  | 15,105 | ​ |  | 15,107 | ​ |  | 15,233 | ​ |  | 15,217 | ​ |  | 15,222
Additional paid-in capital | ​ |  | 251,836 | ​ |  | 252,693 | ​ |  | 254,626 | ​ |  | 254,396 | ​ |  | 254,356
Retained earnings | ​ |  | 96,034 | ​ |  | 87,185 | ​ |  | 78,918 | ​ |  | 73,283 | ​ |  | 67,869
Accumulated other comprehensive income (loss) | ​ |  | 1,083 | ​ |  | 2,183 | ​ |  | 1,012 | ​ |  | 592 | ​ |  | (1,247)
Total shareholders' equity | ​ |  | 364,058 | ​ |  | 357,168 | ​ |  | 349,789 | ​ |  | 343,488 | ​ |  | 336,200
Total liabilities & shareholders' equity | ​ | $ | 3,557,203 | ​ | $ | 3,304,949 | ​ | $ | 3,387,588 | ​ | $ | 3,265,985 | ​ | $ | 2,873,715

​

​

​

​

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 |
​ | 2021 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​
Interest income: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  | ​
Loans, including fees | $ | 28,018 | ​ | $ | 28,594 | ​ | $ | 28,621 | ​ | $ | 28,663 | ​ | $ | 26,434 | ​
Securities available-for-sale: |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Taxable |  | 724 | ​ |  | 609 | ​ |  | 546 | ​ |  | 589 | ​ |  | 679 | ​
Tax-exempt |  | 259 | ​ |  | 306 | ​ |  | 364 | ​ |  | 416 | ​ |  | 283 | ​
Federal funds sold and other earning assets |  | 291 | ​ |  | 303 | ​ |  | 327 | ​ |  | 277 | ​ |  | 602 | ​
Total interest income |  | 29,292 | ​ |  | 29,812 | ​ |  | 29,858 | ​ |  | 29,945 | ​ |  | 27,998 | ​
Interest expense: |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Deposits |  | 2,331 | ​ |  | 2,580 | ​ |  | 2,897 | ​ |  | 3,366 | ​ |  | 4,754 | ​
Borrowings |  | 117 | ​ |  | 142 | ​ |  | 334 | ​ |  | 249 | ​ |  | 89 | ​
Subordinated debt |  | 584 | ​ |  | 584 | ​ |  | 584 | ​ |  | 584 | ​ |  | 584 | ​
Total interest expense |  | 3,032 | ​ |  | 3,306 | ​ |  | 3,815 | ​ |  | 4,199 | ​ |  | 5,427 | ​
Net interest income |  | 26,260 | ​ |  | 26,506 | ​ |  | 26,043 | ​ |  | 25,746 | ​ |  | 22,571 | ​
Provision for loan losses |  | 67 | ​ |  | — | ​ |  | 2,634 | ​ |  | 2,850 | ​ |  | 3,200 | ​
Net interest income after provision for loan losses |  | 26,193 | ​ |  | 26,506 | ​ |  | 23,409 | ​ |  | 22,896 | ​ |  | 19,371 | ​
Noninterest income: |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Service charges on deposit accounts |  | 1,009 | ​ |  | 1,032 | ​ |  | 892 | ​ |  | 709 | ​ |  | 770 | ​
Gain (loss) on sale of securities, net |  | — | ​ |  | — | ​ |  | (9) | ​ |  | 16 | ​ |  | — | ​
Mortgage banking |  | 1,139 | ​ |  | 1,331 | ​ |  | 1,029 | ​ |  | 931 | ​ |  | 584 | ​
Investment services |  | 531 | ​ |  | 407 | ​ |  | 359 | ​ |  | 363 | ​ |  | 437 | ​
Insurance commissions |  | 1,466 | ​ |  | 548 | ​ |  | 560 | ​ |  | 473 | ​ |  | 269 | ​
Interchange and debit card transaction fees |  | 839 | ​ |  | 760 | ​ |  | 868 | ​ |  | 508 | ​ |  | 276 | ​
Other |  | 707 | ​ |  | 898 | ​ |  | 422 | ​ |  | 511 | ​ |  | 482 | ​
Total noninterest income |  | 5,691 | ​ |  | 4,976 | ​ |  | 4,121 | ​ |  | 3,511 | ​ |  | 2,818 | ​
Noninterest expense: |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Salaries and employee benefits |  | 10,869 | ​ |  | 11,516 | ​ |  | 11,032 | ​ |  | 10,357 | ​ |  | 10,006 | ​
Occupancy and equipment |  | 2,341 | ​ |  | 2,256 | ​ |  | 2,186 | ​ |  | 1,996 | ​ |  | 1,911 | ​
FDIC insurance |  | 371 | ​ |  | 297 | ​ |  | 534 | ​ |  | 180 | ​ |  | 180 | ​
Other real estate and loan related expense |  | 602 | ​ |  | 516 | ​ |  | 643 | ​ |  | 346 | ​ |  | 545 | ​
Advertising and marketing |  | 190 | ​ |  | 181 | ​ |  | 253 | ​ |  | 202 | ​ |  | 198 | ​
Data processing and technology |  | 1,379 | ​ |  | 1,182 | ​ |  | 1,131 | ​ |  | 1,155 | ​ |  | 1,008 | ​
Professional services |  | 641 | ​ |  | 786 | ​ |  | 594 | ​ |  | 868 | ​ |  | 711 | ​
Amortization of intangibles |  | 444 | ​ |  | 571 | ​ |  | 402 | ​ |  | 405 | ​ |  | 362 | ​
Merger related and restructuring expenses |  | 103 | ​ |  | 702 | ​ |  | 290 | ​ |  | 1,477 | ​ |  | 2,096 | ​
Other |  | 2,524 | ​ |  | 1,946 | ​ |  | 2,102 | ​ |  | 1,820 | ​ |  | 1,776 | ​
Total noninterest expense |  | 19,464 | ​ |  | 19,953 | ​ |  | 19,167 | ​ |  | 18,806 | ​ |  | 18,793 | ​
Income before income taxes |  | 12,420 | ​ |  | 11,529 | ​ |  | 8,363 | ​ |  | 7,601 | ​ |  | 3,396 | ​
Income tax expense |  | 2,664 | ​ |  | 2,499 | ​ |  | 1,968 | ​ |  | 1,427 | ​ |  | 664 | ​
Net income | $ | 9,756 | ​ | $ | 9,030 | ​ | $ | 6,395 | ​ | $ | 6,174 | ​ | $ | 2,732 | ​
Earnings per common share: |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Basic | $ | 0.65 | ​ | $ | 0.60 | ​ | $ | 0.42 | ​ | $ | 0.41 | ​ | $ | 0.19 | ​
Diluted | $ | 0.65 | ​ | $ | 0.59 | ​ | $ | 0.42 | ​ | $ | 0.41 | ​ | $ | 0.19 | ​
Weighted average common shares outstanding: |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Basic |  | 15,011,573 | ​ |  | 15,109,298 | ​ |  | 15,160,579 | ​ |  | 15,152,768 | ​ |  | 14,395,103 | ​
Diluted |  | 15,111,947 | ​ |  | 15,182,796 | ​ |  | 15,210,611 | ​ |  | 15,202,335 | ​ |  | 14,479,679 | ​

​

​

​

​

​

​

9

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS

​

​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended |
​ | ​ | March 31, 2021 | ​ | December 31, 2020 | ​ | March 31, 2020 |
​ |  | Average |  | ​ | ​ |  | Yield/ |  | Average |  | ​ | ​ |  | Yield/ |  | Average |  |  | ​ |  | Yield/ |
​ | ​ | Balance | ​ | Interest1 | ​ | Cost1 | ​ | Balance | ​ | Interest1 | ​ | Cost1 | ​ | Balance | ​ | Interest1 | ​ | Cost1 |
Assets: |  | ​ |  |  | ​ |  |  |  |  | ​ |  |  | ​ |  |  |  |  | ​ |  |  | ​ |  |  |  | ​
Loans, including fees2 | ​ | $ | 2,428,499 | ​ | $ | 27,943 |  | 4.67 | % | $ | 2,401,406 | ​ | $ | 28,506 |  | 4.72 | % | $ | 1,982,997 | ​ | $ | 26,389 |  | 5.35 | %
Loans held for sale | ​ | ​ | 7,913 | ​ | ​ | 75 | ​ | 3.82 | % | ​ | 10,191 | ​ | ​ | 88 | ​ | 3.45 | % | ​ | 4,294 | ​ | ​ | 45 | ​ | 4.24 | %
Taxable securities | ​ |  | 136,492 | ​ |  | 724 |  | 2.15 | % |  | 119,936 | ​ |  | 609 |  | 2.02 | % |  | 116,837 | ​ |  | 679 |  | 2.34 | %
Tax-exempt securities | ​ |  | 90,849 | ​ |  | 409 |  | 1.82 | % |  | 90,200 | ​ |  | 456 |  | 2.01 | % |  | 70,397 | ​ |  | 400 |  | 2.28 | %
Federal funds sold and other earning assets | ​ |  | 417,144 | ​ |  | 291 |  | 0.28 | % |  | 349,167 | ​ |  | 303 |  | 0.35 | % |  | 165,512 | ​ |  | 602 |  | 1.46 | %
Total interest-earning assets | ​ |  | 3,080,897 | ​ |  | 29,442 |  | 3.88 | % |  | 2,970,900 | ​ |  | 29,962 |  | 4.01 | % |  | 2,340,037 | ​ |  | 28,115 |  | 4.83 | %
Noninterest-earning assets | ​ |  | 275,272 | ​ |  | ​ |  | ​ | ​ |  | 255,477 | ​ |  |  |  |  | ​ |  | 216,498 | ​ |  |  |  |  | ​
Total assets | ​ | $ | 3,356,169 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 3,226,377 | ​ |  |  |  |  | ​ | $ | 2,556,535 | ​ |  |  |  |  | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities and Stockholders’ Equity: | ​ |  |  | ​ |  |  | ​ |  | ​ |  |  | ​ |  |  |  |  | ​ |  |  | ​ |  |  |  |  | ​
Interest-bearing demand deposits | ​ | $ | 641,214 | ​ |  | 256 | ​ | 0.16 | % | $ | 570,326 | ​ |  | 230 |  | 0.16 | % | $ | 389,500 | ​ |  | 434 |  | 0.45 | %
Money market and savings deposits | ​ |  | 983,893 | ​ |  | 821 | ​ | 0.34 | % |  | 903,235 | ​ |  | 774 |  | 0.34 | % |  | 664,983 | ​ |  | 1,389 |  | 0.84 | %
Time deposits | ​ |  | 526,062 | ​ |  | 1,254 | ​ | 0.97 | % |  | 565,237 | ​ |  | 1,576 |  | 1.11 | % |  | 680,830 | ​ |  | 2,931 |  | 1.73 | %
Total interest-bearing deposits | ​ |  | 2,151,169 | ​ |  | 2,331 | ​ | 0.44 | % |  | 2,038,798 | ​ |  | 2,580 |  | 0.50 | % |  | 1,735,313 | ​ |  | 4,754 |  | 1.10 | %
Borrowings3 | ​ |  | 81,837 | ​ |  | 117 | ​ | 0.58 | % |  | 99,777 | ​ |  | 142 |  | 0.57 | % |  | 51,921 | ​ |  | 89 |  | 0.69 | %
Subordinated debt | ​ |  | 39,354 | ​ |  | 584 | ​ | 6.01 | % |  | 39,332 | ​ |  | 584 |  | 5.90 | % |  | 39,269 | ​ |  | 584 |  | 5.98 | %
Total interest-bearing liabilities | ​ |  | 2,272,360 | ​ |  | 3,032 | ​ | 0.54 | % |  | 2,177,907 | ​ |  | 3,306 |  | 0.60 | % |  | 1,826,503 | ​ |  | 5,426 |  | 1.19 | %
Noninterest-bearing deposits | ​ |  | 700,962 | ​ |  | ​ | ​ | ​ | ​ |  | 670,820 | ​ |  |  |  |  | ​ |  | 373,125 | ​ |  |  |  |  | ​
Other liabilities | ​ |  | 21,928 | ​ |  | ​ | ​ | ​ | ​ |  | 23,624 | ​ |  |  |  |  | ​ |  | 27,215 | ​ |  |  |  |  | ​
Total liabilities | ​ |  | 2,995,250 | ​ |  | ​ | ​ | ​ | ​ |  | 2,872,351 | ​ |  |  |  |  | ​ |  | 2,226,843 | ​ |  |  |  |  | ​
Shareholders' equity | ​ |  | 360,919 | ​ |  | ​ | ​ | ​ | ​ |  | 354,026 | ​ |  |  |  |  | ​ |  | 329,692 | ​ |  |  |  |  | ​
Total liabilities and shareholders' equity | ​ | $ | 3,356,169 | ​ | ​ | ​ | ​ | ​ | ​ | $ | 3,226,377 | ​ |  |  |  |  | ​ | $ | 2,556,535 | ​ |  |  |  |  | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net interest income, taxable equivalent | ​ | ​ | ​ | ​ | $ | 26,410 | ​ | ​ | ​ |  |  | ​ | $ | 26,656 |  |  | ​ |  |  | ​ | $ | 22,689 |  |  | ​
Interest rate spread | ​ |  | ​ | ​ |  | ​ | ​ | 3.33 | % |  |  | ​ |  |  |  | 3.41 | % |  |  | ​ |  |  |  | 3.63 | %
Tax equivalent net interest margin | ​ |  | ​ | ​ |  | ​ | ​ | 3.48 | % |  |  | ​ |  |  |  | 3.57 | % |  |  | ​ |  |  |  | 3.90 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Percentage of average interest-earning assets to average interest-bearing liabilities | ​ |  | ​ | ​ |  | ​ | ​ | 135.58 | % |  |  | ​ |  |  |  | 136.41 | % |  |  | ​ |  |  |  | 128.12 | %
Percentage of average equity to average assets | ​ |  | ​ | ​ |  | ​ | ​ | 10.75 | % |  |  | ​ |  |  |  | 10.97 | % |  |  | ​ |  |  |  | 12.90 | %

​

1 Taxable equivalent

2 Includes average balance of $312,582 and $296,337 in PPP loans for the quarters ended March 31, 2021 and December 31, 2020, respectively. No PPP loans are included in the average balance for the quarter end March 31, 2020.

3 Includes average balance of $18,092 in Paycheck Protection Program Liquidity Facility (“PPPLF”) funding for the quarter ended December 31, 2020. No PPPLF funding was used for the quarters ended March 31, 2021 and 2020.

​

​

​

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 |
​ | ​ | 2021 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​ | 2020 |
Composition of Loans: |  | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ |  |  | ​ |  | ​
Commercial real estate |  | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ |  |  | ​ |  | ​
owner occupied | ​ | $ | 477,293 | ​ | $ | 463,771 | ​ | $ | 467,569 | ​ | $ | 464,073 | ​ | $ | 473,398 | ​
non-owner occupied | ​ |  | 593,348 | ​ |  | 549,205 | ​ |  | 563,082 | ​ |  | 552,958 | ​ |  | 535,637 | ​
Commercial real estate, total | ​ |  | 1,070,641 | ​ |  | 1,012,976 | ​ |  | 1,030,651 | ​ |  | 1,017,031 | ​ |  | 1,009,035 | ​
Commercial & industrial | ​ |  | 686,010 | ​ |  | 634,446 | ​ |  | 644,498 | ​ |  | 637,450 | ​ |  | 377,173 | ​
Construction & land development | ​ |  | 285,973 | ​ |  | 278,075 | ​ |  | 275,172 | ​ |  | 279,216 | ​ |  | 253,445 | ​
Consumer real estate | ​ |  | 432,486 | ​ |  | 443,930 | ​ |  | 440,310 | ​ |  | 459,861 | ​ |  | 482,728 | ​
Consumer and other | ​ |  | 12,019 | ​ |  | 12,816 | ​ |  | 13,426 | ​ |  | 14,726 | ​ |  | 16,866 | ​
Total loans | ​ | $ | 2,487,129 | ​ | $ | 2,382,243 | ​ | $ | 2,404,057 | ​ | $ | 2,408,284 | ​ | $ | 2,139,247 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Asset Quality and Additional Loan Data: | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |  | ​
Nonperforming loans | ​ | $ | 6,234 | ​ | $ | 5,782 | ​ | $ | 2,248 | ​ | $ | 3,776 | ​ | $ | 3,069 | ​
Other real estate owned | ​ |  | 3,946 | ​ |  | 4,619 | ​ |  | 3,932 | ​ |  | 5,524 | ​ |  | 5,894 | ​
Total nonperforming assets | ​ | $ | 10,180 | ​ | $ | 10,401 | ​ | $ | 6,180 | ​ | $ | 9,300 | ​ | $ | 8,963 | ​
Restructured loans not included in nonperforming loans | ​ | $ | 250 | ​ | $ | 257 | ​ | $ | 8 | ​ | $ | 9 | ​ | $ | 9 | ​
Net charge-offs to average loans (annualized) | ​ |  | 0.01 | % |  | 0.08 | % |  | 0.01 | % |  | — | % |  | — | %
Allowance for loan losses to loans | ​ |  | 0.74 | % |  | 0.77 | % |  | 0.78 | % |  | 0.67 | % |  | 0.63 | %
Nonperforming loans to total loans, gross | ​ |  | 0.25 | % |  | 0.24 | % |  | 0.09 | % |  | 0.16 | % |  | 0.14 | %
Nonperforming assets to total assets | ​ |  | 0.29 | % |  | 0.31 | % |  | 0.18 | % |  | 0.28 | % |  | 0.31 | %
Acquired loan fair value discount balance | ​ | $ | 12,951 | ​ | $ | 14,467 | ​ | $ | 15,141 | ​ | $ | 16,187 | ​ | $ | 17,237 | ​
Accretion income on acquired loans | ​ |  | 1,636 | ​ |  | 768 | ​ |  | 960 | ​ |  | 888 | ​ |  | 1,841 | ​
PPP net fees deferred balance | ​ | ​ | 7,351 | ​ | ​ | 4,190 | ​ | ​ | 6,348 | ​ | ​ | 8,582 | ​ | ​ | — | ​
PPP net fees recognized | ​ | ​ | 2,398 | ​ | ​ | 2,157 | ​ | ​ | 1,812 | ​ | ​ | 1,909 | ​ | ​ | — | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Capital Ratios: | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |  | ​
Equity to Assets | ​ |  | 10.23 | % |  | 10.81 | % |  | 10.33 | % |  | 10.52 | % |  | 11.70 | %
Tangible common equity to tangible assets (Non-GAAP)1 | ​ |  | 8.00 | % |  | 8.41 | % |  | 7.97 | % |  | 8.09 | % |  | 8.96 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
SmartFinancial, Inc.2 | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |  | ​
Tier 1 leverage | ​ |  | 8.55 | % |  | 8.69 | % |  | 8.78 | % |  | 8.83 | % |  | 10.28 | %
Common equity Tier 1 | ​ |  | 11.30 | % |  | 11.61 | % |  | 11.33 | % |  | 10.92 | % |  | 10.87 | %
Tier 1 capital | ​ |  | 11.30 | % |  | 11.61 | % |  | 11.33 | % |  | 10.92 | % |  | 10.87 | %
Total capital | ​ |  | 13.63 | % |  | 14.07 | % |  | 13.81 | % |  | 13.25 | % |  | 13.13 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
SmartBank | ​ |  | Estimated3 | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  |  | ​ |  |  | ​
Tier 1 leverage | ​ |  | 9.33 | % |  | 9.58 | % |  | 9.74 | % |  | 9.82 | % |  | 11.42 | %
Common equity Tier 1 | ​ |  | 12.32 | % |  | 12.79 | % |  | 12.57 | % |  | 12.14 | % |  | 12.05 | %
Tier 1 risk-based capital | ​ |  | 12.32 | % |  | 12.79 | % |  | 12.57 | % |  | 12.14 | % |  | 12.05 | %
Total risk-based capital | ​ |  | 13.07 | % |  | 13.57 | % |  | 13.37 | % |  | 12.82 | % |  | 12.62 | %

​

1Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures.

2All 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 |
​ | 2021 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​
Selected Performance Ratios (Annualized): | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  | ​
Return on average assets | ​ | 1.18 | % | ​ | 1.11 | % | ​ | 0.76 | % | ​ | 0.79 | % | ​ | 0.43 | %
Return on average shareholders' equity | ​ | 10.96 | % | ​ | 10.15 | % | ​ | 7.31 | % | ​ | 7.31 | % | ​ | 3.33 | %
Return on average tangible common equity¹ | ​ | 14.41 | % | ​ | 13.43 | % | ​ | 9.72 | % | ​ | 9.80 | % | ​ | 4.41 | %
Noninterest income / average assets | ​ | 0.69 | % | ​ | 0.61 | % | ​ | 0.49 | % | ​ | 0.45 | % | ​ | 0.44 | %
Noninterest expense / average assets | ​ | 2.35 | % | ​ | 2.46 | % | ​ | 2.28 | % | ​ | 2.41 | % | ​ | 2.96 | %
Efficiency ratio | ​ | 60.92 | % | ​ | 63.38 | % | ​ | 63.54 | % | ​ | 64.28 | % | ​ | 74.02 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating Selected Performance Ratios (Annualized): | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Operating return on average assets1 | ​ | 1.19 | % | ​ | 1.14 | % | ​ | 0.79 | % | ​ | 0.93 | % | ​ | 0.67 | %
Operating PTPP return on average assets1 | ​ | 1.52 | % | ​ | 1.45 | % | ​ | 1.35 | % | ​ | 1.53 | % | ​ | 1.37 | %
Operating return on average shareholders' equity1 | ​ | 11.05 | % | ​ | 10.34 | % | ​ | 7.57 | % | ​ | 8.58 | % | ​ | 5.22 | %
Operating return on average tangible common equity1 | ​ | 14.53 | % | ​ | 13.69 | % | ​ | 10.06 | % | ​ | 11.51 | % | ​ | 6.90 | %
Operating efficiency ratio1 | ​ | 60.32 | % | ​ | 60.86 | % | ​ | 62.25 | % | ​ | 58.95 | % | ​ | 65.46 | %
Operating noninterest income / average assets1 | ​ | 0.69 | % | ​ | 0.56 | % | ​ | 0.49 | % | ​ | 0.45 | % | ​ | 0.44 | %
Operating noninterest expense / average assets1 | ​ | 2.34 | % | ​ | 2.37 | % | ​ | 2.25 | % | ​ | 2.23 | % | ​ | 2.63 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Selected Interest Rates and Yields: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Yield on loans | ​ | 4.67 | % | ​ | 4.72 | % | ​ | 4.71 | % | ​ | 4.87 | % | ​ | 5.35 | %
Yield on earning assets, FTE | ​ | 3.88 | % | ​ | 4.01 | % | ​ | 3.88 | % | ​ | 4.22 | % | ​ | 4.83 | %
Cost of interest-bearing deposits | ​ | 0.44 | % | ​ | 0.50 | % | ​ | 0.59 | % | ​ | 0.71 | % | ​ | 1.10 | %
Cost of total deposits | ​ | 0.33 | % | ​ | 0.38 | % | ​ | 0.44 | % | ​ | 0.54 | % | ​ | 0.91 | %
Cost of interest-bearing liabilities | ​ | 0.54 | % | ​ | 0.60 | % | ​ | 0.65 | % | ​ | 0.77 | % | ​ | 1.19 | %
Net interest margin, FTE | ​ | 3.48 | % | ​ | 3.57 | % | ​ | 3.39 | % | ​ | 3.63 | % | ​ | 3.90 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Per Common Share: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  | ​
Net income, basic | $ | 0.65 | ​ | $ | 0.60 | ​ | $ | 0.42 | ​ | $ | 0.41 | ​ | $ | 0.19 | ​
Net income, diluted |  | 0.65 | ​ |  | 0.59 | ​ |  | 0.42 | ​ |  | 0.41 | ​ |  | 0.19 | ​
Operating earnings, basic¹ |  | 0.65 | ​ |  | 0.61 | ​ |  | 0.44 | ​ |  | 0.48 | ​ |  | 0.30 | ​
Operating earnings, diluted¹ |  | 0.65 | ​ |  | 0.61 | ​ |  | 0.44 | ​ |  | 0.48 | ​ |  | 0.30 | ​
Book value |  | 24.10 | ​ |  | 23.64 | ​ |  | 22.96 | ​ |  | 22.57 | ​ |  | 22.09 | ​
Tangible book value¹ |  | 18.39 | ​ |  | 17.92 | ​ |  | 17.27 | ​ |  | 16.90 | ​ |  | 16.40 | ​
Common shares outstanding |  | 15,104,536 | ​ |  | 15,107,214 | ​ |  | 15,233,227 | ​ |  | 15,216,932 | ​ |  | 15,221,990 | ​

​

¹See 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 |
​ | ​ | 2021 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​
Operating Earnings: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  | ​
Net income (GAAP) | ​ | $ | 9,756 | ​ | $ | 9,030 | ​ | $ | 6,395 | ​ | $ | 6,174 | ​ | $ | 2,732 | ​
Noninterest income: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Securities gains (losses), net | ​ |  | — | ​ |  | — | ​ |  | 9 | ​ |  | (16) | ​ |  | — | ​
ADECA termination proceeds | ​ |  | — | ​ |  | (465) | ​ |  | — | ​ |  | — | ​ |  | — | ​
Noninterest expenses: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
Merger related and restructuring expenses | ​ |  | 103 | ​ |  | 702 | ​ |  | 290 | ​ |  | 1,477 | ​ |  | 2,096 | ​
Income taxes: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
Income tax effect of adjustments | ​ |  | (27) | ​ |  | (62) | ​ |  | (77) | ​ |  | (382) | ​ |  | (548) | ​
Operating earnings (Non-GAAP) | ​ | $ | 9,832 | ​ | $ | 9,205 | ​ | $ | 6,617 | ​ | $ | 7,253 | ​ | $ | 4,280 | ​
Operating earnings per common share (Non-GAAP): | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Basic | ​ | $ | 0.65 | ​ | $ | 0.61 | ​ | $ | 0.44 | ​ | $ | 0.48 | ​ | $ | 0.30 | ​
Diluted | ​ |  | 0.65 | ​ |  | 0.61 | ​ |  | 0.44 | ​ |  | 0.48 | ​ |  | 0.30 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating Noninterest Income: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Noninterest income (GAAP) | ​ | $ | 5,691 | ​ | $ | 4,976 | ​ | $ | 4,121 | ​ | $ | 3,511 | ​ | $ | 2,818 | ​
Securities gains (losses), net | ​ |  | — | ​ |  | — | ​ |  | 9 | ​ |  | (16) | ​ |  | — | ​
ADECA termination proceeds | ​ |  | — | ​ |  | (465) | ​ |  | — | ​ |  | — | ​ |  | — | ​
Operating noninterest income (Non-GAAP) | ​ | $ | 5,691 | ​ | $ | 4,511 | ​ | $ | 4,130 | ​ | $ | 3,495 | ​ | $ | 2,818 | ​
Operating noninterest income (Non-GAAP)/average assets1 | ​ |  | 0.69 | % |  | 0.56 | % |  | 0.49 | % |  | 0.45 | % |  | 0.44 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating Noninterest Expense: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Noninterest expense (GAAP) | ​ | $ | 19,464 | ​ | $ | 19,953 | ​ | $ | 19,167 | ​ | $ | 18,806 | ​ | $ | 18,793 | ​
Merger related and restructuring expenses | ​ |  | (103) | ​ |  | (702) | ​ |  | (290) | ​ |  | (1,477) | ​ |  | (2,096) | ​
Operating noninterest expense (Non-GAAP) | ​ | $ | 19,361 | ​ | $ | 19,251 | ​ | $ | 18,877 | ​ | $ | 17,329 | ​ | $ | 16,697 | ​
Operating noninterest expense (Non-GAAP)/average assets2 | ​ |  | 2.34 | % |  | 2.37 | % |  | 2.25 | % |  | 2.23 | % |  | 2.63 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating Pre-tax Pre-provision ("PTPP") Earnings: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net interest income (GAAP) | ​ | $ | 26,260 | ​ | $ | 26,506 | ​ | $ | 26,043 | ​ | $ | 25,746 | ​ | $ | 22,571 | ​
Operating noninterest income | ​ | ​ | 5,691 | ​ | ​ | 4,511 | ​ | ​ | 4,130 | ​ | ​ | 3,495 | ​ | ​ | 2,818 | ​
Operating noninterest expense | ​ | ​ | (19,361) | ​ | ​ | (19,251) | ​ | ​ | (18,877) | ​ | ​ | (17,329) | ​ | ​ | (16,697) | ​
Operating PTPP earnings (Non-GAAP) | ​ | $ | 12,590 | ​ | $ | 11,766 | ​ | $ | 11,296 | ​ | $ | 11,912 | ​ | $ | 8,692 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-GAAP Return Ratios: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Operating return on average assets (Non-GAAP)3 | ​ |  | 1.19 | % |  | 1.14 | % |  | 0.79 | % |  | 0.93 | % |  | 0.67 | %
Operating PTPP return on average assets (Non-GAAP)4 | ​ | ​ | 1.52 | % | ​ | 1.45 | % | ​ | 1.35 | % | ​ | 1.53 | % | ​ | 1.37 | %
Return on average tangible common equity (Non-GAAP)5 | ​ |  | 14.41 | % |  | 13.43 | % |  | 9.72 | % |  | 9.80 | % |  | 4.41 | %
Operating return on average shareholders' equity (Non-GAAP)6 | ​ |  | 11.05 | % |  | 10.34 | % |  | 7.57 | % |  | 8.58 | % |  | 5.22 | %
Operating return on average tangible common equity (Non-GAAP)7 | ​ |  | 14.53 | % |  | 13.69 | % |  | 10.06 | % |  | 11.51 | % |  | 6.90 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating Efficiency Ratio: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Efficiency ratio (GAAP) | ​ |  | 60.92 | % |  | 63.38 | % |  | 63.54 | % |  | 64.28 | % |  | 74.02 | %
Adjustment for taxable equivalent yields | ​ |  | (0.28) | % |  | (0.30) | % |  | (0.32) | % |  | (0.34) | % |  | (0.34) | %
Adjustment for securities gains (losses) | ​ |  | — | % |  | — | % |  | 0.02 | % |  | (0.04) | % |  | — | %
Adjustment for merger related income and costs | ​ |  | (0.32) | % |  | (2.22) | % |  | (0.99) | % |  | (4.95) | % |  | (8.21) | %
Operating efficiency ratio (Non-GAAP) | ​ |  | 60.32 | % |  | 60.86 | % |  | 62.25 | % |  | 58.95 | % |  | 65.46 | %

​

1Operating noninterest income (Non-GAAP) is annualized and divided by average assets.

2Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.

3Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.

4Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets.

5Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).

6Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average equity.

7Operating 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 |
​ | ​ | 2021 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​ | 2020 | ​
Tangible Common Equity: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  | ​
Shareholders' equity (GAAP) | ​ | $ | 364,058 | ​ | $ | 357,168 | ​ | $ | 349,789 | ​ | $ | 343,488 | ​ | $ | 336,200 | ​
Less goodwill and other intangible assets | ​ |  | 86,350 | ​ |  | 86,471 | ​ |  | 86,710 | ​ |  | 86,327 | ​ |  | 86,503 | ​
Tangible common equity (Non-GAAP) | ​ | $ | 277,708 | ​ | $ | 270,697 | ​ | $ | 263,079 | ​ | $ | 257,161 | ​ | $ | 249,697 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Average Tangible Common Equity: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​
Average shareholders' equity (GAAP) | ​ | $ | 360,919 | ​ | $ | 354,026 | ​ | $ | 347,907 | ​ | $ | 339,861 | ​ | $ | 329,692 | ​
Less average goodwill and other intangible assets | ​ |  | 85,486 | ​ |  | 86,561 | ​ |  | 86,206 | ​ |  | 86,484 | ​ |  | 80,370 | ​
Average tangible common equity (Non-GAAP) | ​ | $ | 275,433 | ​ | $ | 267,465 | ​ | $ | 261,701 | ​ | $ | 253,377 | ​ | $ | 249,322 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tangible Book Value per Common Share: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Book value per common share (GAAP) | ​ | $ | 24.10 | ​ | $ | 23.64 | ​ | $ | 22.96 | ​ | $ | 22.57 | ​ | $ | 22.09 | ​
Adjustment due to goodwill and other intangible assets | ​ | ​ | (5.72) | ​ | ​ | (5.72) | ​ | ​ | (5.69) | ​ | ​ | (5.67) | ​ | ​ | (5.69) | ​
Tangible book value per common share (Non-GAAP)1 | ​ | $ | 18.39 | ​ | $ | 17.92 | ​ | $ | 17.27 | ​ | $ | 16.90 | ​ | $ | 16.40 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tangible Common Equity to Tangible Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total Assets | ​ | $ | 3,557,203 | ​ | $ | 3,304,949 | ​ | $ | 3,387,588 | ​ | $ | 3,265,985 | ​ | $ | 2,873,715 | ​
Less goodwill and other intangibles | ​ | ​ | 86,350 | ​ | ​ | 86,471 | ​ | ​ | 86,710 | ​ | ​ | 86,327 | ​ | ​ | 86,503 | ​
Tangible Assets (Non-GAAP): | ​ | $ | 3,470,853 | ​ | $ | 3,218,478 | ​ | $ | 3,300,878 | ​ | $ | 3,179,658 | ​ | $ | 2,787,212 | ​
Tangible common equity to tangible assets (Non-GAAP) | ​ | ​ | 8.00% | ​ | ​ | 8.41% | ​ | ​ | 7.97% | ​ | ​ | 8.09% | ​ | ​ | 8.96% | ​

​

​

​

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

​

​

14