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SmartFinancial Announces Results for the Second Quarter 2024
Globe Newswire 22-Jul-2024 5:00 PM
KNOXVILLE, Tenn., July 22, 2024 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ((", SmartFinancial", or the ", Company", , NYSE:SMBK), today announced net income of $8.0 million, or $0.48 per diluted common share, for the second quarter of 2024, compared to net income of $8.8 million, or $0.52 per diluted common share, for the second quarter of 2023, and compared to prior quarter net income of $9.4 million, or $0.55 per diluted common share. Operating earnings1, which excludes non-recurring income, net of tax adjustments, totaled $7.8 million, or $0.46 per diluted common share, in the second quarter of 2024, compared to $8.8 million, or $0.52 per diluted common share, in the second quarter of 2023, and compared to $8.4 million, or $0.49 per diluted common share, in the first quarter of 2024.
Highlights for the Second Quarter of 2024
Operating earnings1 of $7.8 million, or $0.46 per diluted common share
Net organic loan and lease growth of $97 million with 11% annualized quarter-over-quarter increase
Quarter-over-quarter net tax equivalent interest margin expansion of 12 basis points to 2.97%
10% annualized quarter-over-quarter increase in tangible book value per common share1
136,195 shares repurchased at a weighted average price of $21.57
Credit quality remains solid with nonperforming assets to total assets of 0.20%
___________________________________ 1 Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliations
Billy Carroll, President & CEO, stated: "Our Company continued to gain momentum with a very nice second quarter highlighted by solid growth in operating revenue and a 10% annualized increase in tangible book value per share quarter over quarter. We also took advantage of our liquidity position, growing loans at an 11% quarterly annualized pace. Margin inflection accelerated during the quarter, and we look forward to seeing that trend continue. The sales energy around our Company is very strong and our outlook for the second half of 2024 remains bullish as we gain further operating leverage."
SmartFinancial's Chairman, Miller Welborn, concluded: "The Board of Directors was pleased to see operating leverage expansion and strong loan growth during the second quarter. The Company's markets continue to provide great organic growth opportunities that we look forward to winning. We continue to strategically progress towards our longer-term financial objectives and this quarter's margin expansion and expense control is a good demonstration of our team's ability to execute our plan. We are confident in our team and look forward to continued improvement as the year progresses."
Net Interest Income and Net Interest Margin
Net interest income was $32.8 million for the second quarter of 2024, compared to $31.7 million for the prior quarter. Average earning assets totaled $4.5 billion for the current and prior quarters. The categories of average earnings assets changed quarter-over-quarter, primarily from an increase in average loans and leases of $46.2 million, offset by a decrease in average securities of $40.8 million and average interest-earning cash of $7.5 million. Average interest-bearing liabilities decreased by $19.8 million from the prior quarter, attributable to a decrease in average deposits of $21.3 million, offset by an increase in average borrowings of $1.4 million.
The tax equivalent net interest margin was 2.97% for the second quarter of 2024, compared to 2.85% for the prior quarter. The tax equivalent net interest margin was positively impacted by the increased yield on interest-earning assets, quarter-over-quarter, coupled with a slower rise on the cost of interest-bearing liabilities, quarter-over-quarter. The yield on loans and leases, excluding loan fees, on a fully tax equivalent basis ("FTE") was 5.80% for the second quarter, compared to 5.71% for the prior quarter.
The cost of total deposits for the second quarter of 2024 was 2.56% compared to 2.52% in the prior quarter. The cost of interest-bearing liabilities increased to 3.29% for the second quarter of 2024, compared to 3.23% for the prior quarter. The cost of average interest-bearing deposits was 3.23% for the second quarter of 2024, compared to 3.16% for the prior quarter, an increase of 7 basis points.
The following table presents selected interest rates and yields for the periods indicated:
Three Months Ended
Jun
Mar
Increase
Selected Interest Rates and Yields
2024
2024
(Decrease)
Yield on loans and leases, excluding loan fees, FTE
5.80
%
5.71
%
0.09
%
Yield on loans and leases, FTE
5.87
%
5.82
%
0.05
%
Yield on earning assets, FTE
5.52
%
5.36
%
0.16
%
Cost of interest-bearing deposits
3.23
%
3.16
%
0.07
%
Cost of total deposits
2.56
%
2.52
%
0.04
%
Cost of interest-bearing liabilities
3.29
%
3.23
%
0.06
%
Net interest margin, FTE
2.97
%
2.85
%
0.12
%
Provision for Credit Losses on Loans and Leases and Credit Quality
At June 30, 2024, the allowance for credit losses was $34.7 million. The allowance for credit losses to total loans and leases was 0.97% as of June 30, 2024, compared to 0.98% as of March 31, 2024.
The following table presents detailed information related to the provision for credit losses for the periods indicated (dollars in thousands):
Three Months Ended
Jun
Mar
Increase
Provision for Credit Losses on Loans and Leases Rollforward
2024
2024
(Decrease)
Beginning balance
$
34,203
$
35,066
$
(863
)
Charge-offs
(457
)
(920
)
463
Recoveries
48
135
(87
)
Net (charge-offs) recoveries
(409
)
(785
)
376
Provision for credit losses (1)
896
(78
)
974
Ending balance
$
34,690
$
34,203
$
487
Allowance for credit losses to total loans and leases, gross
0.97
%
0.98
%
(0.01
)
%
(1)
The current quarter-ended and prior quarter-ended excludes unfunded commitments release of $13 thousand and $362 thousand, respectively. At June 30, 2024, the unfunded commitment liability totaled $2.0 million.
Nonperforming loans and leases as a percentage of total loans and leases was 0.19% as of June 30, 2024, an increase of 1 basis point from the 0.18% reported in the first quarter of 2024. 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 0.20% as of June 30, 2024, and 0.18% on March 31, 2024.
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
2024
2024
(Decrease)
Nonaccrual loans and leases
$
6,432
$
6,171
$
261
Loans and leases past due 90 days or more and still accruing
210
95
115
Total nonperforming loans and leases
6,642
6,266
376
Other real estate owned
688
696
(8
)
Other repossessed assets
2,645
2,033
612
Total nonperforming assets
$
9,975
$
8,995
$
980
Nonperforming loans and leases to total loans and leases, gross
0.19
%
0.18
%
0.01
%
Nonperforming assets to total assets
0.20
%
0.18
%
0.02
%
Noninterest Income
Noninterest income decreased $776 thousand to $7.6 million for the second quarter of 2024 compared to $8.4 million for the prior quarter. The current quarter decrease was primarily associated with the $1.3 million pre-tax gain on the sale of a former branch building in the prior quarter, offset by a $283 thousand pre-tax gain on the sale of a bank property in the current quarter.
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
2024
2024
(Decrease)
Service charges on deposit accounts
$
1,692
$
1,612
$
80
Mortgage banking income
348
280
68
Investment services
1,302
1,380
(78
)
Insurance commissions
1,284
1,103
181
Interchange and debit card transaction fees
1,343
1,253
90
Other
1,635
2,752
(1,117
)
Total noninterest income
$
7,604
$
8,380
$
(776
)
Noninterest Expense
Noninterest expense increased $648 thousand to $29.2 million for the second quarter of 2024 compared to $28.6 million for the prior quarter. The current quarter increase was primarily related to an increase in salaries and employee benefits related to incentive accruals for production performance.
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
2024
2024
(Decrease)
Salaries and employee benefits
$
17,261
$
16,639
$
622
Occupancy and equipment
3,324
3,396
(72
)
FDIC insurance
825
915
(90
)
Other real estate and loan related expenses
538
584
(46
)
Advertising and marketing
295
302
(7
)
Data processing and technology
2,452
2,465
(13
)
Professional services
1,064
924
140
Amortization of intangibles
608
612
(4
)
Other
2,834
2,716
118
Total noninterest expense
$
29,201
$
28,553
$
648
Income Tax Expense
Income tax expense was $2.3 million for the second quarter of 2024, a decrease of $299 thousand, compared to $2.6 million for the prior quarter.
The effective tax rate was 22.56% for the second quarter of 2024 and 21.94% for the prior quarter.
Balance Sheet Trends
Total assets at June 30, 2024 were $4.89 billion compared to $4.83 billion at December 31, 2023. The $61.6 million increase is primarily attributable to increases loans and leases of $129.7 million, offset by a decrease in securities of $59.8 million and cash and cash equivalents of $9.4 million.
Total liabilities increased to $4.42 billion at June 30, 2024 from $4.37 billion at December 31, 2023. The increase of $49.0 million was primarily from organic deposit growth of $48.8 million.
Shareholders' equity at June 30, 2024, totaled $472.5 million, an increase of $12.6 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $17.4 million for the six months ended June 30, 2024, offset by dividends paid of $2.7 million and repurchase of the Company's stock of $3.0 million. Tangible book value per share1 was $21.66 at June 30, 2024, compared to $20.76 at December 31, 2023. Tangible common equity1 as a percentage of tangible assets1 was 7.66% at June 30, 2024, compared with 7.47% at December 31, 2023.
___________________________________ 1 Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliation
The following table presents selected balance sheet information for the periods indicated (dollars in thousands):
Jun
Dec
Increase
Selected Balance Sheet Information
2024
2023
(Decrease)
Total assets
$
4,891,009
$
4,829,387
$
61,622
Total liabilities
4,418,544
4,369,501
49,043
Total equity
472,465
459,886
12,579
Securities
629,817
689,646
(59,829
)
Loans and leases
3,574,158
3,444,462
129,696
Deposits
4,316,656
4,267,854
48,802
Borrowings
12,732
13,078
(346
)
Conference Call Information
SmartFinancial issued this earnings release for the second quarter of 2024 on Monday, July 22, 2024, and will host a conference call on Tuesday, July 23, 2024, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 533803. A replay of the conference call will be available through August 22, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 897395. 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 Florida. 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
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 ("Non-GAAP") 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 and ratios derived therefrom in its analysis of the Company's performance, including:
(i)
Operating earnings
(ii)
Operating noninterest income
(iii)
Operating noninterest expense
(iv)
Operating pre-provision net revenue ("PPNR") earnings
(v)
Tangible common equity
(vi)
Average tangible common equity
(vii)
Tangible book value per common share
(viii)
Tangible assets
Operating earnings, operating noninterest income, operating noninterest expense and operating PPNR exclude non-operating related income and expense items, respectively. 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 per common share is tangible common equity divided by common shares outstanding. Tangible assets excludes goodwill and other intangibles from total assets. A detailed reconciliation of these items and ratios derived therefrom is available in the Non-GAAP reconciliations.
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 also believes these Non-GAAP financial measures 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 are not historical in nature and can generally be identified by such words as "expect," "anticipate," "intend," "plan," "believe," "seek," "may," "estimate," and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others,
(1)
risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively;
(2)
claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters;
(3)
the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize;
(4)
disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships;
(5)
our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank;
(6)
changes in management's plans for the future;
(7)
prevailing, or changes in, economic or political conditions, particularly in our market areas, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing;
(8)
our ability to anticipate interest rate changes and manage interest rate risk (including the impact of higher interest rates on macroeconomic conditions, competition, and the cost of doing business and the impact of prolonged elevated interest rates on our financial projections, models and guidance);
(9)
increased technology and cybersecurity risks, including generative artificial intelligence risks;
(10)
credit risk associated with our lending activities;
(11)
changes in loan demand, real estate values, or competition;
(12)
developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance;
(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;
(16)
potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto;
(17)
significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities;
(18)
the effects of war or other conflicts including the impacts related to or resulting from Russia's military action in Ukraine or the conflict in Israel and surrounding areas; 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.
SmartFinancial, Inc. and Subsidiary Condensed Consolidated Financial Information - (unaudited) (dollars in thousands)
Ending Balances
Jun
Mar
Dec
Sep
Jun
2024
2024
2023
2023
2023
Assets:
Cash and cash equivalents
$
342,835
$
477,941
$
352,271
$
400,258
$
238,898
Securities available-for-sale, at fair value
500,821
474,347
408,410
385,131
540,308
Securities held-to-maturity, at amortized cost
128,996
180,169
281,236
282,313
283,564
Other investments
13,780
13,718
13,662
13,805
14,396
Loans held for sale
3,103
4,861
4,418
2,734
986
Loans and leases
3,574,158
3,477,555
3,444,462
3,378,999
3,337,790
Less: Allowance for credit losses
(34,690
)
(34,203
)
(35,066
)
(33,687
)
(32,747
)
Loans and leases, net
3,539,468
3,443,352
3,409,396
3,345,312
3,305,043
Premises and equipment, net
91,315
92,694
92,963
92,020
92,351
Other real estate owned
688
696
517
1,370
1,708
Goodwill and other intangibles, net
105,929
106,537
107,148
107,792
108,439
Bank owned life insurance
84,483
83,957
83,434
82,914
82,419
Other assets
79,591
76,418
75,932
83,522
77,688
Total assets
$
4,891,009
$
4,954,690
$
4,829,387
$
4,797,171
$
4,745,800
Liabilities:
Deposits:
Noninterest-bearing demand
$
903,300
$
907,254
$
898,044
$
923,763
$
1,003,432
Interest-bearing demand
988,057
996,298
1,006,915
993,717
938,758
Money market and savings
1,901,281
1,952,410
1,812,427
1,766,409
1,720,202
Time deposits
524,018
538,159
550,468
562,620
537,192
Total deposits
4,316,656
4,394,121
4,267,854
4,246,509
4,199,584
Borrowings
12,732
9,849
13,078
14,117
15,496
Subordinated debt
42,142
42,120
42,099
42,078
42,057
Other liabilities
47,014
41,804
46,470
47,815
43,816
Total liabilities
4,418,544
4,487,894
4,369,501
4,350,519
4,300,953
Shareholders' Equity:
Common stock
16,926
17,057
16,989
16,995
17,004
Additional paid-in capital
293,586
296,061
295,699
295,542
295,296
Retained earnings
187,751
181,103
173,105
168,271
167,564
Accumulated other comprehensive loss
(25,798
)
(27,425
)
(25,907
)
(34,156
)
(35,017
)
Total shareholders' equity
472,465
466,796
459,886
446,652
444,847
Total liabilities & shareholders' equity
$
4,891,009
$
4,954,690
$
4,829,387
$
4,797,171
$
4,745,800
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
2024
2024
2023
2023
2023
2024
2023
Interest income:
Loans and leases, including fees
$
50,853
$
50,020
$
48,767
$
47,539
$
45,446
$
100,873
$
90,173
Investment securities:
Taxable
5,320
4,548
4,344
4,335
4,335
9,869
7,986
Tax-exempt
353
352
352
356
357
705
709
Federal funds sold and other earning assets
4,759
4,863
4,032
3,045
1,956
9,620
6,405
Total interest income
61,285
59,783
57,495
55,275
52,094
121,067
105,273
Interest expense:
Deposits
27,439
27,035
24,926
23,433
19,554
54,474
35,900
Borrowings
148
128
162
210
339
276
564
Subordinated debt
884
899
890
626
626
1,782
1,252
Total interest expense
28,471
28,062
25,978
24,269
20,519
56,532
37,716
Net interest income
32,814
31,721
31,517
31,006
31,575
64,535
67,557
Provision for credit losses
883
(440
)
1,571
795
113
443
663
Net interest income after provision for credit losses
31,931
32,161
29,946
30,211
31,462
64,092
66,894
Noninterest income:
Service charges on deposit accounts
1,692
1,612
1,673
1,736
1,657
3,304
3,102
Loss on sale of securities, net
—
—
—
(6,801
)
—
—
—
Mortgage banking
348
280
227
309
332
628
504
Investment services
1,302
1,380
1,339
1,461
1,300
2,682
2,305
Insurance commissions
1,284
1,103
1,133
1,153
1,139
2,387
2,398
Interchange and debit card transaction fees
1,343
1,253
1,370
1,357
1,347
2,596
2,730
Other
1,635
2,752
1,837
1,476
1,355
4,387
3,016
Total noninterest income
7,604
8,380
7,579
691
7,130
15,984
14,055
Noninterest expense:
Salaries and employee benefits
17,261
16,639
16,275
16,785
15,947
33,900
32,689
Occupancy and equipment
3,324
3,396
3,378
3,547
3,318
6,720
6,526
FDIC insurance
825
915
915
825
875
1,740
1,416
Other real estate and loan related expense
538
584
781
603
441
1,123
1,013
Advertising and marketing
295
302
336
346
305
597
660
Data processing and technology
2,452
2,465
2,458
2,378
2,235
4,916
4,398
Professional services
1,064
924
1,136
735
764
1,989
1,572
Amortization of intangibles
608
612
643
647
675
1,220
1,334
Merger related and restructuring expenses
—
—
—
110
—
—
—
Other
2,834
2,716
3,773
2,540
2,850
5,549
5,331
Total noninterest expense
29,201
28,553
29,695
28,516
27,410
57,754
54,939
Income before income taxes
10,334
11,988
7,830
2,386
11,182
22,322
26,010
Income tax expense
2,331
2,630
1,640
319
2,346
4,962
5,674
Net income
$
8,003
$
9,358
$
6,190
$
2,067
$
8,836
$
17,360
$
20,336
Earnings per common share:
Basic
$
0.48
$
0.56
$
0.37
$
0.12
$
0.53
$
1.03
$
1.21
Diluted
$
0.48
$
0.55
$
0.37
$
0.12
$
0.52
$
1.03
$
1.20
Weighted average common shares outstanding:
Basic
16,770,819
16,849,735
16,814,647
16,807,548
16,806,389
16,810,277
16,798,939
Diluted
16,850,250
16,925,408
16,918,234
16,918,635
16,898,091
16,887,374
16,897,444
SmartFinancial, Inc. and Subsidiary Condensed Consolidated Financial Information - (unaudited) (dollars in thousands) YIELD ANALYSIS
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Average
Yield/
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Balance
Interest
Cost
Assets:
Loans and leases, including fees1
$
3,504,265
$
51,110
5.87
%
$
3,458,109
$
50,020
5.82
%
$
3,308,595
$
45,446
5.51
%
Taxable securities
580,517
5,320
3.69
%
620,805
4,548
2.95
%
770,275
4,335
2.26
%
Tax-exempt securities2
63,690
447
2.82
%
64,161
445
2.79
%
65,265
452
2.78
%
Federal funds sold and other earning assets
346,459
4,759
5.52
%
353,913
4,863
5.53
%
195,266
1,956
4.02
%
Total interest-earning assets
4,494,931
61,636
5.52
%
4,496,988
59,876
5.36
%
4,339,401
52,189
4.82
%
Noninterest-earning assets
383,697
380,231
355,701
Total assets
$
4,878,628
$
4,877,219
$
4,695,102
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits
$
983,433
5,950
2.43
%
$
996,147
6,060
2.45
%
$
950,227
4,892
2.06
%
Money market and savings deposits
1,909,125
16,529
3.48
%
1,904,855
16,149
3.41
%
1,737,303
11,785
2.72
%
Time deposits
528,985
4,960
3.77
%
541,792
4,826
3.58
%
504,350
2,877
2.29
%
Total interest-bearing deposits
3,421,543
27,439
3.23
%
3,442,794
27,035
3.16
%
3,191,880
19,554
2.46
%
Borrowings
12,684
148
4.69
%
11,245
128
4.58
%
24,845
339
5.47
%
Subordinated debt
42,129
884
8.44
%
42,107
899
8.59
%
42,044
626
5.97
%
Total interest-bearing liabilities
3,476,356
28,471
3.29
%
3,496,146
28,062
3.23
%
3,258,769
20,519
2.53
%
Noninterest-bearing deposits
888,693
872,840
951,381
Other liabilities
47,208
47,085
40,669
Total liabilities
4,412,257
4,416,071
4,250,819
Shareholders' equity
466,371
461,148
444,283
Total liabilities and shareholders' equity
$
4,878,628
$
4,877,219
$
4,695,102
Net interest income, taxable equivalent
$
33,165
$
31,814
$
31,670
Interest rate spread
2.22
%
2.13
%
2.30
%
Tax equivalent net interest margin
2.97
%
2.85
%
2.93
%
Percentage of average interest-earning assets to average interest-bearing liabilities
129.30
%
128.63
%
133.16
%
Percentage of average equity to average assets
9.56
%
9.46
%
9.46
%
1 Yields computed on tax-exempt loans on a tax equivalent basis include $257 thousand, $0 thousand, and $0 thousand of taxable equivalent income for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.
2 Yields computed on tax-exempt instruments on a tax equivalent basis include $94 thousand, $93 thousand, and $95 thousand of taxable equivalent income for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.
SmartFinancial, Inc. and Subsidiary Condensed Consolidated Financial Information - (unaudited) (dollars in thousands) YIELD ANALYSIS
Six Months Ended
June 30, 2024
June 30, 2023
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Assets:
Loans and leases, including fees1
$
3,481,187
$
101,130
5.84
%
$
3,283,662
$
90,173
5.54
%
Taxable securities
600,661
9,869
3.30
%
747,037
7,986
2.16
%
Tax-exempt securities2
63,925
892
2.81
%
65,405
897
2.77
%
Federal funds sold and other earning assets
350,186
9,620
5.52
%
286,254
6,405
4.51
%
Total interest-earning assets
4,495,959
121,511
5.44
%
4,382,358
105,461
4.85
%
Noninterest-earning assets
381,964
357,837
Total assets
$
4,877,923
$
4,740,195
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits
$
989,790
12,010
2.44
%
$
947,196
9,119
1.94
%
Money market and savings deposits
1,906,990
32,677
3.45
%
1,778,650
22,168
2.51
%
Time deposits
535,389
9,787
3.68
%
486,952
4,613
1.91
%
Total interest-bearing deposits
3,432,169
54,474
3.19
%
3,212,798
35,900
2.25
%
Borrowings
11,964
276
4.64
%
20,874
564
5.45
%
Subordinated debt
42,118
1,782
8.51
%
42,033
1,252
6.01
%
Total interest-bearing liabilities
3,486,251
56,532
3.26
%
3,275,705
37,716
2.32
%
Noninterest-bearing deposits
880,767
983,348
Other liabilities
47,146
42,777
Total liabilities
4,414,164
4,301,830
Shareholders' equity
463,759
438,365
Total liabilities and shareholders' equity
$
4,877,923
$
4,740,195
Net interest income, taxable equivalent
$
64,979
$
67,745
Interest rate spread
2.17
%
2.53
%
Tax equivalent net interest margin
2.91
%
3.12
%
Percentage of average interest-earning assets to average interest-bearing liabilities
128.96
%
133.78
%
Percentage of average equity to average assets
9.51
%
9.25
%
1Yields computed on tax-exempt loans on a tax equivalent basis included $257 thousand and $0 thousand of taxable equivalent income for the six months ended June 30, 2024, and 2023, respectively.
2Yields computed on tax-exempt instruments on a tax equivalent basis included $187 thousand and $188 thousand of taxable equivalent income for the six months ended June 30, 2024, and 2023, respectively.
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
2024
2024
2023
2023
2023
Composition of Loans and Leases:
Commercial real estate:
Owner occupied
$
829,085
$
804,557
$
798,416
$
776,402
$
769,978
Non-owner occupied
986,278
938,648
940,789
890,774
871,779
Commercial real estate, total
1,815,363
1,743,205
1,739,205
1,667,176
1,641,757
Commercial & industrial
701,460
667,903
645,918
617,115
594,427
Construction & land development
294,575
321,860
327,185
373,068
394,742
Consumer real estate
678,331
659,209
649,867
638,518
624,828
Leases
70,299
71,909
68,752
68,538
66,401
Consumer and other
14,130
13,469
13,535
14,584
15,635
Total loans and leases
$
3,574,158
$
3,477,555
$
3,444,462
$
3,378,999
$
3,337,790
Asset Quality and Additional Loan Data:
Nonperforming loans and leases
$
6,642
$
6,266
$
8,101
$
4,163
$
3,722
Other real estate owned
688
696
517
1,370
1,708
Other repossessed assets
2,645
2,033
1,117
348
282
Total nonperforming assets
$
9,975
$
8,995
$
9,735
$
5,881
$
5,712
Modified loans and leases1 not included in nonperforming loans and leases
$
4,241
$
4,413
$
4,245
$
2,376
$
657
Net charge-offs to average loans and leases (annualized)
0.05
%
0.09
%
0.04
%
0.04
%
(0.01
)
%
Allowance for credit losses to loans and leases
0.97
%
0.98
%
1.02
%
1.00
%
0.98
%
Nonperforming loans and leases to total loans and leases, gross
0.19
%
0.18
%
0.24
%
0.12
%
0.11
%
Nonperforming assets to total assets
0.20
%
0.18
%
0.20
%
0.12
%
0.12
%
Capital Ratios:
Equity to Assets
9.66
%
9.42
%
9.52
%
9.31
%
9.37
%
Tangible common equity to tangible assets (Non-GAAP)2
7.66
%
7.43
%
7.47
%
7.23
%
7.25
%
SmartFinancial, Inc.3
Tier 1 leverage
8.32
%
8.23
%
8.27
%
8.13
%
8.24
%
Common equity Tier 1
10.06
%
10.20
%
10.14
%
10.07
%
10.12
%
Tier 1 capital
10.06
%
10.20
%
10.14
%
10.07
%
10.12
%
Total capital
11.68
%
11.85
%
11.78
%
11.90
%
11.94
%
SmartBank
Estimated4
Tier 1 leverage
9.11
%
9.07
%
9.18
%
9.00
%
9.18
%
Common equity Tier 1
11.02
%
11.23
%
11.26
%
11.15
%
11.27
%
Tier 1 capital
11.02
%
11.23
%
11.26
%
11.15
%
11.27
%
Total capital
11.79
%
12.00
%
12.02
%
11.87
%
11.97
%
1Borrowers that have experienced financial difficulty. 2Total common equity less intangibles divided by total assets less intangibles. See reconciliation of Non-GAAP measures. 3All periods presented are estimated. 4Current 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)
Operating Pre-provision Net revenue ("PPNR") Earnings:
Net interest income (GAAP)
$
32,814
$
31,721
$
31,517
$
31,006
$
31,575
$
64,535
$
67,557
Operating noninterest income (Non-GAAP)
7,321
7,034
7,579
7,492
7,130
14,355
14,055
Operating noninterest expense (Non-GAAP)
(29,201
)
(28,553
)
(28,770
)
(28,406
)
(27,410
)
(57,754
)
(54,939
)
Operating PPNR earnings (Non-GAAP)
$
10,934
$
10,202
$
10,326
$
10,092
$
11,295
$
21,136
$
26,673
Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)3
0.64
%
0.69
%
0.57
%
0.60
%
0.75
%
0.67
%
0.87
%
Operating PPNR return on average assets (Non-GAAP)4
0.90
%
0.84
%
0.86
%
0.84
%
0.96
%
0.87
%
1.13
%
Return on average tangible common equity (Non-GAAP)5
8.94
%
10.62
%
7.18
%
2.43
%
10.57
%
9.77
%
12.46
%
Operating return on average shareholders' equity (Non-GAAP)6
6.72
%
7.29
%
6.07
%
6.41
%
7.98
%
7.00
%
9.36
%
Operating return on average tangible common equity (Non-GAAP)7
8.70
%
9.49
%
7.98
%
8.46
%
10.57
%
9.09
%
12.46
%
Operating Efficiency Ratio:
Efficiency ratio (GAAP)
72.25
%
71.20
%
75.95
%
89.96
%
70.82
%
71.73
%
67.32
%
Adjustment for taxable equivalent yields
(0.63
)
%
(0.17
)
%
(0.18
)
%
(0.27
)
%
(0.18
)
%
(0.40
)
%
(0.16
)
%
Adjustment for securities gains (losses)
—
%
—
%
—
%
(15.89
)
%
—
%
—
%
—
%
Adjustment for sale of branch location
0.51
%
2.46
%
—
%
—
%
—
%
1.48
%
—
%
Adjustment for donation of a former branch location
—
%
—
%
(0.64
)
%
—
%
—
%
—
%
—
%
Adjustment for accruals for pending litigation
—
%
—
%
(1.72
)
%
—
%
—
%
—
%
—
%
Adjustment for merger related income and costs
—
%
—
%
—
%
(0.20
)
%
—
%
—
%
—
%
Operating efficiency ratio (Non-GAAP)
72.13
%
73.50
%
73.41
%
73.60
%
70.64
%
72.81
%
67.16
%
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 PPNR return on average assets (Non-GAAP) is the annualized operating PPNR 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).
SmartFinancial, Inc. and Subsidiary Condensed Consolidated Financial Information - (unaudited) (dollars in thousands) NON-GAAP RECONCILIATIONS
Three Months Ended
Jun
Mar
Dec
Sep
Jun
2024
2024
2023
2023
2023
Tangible Common Equity:
Shareholders' equity (GAAP)
$
472,465
$
466,796
$
459,886
$
446,652
$
444,847
Less goodwill and other intangible assets
105,929
106,537
107,148
107,792
108,439
Tangible common equity (Non-GAAP)
$
366,536
$
360,259
$
352,738
$
338,860
$
336,408
Average Tangible Common Equity:
Average shareholders' equity (GAAP)
$
466,371
$
461,148
$
449,526
$
445,432
$
444,283
Less average goodwill and other intangible assets
106,301
106,920
107,551
108,194
108,851
Average tangible common equity (Non-GAAP)
$
360,070
$
354,228
$
341,975
$
337,238
$
335,432
Tangible Book Value per Common Share:
Book value per common share (GAAP)
$
27.91
$
27.37
$
27.07
$
26.28
$
26.16
Adjustment due to goodwill and other intangible assets
(6.25
)
(6.25
)
(6.31
)
(6.34
)
(6.38
)
Tangible book value per common share (Non-GAAP)1
$
21.66
$
21.12
$
20.76
$
19.94
$
19.78
Tangible Common Equity to Tangible Assets:
Total Assets (GAAP)
$
4,891,009
$
4,954,690
$
4,829,387
$
4,797,171
$
4,745,800
Less goodwill and other intangibles
105,929
106,537
107,148
107,792
108,439
Tangible Assets (Non-GAAP)
$
4,785,080
$
4,848,153
$
4,722,239
$
4,689,379
$
4,637,361
Tangible common equity to tangible assets (Non-GAAP)
7.66
%
7.43
%
7.47
%
7.23
%
7.25
%
1Tangible book value per share (Non-GAAP) is computed by dividing total shareholders' equity, less goodwill and other intangible assets, by common shares outstanding.
