SmartFinancial Announces Results for the Fourth Quarter 2021

Highlightsfor 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 [email protected]
Ron Gorczynski
Executive Vice President, Chief Financial Officer
(865) 437-5724 [email protected]
Media Contact
Kelley Fowler
Senior Vice President, Public Relations & Marketing
(865) 868-0611 [email protected]

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	%

¹ Taxable equivalent
² Includes 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	%

¹ Taxable equivalent
² Includes 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.

Source: SmartFinancial, Inc.