KNOXVILLE, Tenn., April 20, 2021 (GLOBE NEWSWIRE) -- 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. 

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

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.

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

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.

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.

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

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

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.

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS

		Year Ended
		December 31, 2020								December 31, 2019
		Average						Yield/		Average						Yield/
		Balance			Interest1			Cost1		Balance			Interest1			Cost1
Assets:
Loans, including fees2		$	2,289,612		$	111,992		4.89	%	$	1,836,963		$	100,831		5.49	%
Loans held for sale			7,360			320		4.34	%		3,858			171		4.43	%
Taxable securities			122,900			2,423		1.97	%		129,705			3,289		2.54	%
Tax-exempt securities			83,765			1,941		2.32	%		56,458			1,972		3.49	%
Federal funds sold and other earning assets			308,843			1,509		0.49	%		110,380			2,646		2.40	%
Total interest-earning assets			2,812,480			118,185		4.20	%		2,137,364			108,909		5.10	%
Noninterest-earning assets			250,955								201,976
Total assets		$	3,063,435							$	2,339,340
Liabilities and Stockholders’ Equity:
Interest-bearing demand deposits		$	481,050			1,013		0.21	%	$	333,100			1,883		0.57	%
Money market and savings deposits			788,006			3,482		0.44	%		651,855			7,827		1.20	%
Time deposits			641,647			9,102		1.42	%		635,451			12,205		1.92	%
Total interest-bearing deposits			1,910,703			13,597		0.71	%		1,620,406			21,915		1.35	%
Borrowings3			177,204			816		0.46	%		21,526			319		1.48	%
Subordinated debt			39,301			2,334		5.94	%		39,216			2,341		5.97	%
Total interest-bearing liabilities			2,127,208			16,747		0.79	%		1,681,148			24,575		1.46	%
Noninterest-bearing deposits			571,282								343,611
Other liabilities			23,775								15,852
Total liabilities			2,722,265								2,040,611
Shareholders' equity			341,170								298,729
Total liabilities and shareholders' equity		$	3,063,435							$	2,339,340
Net interest income, taxable equivalent					$	101,438							$	84,334
Interest rate spread								3.41	%							3.64	%
Tax equivalent net interest margin								3.61	%							3.95	%
Percentage of average interest-earning assets to average interest-bearing liabilities								132.21	%							127.14	%
Percentage of average equity to average assets								11.14	%							12.77	%

¹ Taxable equivalent
² Includes average balance of $201,470 in PPP loans for the twelve months ended December 31, 2020.
³ Includes average balance of $91,190 in PPPLF funding for the twelve months ended December 31, 2020.



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	%

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
	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

¹ See reconciliation of Non-GAAP measures

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		%

¹ Operating noninterest income (Non-GAAP) is annualized and divided by average assets.
² Operating noninterest expense (Non-GAAP) is annualized and divided by average assets.
³ Operating return on average assets (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average assets.
⁴ Operating PTPP return on average assets (Non-GAAP) is the annualized operating PTPP earnings (Non-GAAP) divided by average assets.
⁵ Return on average tangible common equity (Non-GAAP) is the annualized net income divided by average tangible common equity (Non-GAAP).
⁶ Operating return on average shareholders’ equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average equity.
⁷ Operating return on average tangible common equity (Non-GAAP) is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP).

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	%

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

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