SmartFinancial (SMBK) Q2 2025 Earnings Call July 22, 2025 10:00 AM ET Company ParticipantsNate Strall - VP, Director of Strategy & Corporate DevelopmentWilliam Carroll - President & CEORon Gorczynski - EVP & CFOMiller Welborn - ChairmanCatherine Mealor - Managing DirectorRussell Gunther - Managing DirectorRhett Jordan - EVP & Chief Credit OfficerThomas Bernard Reid - Financial AdvisorChristopher Marinac - Director - ResearchConference Call ParticipantsStephen Scouten - MD & Senior Research AnalystOperatorHe ...

Financial Data and Key Metrics Changes - The company reported a net income of $11.7 million or $0.69 per diluted share for Q2 2025, indicating strong performance [6] - Tangible book value increased to $24.42 per share, representing over 13% annualized growth quarter over quarter [7] - Total revenue for the quarter was $49.2 million, with net interest income expanding as anticipated [9] Business Line Data and Key Metrics Changes - Loan growth was at a 13% annualized pace for Q2, exceeding expectations, while deposit growth was 5% quarter over quarter annualized [8] - Noninterest income rose by $300,000 to $8.9 million, driven by higher insurance and mortgage banking revenues [16] Market Data and Key Metrics Changes - The average portfolio yield, including fees and accretion, was up to 6.07%, with new loan production contributing positively [12] - The loan to deposit ratio was maintained at 85%, with noninterest bearing deposits comprising 90% of total deposits [14] Company Strategy and Development Direction - The company aims to deepen its presence in existing markets rather than pursuing new market expansions, focusing on organic growth [33][81] - Talent acquisition remains a priority, with plans to add 10 new revenue-producing team members in commercial banking, private banking, and treasury management [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in EPS and revenue, with solid pipelines and a focus on operational efficiency [20][22] - The company anticipates margin expansion of 2 to 3 basis points per quarter for the second half of 2025, despite expected increases in deposit costs [15][47] Other Important Information - The company maintained a strong credit quality with non-performing assets at just 0.19% of total assets [16] - Operating expenses were recorded at $32.6 million, at the low end of the guided range, with a modest increase attributed to merit increases and incentive compensation [17] Q&A Session Summary Question: Loan growth and future potential - Management believes maintaining a high single-digit growth rate is feasible, with potential for low double-digit growth if new hires are effective [25][28] Question: Geographic focus for new hires - New hires are spread across various regions, including Tennessee, Alabama, and the Gulf Coast, with no specific geographic concentration [29][30] Question: Future revenue targets and growth strategy - The company is focused on deepening its market presence and achieving set targets for 2025, with ongoing planning for 2026 [31][34] Question: Margin expectations and deposit costs - The company expects to see margin expansion despite rising deposit costs, with a forecasted margin of 3.3% to 3.35% for Q3 [15][47] Question: Credit quality and stress testing - Management reported no signs of weakness in credit quality and has conducted stress testing on lower-yielding loans maturing in Q4 [71][75] Question: Recruitment and market expansion - The company is focused on organic growth and recruitment within existing markets, with no immediate plans for major market expansions [81][82]

Financial Performance Highlights - The company's GAAP Earnings Per Share (EPS) increased from $0.48 in 2Q24 to $0.69 in 2Q25[10] - The company's Operating EPS increased from $0.46 in 2Q24 to $0.69 in 2Q25[10] - The company's Operating Return on Average Assets (ROAA) was 0.88% in 2Q25[10] - The company's Operating Return on Average Tangible Common Equity (ROATCE) was 11.5% in 2Q25[10] - The company's Tangible Book Value (TBV) per share increased from $21.66 in 2Q24 to $24.42 in 2Q25[10] Balance Sheet and Loan Portfolio - Total assets reached $5.5 billion[10] - Total loans amounted to $4.1 billion[39] - Total deposits reached $4.9 billion[39] - The loan-to-deposit ratio was 85%[10] - Non-Performing Assets (NPAs) to total assets ratio was 0.19%[10]

Financial Performance - For the quarter ended June 2025, SmarFinancial (SMBK) reported revenue of $49.24 million, up 21.8% year-over-year [1] - EPS for the quarter was $0.69, compared to $0.46 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $48.71 million by +1.09% [1] - EPS also surpassed the consensus estimate of $0.66 by +4.55% [1] Key Metrics - Efficiency Ratio was 66.1%, better than the three-analyst average estimate of 67% [4] - Net Interest Margin was reported at 3.3%, matching the average estimate [4] - Net charge-offs to average loans were 0%, compared to the two-analyst average estimate of 0.1% [4] - Average Balance of Total interest earning assets was $4.96 billion, in line with estimates [4] - Total noninterest income was $8.9 million, exceeding the average estimate of $8.61 million [4] - Interchange and debit card transaction fees were $1.34 million, slightly above the average estimate of $1.32 million [4] - Service charges on deposit accounts were $1.77 million, slightly below the average estimate of $1.79 million [4] - Other noninterest income was $2.17 million, significantly above the two-analyst average estimate of $1.85 million [4] - Investment services revenue was $1.44 million, below the average estimate of $1.55 million [4] - Insurance commissions were $1.55 million, exceeding the average estimate of $1.33 million [4] - Net interest income (FTE) was $40.69 million, above the two-analyst average estimate of $40.19 million [4] Stock Performance - Shares of SmarFinancial have returned +14.7% over the past month, outperforming the Zacks S&P 500 composite's +5.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

SmarFinancial (SMBK) came out with quarterly earnings of $0.69 per share, beating the Zacks Consensus Estimate of $0.66 per share. This compares to earnings of $0.46 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +4.55%. A quarter ago, it was expected that this bank holding company would post earnings of $0.55 per share when it actually produced earnings of $0.67, delivering a surprise of +21.82%.Over the last four quarters, ...

Exhibit 99.1 2Q 2025 SmartFinancial Announces Results for the Second Quarter 2025 KNOXVILLE, TN – July 21, 2025 - SmartFinancial, Inc. ("SmartFinancial" or the "Company"; NYSE: SMBK), today announced net income of $11.7 million, or $0.69 per diluted common share, for the second quarter of 2025, compared to net income of $8.0 million, or $0.48 per diluted common share, for the second quarter of 2024, and compared to prior quarter net income of $11.3 million, or $0.67 per diluted common share. Operating earni ...

Financial Performance - Net income for Q1 2025 was $11.3 million, or $0.67 per diluted common share, compared to $9.4 million, or $0.55 per diluted common share in Q1 2024, representing an increase of 20.2%[151] - Net interest income rose to $38.6 million in Q1 2025, up from $31.8 million in Q1 2024, driven by higher loan and lease balances[154] - Noninterest income was $8.6 million in Q1 2025, a slight increase from $8.4 million in Q1 2024[152] - Noninterest expense increased to $32.3 million in Q1 2025 from $28.6 million in Q1 2024, reflecting higher operational costs[152] - The effective tax rate decreased to approximately 17.01% in Q1 2025 from 21.94% in Q1 2024, with income tax expense totaling $2.3 million compared to $2.6 million[162] Asset and Loan Growth - Net loans and leases increased by $85.1 million from December 31, 2024, reflecting strong organic growth[151] - Total net loans and leases outstanding reached approximately $3.95 billion as of March 31, 2025, up from $3.87 billion at December 31, 2024[163] - The composition of the loan portfolio included 27.9% in non-owner occupied commercial real estate and 22.2% in owner-occupied commercial real estate as of March 31, 2025[163] - Total accruing loans past due (30-89 days) amounted to $7,667 thousand, representing 0.19% of total loans as of March 31, 2025, while total loans past due for 90 days or more were $183 thousand[166] Deposit Growth - Total deposits grew by $122.2 million from December 31, 2024, indicating robust customer confidence[151] - Total deposits as of March 31, 2025, were $4.81 billion, an increase of $122.2 million from December 31, 2024[179] - The average balance of noninterest-bearing demand deposits was $884.1 million, accounting for 18.9% of total deposits[176] - Money market and savings accounts had an average balance of $2.06 billion, representing 44.1% of total deposits with an average interest rate of 2.96%[176] Interest Income and Margin - The tax equivalent net interest margin increased to 3.21% in Q1 2025, compared to 2.85% in Q1 2024[153] - Total interest-earning assets increased to $4,867,260 thousand in Q1 2025, compared to $4,496,988 thousand in Q1 2024, reflecting a yield increase from 5.36% to 5.56%[155] - The interest rate spread improved to 2.59% in Q1 2025 from 2.13% in Q1 2024, indicating better net interest margin performance[155] Credit Quality - The provision for credit losses was $979 thousand in Q1 2025, compared to a reversal of $440 thousand in Q1 2024, indicating a shift in credit quality outlook[152] - Nonperforming loans and leases remained stable at 0.20% of total gross loans and leases as of March 31, 2025, consistent with December 31, 2024[165] - The allowance for credit losses was $38.2 million as of March 31, 2025, compared to $37.4 million as of December 31, 2024, maintaining a ratio of 0.96% of total loans and leases[167] Securities and Borrowings - The securities portfolio increased from $609.0 million at December 31, 2024, to $625.0 million at March 31, 2025, primarily due to purchases of available-for-sale securities[172] - Short-term borrowings totaled $4.0 million, and long-term debt was $39.7 million as of March 31, 2025[182] - The Company had $844.5 million of pre-approved but unused lines of credit and $23.6 million of standby letters of credit as of March 31, 2025[184] Liquidity and Risk Management - The Company anticipates adequate liquidity to meet expected customer obligations[192] - The Market Risk and Liquidity Risk Management information is referenced in the Management's Discussion and Analysis section[194]

Core Viewpoint - SmarFinancial (SMBK) is experiencing solid improvements in earnings estimates, which is likely to positively impact its stock price in the near term [1][2]. Earnings Estimates - Analysts are increasingly optimistic about SmarFinancial's earnings prospects, leading to higher estimates that should reflect in the stock price [2]. - The consensus earnings estimate for the current quarter is $0.63 per share, indicating a year-over-year increase of +36.96% [6]. - For the full year, the earnings estimate stands at $2.58 per share, representing a change of +24.64% from the previous year [7]. Estimate Revisions - Over the past month, two estimates for the current year have moved higher, while no negative revisions have occurred, resulting in a 5.42% increase in the consensus estimate [8]. - The Zacks Consensus Estimate for the current quarter has increased by 6.82% due to one upward revision and one downward revision in the last 30 days [6]. Zacks Rank - SmarFinancial currently holds a Zacks Rank 1 (Strong Buy), which is based on the positive estimate revisions and has a proven track record of outperforming the market [9]. - Stocks with a Zacks Rank 1 and 2 significantly outperform the S&P 500, indicating strong investment potential [9]. Stock Performance - The stock has gained 6.8% over the past four weeks, reflecting investor confidence driven by solid estimate revisions [10].

Financial Performance Highlights - The company reported GAAP Earnings Per Share (EPS) of $0.55 for 1Q25, compared to $0.57 in 4Q24 and $0.49 in 1Q24[10] - Operating EPS reached $0.67 in 1Q25, up from $0.57 in 4Q24 and $0.49 in 1Q24[10] - Tangible book value per share increased to $23.61 in 1Q25, from $22.85 in 4Q24 and $21.12 in 1Q24[10] - Operating Return on Average Assets (ROAA) was 0.87% in 1Q25, compared to 0.75% in 4Q24 and 0.69% in 1Q24[10] - Operating Return on Average Tangible Common Equity (ROATCE) was 11.6% in 1Q25, up from 9.9% in 4Q24 and 9.5% in 1Q24[10] Balance Sheet and Loan Portfolio - Total assets reached $5.4 billion[10,39] - Total loans amounted to $4.0 billion[39] - Total deposits reached $4.8 billion[39] - The loan-to-deposit ratio stood at 83%[10] - Non-performing assets represented 0.19% of total assets[10]

Financial Data and Key Metrics Changes - The company reported net income of $11.3 million or 67 cents per diluted share for Q1 2025, reflecting strong performance [10] - Tangible book value increased to $23.61 per share, representing over 9% annualized growth quarter over quarter [11] - Total revenue reached $46.8 million, with net interest income expanding as anticipated [15] Business Line Data and Key Metrics Changes - Loan growth was at a 9% annualized pace for Q1, meeting expectations, while deposit growth was 10% quarter over quarter annualized [13] - Non-interest income for the quarter totaled $8.6 million, exceeding guidance due to stronger insurance and mortgage banking revenues [28] - Non-interest expenses remained stable at just over $32 million, indicating effective cost management [16][29] Market Data and Key Metrics Changes - The loan to deposit ratio held steady at 83%, providing flexibility for future growth [20] - The weighted average cost of non-broker deposits was 3.39%, with total interest-bearing costs decreasing by 10 basis points to 0.92% [22] - Net interest margin was reported at 3.21%, slightly down from the previous quarter but in line with guidance [24] Company Strategy and Development Direction - The company is focused on leveraging growth and maintaining a strong position in attractive markets, emphasizing the importance of talent acquisition [33][36] - Management expressed confidence in achieving mid to high single-digit growth rates while remaining prudent in expense management [57] - The company is prioritizing organic growth and is open to potential deposit-based acquisitions if opportunities arise [140][156] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about loan growth prospects despite economic uncertainties, citing strong client sentiment and business performance [46][52] - The company anticipates margin expansion of 2 to 3 basis points quarterly throughout 2025, driven by new loan production and amortization of lower-yielding loans [26] - Asset quality remains strong, with non-performing assets at 0.19% of total assets [27] Other Important Information - The effective corporate tax rate for the quarter was approximately 17%, with expectations to stabilize between 18% to 19% going forward [30] - The company welcomed a new board member, Kelly Showmaker, enhancing its governance and strategic oversight [40] Q&A Session Summary Question: Customer sentiment and loan growth outlook - Management noted strong market conditions and positive client feedback, indicating confidence in maintaining loan growth despite economic volatility [45][46] Question: Balance sheet leverage and deposit ratios - The company is positioned for prudent growth, with a focus on maintaining appropriate loan and credit structures while exploring opportunities for balance sheet optimization [53][56] Question: Share repurchase plans - The company has approximately $1.5 million left for share repurchases and will consider buying back shares as valuations improve [60][63] Question: Margin expectations and Fed rate cuts - Management indicated that they are slightly liability sensitive and expect to benefit from potential Fed rate cuts, which could enhance net interest margin [70][72] Question: Fee income outlook and performance - The company anticipates low to mid $8 million range for non-interest income in Q2, driven by strong performance in insurance and mortgage banking [28][113] Question: Equipment financing and leasing business - Management expressed satisfaction with the growth of the equipment financing segment, indicating it has been a profitable addition to the business [148][153] Question: M&A considerations - The company is primarily focused on organic growth but remains open to attractive acquisition opportunities, particularly in the deposit space [140][156]