SmartFinancial (SMBK) 8-K SmartFinancial Announces Results for the Second Quarter 2022

Exhibit 99.1

2Q 2022

SmartFinancial Announces Results for the Second Quarter 2022

Highlights for the Second Quarter of 2022

● Operating earnings¹ of $10.3 million, or $0.61 per diluted common share, for the second quarter of 2022

● Net organic loan and lease growth of over $206.8 million - 30% annualized quarter-over-quarter increase

● Non-maturity deposit growth of over $128.1 million – 14% annualized quarter-over-quarter increase

● Net interest income growth of $2.9 million or 39% annualized quarter-over-quarter increase

● Credit quality remains solid with nonperforming assets to total assets of 0.11%

KNOXVILLE, TN – July 25, 2022 - SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NASDAQ: SMBK), today announced net income of $10.2 million, or $0.61 per diluted common share, for the second quarter of 2022, compared to net income of $8.8 million, or $0.58 per diluted common share, for the second quarter of 2021, and compared to prior quarter net income of $8.3 million, or $0.49 per diluted common share.  Operating earnings¹, which excludes securities gains and merger related and restructuring expenses, totaled $10.3 million, or $0.61 per diluted common share, in the second quarter of 2022, compared to $9.1 million, or $0.60 per diluted common share, in the second quarter of 2021, and compared to $8.6 million, or $0.51 per diluted common share, in the first quarter of 2022.

Billy Carroll, President & CEO, stated: "I am extremely pleased with another outstanding quarter as our team executes our strategy.  We continue to grow revenue, from both strong loan growth and enhanced non-interest income lines, while starting to realize operating leverage.  Earnings performance was right in-line with our plan, and as we monitor the economy, we remain bullish on our outlook."

SmartFinancial's Chairman, Miller Welborn, concluded: “Impressive performance by our team. Our southeastern economy continues to be very strong, and all of our markets are executing at a high level.” 

Net Interest Income and Net Interest Margin

Net interest income was $33.1 million for the second quarter of 2022, compared to $30.1 million for the prior quarter.  Average earning assets totaled $4.32 billion, an increase of $98.1 million.  The growth in average earnings assets was primarily driven by an increase in average loans and leases of $145.5 million and securities of $100.6 million, offset by a decrease in average interest-earning cash of $147.2 million as the Bank continues to deploy excess liquidity into loans and leases.  Average interest-bearing liabilities increased $16.1 million as a result of core deposit growth of $54.3 million and a decrease in borrowings of $38.2 million.

The tax equivalent net interest margin was 3.08% for the second quarter of 2022, compared to 2.91% for the prior quarter. The tax equivalent net interest margin was positively impacted by the continued deployment of excess cash and cash equivalents into loans and leases and the increase in rates by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

The yield on interest-bearing liabilities increased to 0.42% for the second quarter of 2022 compared to 0.36% for the prior quarter. The cost of average interest-bearing deposits was 0.33% for the second quarter of 2022 compared to 0.27% for the prior quarter, an increase of 6 basis points, primarily attributable to the increases in rates by the Federal Reserve. The cost of total deposits for the second quarter of 2022 was 0.24% compared to 0.20% in the prior quarter.

¹ Non-GAAP measures. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation

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

	Three Months Ended
	Jun		Mar		Increase
Selected Interest Rates and Yields	2022		2022		(Decrease)
Yield on loans and leases	4.40	%	4.40	%	-	%
Yield on earning assets, FTE	3.39	%	3.18	%	0.21	%
Cost of interest-bearing deposits	0.33	%	0.27	%	0.06	%
Cost of total deposits	0.24	%	0.20	%	0.04	%
Cost of interest-bearing liabilities	0.42	%	0.36	%	0.06	%
Net interest margin, FTE	3.08	%	2.91	%	0.17	%

Provision for Loan and Lease Losses and Credit Quality

At June 30, 2022, the allowance for loan and lease losses was $21.9 million.  The allowance for loan and lease losses to total loans and leases was 0.73% as of June 30, 2022, compared to 0.72% at March 31, 2022.  For the Company’s originated loans and leases, the allowance for loan and lease losses to originated loans and leases, less PPP loans, was 0.74% as of June 30, 2022, and March 31, 2022, respectively.  The remaining discounts on the acquired loan and lease portfolio totaled $14.7 million, or 4.17% of acquired loans and leases as of June 30, 2022.  

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

	Three Months Ended
		Jun			Mar
Provision for Loan and Lease Losses Rollforward		2022			2022			Change
Beginning balance	$	20,078		$	19,352		$	726
Charge-offs		(143)			(488)			345
Recoveries		753			208			545
Net charge-offs		610			(280)			890
Provision		1,250			1,006			244
Ending balance	$	21,938		$	20,078		$	1,860
Allowance for loan losses to total loans and leases, gross		0.73	%		0.72	%		0.01	%

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 and lease losses under the incurred loss model.

Nonperforming loans and leases as a percentage of total loans and leases was 0.11% as of June 30, 2022, a decrease of 1 basis point from the 0.12% reported in the first quarter of 2022.  Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.11% as of June 30, 2022, and March 31, 2022, respectively. 

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

	Three Months Ended
		Jun			Mar			Increase
Credit Quality		2022			2022			(Decrease)
Nonaccrual loans and leases	$	3,413		$	3,342		$	71
Loans and leases past due 90 days or more and still accruing		-			-			-
Total nonperforming loans and leases		3,413			3,342			71
Other real estate owned		1,612			1,612			-
Other repossessed assets		17			27			(10)
Total nonperforming assets	$	5,042		$	4,981		$	61
Nonperforming loans and leases to total loans and leases, gross		0.11	%		0.12	%		(0.01)	%
Nonperforming assets to total assets		0.11	%		0.11	%		-	%

Noninterest Income

Noninterest income increased $118 thousand to $7.2 million for the second quarter of 2022 compared to $7.1 million for the prior quarter.  During the second quarter of 2022, the primary components of the changes in noninterest income were as follows:

● Increase in service charges on deposit accounts, related to deposit growth and transaction volume;

● Decrease in mortgage banking income, related to lower volume of secondary market activity;

● Decrease in insurance commissions, driven by annual contingency payments in the prior quarter;

● Increase in interchange and debit card transaction fees, related to higher volume; and

● Increase in other, primarily related to increased fees from capital markets activity.

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

	Three Months Ended
		Jun		Mar		Increase
Noninterest Income		2022		2022		(Decrease)
Service charges on deposit accounts	$	1,446	$	1,319	$	127
Mortgage banking income		471		834		(363)
Investment services		1,065		1,070		(5)
Insurance commissions		598		901		(303)
Interchange and debit card transaction fees		1,467		1,284		183
Other		2,182		1,703		479
Total noninterest income	$	7,229	$	7,111	$	118

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Noninterest Expense

Noninterest expense increased $208 thousand to $25.9 million for the second quarter of 2022 compared to $25.7 million for the prior quarter. During the second quarter of 2022, the primary components of the changes in noninterest expense were as follows:

● Increase in salaries and employee benefits, primarily attributable to full quarters effect of merit increases and increased employee insurance cost;

● Decrease in occupancy and equipment as a result of prior quarter maintenance expenditures and lower utility expenses in current quarter;

● Increase in data processing and technology as a result of continued infrastructure improvements;

● Decrease in professional services, related to fewer services performed during the quarter; and

● Increase in other expense, related to disposal of fixed assets, training and education initiatives.

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

	Three Months Ended
		Jun		Mar		Increase
Noninterest Expense		2022		2022		(Decrease)
Salaries and employee benefits	$	15,673	$	15,046	$	627
Occupancy and equipment		2,793		3,059		(266)
FDIC insurance		676		641		35
Other real estate and loan related expenses		636		729		(93)
Advertising and marketing		327		369		(42)
Data processing and technology		1,728		1,586		142
Professional services		745		1,242		(497)
Amortization of intangibles		633		637		(4)
Merger related and restructuring expenses		81		439		(358)
Other		2,634		1,970		664
Total noninterest expense	$	25,926	$	25,718	$	208

Income Tax Expense

Income tax expense was $2.9 million for the second quarter of 2022, an increase of $654 thousand, compared to $2.2 million for the prior quarter.

The effective tax rate was 22.11% for the second quarter of 2022 and 21.38% for the prior quarter.

Balance Sheet Trends

Total assets at June 30, 2022 were $4.79 billion compared with $4.61 billion at December 31, 2021.  The increase of $176.5 million is primarily attributable to increases in loans and leases of $300.7 million, securities of $253.8 million, and other assets of $14.6 million, offset by a decrease in cash and cash equivalents of $390.1 million, primarily from the funding of loans and leases and purchase of securities.

Total liabilities increased to $4.37 billion at June 30, 2022 from $4.18 billion at December 31, 2021.  The increase of $185.5 million was primarily from organic deposit growth of $259.7 million, offset by a decrease in borrowings of $75.0 million.

Shareholders' equity at June 30, 2022 totaled $420.4 million, a decrease of $9.0 million, from December 31, 2021.  The decrease in shareholders' equity was primarily from the change in accumulated other comprehensive income (loss) of $26.1 million and dividends paid of $2.4 million, offset by net income of $18.5 million for the six months ended June 30, 2022.  Tangible book value per share¹ was $18.69 at June 30, 2022, compared to $19.26 at December 31, 2021.  Tangible common equity¹ as a percentage of tangible assets¹ was 6.74% at June 30, 2022, compared with 7.18% at December 31, 2021.

¹ Non-GAAP measures. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP reconciliation

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

	Jun		Dec		Increase
Selected Balance Sheet Information	2022		2021		(Decrease)
Total assets	$	4,788,113	$	4,611,579	$	176,534
Total liabilities		4,367,686		4,182,149		185,537
Total equity		420,427		429,430		(9,003)
Securities		813,227		617,452		195,775
Loans and leases		2,994,074		2,693,397		300,677
Deposits		4,281,632		4,021,938		259,694
Borrowings		12,549		87,585		(75,036)

Conference Call Information

SmartFinancial issued this earnings release for the second quarter of 2022 on Monday, July 25, 2022, and will host a conference call on Tuesday, July 26, 2022, at 10:00 a.m. ET.  To access this interactive teleconference, dial (844) 200-6205 or (646) 904-5544 and entering the access code, 357084.  A replay of the conference call will be available through September 26, 2022, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 729133.  Conference call materials will be published on the Company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call.

About SmartFinancial, Inc.

SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and the Florida Panhandle.  Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.

Source

SmartFinancial, Inc.

Investor Contacts

Billy Carroll

President & CEO

(865) 868-0613   billy.carroll@smartbank.com

Ron Gorczynski

Executive Vice President, Chief Financial Officer

(865) 437-5724 ron.gorczynski@smartbank.com

Media Contact

Kelley Fowler

Senior Vice President, Public Relations & Marketing

(865) 868-0611    kelley.fowler@smartbank.com

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Non-GAAP Financial Measures

Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures, including: (i) operating earnings, (ii) operating return on average assets, (iii) operating pre-tax pre-provision return on average assets, (iv) operating return on average shareholders' equity, (v) return on average tangible common equity, (vi) operating return on average tangible common equity, (vii) operating efficiency ratio, (viii) operating noninterest income, (ix) operating pre-tax pre-provision earnings (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value; (xiv) tangible assets; and ratios derived therefrom, in its analysis of the company's performance. Operating earnings excludes the following from net income: securities gains and losses and merger related and restructuring expenses.  Operating return on average assets is the annualized operating earnings (Non-GAAP) divided by average assets.  Operating pre-tax pre-provision return on average assets is the annualized operating pre-tax pre-provision income earnings (Non-GAAP) by average assets. Operating return on average shareholders' equity is the annualized operating earnings (Non-GAAP) divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity (Non-GAAP). Operating return on average tangible common equity is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP). The operating efficiency ratio includes an adjustment for taxable equivalent yields and excludes securities gains and losses and merger related and restructuring expenses from the efficiency ratio. Operating noninterest income excludes the following from noninterest income: securities gains and losses.  Operating pre-tax pre-provision earnings is net interest income plus operating noninterest income (Non-GAAP) less operating noninterest expense (Non-GAAP).  Operating noninterest expense excludes the following from noninterest expense: prior year adjustments to salaries, merger related and restructuring expenses and certain franchise tax true-up expenses. Tangible common equity (Non-GAAP) and average tangible common equity (Non-GAAP) excludes goodwill and other intangible assets from shareholders' equity and average shareholders' equity, respectively.  Tangible book value (Non-GAAP) is tangible common equity (Non-GAAP) divided by common shares outstanding.  Tangible assets (Non-GAAP) excludes goodwill and other intangibles from total assets.  Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers.  Management believes these Non-GAAP financial measures also enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance.  Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.

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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 and related variants 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 acquisition of Sevier County Bancshares, Inc. (“SCB”); (7) the risk that the anticipated benefits from the 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 prices, values and sales volumes of residential and commercial real estate; (13) changes in accounting principles, policies, or guidelines; (14) changes in applicable laws, rules, or regulations; (15) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic and related variants; (16) the impact of the COVID-19 pandemic and related variants on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (17) higher inflation and its impacts; (18) the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; and (19) 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.

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SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

	Ending Balances
	Jun		Mar		Dec		Sep		Jun
	2022		2022		2021		2021		2021
Assets:
Cash and cash equivalents	$	654,945	$	763,968	$	1,045,077	$	1,091,160	$	673,515
Securities available-for-sale, at fair value		524,864		540,483		482,453		339,343		250,817
Securities held-to-maturity, at amortized cost		288,363		289,532		76,969		—		—
Other investments		16,569		16,499		16,494		14,972		14,584
Loans held for sale		1,707		5,894		5,103		3,418		4,334
Loans and leases		2,994,074		2,806,026		2,693,397		2,652,663		2,468,318
Less: Allowance for loan and lease losses		(21,938)		(20,078)		(19,352)		(19,295)		(18,310)
Loans and leases, net		2,972,136		2,785,948		2,674,045		2,633,368		2,450,008
Premises and equipment, net		89,950		84,793		85,958		85,346		72,314
Other real estate owned		1,612		1,612		1,780		2,415		2,499
Goodwill and other intangibles, net		104,582		105,215		105,852		104,930		90,966
Bank owned life insurance		80,537		80,074		79,619		79,145		72,013
Other assets		52,848		44,561		38,229		29,934		23,306
Total assets	$	4,788,113	$	4,718,579	$	4,611,579	$	4,384,031	$	3,654,356
Liabilities:
Deposits:
Noninterest-bearing demand	$	1,162,843	$	1,093,933	$	1,055,125	$	977,180	$	807,560
Interest-bearing demand		999,893		975,272		899,158		847,007		702,470
Money market and savings		1,607,714		1,573,101		1,493,007		1,389,393		1,140,029
Time deposits		511,182		549,047		574,648		585,692		489,413
Total deposits		4,281,632		4,191,353		4,021,938		3,799,272		3,139,472
Borrowings		12,549		36,713		87,585		88,748		78,834
Subordinated debt		41,973		41,952		41,930		41,909		39,388
Other liabilities		31,532		28,519		30,696		29,382		23,269
Total liabilities		4,367,686		4,298,537		4,182,149		3,959,311		3,280,963
Shareholders' Equity:
Common stock		16,898		16,893		16,803		16,801		15,110
Additional paid-in capital		293,815		293,376		292,937		292,760		252,039
Retained earnings		134,362		125,329		118,247		112,600		103,906
Accumulated other comprehensive income (loss)		(24,648)		(15,556)		1,443		2,559		2,338
Total shareholders' equity		420,427		420,042		429,430		424,720		373,393
Total liabilities & shareholders' equity	$	4,788,113	$	4,718,579	$	4,611,579	$	4,384,031	$	3,654,356

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SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)

	Three Months Ended										Six Months Ended
	Jun		Mar		Dec		Sep		Jun		Jun		Jun
	2022		2022		2021		2021		2021		2022		2021
Interest income:
Loans and leases, including fees	$	31,530	$	29,643	$	30,567	$	31,674	$	28,323	$	61,172	$	56,341
Investment securities:
Taxable		2,908		2,418		1,341		832		916		5,327		1,640
Tax-exempt		441		368		322		331		304		809		563
Federal funds sold and other earning assets		1,430		486		547		474		309		1,916		600
Total interest income		36,309		32,915		32,777		33,311		29,852		69,224		59,144
Interest expense:
Deposits		2,504		2,014		2,116		2,153		2,248		4,518		4,579
Borrowings		117		157		180		121		123		274		241
Subordinated debt		626		626		626		655		584		1,252		1,167
Total interest expense		3,247		2,797		2,922		2,929		2,955		6,044		5,987
Net interest income		33,062		30,118		29,855		30,382		26,897		63,180		53,157
Provision for loan and lease losses		1,250		1,006		422		1,149		(5)		2,256		62
Net interest income after provision for loan and lease losses		31,812		29,112		29,433		29,233		26,902		60,924		53,095
Noninterest income:
Service charges on deposit accounts		1,446		1,319		1,372		1,220		1,048		2,765		2,057
Gain (loss) on sale of securities, net		—		—		—		45		—		—		—
Mortgage banking		471		834		803		994		1,105		1,305		2,244
Investment services		1,065		1,070		621		448		567		2,135		1,098
Insurance commissions		598		901		517		745		557		1,499		2,023
Interchange and debit card transaction fees		1,467		1,284		1,445		1,078		922		2,751		1,761
Other		2,182		1,703		2,048		1,779		944		3,885		1,652
Total noninterest income		7,229		7,111		6,806		6,309		5,143		14,340		10,835
Noninterest expense:
Salaries and employee benefits		15,673		15,046		14,990		13,594		12,203		30,719		23,072
Occupancy and equipment		2,793		3,059		3,026		2,536		2,294		5,852		4,635
FDIC insurance		676		641		567		525		371		1,317		741
Other real estate and loan related expense		636		729		583		407		506		1,365		1,108
Advertising and marketing		327		369		176		235		230		697		419
Data processing and technology		1,728		1,586		1,722		1,753		1,509		3,314		2,889
Professional services		745		1,242		847		810		849		1,987		1,490
Amortization of intangibles		633		637		660		711		441		1,270		886
Merger related and restructuring expenses		81		439		2,762		464		372		520		475
Other		2,634		1,970		2,490		2,274		2,022		4,602		4,547
Total noninterest expense		25,926		25,718		27,823		23,309		20,797		51,643		40,262
Income before income taxes		13,115		10,505		8,416		12,233		11,248		23,621		23,668
Income tax expense		2,900		2,246		1,761		2,633		2,470		5,146		5,134
Net income	$	10,215	$	8,259	$	6,655	$	9,600	$	8,778	$	18,475	$	18,534
Earnings per common share:
Basic	$	0.61	$	0.49	$	0.40	$	0.62	$	0.59	$	1.11	$	1.24
Diluted	$	0.61	$	0.49	$	0.40	$	0.61	$	0.58	$	1.10	$	1.23
Weighted average common shares outstanding:
Basic		16,734,930		16,718,371		16,699,010		15,557,528		15,003,657		16,726,696		15,007,593
Diluted		16,867,774		16,858,288		16,846,315		15,691,126		15,126,184		16,863,299		15,118,924

9

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS

	Three Months Ended
	June 30, 2022						March 31, 2022						June 30, 2021
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest1		Cost1		Balance		Interest1		Cost1		Balance		Interest1		Cost1
Assets:
Loans and leases, including fees2	$	2,869,687	$	31,492	4.40	%	$	2,724,206	$	29,570	4.40	%	$	2,508,388	$	28,256	4.52	%
Loans held for sale		3,061		38	4.94	%		3,890		73	7.62	%		5,315		67	5.03	%
Taxable securities		717,507		2,908	1.63	%		612,980		2,418	1.60	%		164,935		916	2.23	%
Tax-exempt securities		101,585		609	2.40	%		105,516		533	2.05	%		89,296		453	2.04	%
Federal funds sold and other earning assets		628,677		1,430	0.91	%		775,834		486	0.25	%		531,125		309	0.23	%
Total interest-earning assets		4,320,517		36,477	3.39	%		4,222,426		33,080	3.18	%		3,299,059		30,001	3.65	%
Noninterest-earning assets		374,776						381,807						286,211
Total assets	$	4,695,293					$	4,604,233					$	3,585,270
Liabilities and Stockholders’ Equity:
Interest-bearing demand deposits	$	968,806		734	0.30	%	$	921,835		446	0.20	%	$	688,756		304	0.18	%
Money market and savings deposits		1,559,963		1,126	0.29	%		1,523,188		859	0.23	%		1,117,290		905	0.32	%
Time deposits		531,783		644	0.49	%		561,207		709	0.51	%		502,755		1,039	0.83	%
Total interest-bearing deposits		3,060,552		2,504	0.33	%		3,006,230		2,014	0.27	%		2,308,801		2,248	0.39	%
Borrowings		31,510		117	1.49	%		69,769		157	0.91	%		81,525		123	0.61	%
Subordinated debt		41,959		626	5.98	%		41,938		626	6.05	%		39,375		584	5.95	%
Total interest-bearing liabilities		3,134,021		3,247	0.42	%		3,117,937		2,797	0.36	%		2,429,701		2,955	0.49	%
Noninterest-bearing deposits		1,112,643						1,028,298						768,399
Other liabilities		28,903						30,053						17,845
Total liabilities		4,275,567						4,176,288						3,215,945
Shareholders' equity		419,726						427,945						369,325
Total liabilities and shareholders' equity	$	4,695,293					$	4,604,233					$	3,585,270
Net interest income, taxable equivalent			$	33,230					$	30,283					$	27,046
Interest rate spread					2.97	%					2.82	%					3.16	%
Tax equivalent net interest margin					3.08	%					2.91	%					3.29	%
Percentage of average interest-earning assets to average interest-bearing liabilities					137.86	%					135.42	%					135.78	%
Percentage of average equity to average assets					8.94	%					9.29	%					10.30	%

¹ Taxable equivalent

² Includes average balance of $34,307, $53,966 and $266,114 in PPP loans for the quarters ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively.

10

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS

	Six Months Ended
	June 30, 2022							June 30, 2021
	Average				Yield/			Average				Yield/
	Balance		Interest1		Cost1			Balance		Interest1		Cost1
Assets:
Loans and leases, including fees2	$	2,797,348	$	61,061		4.40	%	$	2,468,665	$	56,200	4.59	%
Loans held for sale		3,473		111		6.43	%		6,607		141	4.31	%
Taxable securities		665,532		5,327		1.61	%		150,792		1,640	2.19	%
Tax-exempt securities		103,540		1,142		2.22	%		90,068		862	1.93	%
Federal funds sold and other earning assets		701,850		1,916		0.55	%		474,449		600	0.26	%
Total interest-earning assets		4,271,743		69,557		3.28	%		3,190,581		59,443	3.76	%
Noninterest-earning assets		378,271							280,772
Total assets	$	4,650,014						$	3,471,353
Liabilities and Stockholders’ Equity:
Interest-bearing demand deposits	$	945,450		1,181		0.25	%	$	665,116		560	0.17	%
Money market and savings deposits		1,541,678		1,985		0.26	%		1,050,961		1,726	0.33	%
Time deposits		546,413		1,352		0.50	%		514,344		2,293	0.90	%
Total interest-bearing deposits		3,033,541		4,518		0.30	%		2,230,421		4,579	0.41	%
Borrowings		50,533		274		1.09	%		81,680		241	0.59	%
Subordinated debt		41,949		1,252		6.02	%		39,364		1,167	5.98	%
Total interest-bearing liabilities		3,126,023		6,044		0.39	%		2,351,465		5,987	0.51	%
Noninterest-bearing deposits		1,070,703							734,867
Other liabilities		29,475							19,876
Total liabilities		4,226,201							3,106,208
Shareholders' equity		423,813							365,145
Total liabilities and shareholders' equity	$	4,650,014						$	3,471,353
Net interest income, taxable equivalent			$	63,513						$	53,456
Interest rate spread						2.89	%					3.25	%
Tax equivalent net interest margin						3.00	%					3.38	%
Percentage of average interest-earning assets to average interest-bearing liabilities						136.65	%					135.68	%
Percentage of average equity to average assets						9.11	%					10.52	%

¹ Taxable equivalent

² Includes average balance of $44,082 and $289,220 in PPP loans for the six months ended June 30, 2022, and 2021, respectively.

11

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

	As of and for The Three Months Ended
	Jun			Mar			Dec			Sep			Jun
	2022			2022			2021			2021			2021
Composition of Loans and Leases:
Commercial real estate:
owner occupied	$	684,250		$	612,675		$	590,064		$	560,671		$	492,750
non-owner occupied		850,338			863,181			794,092			752,576			669,741
Commercial real estate, total		1,534,588			1,475,856			1,384,156			1,313,247			1,162,491
Commercial & industrial		483,588			461,153			488,024			469,739			496,114
Construction & land development		364,368			314,654			278,386			326,374			300,704
Consumer real estate		533,582			483,229			477,272			478,161			444,640
Leases		63,264			59,892			53,708			53,396			53,038
Consumer and other		14,684			11,242			11,851			11,746			11,331
Total loans and leases	$	2,994,074		$	2,806,026		$	2,693,397		$	2,652,663		$	2,468,318
Asset Quality and Additional Loan Data:
Nonperforming loans and leases	$	3,413		$	3,342		$	3,188		$	3,567		$	3,758
Other real estate owned		1,612			1,612			1,780			2,415			2,499
Other repossessed assets		17			27			90			77			199
Total nonperforming assets	$	5,042		$	4,981		$	5,058		$	6,059		$	6,456
Restructured loans and leases not included in nonperforming loans and leases	$	678		$	625		$	206		$	212		$	219
Net charge-offs to average loans and leases (annualized)		(0.09)	%		0.04	%		0.05	%		0.03	%		0.01	%
Allowance for loan and leases losses to loans and leases		0.73	%		0.72	%		0.72	%		0.73	%		0.74	%
Nonperforming loans and leases to total loans and leases, gross		0.11	%		0.12	%		0.12	%		0.13	%		0.15	%
Nonperforming assets to total assets		0.11	%		0.11	%		0.11	%		0.14	%		0.18	%
Acquired loan and lease fair value discount balance	$	14,737		$	14,913		$	15,483		$	13,001		$	12,982
Accretion income on acquired loans and leases		225			389			457			1,760			761
PPP net fees deferred balance		301			972			2,038			3,783			6,651
PPP net fees recognized		669			1,066			1,725			2,873			2,132
Capital Ratios:
Equity to Assets		8.78	%		8.90	%		9.31	%		9.69	%		10.22	%
Tangible common equity to tangible assets (Non-GAAP)1		6.74	%		6.82	%		7.18	%		7.47	%		7.93	%
SmartFinancial, Inc.2
Tier 1 leverage		7.48	%		7.41	%		7.45	%		8.36	%		8.10	%
Common equity Tier 1		9.95	%		10.30	%		10.56	%		10.85	%		10.63	%
Tier 1 capital		9.95	%		10.30	%		10.56	%		10.85	%		10.63	%
Total capital		11.80	%		12.22	%		12.55	%		12.92	%		12.80	%
SmartBank		Estimated3
Tier 1 leverage		8.33	%		8.24	%		8.23	%		9.20	%		8.75	%
Common equity Tier 1		11.08	%		11.46	%		11.66	%		11.94	%		11.50	%
Tier 1 capital		11.08	%		11.46	%		11.66	%		11.94	%		11.50	%
Total capital		11.72	%		12.08	%		12.29	%		12.59	%		12.19	%

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.

12

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)

	As of and for The															As of and for The
	Three Months Ended															Six Months Ended
	Jun			Mar			Dec			Sep			Jun			Jun			Jun
	2022			2022			2021			2021			2021			2022			2021
Selected Performance Ratios (Annualized):
Return on average assets		0.87	%		0.73	%		0.59	%		0.97	%		0.98	%		0.80	%		1.08	%
Return on average shareholders' equity		9.76	%		7.83	%		6.19	%		9.70	%		9.53	%		8.79	%		10.24	%
Return on average tangible common equity¹		13.02	%		10.39	%		8.18	%		12.84	%		12.54	%		11.70	%		13.46	%
Noninterest income / average assets		0.62	%		0.63	%		0.60	%		0.64	%		0.58	%		0.62	%		0.63	%
Noninterest expense / average assets		2.21	%		2.27	%		2.47	%		2.35	%		2.33	%		2.24	%		2.34	%
Efficiency ratio		64.35	%		69.08	%		75.89	%		63.53	%		64.91	%		66.62	%		62.92	%
Operating Selected Performance Ratios (Annualized):
Operating return on average assets1		0.88	%		0.76	%		0.77	%		1.00	%		1.01	%		0.82	%		1.10	%
Operating PTPP return on average assets1		1.23	%		1.05	%		1.03	%		1.39	%		1.30	%		1.14	%		1.41	%
Operating return on average shareholders' equity1		9.82	%		8.14	%		8.09	%		10.01	%		9.83	%		8.97	%		10.43	%
Operating return on average tangible common equity1		13.09	%		10.80	%		10.70	%		13.26	%		12.93	%		11.94	%		13.72	%
Operating efficiency ratio1		63.88	%		67.60	%		68.07	%		62.10	%		63.46	%		65.67	%		61.89	%
Operating noninterest income / average assets1		0.62	%		0.63	%		0.60	%		0.63	%		0.58	%		0.62	%		0.63	%
Operating noninterest expense / average assets1		2.21	%		2.23	%		2.23	%		2.30	%		2.29	%		2.22	%		2.31	%
Selected Interest Rates and Yields:
Yield on loans and leases		4.40	%		4.40	%		4.53	%		4.95	%		4.52	%		4.40	%		4.59	%
Yield on earning assets, FTE		3.39	%		3.18	%		3.20	%		3.67	%		3.65	%		3.28	%		3.76	%
Cost of interest-bearing deposits		0.33	%		0.27	%		0.29	%		0.34	%		0.39	%		0.30	%		0.41	%
Cost of total deposits		0.24	%		0.20	%		0.22	%		0.25	%		0.29	%		0.22	%		0.31	%
Cost of interest-bearing liabilities		0.42	%		0.36	%		0.39	%		0.44	%		0.49	%		0.39	%		0.51	%
Net interest margin, FTE		3.08	%		2.91	%		2.92	%		3.35	%		3.29	%		3.00	%		3.38	%
Per Common Share:
Net income, basic	$	0.61		$	0.49		$	0.40		$	0.62		$	0.59		$	1.11		$	1.24
Net income, diluted		0.61			0.49			0.40			0.61			0.58			1.10			1.23
Operating earnings, basic¹		0.61			0.51			0.52			0.64			0.60			1.13			1.25
Operating earnings, diluted¹		0.61			0.51			0.52			0.63			0.60			1.12			1.25
Book value		24.88			24.86			25.56			25.28			24.71			24.88			24.71
Tangible book value¹		18.69			18.64			19.26			19.03			18.69			18.69			18.69
Common shares outstanding		16,898,405			16,893,282			16,802,990			16,801,447			15,109,736			16,898,405			15,109,736

¹Non-GAAP measure. See reconciliation of Non-GAAP measures.

13

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS

	Three Months Ended															Six Months Ended
	Jun			Mar			Dec			Sep			Jun			Jun			Jun
	2022			2022			2021			2021			2021			2022			2021
Operating Earnings:
Net income (GAAP)	$	10,215		$	8,259		$	6,655		$	9,600		$	8,778		$	18,475		$	18,534
Noninterest income:
Securities gains (losses), net		—			—			—			(45)			—			—			—
Noninterest expenses:
Merger related and restructuring expenses		81			439			2,762			464			372			520			475
Income taxes:
Income tax effect of adjustments		(21)			(113)			(713)			(108)			(96)			(134)			(123)
Operating earnings (Non-GAAP)	$	10,275		$	8,585		$	8,704		$	9,911		$	9,054		$	18,861		$	18,886
Operating earnings per common share (Non-GAAP):
Basic	$	0.61		$	0.51		$	0.52		$	0.64		$	0.60		$	1.13		$	1.25
Diluted		0.61			0.51			0.52			0.63			0.60			1.12			1.25
Operating Noninterest Income:
Noninterest income (GAAP)	$	7,229		$	7,111		$	6,806		$	6,309		$	5,143		$	14,340		$	10,835
Securities gains (losses), net		—			—			—			(45)			—			—			—
Operating noninterest income (Non-GAAP)	$	7,229		$	7,111		$	6,806		$	6,264		$	5,143		$	14,340		$	10,835
Operating noninterest income (Non-GAAP)/average assets1		0.62	%		0.63	%		0.60	%		0.63	%		0.58	%		0.62	%		0.63	%
Operating Noninterest Expense:
Noninterest expense (GAAP)	$	25,926		$	25,718		$	27,823		$	23,309		$	20,797		$	51,643		$	40,262
Merger related and restructuring expenses		(81)			(439)			(2,762)			(464)			(372)			(520)			(475)
Operating noninterest expense (Non-GAAP)	$	25,845		$	25,279		$	25,061		$	22,845		$	20,425		$	51,123		$	39,787
Operating noninterest expense (Non-GAAP)/average assets2		2.21	%		2.23	%		2.23	%		2.30	%		2.29	%		2.22	%		2.31	%
												���
Operating Pre-tax Pre-provision ("PTPP") Earnings:
Net interest income (GAAP)	$	33,062		$	30,118		$	29,855		$	30,382		$	26,897		$	63,180		$	53,157
Operating noninterest income (Non-GAAP)		7,229			7,111			6,806			6,264			5,143			14,340			10,835
Operating noninterest expense (Non-GAAP)		(25,845)			(25,279)			(25,061)			(22,845)			(20,425)			(51,123)			(39,787)
Operating PTPP earnings (Non-GAAP)	$	14,446		$	11,950		$	11,600		$	13,801		$	11,615		$	26,397		$	24,205
Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)3		0.88	%		0.76	%		0.77	%		1.00	%		1.01	%		0.82	%		1.10	%
Operating PTPP return on average assets (Non-GAAP)4		1.23	%		1.05	%		1.03	%		1.39	%		1.30	%		1.14	%		1.41	%
Return on average tangible common equity (Non-GAAP)5		13.02	%		10.39	%		8.18	%		12.84	%		12.54	%		11.70	%		13.46	%
Operating return on average shareholders' equity (Non-GAAP)6		9.82	%		8.14	%		8.09	%		10.01	%		9.83	%		8.97	%		10.43	%
Operating return on average tangible common equity (Non-GAAP)7		13.09	%		10.80	%		10.70	%		13.26	%		12.93	%		11.94	%		13.72	%
Operating Efficiency Ratio:
Efficiency ratio (GAAP)		64.35	%		69.08	%		75.89	%		63.53	%		64.91	%		66.62	%		62.92	%
Adjustment for taxable equivalent yields		(0.27)	%		(0.31)	%		(0.32)	%		(0.25)	%		(0.30)	%		(0.29)	%		(0.31)	%
Adjustment for securities gains (losses)		—	%		—	%		—	%		(0.08)	%		—	%		—	%		—	%
Adjustment for merger related income and costs		(0.20)	%		(1.17)	%		(7.50)	%		(1.10)	%		(1.15)	%		(0.66)	%		(0.72)	%
Operating efficiency ratio (Non-GAAP)		63.88	%		67.60	%		68.07	%		62.10	%		63.46	%		65.67	%		61.89	%

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).

14

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS

	Three Months Ended										Six Months Ended
	Jun		Mar		Dec		Sep		Jun		Jun		Jun
	2022		2022		2021		2021		2021		2022		2021
Tangible Common Equity:
Shareholders' equity (GAAP)	$	420,427	$	420,042	$	429,430	$	424,720	$	373,393	$	420,427	$	373,393
Less goodwill and other intangible assets		104,582		105,215		105,852		104,930		90,966		104,582		90,966
Tangible common equity (Non-GAAP)	$	315,845	$	314,827	$	323,578	$	319,790	$	282,427	$	315,845	$	282,427
Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	419,726	$	427,945	$	426,808	$	392,798	$	369,325	$	423,813	$	365,145
Less average goodwill and other intangible assets		104,986		105,617		104,193		96,250		88,551		105,300		87,494
Average tangible common equity (Non-GAAP)	$	314,740	$	322,328	$	322,615	$	296,548	$	280,774	$	318,513	$	277,651
Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	24.88	$	24.86	$	25.56	$	25.28	$	24.71	$	24.88	$	24.71
Adjustment due to goodwill and other intangible assets		(6.19)		(6.23)		(6.30)		(6.25)		(6.02)		(6.19)		(6.02)
Tangible book value per common share (Non-GAAP)1	$	18.69	$	18.64	$	19.26	$	19.03	$	18.69	$	18.69	$	18.69
Tangible Common Equity to Tangible Assets:
Total Assets	$	4,788,113	$	4,718,579	$	4,611,579	$	4,384,031	$	3,654,356	$	4,788,113	$	3,654,356
Less goodwill and other intangibles		104,582		105,215		105,852		104,930		90,966		104,582		90,966
Tangible Assets (Non-GAAP):	$	4,683,531	$	4,613,364	$	4,505,727	$	4,279,101	$	3,563,390	$	4,683,531	$	3,563,390
Tangible common equity to tangible assets (Non-GAAP)		6.74%		6.82%		7.18%		7.47%		7.93%		6.74%		7.93%

¹Tangible 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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