KNOXVILLE, Tenn., July 22, 2024 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ((", SmartFinancial", or the ", Company", , NYSE:SMBK), today announced net income of $8.0 million, or $0.48 per diluted common share, for the second quarter of 2024, compared to net income of $8.8 million, or $0.52 per diluted common share, for the second quarter of 2023, and compared to prior quarter net income of $9.4 million, or $0.55 per diluted common share. Operating earnings1, which excludes non-recurring income, net of tax adjustments, totaled $7.8 million, or $0.46 per diluted common share, in the second quarter of 2024, compared to $8.8 million, or $0.52 per diluted common share, in the second quarter of 2023, and compared to $8.4 million, or $0.49 per diluted common share, in the first quarter of 2024. Highlights for the Second Quarter of 2024 Operating earnings1 of $7.8 million, or $0.46 per diluted common share Net organic loan and lease growth of $97 million with 11% annualized quarter-over-quarter increase Quarter-over-quarter net tax equivalent interest margin expansion of 12 basis points to 2.97% 10% annualized quarter-over-quarter increase in tangible book value per common share1 136,195 shares repurchased at a weighted average price of $21.57 Credit quality remains solid with nonperforming assets to total assets of 0.20% ___________________________________1 Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliations Billy Carroll, President & CEO, stated: "Our Company continued to gain momentum with a very nice second quarter highlighted by solid growth in operating revenue and a 10% annualized increase in tangible book value per share quarter over quarter.  We also took advantage of our liquidity position, growing loans at an 11% quarterly annualized pace.  Margin inflection accelerated during the quarter, and we look forward to seeing that trend continue.  The sales energy around our Company is very strong and our outlook for the second half of 2024 remains bullish as we gain further operating leverage." SmartFinancial's Chairman, Miller Welborn, concluded: "The Board of Directors was pleased to see operating leverage expansion and strong loan growth during the second quarter. The Company's markets continue to provide great organic growth opportunities that we look forward to winning. We continue to strategically progress towards our longer-term financial objectives and this quarter's margin expansion and expense control is a good demonstration of our team's ability to execute our plan. We are confident in our team and look forward to continued improvement as the year progresses." Net Interest Income and Net Interest Margin Net interest income was $32.8 million for the second quarter of 2024, compared to $31.7 million for the prior quarter. Average earning assets totaled $4.5 billion for the current and prior quarters. The categories of average earnings assets changed quarter-over-quarter, primarily from an increase in average loans and leases of $46.2 million, offset by a decrease in average securities of $40.8 million and average interest-earning cash of $7.5 million. Average interest-bearing liabilities decreased by $19.8 million from the prior quarter, attributable to a decrease in average deposits of $21.3 million, offset by an increase in average borrowings of $1.4 million. The tax equivalent net interest margin was 2.97% for the second quarter of 2024, compared to 2.85% for the prior quarter. The tax equivalent net interest margin was positively impacted by the increased yield on interest-earning assets, quarter-over-quarter, coupled with a slower rise on the cost of interest-bearing liabilities, quarter-over-quarter. The yield on loans and leases, excluding loan fees, on a fully tax equivalent basis ("FTE") was 5.80% for the second quarter, compared to 5.71% for the prior quarter. The cost of total deposits for the second quarter of 2024 was 2.56% compared to 2.52% in the prior quarter. The cost of interest-bearing liabilities increased to 3.29% for the second quarter of 2024, compared to 3.23% for the prior quarter. The cost of average interest-bearing deposits was 3.23% for the second quarter of 2024, compared to 3.16% for the prior quarter, an increase of 7 basis points.   The following table presents selected interest rates and yields for the periods indicated:     Three Months Ended             Jun   Mar   Increase   Selected Interest Rates and Yields   2024   2024   (Decrease)   Yield on loans and leases, excluding loan fees, FTE   5.80   % 5.71   % 0.09   % Yield on loans and leases, FTE   5.87   % 5.82   % 0.05   % Yield on earning assets, FTE   5.52   % 5.36   % 0.16   % Cost of interest-bearing deposits   3.23   % 3.16   % 0.07   % Cost of total deposits   2.56   % 2.52   % 0.04   % Cost of interest-bearing liabilities   3.29   % 3.23   % 0.06   % Net interest margin, FTE   2.97   % 2.85   % 0.12   % Provision for Credit Losses on Loans and Leases and Credit Quality At June 30, 2024, the allowance for credit losses was $34.7 million. The allowance for credit losses to total loans and leases was 0.97% as of June 30, 2024, compared to 0.98% as of March 31, 2024.   The following table presents detailed information related to the provision for credit losses for the periods indicated (dollars in thousands):     Three Months Ended             Jun   Mar   Increase   Provision for Credit Losses on Loans and Leases Rollforward     2024       2024     (Decrease)   Beginning balance   $ 34,203     $ 35,066     $ (863 )   Charge-offs     (457 )     (920 )     463     Recoveries     48       135       (87 )   Net (charge-offs) recoveries     (409 )     (785 )     376     Provision for credit losses (1)     896       (78 )     974     Ending balance   $ 34,690     $ 34,203     $ 487                           Allowance for credit losses to total loans and leases, gross     0.97   %   0.98   %   (0.01 ) %   (1) The current quarter-ended and prior quarter-ended excludes unfunded commitments release of $13 thousand and $362 thousand, respectively. At June 30, 2024, the unfunded commitment liability totaled $2.0 million. Nonperforming loans and leases as a percentage of total loans and leases was 0.19% as of June 30, 2024, an increase of 1 basis point from the 0.18% reported in the first quarter of 2024. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.20% as of June 30, 2024, and 0.18% on March 31, 2024. The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):     Three Months Ended               Jun       Mar     Increase   Credit Quality     2024       2024     (Decrease)   Nonaccrual loans and leases   $ 6,432     $ 6,171     $ 261     Loans and leases past due 90 days or more and still accruing     210       95       115     Total nonperforming loans and leases     6,642       6,266       376     Other real estate owned     688       696       (8 )   Other repossessed assets     2,645       2,033       612     Total nonperforming assets   $ 9,975     $ 8,995     $ 980                               Nonperforming loans and leases to total loans and leases, gross     0.19   %   0.18   %   0.01   % Nonperforming assets to total assets     0.20   %   0.18   %   0.02   % Noninterest Income Noninterest income decreased $776 thousand to $7.6 million for the second quarter of 2024 compared to $8.4 million for the prior quarter. The current quarter decrease was primarily associated with the $1.3 million pre-tax gain on the sale of a former branch building in the prior quarter, offset by a $283 thousand pre-tax gain on the sale of a bank property in the current quarter.   The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):     Three Months Ended             Jun       Mar     Increase Noninterest Income     2024       2024     (Decrease) Service charges on deposit accounts   $ 1,692     $ 1,612     $ 80   Mortgage banking income     348       280       68   Investment services     1,302       1,380       (78 ) Insurance commissions     1,284       1,103       181   Interchange and debit card transaction fees     1,343       1,253       90   Other     1,635       2,752       (1,117 ) Total noninterest income   $ 7,604     $ 8,380     $ (776 ) Noninterest Expense Noninterest expense increased $648 thousand to $29.2 million for the second quarter of 2024 compared to $28.6 million for the prior quarter. The current quarter increase was primarily related to an increase in salaries and employee benefits related to incentive accruals for production performance. The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):     Three Months Ended             Jun       Mar     Increase Noninterest Expense     2024       2024     (Decrease) Salaries and employee benefits   $ 17,261     $ 16,639     $ 622   Occupancy and equipment     3,324       3,396       (72 ) FDIC insurance     825       915       (90 ) Other real estate and loan related expenses     538       584       (46 ) Advertising and marketing     295       302       (7 ) Data processing and technology     2,452       2,465       (13 ) Professional services     1,064       924       140   Amortization of intangibles     608       612       (4 ) Other     2,834       2,716       118   Total noninterest expense   $ 29,201     $ 28,553     $ 648   Income Tax Expense Income tax expense was $2.3 million for the second quarter of 2024, a decrease of $299 thousand, compared to $2.6 million for the prior quarter. The effective tax rate was 22.56% for the second quarter of 2024 and 21.94% for the prior quarter. Balance Sheet Trends Total assets at June 30, 2024 were $4.89 billion compared to $4.83 billion at December 31, 2023. The $61.6 million increase is primarily attributable to increases loans and leases of $129.7 million, offset by a decrease in securities of $59.8 million and cash and cash equivalents of $9.4 million. Total liabilities increased to $4.42 billion at June 30, 2024 from $4.37 billion at December 31, 2023. The increase of $49.0 million was primarily from organic deposit growth of $48.8 million. Shareholders' equity at June 30, 2024, totaled $472.5 million, an increase of $12.6 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $17.4 million for the six months ended June 30, 2024, offset by dividends paid of $2.7 million and repurchase of the Company's stock of $3.0 million. Tangible book value per share1 was $21.66 at June 30, 2024, compared to $20.76 at December 31, 2023. Tangible common equity1 as a percentage of tangible assets1 was 7.66% at June 30, 2024, compared with 7.47% at December 31, 2023. ___________________________________1 Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliation The following table presents selected balance sheet information for the periods indicated (dollars in thousands):     Jun   Dec   Increase Selected Balance Sheet Information   2024   2023   (Decrease) Total assets   $ 4,891,009     $ 4,829,387     $ 61,622   Total liabilities     4,418,544       4,369,501       49,043   Total equity     472,465       459,886       12,579   Securities     629,817       689,646       (59,829 ) Loans and leases     3,574,158       3,444,462       129,696   Deposits     4,316,656       4,267,854       48,802   Borrowings     12,732       13,078       (346 ) Conference Call Information SmartFinancial issued this earnings release for the second quarter of 2024 on Monday, July 22, 2024, and will host a conference call on Tuesday, July 23, 2024, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 533803. A replay of the conference call will be available through August 22, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 897395. Conference call materials will be published on the Company's webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call. About SmartFinancial, Inc. SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and Florida. Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank's success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com. Source   SmartFinancial, Inc.       Investor Contacts   Billy Carroll   President & CEO   (865)       Ron Gorczynski   Executive Vice President, Chief Financial Officer   (865) 437-5724        Media Contact   Kelley Fowler   Senior Vice President, Public Relations & Marketing   (865) 868-0611    Non-GAAP Financial Measures Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles ("GAAP") and therefore are considered Non-GAAP financial measures ("Non-GAAP") and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures and ratios derived therefrom in its analysis of the Company's performance, including:   (i) Operating earnings   (ii) Operating noninterest income   (iii) Operating noninterest expense   (iv) Operating pre-provision net revenue ("PPNR") earnings   (v) Tangible common equity   (vi) Average tangible common equity   (vii) Tangible book value per common share   (viii) Tangible assets Operating earnings, operating noninterest income, operating noninterest expense and operating PPNR exclude non-operating related income and expense items, respectively. Tangible common equity and average tangible common equity excludes goodwill and other intangible assets from shareholders' equity and average shareholders' equity, respectively. Tangible book value per common share is tangible common equity divided by common shares outstanding. Tangible assets excludes goodwill and other intangibles from total assets. A detailed reconciliation of these items and ratios derived therefrom is available in the Non-GAAP reconciliations. Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers. Management also believes these Non-GAAP financial measures enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Forward-Looking Statements This news release may contain statements that are based on management's current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and can generally be identified by such words as "expect," "anticipate," "intend," "plan," "believe," "seek," "may," "estimate," and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others,   (1) risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively;   (2) claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters;   (3) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize;   (4) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships;   (5) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank;   (6) changes in management's plans for the future;   (7) prevailing, or changes in, economic or political conditions, particularly in our market areas, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing;   (8) our ability to anticipate interest rate changes and manage interest rate risk (including the impact of higher interest rates on macroeconomic conditions, competition, and the cost of doing business and the impact of prolonged elevated interest rates on our financial projections, models and guidance);   (9) increased technology and cybersecurity risks, including generative artificial intelligence risks;   (10) credit risk associated with our lending activities;   (11) changes in loan demand, real estate values, or competition;   (12) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance;   (13) changes in accounting principles, policies, or guidelines;   (14) changes in applicable laws, rules, or regulations;   (15) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions;   (16) potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto;   (17) significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities;   (18) the effects of war or other conflicts including the impacts related to or resulting from Russia's military action in Ukraine or the conflict in Israel and surrounding areas; and   (19) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial's most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the "SEC") and available on the SEC's website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise. SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)   Ending Balances   Jun      Mar      Dec      Sep      Jun   2024   2024   2023   2023   2023 Assets:                                 Cash and cash equivalents $ 342,835     $ 477,941     $ 352,271     $ 400,258     $ 238,898   Securities available-for-sale, at fair value   500,821       474,347       408,410       385,131       540,308   Securities held-to-maturity, at amortized cost   128,996       180,169       281,236       282,313       283,564   Other investments   13,780       13,718       13,662       13,805       14,396   Loans held for sale   3,103       4,861       4,418       2,734       986   Loans and leases   3,574,158       3,477,555       3,444,462       3,378,999       3,337,790   Less: Allowance for credit losses   (34,690 )     (34,203 )     (35,066 )     (33,687 )     (32,747 ) Loans and leases, net   3,539,468       3,443,352       3,409,396       3,345,312       3,305,043   Premises and equipment, net   91,315       92,694       92,963       92,020       92,351   Other real estate owned   688       696       517       1,370       1,708   Goodwill and other intangibles, net   105,929       106,537       107,148       107,792       108,439   Bank owned life insurance   84,483       83,957       83,434       82,914       82,419   Other assets   79,591       76,418       75,932       83,522       77,688   Total assets $ 4,891,009     $ 4,954,690     $ 4,829,387     $ 4,797,171     $ 4,745,800   Liabilities:                                  Deposits:                                  Noninterest-bearing demand $ 903,300     $ 907,254     $ 898,044     $ 923,763     $ 1,003,432   Interest-bearing demand   988,057       996,298       1,006,915       993,717       938,758   Money market and savings   1,901,281       1,952,410       1,812,427       1,766,409       1,720,202   Time deposits   524,018       538,159       550,468       562,620       537,192   Total deposits   4,316,656       4,394,121       4,267,854       4,246,509       4,199,584   Borrowings   12,732       9,849       13,078       14,117       15,496   Subordinated debt   42,142       42,120       42,099       42,078       42,057   Other liabilities   47,014       41,804       46,470       47,815       43,816   Total liabilities   4,418,544       4,487,894       4,369,501       4,350,519       4,300,953   Shareholders' Equity:                             Common stock   16,926       17,057       16,989       16,995       17,004   Additional paid-in capital   293,586       296,061       295,699       295,542       295,296   Retained earnings   187,751       181,103       173,105       168,271       167,564   Accumulated other comprehensive loss   (25,798 )     (27,425 )     (25,907 )     (34,156 )     (35,017 ) Total shareholders' equity   472,465       466,796       459,886       446,652       444,847   Total liabilities & shareholders' equity $ 4,891,009     $ 4,954,690     $ 4,829,387     $ 4,797,171     $ 4,745,800   SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands except share and per share data)   Three Months Ended   Six Months Ended   Jun      Mar      Dec      Sep      Jun      Jun      Jun   2024   2024   2023   2023   2023   2024   2023 Interest income:                                                        Loans and leases, including fees $ 50,853     $ 50,020     $ 48,767     $ 47,539     $ 45,446     $ 100,873     $ 90,173   Investment securities:                                                          Taxable   5,320       4,548       4,344       4,335       4,335       9,869       7,986   Tax-exempt   353       352       352       356       357       705       709   Federal funds sold and other earning assets   4,759       4,863       4,032       3,045       1,956       9,620       6,405   Total interest income   61,285       59,783       57,495       55,275       52,094       121,067       105,273   Interest expense:                                                          Deposits   27,439       27,035       24,926       23,433       19,554       54,474       35,900   Borrowings   148       128       162       210       339       276       564   Subordinated debt   884       899       890       626       626       1,782       1,252   Total interest expense   28,471       28,062       25,978       24,269       20,519       56,532       37,716   Net interest income   32,814       31,721       31,517       31,006       31,575       64,535       67,557   Provision for credit losses   883       (440 )     1,571       795       113       443       663   Net interest income after provision for credit losses   31,931       32,161       29,946       30,211       31,462       64,092       66,894   Noninterest income:                                                          Service charges on deposit accounts   1,692       1,612       1,673       1,736       1,657       3,304       3,102   Loss on sale of securities, net   —       —       —       (6,801 )     —       —       —   Mortgage banking   348       280       227       309       332       628       504   Investment services   1,302       1,380       1,339       1,461       1,300       2,682       2,305   Insurance commissions   1,284       1,103       1,133       1,153       1,139