SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NYSE: SMBK), today announced net income of $9.6 million, or $0.57 per diluted common share, for the fourth quarter of 2024, compared to net income of $6.2 million, or $0.37 per diluted common share, for the fourth quarter of 2023, and compared to prior quarter net income of $9.1 million, or $0.54 per diluted common share. Operating earnings¹, which excludes non-recurring income, net of tax adjustments, totaled $9.6 million, or $0.57 per diluted common share, in the fourth quarter of 2024, compared to $6.9 million, or $0.41 per diluted common share, in the fourth quarter of 2023, and compared to $9.1 million, or $0.54 per diluted common share, in the third quarter of 2024.

Highlights for the Fourth Quarter of 2024

• Operating earnings¹ of $9.6 million, or $0.57 per diluted common share
• Net organic loan and lease growth of $189 million with 20% annualized quarter-over-quarter increase
• Quarter-over-quarter net tax equivalent interest margin expansion of 13 basis points to 3.24%
• Credit quality remains solid with nonperforming assets to total assets of 0.19%

Billy Carroll, President & CEO, stated: "As we closed 2023, I noted the strong positioning of our Company and expressed my optimism for the year ahead. Now, reflecting on 2024, it’s clear that this optimism was justified. Highlighted by 13% year-over-year loan and lease growth, a fourth quarter net interest margin of 3.24%, 38 basis points higher than the fourth quarter of 2023, continued profitability improvement and numerous operational achievements, 2024 was a notable year. As we look ahead to 2025, we remain committed and confident in our ability to further enhance profitability and drive value for our shareholders.”

SmartFinancial's Chairman, Miller Welborn, concluded: "2024 was a great year of growth and profitability expansion following an extremely challenging 2023. The Board is pleased with the Company’s 10% annual tangible book value growth and steady return metric enhancement. Equally important is SmartBank’s ongoing commitment to its culture and associates. Our associates continue to make SmartBank a great place to work, which is foundational to our present and future success through 2025 and beyond. Thank you!”

Net Interest Income and Net Interest Margin

Net interest income was $37.8 million for the fourth quarter of 2024, compared to $35.0 million for the prior quarter. Average earning assets totaled $4.7 billion, an increase of $151.0 million from the prior quarter. The balances of average earnings assets changed quarter-over-quarter, primarily from an increase in average loans and leases of $195.5 million, offset by a decrease in average interest-earning cash of $33.5 million and securities of $11.1 million. Average interest-bearing liabilities increased by $162.3 million from the prior quarter, primarily attributable to an increase in average deposits of $207.9 million, offset by a decrease in borrowings of $44.4 million.

The tax equivalent net interest margin was 3.24% for the fourth quarter of 2024, compared to 3.11% for the prior quarter. The tax equivalent net interest margin was positively impacted primarily by the decreased cost of interest-bearing deposits, quarter-over-quarter. The yield on loans and leases, excluding loan fees, on a fully tax equivalent basis (“FTE”) held constant at 5.95% quarter-over-quarter.

The cost of total deposits for the fourth quarter of 2024 was 2.43%, compared to 2.54% in the prior quarter. The cost of interest-bearing liabilities was 3.08% for the fourth quarter, compared to 3.29% in the prior quarter. The cost of average interest-bearing deposits was 3.02% for the fourth quarter of 2024, compared to 3.20% for the prior quarter, a decrease of 18 basis points.

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

Provision for Credit Losses on Loans and Leases and Credit Quality

At December 31, 2024, the allowance for credit losses was $37.4 million. The allowance for credit losses to total loans and leases was 0.96% as of December 31, 2024, and September 30, 2024.

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

Nonperforming loans and leases as a percentage of total loans and leases was 0.20% as of December 31, 2024, a decrease of 6 basis points from the 0.26% reported in the third 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 0.19% as of December 31, 2024, and 0.26% as of September 30, 2024.

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

Noninterest Income

Noninterest income decreased $109 thousand for the fourth quarter of 2024, compared to $9.1 million for the prior quarter. The current quarter decrease was primarily associated with a $499 thousand decrease in investment services from a lower volume of investment activity and offset by a $355 thousand increase in insurance commissions from new policies.

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

Noninterest Expense

Noninterest expense increased $1.4 million to $32.3 million for the fourth quarter of 2024 compared to $30.8 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 and an increase in other real estate and loan related expenses due to write downs on repossessed assets at the Company’s equipment leasing subsidiary, offset by a decrease in other related to lower operational cost and lower franchise taxes related to the newly established Real Estate Investment Trust (“REIT”).

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

Income Tax Expense

Income tax expense was $2.7 million for the fourth quarter of 2024, an increase of $1.1 million, compared to $1.6 million for the prior quarter. The increase was due to an increase in pre-tax income compared to the prior quarter and final state income tax adjustments during the quarter related to the Bank’s REIT. The REIT will create a more tax-effective structure that will result in a lower effective tax rate during future periods by lowering the Bank’s state income tax expense.

Balance Sheet Trends

Total assets at December 31, 2024 were $5.28 billion compared to $4.83 billion at December 31, 2023. The $446.5 million increase is primarily attributable to increases in loans and leases of $461.9 million, cash and cash equivalents of $35.3 million and bank owned life insurance of $32.5 million, offset by a decrease in securities of $80.7 million.

Total liabilities were $4.78 billion at December 31, 2024, compared to $4.37 billion at December 31, 2023, an increase of $414.9 million. Total deposits increased $418.6 million, which was driven primarily by increases in money market deposits of $227.1 million, the issuance of brokered deposits of $189.8 million, other time deposits of $104.4 million and noninterest demand deposits of $67.5 million, offset by a decline in interest-bearing demand deposits of $170.2 million. Other liabilities increased $3.7 million, which was offset by a decrease in borrowings of $4.9 million and subordinated debt of $2.4 million.

Shareholders' equity at December 31, 2024, totaled $491.5 million, an increase of $31.6 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $36.1 million for the twelve months ended December 31, 2024, and a positive change of $2.2 million in accumulated other comprehensive income, offset by dividends paid of $5.4 million. Tangible book value per share² was $22.85 at December 31, 2024, compared to $20.76 at December 31, 2023. Tangible common equity¹ as a percentage of tangible assets¹ was 7.48% at December 31, 2024, compared with 7.47% at December 31, 2023.

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

Board of Directors Declares Dividend

On January 16, 2025, the board of directors of SmartFinancial declared a quarterly cash dividend of $0.08 per share of SmartFinancial common stock payable on February 18, 2025, to shareholders of record as of the close of business on January 31, 2025.

Conference Call Information

SmartFinancial issued this earnings release for the fourth quarter of 2024 on Tuesday, January 21, 2025, and will host a conference call on Wednesday, January 22, 2025, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 994691. A replay of the conference call will be available through March 23, 2025, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 147026. 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.

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:

Operating earnings, operating noninterest income, operating noninterest expense and operating PPNR earnings exclude non-operating related income and expense items from net income, noninterest income and noninterest expense, respectively. Tangible common equity and average tangible common equity exclude 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. Operating efficiency ratio is the quotient of operating noninterest expense divided by the sum of net interest income adjusted for taxable equivalent yields plus operating noninterest income. A detailed reconciliation of these items and the 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,

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.