Highlights for the Fourth Quarter of 2021

Operating earnings¹ of $0.52 and $2.39 per diluted common share for the 2021 fourth quarter and year end, respectively
31% increase in year-over-year operating earnings¹ per diluted common share
Net organic loan growth of over $75 million, a 12% annualized quarter-over-quarter increase
Tangible book value per share¹ of $19.26, a 4.8% annualized quarter-over-quarter increase
Strategic Nashville, TN MSA² enhancement with several senior relationship manager hires
Gulf Coast Wealth Management team lift-out previously responsible for managing ~$350 million in AUM²
Completion of Sevier County Bancshares, Inc. ("SCB") integration; five branch closures with near full realization of operational efficiencies
Opening of Mobile, AL branch office and application approval of Auburn, Dothan and Montgomery branch offices
Opening of Birmingham, AL loan production office

^{1 Non-GAAP}

^{2 Metropolitan Statistical Area ("MSA"); Assets Under Management ("AUM")}

KNOXVILLE, Tenn., Jan. 24, 2022 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ((", SmartFinancial", or the ", Company", , NASDAQ:SMBK), today announced net income of $6.7 million, or $0.40 per diluted common share, for the fourth quarter of 2021, compared to net income of $9.0 million, or $0.59 per diluted common share, for the fourth quarter of 2020, and compared to prior quarter net income of $9.6 million, or $0.61 per diluted common share. Operating earnings (Non-GAAP), which excludes securities gains, merger related and restructuring expenses and non-operating items, totaled $8.7 million, or $0.52 per diluted common share, in the fourth quarter of 2021, compared to $9.2 million, or $0.61 per diluted common share, in the fourth quarter of 2020, and compared to $9.9 million, or $0.63 per diluted common share, in the third quarter of 2021.

Billy Carroll, President & CEO, stated: "SmartFinancial reported another solid quarter as we wrapped up an outstanding year for our company. Loans and deposits continued to organically grow at a strong pace. We also expanded our sales team again this quarter with experienced and seasoned industry professionals. The investments we made in 2021 are positioning us very well as we look into 2022 and beyond."

SmartFinancial's Chairman, Miller Welborn, concluded: "We couldn't be more excited about where we are as a company. Our 2021 was a fantastic year on many fronts and it's nice to finish with strong numbers and incredible momentum. Our team is poised and ready for 2022."

Net Interest Income and Net Interest Margin

Net interest income was $29.9 million for the fourth quarter of 2021, compared to $30.4 million for the prior quarter. Average earning assets totaled $4.08 billion, an increase of $469.4 million. The growth in average earnings assets was primarily driven by an increase in average securities of $167.7 million, average interest-earning cash of $163.2 million and average loans and leases of $137.3 million. Average interest-bearing liabilities increased $354.3 million, related to continued core deposit growth.

The tax equivalent net interest margin was 2.92% for the fourth quarter of 2021, compared to 3.35% for the prior quarter. The tax equivalent net interest margin was impacted by a 47 basis point decrease in the average yield on interest-earning assets and offset by a 5 basis point decline in the rate on interest-bearing liabilities over the prior quarter. The decrease in yield on interest-earning assets was due to the combined impact of a quarter-over-quarter loan discount accretion and Payroll Protection Program ("PPP") fee accretion decrease of $2.5 million and increased interest-earning cash position.

The yield on interest-bearing liabilities decreased to 0.39% for the fourth quarter of 2021 compared to 0.44% for the prior quarter. The cost of average interest-bearing deposits was 0.29% for the fourth quarter of 2021 compared to 0.34% for the prior quarter, a decrease of 5 basis points. The lower cost of average deposits was attributable to the maturing and repricing of time deposits, which decreased 13 basis points during the period. The cost of total deposits for the fourth quarter of 2021 was 0.22% compared to 0.25% in the prior quarter.

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


	Three Months Ended
	Dec		Sep		Increase
Selected Interest Rates and Yields	2021		2021		(Decrease)
Yield on loans and leases	4.53	%	4.95	%	(0.42	)	%
Yield on earning assets, FTE	3.20	%	3.67	%	(0.47	)	%
Cost of interest-bearing deposits	0.29	%	0.34	%	(0.05	)	%
Cost of total deposits	0.22	%	0.25	%	(0.03	)	%
Cost of interest-bearing liabilities	0.39	%	0.44	%	(0.05	)	%
Net interest margin, FTE	2.92	%	3.35	%	(0.43	)	%

Provision for Loan and Lease Losses and Credit Quality

At December 31, 2021, the allowance for loan and lease losses was $19.4 million. The allowance for loan and lease losses to total loans and leases was 0.72% as of December 31, 2021, compared to 0.73% as of September 30, 2021. 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 December 31, 2021, compared to 0.76% as of September 30, 2021. The remaining discounts on the acquired loan and lease portfolio totaled $15.5 million, or 3.42% of acquired loans and leases as of December 31, 2021.

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
	Dec			Sep
Provision for Loan and Lease Losses Rollforward	2021			2021			Change
Beginning balance	$	19,295		$	18,310		$	985
Charge-offs		(499	)		(239	)		(260	)
Recoveries		134			75			59
Net charge-offs		(365	)		(164	)		(201	)
Provision		422			1,149			727
Ending balance	$	19,352		$	19,295		$	57

Allowance for loan losses to total loans and leases, gross		0.72	%		0.73	%		(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 0.12% as of December 31, 2021, a decrease of 1 basis point from the 0.13% reported in the third quarter of 2021. 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 December 31, 2021, as compared to 0.14% as of September 30, 2021.

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


	Three Months Ended
	Dec			Sep			Increase
Credit Quality	2021			2021			(Decrease)
Nonaccrual loans and leases	$	3,124		$	3,567		$	(443	)
Loans and leases past due 90 days or more and still accruing		64			-			64
Total nonperforming loans and leases		3,188			3,567			(379	)
Other real estate owned		1,780			2,415			(635	)
Other repossessed assets		90			77			13
Total nonperforming assets	$	5,058		$	6,059		$	(1,001	)

Nonperforming loans and leases to total loans and leases, gross		0.12	%		0.13	%		(0.01	)%
Nonperforming assets to total assets		0.11	%		0.14	%		(0.03	)%

Noninterest Income

Noninterest income increased $497 thousand to $6.8 million for the fourth quarter of 2021 compared to $6.3 million for the prior quarter. During the fourth quarter of 2021, the primary components of the changes in noninterest income were as follows:

Increase in service charges on deposit accounts, related to the SCB acquisition, account growth and transaction volume;
Increase in investment income, related to increased volume;
Decrease in insurance commissions, due to lower transaction volume, primarily driven by seasonality;
Increased interchange and debit card transaction fees, related to higher volume, account growth and the SCB acquisition; and
Increase in other, primarily from the gain on sale of credit card portfolio.

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


	Three Months Ended
		Dec		Sep		Increase
Noninterest Income		2021		2021		(Decrease)
Service charges on deposit accounts	$	1,372	$	1,220	$	152
Gain (loss) on sale of securities, net		-		45		(45	)
Mortgage banking income		803		994		(191	)
Investment services		621		448		173
Insurance commissions		517		745		(228	)
Interchange and debit card transaction fees		1,445		1,078		367
Other		2,048		1,779		269
Total noninterest income	$	6,806	$	6,309	$	497

Noninterest Expense

Noninterest expense increased $4.5 million to $27.8 million for the fourth quarter of 2021 compared to $23.3 million for the prior quarter. During the fourth quarter of 2021, the primary components of the changes in noninterest expense were as follows:

Increase in salaries and employee benefits, primarily due to:
- Additional personnel related to the SCB acquisition;
- Banking team hires in Auburn, Dothan, Montgomery and Birmingham, AL, Tallahassee, FL and Nashville, TN;
- The Gulf Coast Wealth Management team lift-out;
Increase in occupancy and equipment expense from the SCB acquisition and expansion in Alabama; and
Increase in other expense, primarily related to overall franchise growth.

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


	Three Months Ended
		Dec		Sep		Increase
Noninterest Expense		2021		2021		(Decrease)
Salaries and employee benefits	$	14,990	$	13,594	$	1,396
Occupancy and equipment		3,026		2,536		490
FDIC insurance		567		525		42
Other real estate and loan related expenses		583		407		176
Advertising and marketing		176		235		(59	)
Data processing and technology		1,722		1,753		(31	)
Professional services		847		810		37
Amortization of intangibles		660		711		(51	)
Merger related and restructuring expenses		2,762		464		2,298
Other		2,490		2,274		216
Total noninterest expense	$	27,823	$	23,309	$	4,514

Income Tax Expense

Income tax expense was $1.8 million for the fourth quarter of 2021, a decrease of $872 thousand, compared to $2.6 million for the prior quarter.

The effective tax rate was 20.9% for the fourth quarter of 2021 and 21.5% for the prior quarter.

Balance Sheet Trends

Total assets at December 31, 2021 were $4.61 billion compared with $3.30 billion at December 31, 2020. The increase of $1.31 billion is primarily attributable to increases in cash and cash equivalents of $563.4 million, securities of $343.8 million, loans and leases of $311.2 million, bank owned life insurance of $48.4 million and goodwill and intangibles of $19.4 million related to the SCB acquisition and the acquisition of Fountain Equipment Finance, LLC.

Total liabilities increased to $4.18 billion at December 31, 2021 from $2.95 billion at December 31, 2020. The increase of $1.23 billion was primarily from organic deposit growth of $809.8 million and deposits of $407.0 million from the SCB acquisition.

Shareholders' equity at December 31, 2021 totaled $429.4 million, an increase of $72.3 million, from December 31, 2020. The increase in shareholders' equity was primarily from the issuance of $42.3 million of common stock for the acquisition of SCB and net income of $34.8 million for the twelve months ended December 31, 2021, which was offset by repurchase of the Company's common stock of $1.2 million and $3.7 million of dividends paid. Tangible book value per share (Non-GAAP) was $19.26 at December 31, 2021, compared to $17.92 at December 31, 2020. Tangible common equity (Non-GAAP) as a percentage of tangible assets (Non-GAAP) was 7.18% at December 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):


	Dec		Dec		Increase
Selected Balance Sheet Information	2021		2020		(Decrease)
Total assets	$	4,611,579	$	3,304,949	$	1,306,630
Total liabilities		4,182,149		2,947,781		1,234,368
Total equity		429,430		357,168		72,262
Securities		559,422		215,634		343,788
Loans and leases		2,693,397		2,382,243		311,154
Deposits		4,021,938		2,805,215		1,216,723
Borrowings		87,585		81,199		6,386

Conference Call Information

SmartFinancial issued this earnings release for the fourth quarter of 2021 on Monday, January 24, 2022, and will host a conference call on Tuesday, January 25, 2022, at 10:00 a.m. ET. To access this interactive teleconference, dial (844) 200-6205 for United States or +1 (929) 526-1599 for other locations and enter the access code, 574606. A replay of the conference call will be available through March 26, 2022, by dialing (866) 813-9403 for United States or +44 (204) 525-0658 and entering the access code, 247688. 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 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

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, 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 (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, proceeds related to the termination of the ADECA loan program. 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 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 (Non-GAAP) 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 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 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 and related variants; (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 and related variants; (15) 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; (16) potential increases in the provision for loan losses resulting from the COVID-19 pandemic and related variants; 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
	Dec			Sep			Jun			Mar			Dec
	2021			2021			2021			2021			2020
Assets:
Cash and cash equivalents	$	1,045,077		$	1,091,160		$	673,515		$	556,701		$	481,719
Securities available-for-sale, at fair value		482,453			339,343			250,817			250,937			215,634
Securities held-to-maturity, at amortized cost		76,969			—			—			—			—
Other investments		16,494			14,972			14,584			14,728			14,794
Loans held for sale		5,103			3,418			4,334			7,870			11,721
Loans and leases		2,693,397			2,652,663			2,468,318			2,487,129			2,382,243
Less: Allowance for loan and lease losses		(19,352	)		(19,295	)		(18,310	)		(18,370	)		(18,346	)
Loans and leases, net		2,674,045			2,633,368			2,450,008			2,468,759			2,363,897
Premises and equipment, net		85,958			85,346			72,314			72,697			72,682
Other real estate owned		1,780			2,415			2,499			3,946			4,619
Goodwill and other intangibles, net		105,852			104,930			90,966			86,350			86,471
Bank owned life insurance		79,619			79,145			72,013			71,586			31,215
Other assets		38,229			29,934			23,306			23,629			22,197
Total assets	$	4,611,579		$	4,384,031		$	3,654,356		$	3,557,203		$	3,304,949
Liabilities:
Deposits:
Noninterest-bearing demand	$	1,055,125		$	977,180		$	807,560		$	777,968		$	685,957
Interest-bearing demand		899,158			847,007			702,470			683,887			649,129
Money market and savings		1,493,007			1,389,393			1,140,029			1,073,941			919,631
Time deposits		574,648			585,692			489,413			512,417			550,498
Total deposits		4,021,938			3,799,272			3,139,472			3,048,213			2,805,215
Borrowings		87,585			88,748			78,834			82,642			81,199
Subordinated debt		41,930			41,909			39,388			39,367			39,346
Other liabilities		30,696			29,382			23,269			22,923			22,021
Total liabilities		4,182,149			3,959,311			3,280,963			3,193,145			2,947,781
Shareholders' Equity:
Common stock		16,803			16,801			15,110			15,105			15,107
Additional paid-in capital		292,937			292,760			252,039			251,836			252,693
Retained earnings		118,247			112,600			103,906			96,034			87,185
Accumulated other comprehensive income		1,443			2,559			2,338			1,083			2,183
Total shareholders' equity		429,430			424,720			373,393			364,058			357,168
Total liabilities & shareholders' equity	$	4,611,579		$	4,384,031		$	3,654,356		$	3,557,203		$	3,304,949

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands except share and per share data)


	Three Months Ended											Year Ended
	Dec		Sep		Jun			Mar		Dec		Dec		Dec
	2021		2021		2021			2021		2020		2021		2020
Interest income:
Loans and leases, including fees	$	30,567	$	31,674	$	28,323		$	28,018	$	28,594	$	118,582	$	112,312
Investment securities:
Taxable		1,341		832		916			724		609		3,813		2,423
Tax-exempt		322		331		304			259		306		1,215		1,369
Federal funds sold and other earning assets		547		474		309			291		303		1,622		1,509
Total interest income		32,777		33,311		29,852			29,292		29,812		125,232		117,613
Interest expense:
Deposits		2,116		2,153		2,248			2,331		2,580		8,849		13,597
Borrowings		180		121		123			117		142		540		816
Subordinated debt		626		655		584			584		584		2,449		2,334
Total interest expense		2,922		2,929		2,955			3,032		3,306		11,838		16,747
Net interest income		29,855		30,382		26,897			26,260		26,506		113,394		100,866
Provision for loan and lease losses		422		1,149		(5	)		67		—		1,633		8,683
Net interest income after provision for loan and lease losses		29,433		29,233		26,902			26,193		26,506		111,761		92,183
Noninterest income:
Service charges on deposit accounts		1,372		1,220		1,048			1,009		1,032		4,650		3,403
Gain (loss) on sale of securities, net		—		45		—			—		—		45		6
Mortgage banking		803		994		1,105			1,139		1,331		4,040		3,875
Investment services		621		448		567			531		407		2,167		1,566
Insurance commissions		517		745		557			1,466		548		3,285		1,850
Interchange and debit card transaction fees		1,445		1,078		922			839		760		4,284		2,413
Other		2,048		1,779		944			707		898		5,478		2,313
Total noninterest income		6,806		6,309		5,143			5,691		4,976		23,949		15,426
Noninterest expense:
Salaries and employee benefits		14,990		13,594		12,203			10,869		11,516		51,656		42,911
Occupancy and equipment		3,026		2,536		2,294			2,341		2,256		10,196		8,348
FDIC insurance		567		525		371			371		297		1,833		1,190
Other real estate and loan related expense		583		407		506			602		516		2,098		2,050
Advertising and marketing		176		235		230			190		181		830		834
Data processing and technology		1,722		1,753		1,509			1,379		1,182		6,364		4,476
Professional services		847		810		849			641		786		3,147		2,958
Amortization of intangibles		660		711		441			444		571		2,256		1,740
Merger related and restructuring expenses		2,762		464		372			103		702		3,701		4,565
Other		2,490		2,274		2,022			2,524		1,946		9,310		7,647
Total noninterest expense		27,823		23,309		20,797			19,464		19,953		91,391		76,719
Income before income taxes		8,416		12,233		11,248			12,420		11,529		44,319		30,890
Income tax expense		1,761		2,633		2,470			2,664		2,499		9,529		6,558
Net income	$	6,655	$	9,600	$	8,778		$	9,756	$	9,030	$	34,790	$	24,332
Earnings per common share:
Basic	$	0.40	$	0.62	$	0.59		$	0.65	$	0.60	$	2.23	$	1.63
Diluted	$	0.40	$	0.61	$	0.58		$	0.65	$	0.59	$	2.22	$	1.62
Weighted average common shares outstanding:
Basic		16,699,010		15,557,528		15,003,657			15,011,573		15,109,298		15,572,537		14,955,423
Diluted		16,846,315		15,691,126		15,126,184			15,111,947		15,182,796		15,699,215		15,019,175

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS


	Three Months Ended
	December 31, 2021						September 30, 2021						December 31, 2020
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest¹		Cost¹		Balance		Interest¹		Cost¹		Balance		Interest¹		Cost¹
Assets:
Loans and leases, including fees²	$	2,669,943	$	30,510	4.53	%	$	2,532,604	$	31,623	4.95	%	$	2,401,406	$	28,506	4.72	%
Loans held for sale		5,116		57	4.45	%		3,987		51	5.09	%		10,191		88	3.45	%
Taxable securities		339,371		1,341	1.57	%		187,032		832	1.77	%		119,936		609	2.02	%
Tax-exempt securities		102,989		479	1.85	%		87,621		477	2.16	%		90,200		456	2.01	%
Federal funds sold and other earning assets		965,899		547	0.22	%		802,712		474	0.23	%		349,167		303	0.35	%
Total interest-earning assets		4,083,318		32,934	3.20	%		3,613,956		33,457	3.67	%		2,970,900		29,962	4.01	%
Noninterest-earning assets		383,783						323,067						255,477
Total assets	$	4,467,101					$	3,937,023					$	3,226,377

Liabilities and Stockholders' Equity:
Interest-bearing demand deposits	$	853,763		403	0.19	%	$	763,613		414	0.21	%	$	570,326		230	0.16	%
Money market and savings deposits		1,428,472		920	0.26	%		1,233,533		854	0.27	%		903,235		774	0.34	%
Time deposits		583,165		793	0.54	%		524,327		885	0.67	%		565,237		1,576	1.11	%
Total interest-bearing deposits		2,865,400		2,116	0.29	%		2,521,473		2,153	0.34	%		2,038,798		2,580	0.50	%
Borrowings³		88,828		180	0.80	%		80,188		121	0.60	%		99,777		142	0.57	%
Subordinated debt		41,917		626	5.92	%		40,211		654	6.46	%		39,332		584	5.90	%
Total interest-bearing liabilities		2,996,145		2,922	0.39	%		2,641,872		2,928	0.44	%		2,177,907		3,306	0.60	%
Noninterest-bearing deposits		1,016,438						877,831						670,820
Other liabilities		27,710						24,522						23,624
Total liabilities		4,040,293						3,544,225						2,872,351
Shareholders' equity		426,808						392,798						354,026
Total liabilities and shareholders' equity	$	4,467,101					$	3,937,023					$	3,226,377

Net interest income, taxable equivalent			$	30,012					$	30,529					$	26,656
Interest rate spread					2.81	%					3.23	%					3.41	%
Tax equivalent net interest margin					2.92	%					3.35	%					3.57	%

Percentage of average interest-earning assets to average interest-bearing liabilities					136.29	%					136.80	%					136.41	%
Percentage of average equity to average assets					9.55	%					9.98	%					10.97	%

¹Taxable equivalent

²Includes average balance of $80,501, $128,408 and $296,337 in PPP loans for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

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 December 31, 2021, and September 30, 2021.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

YIELD ANALYSIS


	Year Ended
	December 31, 2021							December 31, 2020
	Average				Yield/			Average				Yield/
	Balance		Interest¹		Cost¹			Balance		Interest¹		Cost¹
Assets:
Loans and leases, including fees²	$	2,535,006	$	118,332		4.67	%	$	2,289,612	$	111,992	4.89	%
Loans held for sale		5,571		250		4.48	%		7,360		320	4.34	%
Taxable securities		207,459		3,813		1.84	%		122,900		2,423	1.97	%
Tax-exempt securities		92,708		1,817		1.96	%		83,765		1,941	2.32	%
Federal funds sold and other earning assets		680,909		1,622		0.24	%		308,843		1,509	0.49	%
Total interest-earning assets		3,521,653		125,834		3.57	%		2,812,480		118,185	4.20	%
Noninterest-earning assets		317,457							250,955
Total assets	$	3,839,110						$	3,063,435

Liabilities and Stockholders' Equity:
Interest-bearing demand deposits	$	737,251		1,378		0.19	%	$	481,050		1,013	0.21	%
Money market and savings deposits		1,191,916		3,501		0.29	%		788,006		3,482	0.44	%
Time deposits		533,994		3,970		0.74	%		641,647		9,102	1.42	%
Total interest-bearing deposits		2,463,161		8,849		0.36	%		1,910,703		13,597	0.71	%
Borrowings³		83,105		540		0.65	%		177,204		816	0.46	%
Subordinated debt		40,221		2,449		6.09	%		39,301		2,334	5.94	%
Total interest-bearing liabilities		2,586,487		11,838		0.46	%		2,127,208		16,747	0.79	%
Noninterest-bearing deposits		841,746							571,282
Other liabilities		23,189							23,775
Total liabilities		3,451,422							2,722,265
Shareholders' equity		387,688							341,170
Total liabilities and shareholders' equity	$	3,839,110						$	3,063,435

Net interest income, taxable equivalent			$	113,996						$	101,438
Interest rate spread						3.12	%					3.41	%
Tax equivalent net interest margin						3.24	%					3.61	%

Percentage of average interest-earning assets to average interest-bearing liabilities						136.16	%					132.21	%
Percentage of average equity to average assets						10.10	%					11.14	%

¹Taxable equivalent

²Includes average balance of $196,078 and $201,470 in PPP loans for the twelve months ended December 31, 2021, and 2020, respectively.

³ Includes average balance of $91,190 in PPPLF funding for the twelve months ended December 31, 2020. No PPPLF funding was used for the twelve months ended December 31, 2021.

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)


	As of and for The Three Months Ended
	Dec			Sep			Jun			Mar			Dec
	2021			2021			2021			2021			2020
Composition of Loans and Leases:
Commercial real estate:
owner occupied	$	590,064		$	560,671		$	492,750		$	477,293		$	463,771
non-owner occupied		794,092			752,576			669,741			593,348			549,205
Commercial real estate, total		1,384,156			1,313,247			1,162,491			1,070,641			1,012,976
Commercial & industrial		488,024			469,739			496,114			686,010			634,446
Construction & land development		278,386			326,374			300,704			285,973			278,075
Consumer real estate		477,272			478,161			444,640			432,486			443,930
Leases		53,708			53,396			53,038			—			—
Consumer and other		11,851			11,746			11,331			12,019			12,816
Total loans and leases	$	2,693,397		$	2,652,663		$	2,468,318		$	2,487,129		$	2,382,243

Asset Quality and Additional Loan Data:
Nonperforming loans and leases	$	3,188		$	3,567		$	3,758		$	6,234		$	5,782
Other real estate owned		1,780			2,415			2,499			3,946			4,619
Other repossessed assets		90			77			199			—			—
Total nonperforming assets	$	5,058		$	6,059		$	6,456		$	10,180		$	10,401
Restructured loans and leases not included in nonperforming loans and leases	$	224		$	212		$	219		$	250		$	257
Net charge-offs to average loans and leases (annualized)		0.05	%		0.03	%		0.01	%		0.01	%		0.08	%
Allowance for loan and leases losses to loans and leases		0.72	%		0.73	%		0.74	%		0.74	%		0.77	%
Nonperforming loans and leases to total loans and leases, gross		0.12	%		0.13	%		0.15	%		0.25	%		0.24	%
Nonperforming assets to total assets		0.11	%		0.14	%		0.18	%		0.29	%		0.31	%
Acquired loan and lease fair value discount balance	$	15,483		$	13,001		$	12,982		$	12,951		$	14,467
Accretion income on acquired loans and leases		457			1,760			761			1,636			768
PPP net fees deferred balance		2,038			3,783			6,651			7,351			4,190
PPP net fees recognized		1,725			2,873			2,132			2,398			2,157

Capital Ratios:
Equity to Assets		9.31	%		9.69	%		10.22	%		10.23	%		10.81	%
Tangible common equity to tangible assets (Non-GAAP)¹		7.18	%		7.47	%		7.93	%		8.00	%		8.41	%

SmartFinancial, Inc.²
Tier 1 leverage		7.45	%		8.36	%		8.10	%		8.55	%		8.69	%
Common equity Tier 1		10.23	%		10.85	%		10.63	%		11.29	%		11.61	%
Tier 1 capital		10.23	%		10.85	%		10.63	%		11.29	%		11.61	%
Total capital		12.16	%		12.92	%		12.80	%		13.62	%		14.07	%

SmartBank		Estimated³
Tier 1 leverage		8.23	%		9.20	%		8.75	%		9.33	%		9.58	%
Common equity Tier 1		11.58	%		11.94	%		11.50	%		12.31	%		12.79	%
Tier 1 capital		11.58	%		11.94	%		11.50	%		12.31	%		12.79	%
Total capital		12.21	%		12.59	%		12.19	%		13.05	%		13.57	%

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.

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															Year Ended
	Dec			Sep			Jun			Mar			Dec			Dec			Dec
	2021			2021			2021			2021			2020			2021			2020
Selected Performance Ratios (Annualized):
Return on average assets		0.59	%		0.97	%		0.98	%		1.18	%		1.11	%		0.91	%		0.79	%
Return on average shareholders' equity		6.19	%		9.70	%		9.53	%		10.96	%		10.15	%		8.97	%		7.13	%
Return on average tangible common equity¹		8.18	%		12.84	%		12.54	%		14.41	%		13.43	%		11.84	%		9.50	%
Noninterest income / average assets		0.60	%		0.64	%		0.58	%		0.69	%		0.61	%		0.62	%		0.50	%
Noninterest expense / average assets		2.47	%		2.35	%		2.33	%		2.35	%		2.46	%		2.38	%		2.50	%
Efficiency ratio		75.89	%		63.53	%		64.91	%		60.92	%		63.38	%		66.54	%		65.97	%

Operating Selected Performance Ratios (Annualized):
Operating return on average assets¹		0.77	%		1.00	%		1.01	%		1.19	%		1.14	%		0.98	%		0.89	%
Operating PTPP return on average assets¹		1.03	%		1.39	%		1.30	%		1.52	%		1.45	%		1.29	%		1.43	%
Operating return on average shareholders' equity¹		8.09	%		10.01	%		9.83	%		11.05	%		10.34	%		9.67	%		8.02	%
Operating return on average tangible common equity¹		10.70	%		13.26	%		12.93	%		14.53	%		13.69	%		12.77	%		10.67	%
Operating efficiency ratio¹		68.07	%		62.09	%		63.46	%		60.32	%		60.86	%		63.59	%		61.75	%
Operating noninterest income / average assets¹		0.60	%		0.63	%		0.58	%		0.69	%		0.56	%		0.62	%		0.49	%
Operating noninterest expense / average assets¹		2.23	%		2.30	%		2.29	%		2.34	%		2.37	%		2.28	%		2.36	%

Selected Interest Rates and Yields:
Yield on loans and leases		4.53	%		4.95	%		4.52	%		4.67	%		4.72	%		4.67	%		4.89	%
Yield on earning assets, FTE		3.20	%		3.67	%		3.65	%		3.88	%		4.01	%		3.57	%		4.20	%
Cost of interest-bearing deposits		0.29	%		0.34	%		0.39	%		0.44	%		0.50	%		0.36	%		0.71	%
Cost of total deposits		0.22	%		0.25	%		0.29	%		0.33	%		0.38	%		0.27	%		0.55	%
Cost of interest-bearing liabilities		0.39	%		0.44	%		0.49	%		0.54	%		0.60	%		0.46	%		0.79	%
Net interest margin, FTE		2.92	%		3.35	%		3.29	%		3.48	%		3.57	%		3.24	%		3.61	%

Per Common Share:
Net income, basic	$	0.40		$	0.62		$	0.59		$	0.65		$	0.60		$	2.23		$	1.63
Net income, diluted		0.40			0.61			0.58			0.65			0.59			2.22			1.62
Operating earnings, basic¹		0.52			0.64			0.60			0.65			0.61			2.41			1.83
Operating earnings, diluted¹		0.52			0.63			0.60			0.65			0.61			2.39			1.82
Book value		25.56			25.28			24.71			24.10			23.64			25.56			23.64
Tangible book value¹		19.26			19.03			18.69			18.39			17.92			19.26			17.92
Common shares outstanding		16,802,990			16,801,447			15,109,736			15,104,536			15,107,214			16,802,990			15,107,214

¹See reconciliation of Non-GAAP measures

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS


	Three Months Ended																Year Ended
	Dec			Sep				Jun			Mar			Dec			Dec			Dec
	2021			2021				2021			2020			2020			2021			2020
Operating Earnings:
Net income (GAAP)	$	6,655		$	9,600			$	8,778		$	9,756		$	9,030		$	34,790		$	24,332
Noninterest income:
Securities gains (losses), net		—			(45	)			—			—			—			(45	)		(6	)
ADECA termination proceeds		—			—				—			—			(465	)		—			(465	)
Noninterest expenses:
Merger related and restructuring expenses		2,762			464				372			103			702			3,701			4,565
Income taxes:
Income tax effect of adjustments		(713	)		(108	)			(96	)		(27	)		(62	)		(944	)		(1,071	)
Operating earnings (Non-GAAP)	$	8,704		$	9,911			$	9,054		$	9,832		$	9,205		$	37,502		$	27,355
Operating earnings per common share (Non-GAAP):
Basic	$	0.52		$	0.64			$	0.60		$	0.65		$	0.61		$	2.41		$	1.83
Diluted		0.52			0.63				0.60			0.65			0.61			2.39			1.82

Operating Noninterest Income:
Noninterest income (GAAP)	$	6,806		$	6,309			$	5,143		$	5,691		$	4,976		$	23,949		$	15,426
Securities gains (losses), net		—			(45	)			—			—			—			(45	)		(6	)
ADECA termination proceeds		—			—				—			—			(465	)		—			(465	)
Operating noninterest income (Non-GAAP)	$	6,806		$	6,264			$	5,143		$	5,691		$	4,511		$	23,904		$	14,955
Operating noninterest income (Non-GAAP)/average assets¹		0.60	%		0.63	%			0.58	%		0.69	%		0.56	%		0.62	%		0.49	%

Operating Noninterest Expense:
Noninterest expense (GAAP)	$	27,823		$	23,309			$	20,797		$	19,464		$	19,953		$	91,391		$	76,719
Merger related and restructuring expenses		(2,762	)		(464	)			(372	)		(103	)		(702	)		(3,701	)		(4,565	)
Operating noninterest expense (Non-GAAP)	$	25,061		$	22,845			$	20,425		$	19,361		$	19,251		$	87,690		$	72,154
Operating noninterest expense (Non-GAAP)/average assets²		2.23	%		2.30	%	%		2.29	%		2.34	%		2.37	%		2.28	%		2.36	%

Operating Pre-tax Pre-provision ("PTPP") Earnings:
Net interest income (GAAP)	$	29,855		$	30,382			$	26,897		$	26,260		$	26,506		$	113,394		$	100,866
Operating noninterest income		6,806			6,264				5,143			5,691			4,511			23,904			14,955
Operating noninterest expense		(25,061	)		(22,845	)			(20,425	)		(19,361	)		(19,251	)		(87,690	)		(72,154	)
Operating PTPP earnings (Non-GAAP)	$	11,600		$	13,801			$	11,615		$	12,590		$	11,766		$	49,608		$	43,667

Non-GAAP Return Ratios:
Operating return on average assets (Non-GAAP)³		0.77	%		1.00	%			1.01	%		1.19	%		1.14	%		0.98	%		0.89	%
Operating PTPP return on average assets (Non-GAAP)⁴		1.03	%		1.39	%			1.30	%		1.52	%		1.45	%		1.29	%		1.43	%
Return on average tangible common equity (Non-GAAP)⁵		8.18	%		12.84	%			12.54	%		14.41	%		13.43	%		11.84	%		9.50	%
Operating return on average shareholders' equity (Non-GAAP)⁶		8.09	%		10.01	%			9.83	%		11.05	%		10.34	%		9.67	%		8.02	%
Operating return on average tangible common equity (Non-GAAP)⁷		10.70	%		13.26	%			12.93	%		14.53	%		13.69	%		12.77	%		10.67	%

Operating Efficiency Ratio:
Efficiency ratio (GAAP)		75.89	%		63.53	%			64.91	%		60.92	%		63.38	%		66.54	%		65.97	%
Adjustment for taxable equivalent yields		(0.32	)%		(0.25	)%			(0.30	)%		(0.28	)%		(0.30	)%		(0.29	)%		(0.33	)%
Adjustment for securities gains (losses)		—	%		(0.08	)%			—	%		—	%		—	%		(0.02	)%		(0.01	)%
Adjustment for merger related income and costs		(7.50	)%		(1.11	)%			(1.15	)%		(0.32	)%		(2.22	)%		(2.64	)%		(3.88	)%
Operating efficiency ratio (Non-GAAP)		68.07	%		62.09	%			63.46	%		60.32	%		60.86	%		63.59	%		61.75	%

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).

SmartFinancial, Inc. and Subsidiary

Condensed Consolidated Financial Information - (unaudited)

(dollars in thousands)

NON-GAAP RECONCILIATIONS


	Three Months Ended															Year Ended
	Dec			Sep			Jun			Mar			Dec			Dec			Dec
	2021			2021			2021			2020			2020			2021			2020
Tangible Common Equity:
Shareholders' equity (GAAP)	$	429,430		$	424,720		$	373,393		$	364,058		$	357,168		$	429,430		$	357,168
Less goodwill and other intangible assets		105,852			104,930			90,966			86,350			86,471			105,852			86,471
Tangible common equity (Non-GAAP)	$	323,578		$	319,790		$	282,427		$	277,708		$	270,697		$	323,578		$	270,697

Average Tangible Common Equity:
Average shareholders' equity (GAAP)	$	426,808		$	392,798		$	369,325		$	360,919		$	354,026		$	387,688		$	341,170
Less average goodwill and other intangible assets		104,193			96,250			88,551			86,424			86,561			93,910			84,913
Average tangible common equity (Non-GAAP)	$	322,615		$	296,548		$	280,774		$	274,495		$	267,465		$	293,778		$	256,257

Tangible Book Value per Common Share:
Book value per common share (GAAP)	$	25.56		$	25.28		$	24.71		$	24.10		$	23.64		$	25.56		$	23.64
Adjustment due to goodwill and other intangible assets		(6.30	)		(6.25	)		(6.02	)		(5.71	)		(5.72	)		(6.30	)		(5.72	)
Tangible book value per common share (Non-GAAP)¹	$	19.26		$	19.03		$	18.69		$	18.39		$	17.92		$	19.26		$	17.92

Tangible Common Equity to Tangible Assets:
Total Assets	$	4,611,579		$	4,384,031		$	3,654,356		$	3,557,203		$	3,304,949		$	4,611,579		$	3,304,949
Less goodwill and other intangibles		105,852			104,930			90,966			86,350			86,471			105,852			86,471
Tangible Assets (Non-GAAP):	$	4,505,727		$	4,279,101		$	3,563,390		$	3,470,853		$	3,218,478		$	4,505,727		$	3,218,478
Tangible common equity to tangible assets (Non-GAAP)		7.18	%		7.47	%		7.93	%		8.00	%		8.41	%		7.18	%		8.41	%

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

SmartFinancial Announces Results for the Fourth Quarter 2021