SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NYSE:
SMBK), today announced net income of $9.1 million, or $0.54 per
diluted common share, for the third quarter of 2024, compared to
net income of $2.1 million, or $0.12 per diluted common share, for
the third quarter of 2023, and compared to prior quarter net income
of $8.0 million, or $0.48 per diluted common share. Operating
earnings1, which excludes non-recurring income, net of tax
adjustments, totaled $9.1 million, or $0.54 per diluted common
share, in the third quarter of 2024, compared to $7.2 million, or
$0.43 per diluted common share, in the third quarter of 2023, and
compared to $7.8 million, or $0.46 per diluted common share, in the
second quarter of 2024.
Highlights for the Third Quarter of 2024
- Operating earnings1 of $9.1 million, or $0.54 per diluted
common share
- Net organic loan and lease growth of $144 million with 16%
annualized quarter-over-quarter increase
- Quarter-over-quarter net tax equivalent interest margin
expansion of 14 basis points to 3.11%
- 19% annualized quarter-over-quarter increase in tangible book
value per common share1
- Credit quality remains solid with nonperforming assets to total
assets of 0.26%
- Established a Real Estate Investment Trust (“REIT”) subsidiary
as a tax saving strategy
Billy Carroll, President & CEO, stated: “As we talked about
last quarter, the sales energy throughout our Company remains very
positive as demonstrated by our 16% quarterly annualized loan and
lease growth. Margin continues to inflect, up another 14 basis
points to 3.11% for the quarter, and we continue to position our
balance sheet for optimized returns. Credit quality remained
strong, and I am pleased with our diligence around expense control.
As we look ahead, we are confident in our ability to further
enhance profitability and deliver strong tangible book value per
share growth.”
SmartFinancial's Chairman, Miller Welborn, concluded: “This
quarter was a further demonstration of our team’s ability to
execute our plan. The Board was especially pleased with the
Company’s operating leverage expansion and quarterly tangible book
value per share growth of nearly 9% annualized. And while financial
results are important, we don’t take for granted SmartBank’s
incredible culture. SmartBank’s certification as a Great Place to
Work by over 94% of its employee base is a tremendous honor and we
look forward to continuing our tradition of being a premier
employment destination.”
Net Interest Income and Net Interest Margin
Net interest income was $35.0 million for the third quarter of
2024, compared to $32.8 million for the prior quarter. Average
earning assets totaled $4.5 billion for the current and prior
quarters. The categories of average earnings assets changed
quarter-over-quarter, primarily from an increase in average loans
and leases of $130.5 million, offset by a decrease in average
securities of $15.7 million and average interest-earning cash of
$79.2 million. Average interest-bearing liabilities increased by
$21.4 million from the prior quarter, primarily attributable to an
increase in average borrowings of $40.9 million, offset by a
decrease in average deposits of $18.2 million.
The tax equivalent net interest margin was 3.11% for the third
quarter of 2024, compared to 2.97% for the prior quarter. The tax
equivalent net interest margin was positively impacted by the
increased yield on interest-earning assets, quarter-over-quarter,
coupled with no change in the cost of interest-bearing liabilities,
quarter-over-quarter. The yield on loans and leases, excluding loan
fees, on a fully tax equivalent basis (“FTE”) was 5.95% for the
third quarter, compared to 5.80% for the prior quarter.
The cost of total deposits for the third quarter of 2024 was
2.54% compared to 2.56% in the prior quarter. The cost of
interest-bearing liabilities was 3.29% for the third quarter of
2024 and the prior quarter. The cost of average interest-bearing
deposits was 3.20% for the third quarter of 2024, compared to 3.23%
for the prior quarter, a decrease of 3 basis points.
1 Non-GAAP measure. See “Non-GAAP
Financial Measures” for more information and see the Non-GAAP
Reconciliations
The following table presents selected interest rates and yields
for the periods indicated:
Three Months Ended
Sep
Jun
Increase
Selected Interest Rates and Yields
2024
2024
(Decrease)
Yield on loans and leases, excluding loan
fees, FTE
5.95
%
5.80
%
0.15
%
Yield on loans and leases, FTE
6.02
%
5.87
%
0.15
%
Yield on earning assets, FTE
5.65
%
5.52
%
0.13
%
Cost of interest-bearing deposits
3.20
%
3.23
%
(0.03
)%
Cost of total deposits
2.54
%
2.56
%
(0.02
)%
Cost of interest-bearing liabilities
3.29
%
3.29
%
-
%
Net interest margin, FTE
3.11
%
2.97
%
0.14
%
Provision for Credit Losses on Loans and Leases and Credit
Quality
At September 30, 2024, the allowance for credit losses was $35.6
million. The allowance for credit losses to total loans and leases
was 0.96% as of September 30, 2024, compared to 0.97% as of June
30, 2024.
The following table presents detailed information related to the
provision for credit losses for the periods indicated (dollars in
thousands):
Three Months Ended
Sep
Jun
Increase
Provision for Credit Losses on Loans and
Leases Rollforward
2024
2024
(Decrease)
Beginning balance
$
34,690
$
34,203
$
487
Charge-offs
(1,426
)
(457
)
(969
)
Recoveries
72
48
24
Net (charge-offs) recoveries
(1,354
)
(409
)
(945
)
Provision for credit losses (1)
2,273
896
1,377
Ending balance
$
35,609
$
34,690
$
919
Allowance for credit losses to total loans
and leases, gross
0.96
%
0.97
%
(0.01
)%
(1) The current quarter-ended and prior
quarter-ended excludes unfunded commitments provision of $302
thousand and a release of $13 thousand, respectively. At September
30, 2024, the unfunded commitment liability totaled $2.3
million.
Nonperforming loans and leases as a percentage of total loans
and leases was 0.26% as of September 30, 2024, an increase of 7
basis points from the 0.19% reported in the second 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 0.26% as of September 30, 2024,
and 0.20% as of June 30, 2024.
The following table presents detailed information related to
credit quality for the periods indicated (dollars in
thousands):
Three Months Ended
Sep
Jun
Increase
Credit Quality
2024
2024
(Decrease)
Nonaccrual loans and leases
$
9,319
$
6,432
$
2,887
Loans and leases past due 90 days or more
and still accruing
172
210
(38
)
Total nonperforming loans and leases
9,491
6,642
2,849
Other real estate owned
179
688
(509
)
Other repossessed assets
2,949
2,645
304
Total nonperforming assets
$
12,619
$
9,975
$
2,644
Nonperforming loans and leases to total
loans and leases, gross
0.26
%
0.19
%
0.07
%
Nonperforming assets to total assets
0.26
%
0.20
%
0.06
%
Noninterest Income
Noninterest income increased $1.5 million to $9.1 million for
the third quarter of 2024 compared to $7.6 million for the prior
quarter. The current quarter increase was primarily associated with
a $579 thousand increase in investment services from a higher
volume of investment activity, a $193 thousand increase in
insurance commissions from new policies and renewals and a $607
thousand increase in other from fees related to capital markets
activity.
The following table presents detailed information related to
noninterest income for the periods indicated (dollars in
thousands):
Three Months Ended
Sep
Jun
Increase
Noninterest Income
2024
2024
(Decrease)
Service charges on deposit accounts
$
1,780
$
1,692
$
88
Mortgage banking income
410
348
62
Investment services
1,881
1,302
579
Insurance commissions
1,477
1,284
193
Interchange and debit card transaction
fees
1,349
1,343
6
Other
2,242
1,635
607
Total noninterest income
$
9,139
$
7,604
$
1,535
Noninterest Expense
Noninterest expense increased $1.6 million to $30.8 million for
the third quarter of 2024 compared to $29.2 million for the prior
quarter. The current quarter increase was primarily related to an
increase in salaries and employee benefits related to incentive
accruals for production performance.
The following table presents detailed information related to
noninterest expense for the periods indicated (dollars in
thousands):
Three Months Ended
Sep
Jun
Increase
Noninterest Expense
2024
2024
(Decrease)
Salaries and employee benefits
$
18,448
$
17,261
$
1,187
Occupancy and equipment
3,423
3,324
99
FDIC insurance
825
825
-
Other real estate and loan related
expenses
460
538
(78
)
Advertising and marketing
327
295
32
Data processing and technology
2,519
2,452
67
Professional services
1,201
1,064
137
Amortization of intangibles
604
608
(4
)
Other
3,039
2,834
205
Total noninterest expense
$
30,846
$
29,201
$
1,645
Income Tax Expense
Income tax expense was $1.6 million for the third quarter of
2024, a decrease of $721 thousand, compared to $2.3 million for the
prior quarter. The decrease was due to a reduction in the Bank’s
annual state income tax expense as a result of the establishment of
the Bank’s newly formed 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 September 30, 2024 were $4.91 billion compared
to $4.83 billion at December 31, 2023. The $79.5 million increase
is primarily attributable to increases loans and leases of $273.0
million and bank owned life insurance of $21.6 million, offset by a
decrease in securities of $60.5 million and cash and cash
equivalents of $159.4 million.
Total liabilities were $4.42 billion at September 30, 2024,
compared to $4.37 billion at December 31, 2023, an increase of
$50.4 million. Total deposits increased $54.6 million, which was
driven primarily by the issuance of brokered deposits of $174.8
million, increase in other time deposits of $44.3 million and
savings deposits of $42.4 million, offset by a decline in
interest-bearing demand deposits of $172.7 million and noninterest
bearing deposits of $34 million. Other liabilities increased $2.3
million, which was offset by a decrease in borrowings of $4.1
million and subordinated debt of $2.4 million. During the quarter,
the Bank elected not to pursue a higher cost public funds
depository relationship and utilized Federal Home Loan Advances
temporarily, which was replaced with brokered deposits.
Shareholders' equity at September 30, 2024, totaled $489.0
million, an increase of $29.1 million, from December 31, 2023. The
increase in shareholders' equity was primarily driven by net income
of $26.5 million for the nine months ended September 30, 2024, and
a positive change of $8.6 million in accumulated other
comprehensive income, offset by dividends paid of $4.1 million.
Tangible book value per share2 was $22.67 at September 30, 2024,
compared to $20.76 at December 31, 2023. Tangible common equity1 as
a percentage of tangible assets1 was 7.99% at September 30, 2024,
compared with 7.47% at December 31, 2023.
The following table presents selected balance sheet information
for the periods indicated (dollars in thousands):
Sep
Dec
Increase
Selected Balance Sheet Information
2024
2023
(Decrease)
Total assets
$
4,908,934
$
4,829,387
$
79,547
Total liabilities
4,419,911
4,369,501
50,410
Total equity
489,023
459,886
29,137
Securities
629,115
689,646
(60,531
)
Loans and leases
3,717,478
3,444,462
273,016
Deposits
4,322,491
4,267,854
54,637
Borrowings
8,997
13,078
(4,081
)
Conference Call Information
SmartFinancial issued this earnings release for the third
quarter of 2024 on Monday, October 21, 2024, and will host a
conference call on Tuesday, October 22, 2024, at 10:00 a.m. ET. To
access this interactive teleconference, dial (833) 470-1428 or
(404) 975-4839 and entering the access code, 599429. A
replay of the conference call will be available through December
21, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering
the access code, 195203. 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.
1 Non-GAAP measure. See “Non-GAAP
Financial Measures” for more information and see the Non-GAAP
Reconciliation
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
- Operating pre-provision net revenue (“PPNR”) earnings
- Tangible common equity
- Average tangible common equity
- Tangible book value per common share
- Tangible assets
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. 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,
- risks associated with our growth strategy, including a failure
to implement our growth plans or an inability to manage our growth
effectively;
- 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;
- general risks related to our merger and acquisition activity,
including risks associated with our pursuit of future
acquisitions;
- changes in management’s plans for the future;
- prevailing, or changes in, economic or political conditions,
particularly in our market areas, including the effects of declines
in the real estate market, high unemployment rates, inflationary
pressures, elevated interest rates and slowdowns in economic
growth, as well as the financial stress on borrowers as a result of
the foregoing;
- our ability to anticipate interest rate changes and manage
interest rate risk (including the impact of higher interest rates
on macroeconomic conditions, competition, and the cost of doing
business and the impact of interest rate fluctuations on our
financial projections, models and guidance);
- increased technology and cybersecurity risks, including
generative artificial intelligence risks;
- credit risk associated with our lending activities;
- changes in loan demand, real estate values, or
competition;
- developments in our mortgage banking business, including loan
modifications, general demand, and the effects of judicial or
regulatory requirements or guidance;
- changes in accounting principles, policies, or guidelines;
- changes in applicable laws, rules, or regulations;
- adverse results from current or future litigation, regulatory
examinations or other legal and/or regulatory actions;
- potential impacts of adverse developments in the banking
industry highlighted by high-profile bank failures, including
impacts on customer confidence, deposit outflows, liquidity and the
regulatory response thereto;
- significant turbulence or a disruption in the capital or
financial markets and the effect of a fall in stock market prices
on our investment securities;
- the effects of war or other conflicts including the impacts
related to or resulting from Russia’s military action in Ukraine or
the conflict in Israel and surrounding areas; and
- 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
Sep
Jun
Mar
Dec
Sep
2024
2024
2024
2023
2023
Assets:
Cash and cash equivalents
$
192,914
$
342,835
$
477,941
$
352,271
$
400,258
Securities available-for-sale, at fair
value
501,336
500,821
474,347
408,410
385,131
Securities held-to-maturity, at amortized
cost
127,779
128,996
180,169
281,236
282,313
Other investments
20,352
13,780
13,718
13,662
13,805
Loans held for sale
5,804
3,103
4,861
4,418
2,734
Loans and leases
3,717,478
3,574,158
3,477,555
3,444,462
3,378,999
Less: Allowance for credit losses
(35,609
)
(34,690
)
(34,203
)
(35,066
)
(33,687
)
Loans and leases, net
3,681,869
3,539,468
3,443,352
3,409,396
3,345,312
Premises and equipment, net
91,055
91,315
92,694
92,963
92,020
Other real estate owned
179
688
696
517
1,370
Goodwill and other intangibles, net
105,324
105,929
106,537
107,148
107,792
Bank owned life insurance
105,025
84,483
83,957
83,434
82,914
Other assets
77,297
79,591
76,418
75,932
83,522
Total assets
$
4,908,934
$
4,891,009
$
4,954,690
$
4,829,387
$
4,797,171
Liabilities:
Deposits:
Noninterest-bearing demand
$
863,949
$
903,300
$
907,254
$
898,044
$
923,763
Interest-bearing demand
834,207
988,057
996,298
1,006,915
993,717
Money market and savings
1,854,777
1,901,281
1,952,410
1,812,427
1,766,409
Time deposits
769,558
524,018
538,159
550,468
562,620
Total deposits
4,322,491
4,316,656
4,394,121
4,267,854
4,246,509
Borrowings
8,997
12,732
9,849
13,078
14,117
Subordinated debt
39,663
42,142
42,120
42,099
42,078
Other liabilities
48,760
47,014
41,804
46,470
47,815
Total liabilities
4,419,911
4,418,544
4,487,894
4,369,501
4,350,519
Shareholders' Equity:
Common stock
16,926
16,926
17,057
16,989
16,995
Additional paid-in capital
293,909
293,586
296,061
295,699
295,542
Retained earnings
195,537
187,751
181,103
173,105
168,271
Accumulated other comprehensive loss
(17,349
)
(25,798
)
(27,425
)
(25,907
)
(34,156
)
Total shareholders' equity
489,023
472,465
466,796
459,886
446,652
Total liabilities & shareholders'
equity
$
4,908,934
$
4,891,009
$
4,954,690
$
4,829,387
$
4,797,171
SmartFinancial, Inc. and
Subsidiary
Condensed Consolidated Financial
Information - (unaudited)
(dollars in thousands except share and
per share data)
Three Months Ended
Nine Months Ended
Sep
Jun
Mar
Dec
Sep
Sep
Sep
2024
2024
2024
2023
2023
2024
2023
Interest income:
Loans and leases, including fees
$
54,738
$
50,853
$
50,020
$
48,767
$
47,539
$
155,611
$
137,712
Investment securities:
Taxable
5,233
5,320
4,548
4,344
4,335
15,101
12,322
Tax-exempt
350
353
352
352
356
1,056
1,066
Federal funds sold and other earning
assets
3,635
4,759
4,863
4,032
3,045
13,255
9,448
Total interest income
63,956
61,285
59,783
57,495
55,275
185,023
160,548
Interest expense:
Deposits
27,350
27,439
27,035
24,926
23,433
81,824
59,333
Borrowings
709
148
128
162
210
985
775
Subordinated debt
865
884
899
890
626
2,647
1,877
Total interest expense
28,924
28,471
28,062
25,978
24,269
85,456
61,985
Net interest income
35,032
32,814
31,721
31,517
31,006
99,567
98,563
Provision for credit losses
2,575
883
(440
)
1,571
795
3,018
1,458
Net interest income after provision for
credit losses
32,457
31,931
32,161
29,946
30,211
96,549
97,105
Noninterest income:
Service charges on deposit accounts
1,780
1,692
1,612
1,673
1,736
5,084
4,838
Loss on sale of securities, net
—
—
—
—
(6,801
)
—
(6,801
)
Mortgage banking
410
348
280
227
309
1,038
813
Investment services
1,881
1,302
1,380
1,339
1,461
4,563
3,766
Insurance commissions
1,477
1,284
1,103
1,133
1,153
3,865
3,551
Interchange and debit card transaction
fees
1,349
1,343
1,253
1,370
1,357
3,945
4,087
Other
2,242
1,635
2,752
1,837
1,476
6,627
4,492
Total noninterest income
9,139
7,604
8,380
7,579
691
25,122
14,746
Noninterest expense:
Salaries and employee benefits
18,448
17,261
16,639
16,275
16,785
52,348
49,474
Occupancy and equipment
3,423
3,324
3,396
3,378
3,547
10,144
10,073
FDIC insurance
825
825
915
915
825
2,565
2,241
Other real estate and loan related
expense
460
538
584
781
603
1,582
1,616
Advertising and marketing
327
295
302
336
346
924
1,006
Data processing and technology
2,519
2,452
2,465
2,458
2,378
7,435
6,777
Professional services
1,201
1,064
924
1,136
735
3,190
2,307
Amortization of intangibles
604
608
612
643
647
1,824
1,981
Merger related and restructuring
expenses
—
—
—
—
110
—
110
Other
3,039
2,834
2,716
3,773
2,540
8,587
7,870
Total noninterest expense
30,846
29,201
28,553
29,695
28,516
88,599
83,455
Income before income taxes
10,750
10,334
11,988
7,830
2,386
33,072
28,396
Income tax expense
1,610
2,331
2,630
1,640
319
6,572
5,993
Net income
$
9,140
$
8,003
$
9,358
$
6,190
$
2,067
$
26,500
$
22,403
Earnings per common share:
Basic
$
0.55
$
0.48
$
0.56
$
0.37
$
0.12
$
1.58
$
1.33
Diluted
$
0.54
$
0.48
$
0.55
$
0.37
$
0.12
$
1.57
$
1.33
Weighted average common shares
outstanding:
Basic
16,726,658
16,770,819
16,849,735
16,814,647
16,807,548
16,782,200
16,801,840
Diluted
16,839,998
16,850,250
16,925,408
16,918,234
16,918,635
16,874,316
16,907,325
SmartFinancial, Inc. and
Subsidiary
Condensed Consolidated Financial
Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS
Three Months Ended
September 30, 2024
June 30, 2024
September 30, 2023
Average
Yield/
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Balance
Interest
Cost
Assets:
Loans and leases, including fees1
$
3,634,808
$
54,993
6.02
%
$
3,504,265
$
51,110
5.87
%
$
3,360,678
$
47,539
5.61
%
Taxable securities
564,978
5,233
3.68
%
580,517
5,320
3.69
%
743,054
4,335
2.31
%
Tax-exempt securities2
63,561
443
2.77
%
63,690
447
2.82
%
64,707
451
2.77
%
Federal funds sold and other earning
assets
267,252
3,634
5.41
%
346,459
4,759
5.52
%
229,487
3,045
5.26
%
Total interest-earning assets
4,530,599
64,303
5.65
%
4,494,931
61,636
5.52
%
4,397,926
55,370
4.99
%
Noninterest-earning assets
381,306
383,697
379,456
Total assets
$
4,911,905
$
4,878,628
$
4,777,382
Liabilities and Shareholders’
Equity:
Interest-bearing demand deposits
$
925,307
5,289
2.27
%
$
983,433
5,950
2.43
%
$
969,122
5,463
2.24
%
Money market and savings deposits
1,917,301
16,608
3.45
%
1,909,125
16,529
3.48
%
1,753,671
13,744
3.11
%
Time deposits
560,699
5,453
3.87
%
528,985
4,960
3.77
%
551,191
4,226
3.04
%
Total interest-bearing deposits
3,403,307
27,350
3.20
%
3,421,543
27,439
3.23
%
3,273,984
23,433
2.84
%
Borrowings
53,592
709
5.26
%
12,684
148
4.69
%
16,228
210
5.13
%
Subordinated debt
40,846
865
8.42
%
42,129
884
8.44
%
42,065
626
5.90
%
Total interest-bearing liabilities
3,497,745
28,924
3.29
%
3,476,356
28,471
3.29
%
3,332,277
24,269
2.89
%
Noninterest-bearing deposits
884,938
888,693
951,179
Other liabilities
50,580
47,208
48,494
Total liabilities
4,433,263
4,412,257
4,331,950
Shareholders' equity
478,642
466,371
445,432
Total liabilities and shareholders'
equity
$
4,911,905
$
4,878,628
$
4,777,382
Net interest income, taxable
equivalent
$
35,379
$
33,165
$
31,101
Interest rate spread
2.36
%
2.22
%
2.11
%
Tax equivalent net interest margin
3.11
%
2.97
%
2.81
%
Percentage of average interest-earning
assets to average interest-bearing liabilities
129.53
%
129.30
%
131.98
%
Percentage of average equity to average
assets
9.74
%
9.56
%
9.32
%
1 Yields computed on tax-exempt loans on a
tax equivalent basis include $255 thousand, $257 thousand, and $0
thousand of taxable equivalent income for the quarters ended
September 30, 2024, June 30, 2024, and September 30, 2023,
respectively.
2 Yields computed on tax-exempt
instruments on a tax equivalent basis include $93 thousand, $94
thousand, and $95 thousand of taxable equivalent income for the
quarters ended September 30, 2024, June 30, 2024, and September 30,
2023, respectively.
SmartFinancial, Inc. and
Subsidiary
Condensed Consolidated Financial
Information - (unaudited)
(dollars in thousands)
YIELD ANALYSIS
Nine Months Ended
September 30, 2024
September 30, 2023
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Assets:
Loans and leases, including fees1
$
3,532,768
$
156,123
5.90
%
$
3,309,616
$
137,712
5.56
%
Taxable securities
588,679
15,101
3.43
%
745,694
12,322
2.21
%
Tax-exempt securities2
63,804
1,336
2.80
%
65,170
1,349
2.77
%
Federal funds sold and other earning
assets
322,339
13,255
5.49
%
267,124
9,448
4.73
%
Total interest-earning assets
4,507,590
185,815
5.51
%
4,387,604
160,831
4.90
%
Noninterest-earning assets
381,743
365,123
Total assets
$
4,889,333
$
4,752,727
Liabilities and Shareholders’
Equity:
Interest-bearing demand deposits
$
968,139
17,299
2.39
%
$
954,585
14,583
2.04
%
Money market and savings deposits
1,910,452
49,285
3.45
%
1,770,232
35,912
2.71
%
Time deposits
543,887
15,240
3.74
%
508,600
8,838
2.32
%
Total interest-bearing deposits
3,422,478
81,824
3.19
%
3,233,417
59,333
2.45
%
Borrowings
25,941
985
5.07
%
19,309
775
5.37
%
Subordinated debt
41,691
2,647
8.48
%
42,044
1,877
5.97
%
Total interest-bearing liabilities
3,490,110
85,456
3.27
%
3,294,770
61,985
2.52
%
Noninterest-bearing deposits
882,168
972,507
Other liabilities
48,299
44,703
Total liabilities
4,420,577
4,311,980
Shareholders' equity
468,756
440,747
Total liabilities and shareholders'
equity
$
4,889,333
$
4,752,727
Net interest income, taxable
equivalent
$
100,359
$
98,846
Interest rate spread
2.24
%
2.39
%
Tax equivalent net interest margin
2.97
%
3.01
%
Percentage of average interest-earning
assets to average interest-bearing liabilities
129.15
%
133.17
%
Percentage of average equity to average
assets
9.59
%
9.27
%
1Yields computed on tax-exempt loans on a
tax equivalent basis included $512 thousand and $0 thousand of
taxable equivalent income for the nine months ended September 30,
2024, and 2023, respectively.
2Yields computed on tax-exempt instruments
on a tax equivalent basis included $280 thousand and $283 thousand
of taxable equivalent income for the nine months ended September
30, 2024, and 2023, respectively.
SmartFinancial, Inc. and
Subsidiary
Condensed Consolidated Financial
Information - (unaudited)
(dollars in thousands)
As of and for The Three Months
Ended
Sep
Jun
Mar
Dec
Sep
2024
2024
2024
2023
2023
Composition of Loans and
Leases:
Commercial real estate:
Owner occupied
$
868,077
$
829,085
$
804,557
$
798,416
$
776,402
Non-owner occupied
1,031,708
986,278
938,648
940,789
890,774
Commercial real estate, total
1,899,785
1,815,363
1,743,205
1,739,205
1,667,176
Commercial & industrial
731,600
701,460
667,903
645,918
617,115
Construction & land development
315,006
294,575
321,860
327,185
373,068
Consumer real estate
690,504
678,331
659,209
649,867
638,518
Leases
67,052
70,299
71,909
68,752
68,538
Consumer and other
13,531
14,130
13,469
13,535
14,584
Total loans and leases
$
3,717,478
$
3,574,158
$
3,477,555
$
3,444,462
$
3,378,999
Asset Quality and Additional Loan
Data:
Nonperforming loans and leases
$
9,491
$
6,642
$
6,266
$
8,101
$
4,163
Other real estate owned
179
688
696
517
1,370
Other repossessed assets
2,949
2,645
2,033
1,117
348
Total nonperforming assets
$
12,619
$
9,975
$
8,995
$
9,735
$
5,881
Modified loans and leases1 not included in
nonperforming loans and leases
$
4,053
$
4,241
$
4,413
$
4,245
$
2,376
Net charge-offs to average loans and
leases (annualized)
0.15
%
0.05
%
0.09
%
0.04
%
0.04
%
Allowance for credit losses to loans and
leases
0.96
%
0.97
%
0.98
%
1.02
%
1.00
%
Nonperforming loans and leases to total
loans and leases, gross
0.26
%
0.19
%
0.18
%
0.24
%
0.12
%
Nonperforming assets to total assets
0.26
%
0.20
%
0.18
%
0.20
%
0.12
%
Capital Ratios:
Equity to Assets
9.96
%
9.66
%
9.42
%
9.52
%
9.31
%
Tangible common equity to tangible assets
(Non-GAAP)2
7.99
%
7.66
%
7.43
%
7.47
%
7.23
%
SmartFinancial, Inc.3
Tier 1 leverage
8.44
%
8.32
%
8.23
%
8.27
%
8.13
%
Common equity Tier 1
10.06
%
10.06
%
10.20
%
10.14
%
10.07
%
Tier 1 capital
10.06
%
10.06
%
10.20
%
10.14
%
10.07
%
Total capital
11.63
%
11.68
%
11.85
%
11.78
%
11.90
%
SmartBank
Estimated4
Tier 1 leverage
9.18
%
9.11
%
9.07
%
9.18
%
9.00
%
Common equity Tier 1
10.92
%
11.02
%
11.23
%
11.26
%
11.15
%
Tier 1 capital
10.92
%
11.02
%
11.23
%
11.26
%
11.15
%
Total capital
11.70
%
11.79
%
12.00
%
12.02
%
11.87
%
1Borrowers that have experienced financial
difficulty.
2Total common equity less intangibles
divided by total assets less intangibles. See reconciliation of
Non-GAAP measures.
3All periods presented are estimated.
4 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
Nine Months Ended
Sep
Jun
Mar
Dec
Sep
Sep
Sep
2024
2024
2024
2023
2023
2024
2023
Selected Performance Ratios
(Annualized):
Return on average assets
0.74
%
0.66
%
0.77
%
0.52
%
0.17
%
0.72
%
0.63
%
Return on average shareholders' equity
7.60
%
6.90
%
8.16
%
5.46
%
1.84
%
7.55
%
6.80
%
Return on average tangible common
equity¹
9.75
%
8.94
%
10.63
%
7.18
%
2.43
%
9.77
%
9.02
%
Noninterest income / average assets
0.74
%
0.63
%
0.69
%
0.63
%
0.06
%
0.69
%
0.41
%
Noninterest expense / average assets
2.50
%
2.41
%
2.35
%
2.47
%
2.37
%
2.42
%
2.35
%
Efficiency ratio
69.83
%
72.25
%
71.20
%
75.95
%
89.96
%
71.06
%
73.65
%
Operating Selected Performance Ratios
(Annualized):
Operating return on average assets1
0.74
%
0.64
%
0.69
%
0.57
%
0.60
%
0.69
%
0.77
%
Operating PPNR return on average
assets1
1.08
%
0.90
%
0.84
%
0.86
%
0.84
%
0.94
%
1.03
%
Operating return on average shareholders'
equity1
7.60
%
6.72
%
7.29
%
6.07
%
6.41
%
7.21
%
8.35
%
Operating return on average tangible
common equity1
9.75
%
8.70
%
9.49
%
7.98
%
8.46
%
9.32
%
11.09
%
Operating efficiency ratio1
69.28
%
72.13
%
73.50
%
73.41
%
73.60
%
71.55
%
69.23
%
Operating noninterest income / average
assets1
0.74
%
0.60
%
0.58
%
0.63
%
0.62
%
0.64
%
0.61
%
Operating noninterest expense / average
assets1
2.50
%
2.41
%
2.35
%
2.39
%
2.36
%
2.42
%
2.34
%
Selected Interest Rates and
Yields:
Yield on loans and leases, excluding loan
fees, FTE
5.95
%
5.80
%
5.71
%
5.61
%
5.52
%
5.82
%
5.37
%
Yield on loans and leases, FTE
6.02
%
5.87
%
5.82
%
5.68
%
5.61
%
5.90
%
5.56
%
Yield on earning assets, FTE
5.65
%
5.52
%
5.36
%
5.22
%
4.99
%
5.51
%
4.90
%
Cost of interest-bearing deposits
3.20
%
3.23
%
3.16
%
3.00
%
2.84
%
3.19
%
2.45
%
Cost of total deposits
2.54
%
2.56
%
2.52
%
2.35
%
2.20
%
2.54
%
1.89
%
Cost of interest-bearing liabilities
3.29
%
3.29
%
3.23
%
3.07
%
2.89
%
3.27
%
2.52
%
Net interest margin, FTE
3.11
%
2.97
%
2.85
%
2.86
%
2.81
%
2.97
%
3.01
%
Per Common Share:
Net income, basic
$
0.55
$
0.48
$
0.56
$
0.37
$
0.12
$
1.58
$
1.33
Net income, diluted
0.54
0.48
0.55
0.37
0.12
1.57
1.33
Operating earnings, basic¹
0.55
0.47
0.50
0.41
0.43
1.51
1.64
Operating earnings, diluted¹
0.54
0.46
0.49
0.41
0.43
1.50
1.63
Book value
28.89
27.91
27.37
27.07
26.28
28.89
26.28
Tangible book value¹
22.67
21.66
21.12
20.76
19.94
22.67
19.94
Common shares outstanding
16,926,374
16,925,902
17,056,704
16,988,879
16,994,543
16,926,374
16,994,543
1Non-GAAP measure. See reconciliation of
Non-GAAP measures.
SmartFinancial, Inc. and
Subsidiary
Condensed Consolidated Financial
Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS
Three Months Ended
Nine Months Ended
Sep
Jun
Mar
Dec
Sep
Sep
Sep
2024
2024
2024
2023
2023
2024
2023
Operating Earnings:
Net income (GAAP)
$
9,140
$
8,003
$
9,358
$
6,190
$
2,067
$
26,500
$
22,403
Noninterest income:
Securities (gains) losses, net
—
—
—
—
6,801
—
6,801
Gain on sale of former branch building
—
(283
)
(1,346
)
—
—
(1,629
)
—
Noninterest expenses:
Donation of a former branch location
—
—
—
250
—
—
—
Accruals for pending litigation
—
—
—
675
—
—
—
Merger related and restructuring
expenses
—
—
—
—
110
—
110
Income taxes:
Income tax effect of adjustments
—
73
348
(239
)
(1,785
)
421
(1,785
)
Operating earnings (Non-GAAP)
$
9,140
$
7,793
$
8,360
$
6,876
$
7,193
$
25,292
$
27,529
Operating earnings per common share
(Non-GAAP):
Basic
$
0.55
$
0.47
$
0.50
$
0.41
$
0.43
$
1.51
$
1.64
Diluted
0.54
0.46
0.49
0.41
0.43
1.50
1.63
Operating Noninterest Income:
Noninterest income (GAAP)
$
9,139
$
7,604
$
8,380
$
7,579
$
691
$
25,122
$
14,746
Securities (gains) losses, net
—
—
—
—
6,801
—
6,801
Gain on sale of former branch building
—
(283
)
(1,346
)
—
—
(1,629
)
—
Operating noninterest income
(Non-GAAP)
$
9,139
$
7,321
$
7,034
$
7,579
$
7,492
$
23,493
$
21,547
Operating noninterest income
(Non-GAAP)/average assets1
0.74
%
0.60
%
0.58
%
0.63
%
0.62
%
0.64
%
0.61
%
Operating Noninterest Expense:
Noninterest expense (GAAP)
$
30,846
$
29,201
$
28,553
$
29,695
$
28,516
$
88,599
$
83,455
Donation of a former branch location
—
—
—
(250
)
—
—
—
Accruals for pending litigation
—
—
—
(675
)
—
—
—
Merger related and restructuring
expenses
—
—
—
—
(110
)
—
(110
)
Operating noninterest expense
(Non-GAAP)
$
30,846
$
29,201
$
28,553
$
28,770
$
28,406
$
88,599
$
83,345
Operating noninterest expense
(Non-GAAP)/average assets2
2.50
%
2.41
%
2.35
%
2.39
%
2.36
%
2.42
%
2.34
%
Operating Pre-provision Net revenue
("PPNR") Earnings:
Net interest income (GAAP)
$
35,032
$
32,814
$
31,721
$
31,517
$
31,006
$
99,567
$
98,563
Operating noninterest income
(Non-GAAP)
9,139
7,321
7,034
7,579
7,492
23,493
21,547
Operating noninterest expense
(Non-GAAP)
(30,846
)
(29,201
)
(28,553
)
(28,770
)
(28,406
)
(88,599
)
(83,345
)
Operating PPNR earnings (Non-GAAP)
$
13,325
$
10,934
$
10,202
$
10,326
$
10,092
$
34,461
$
36,765
Non-GAAP Return Ratios:
Operating return on average assets
(Non-GAAP)3
0.74
%
0.64
%
0.69
%
0.57
%
0.60
%
0.69
%
0.77
%
Operating PPNR return on average assets
(Non-GAAP)4
1.08
%
0.90
%
0.84
%
0.86
%
0.84
%
0.94
%
1.03
%
Return on average tangible common equity
(Non-GAAP)5
9.75
%
8.93
%
10.63
%
7.18
%
2.43
%
9.77
%
9.02
%
Operating return on average shareholders'
equity (Non-GAAP)6
7.60
%
6.72
%
7.29
%
6.07
%
6.41
%
7.21
%
8.35
%
Operating return on average tangible
common equity (Non-GAAP)7
9.75
%
8.70
%
9.49
%
7.98
%
8.46
%
9.32
%
11.09
%
Operating Efficiency Ratio:
Efficiency ratio (GAAP)
69.83
%
72.25
%
71.20
%
75.95
%
89.96
%
71.06
%
73.65
%
Adjustment for taxable equivalent
yields
(0.55
)
%
(0.63
)
%
(0.17
)
%
(0.18
)
%
(0.27
)
%
(0.45
)
%
(0.18
)
%
Adjustment for securities gains
(losses)
—
%
—
%
—
%
—
%
(15.89
)
%
—
%
(4.17
)
%
Adjustment for sale of branch location
—
%
0.51
%
2.46
%
—
%
—
%
0.94
%
—
%
Adjustment for donation of a former branch
location
—
%
—
%
—
%
(0.64
)
%
—
%
—
%
—
%
Adjustment for accruals for pending
litigation
—
%
—
%
—
%
(1.72
)
%
—
%
—
%
—
%
Adjustment for merger related income and
costs
—
%
—
%
—
%
—
%
(0.20
)
%
—
%
(0.07
)
%
Operating efficiency ratio (Non-GAAP)
69.28
%
72.13
%
73.50
%
73.41
%
73.60
%
71.55
%
69.23
%
1Operating noninterest income (Non-GAAP)
is annualized and divided by average assets.
2Operating noninterest expense (Non-GAAP)
is annualized and divided by average assets.
3Operating return on average assets
(Non-GAAP) is the annualized operating earnings (Non-GAAP) divided
by average assets.
4Operating PPNR return on average assets
(Non-GAAP) is the annualized operating PPNR earnings (Non-GAAP)
divided by average assets.
5Return on average tangible common equity
(Non-GAAP) is the annualized net income divided by average tangible
common equity (Non-GAAP).
6Operating return on average shareholders’
equity (Non-GAAP) is the annualized operating earnings (Non-GAAP)
divided by average equity.
7Operating return on average tangible
common equity (Non-GAAP) is the annualized operating earnings
(Non-GAAP) divided by average tangible common equity
(Non-GAAP).
SmartFinancial, Inc. and
Subsidiary
Condensed Consolidated Financial
Information - (unaudited)
(dollars in thousands)
NON-GAAP RECONCILIATIONS
Three Months Ended
Sep
Jun
Mar
Dec
Sep
2024
2024
2024
2023
2023
Tangible Common Equity:
Shareholders' equity (GAAP)
$
489,023
$
472,465
$
466,796
$
459,886
$
446,652
Less goodwill and other intangible
assets
105,324
105,929
106,537
107,148
107,792
Tangible common equity (Non-GAAP)
$
383,699
$
366,536
$
360,259
$
352,738
$
338,860
Average Tangible Common Equity:
Average shareholders' equity (GAAP)
$
478,642
$
466,371
$
461,148
$
449,526
$
445,432
Less average goodwill and other intangible
assets
105,701
106,301
106,920
107,551
108,194
Average tangible common equity
(Non-GAAP)
$
372,941
$
360,070
$
354,228
$
341,975
$
337,238
Tangible Book Value per Common
Share:
Book value per common share (GAAP)
$
28.89
$
27.91
$
27.37
$
27.07
$
26.28
Adjustment due to goodwill and other
intangible assets
(6.22)
(6.25)
(6.25)
(6.31)
(6.34)
Tangible book value per common share
(Non-GAAP)1
$
22.67
$
21.66
$
21.12
$
20.76
$
19.94
Tangible Common Equity to Tangible
Assets:
Total Assets (GAAP)
$
4,908,934
$
4,891,009
$
4,954,690
$
4,829,387
$
4,797,171
Less goodwill and other intangibles
105,324
105,929
106,537
107,148
107,792
Tangible Assets (Non-GAAP)
$
4,803,610
$
4,785,080
$
4,848,153
$
4,722,239
$
4,689,379
Tangible common equity to tangible assets
(Non-GAAP)
7.99%
7.66%
7.43%
7.47%
7.23%
1Tangible book value per share (Non-GAAP)
is computed by dividing total shareholders’ equity, less goodwill
and other intangible assets, by common shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241021822998/en/
Investor Contacts Billy Carroll President & Chief
Executive Officer Email: billy.carroll@smartbank.com Phone: (865)
868-0613 Nathan Strall Vice President and Director of Strategy
& Corporate Development Email: nathan.strall@smartbank.com
Phone: (865) 868-2604
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