DISCLOSURES Forward-Looking Statements This presentation 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 on SmartFinancial Inc.'s ("SmartFinancial") business and financial results and conditions, are not historical in nature and can generally be identified by such words as "expect," ...

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]

Core Viewpoint - SmarFinancial (SMBK) reported quarterly earnings of $0.67 per share, exceeding the Zacks Consensus Estimate of $0.55 per share, and showing an increase from $0.49 per share a year ago, indicating a strong performance in the recent quarter [1][2] Financial Performance - The company achieved revenues of $46.84 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.84% and up from $40.1 million year-over-year [2] - Over the last four quarters, SmarFinancial has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Performance - SmarFinancial shares have declined approximately 6.8% since the beginning of the year, while the S&P 500 has seen a decline of 10.2%, indicating relative outperformance [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.59, with expected revenues of $47.7 million, and for the current fiscal year, the EPS estimate is $2.45 on revenues of $193.93 million [7] - The trend of estimate revisions for SmarFinancial is mixed, which could change following the recent earnings report [6] Industry Context - The Banks - Northeast industry, to which SmarFinancial belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact SmarFinancial's stock performance [5]

Financial Performance - SmartFinancial reported net income of $11.3 million, or $0.67 per diluted common share, for Q1 2025, up from $9.4 million, or $0.55 per diluted common share, in Q1 2024[2]. - Net income for Q1 2025 reached $11,254,000, an increase of 16.5% compared to $9,640,000 in Q4 2024[46]. - Basic earnings per share for Q1 2025 was $0.67, up from $0.58 in Q4 2024, marking a 15.5% increase[38]. - Operating earnings per common share (Non-GAAP) increased to $0.67 in Q1 2025 from $0.57 in Q4 2024, reflecting a growth of 17.6%[46]. - Return on average assets improved to 0.87% in Q1 2025, compared to 0.75% in Q4 2024[44]. - Return on average shareholders' equity increased to 9.17% in Q1 2025, up from 7.84% in Q4 2024[44]. Asset and Deposit Growth - Total assets increased to $5.41 billion as of March 31, 2025, compared to $5.28 billion at December 31, 2024, driven by an increase in loans and leases of $85.9 million[18]. - Total deposits rose by $122.2 million, primarily due to increases in money market deposits of $92.3 million and other time deposits of $54.9 million[19]. - Total assets increased to $5,411,217 thousand as of March 2025, up from $5,275,904 thousand in December 2024, representing a growth of 2.4%[37]. - Total deposits rose to $4,808,659 thousand, compared to $4,686,483 thousand in December 2024, marking an increase of 2.6%[37]. Loan and Lease Performance - The company achieved a net organic loan and lease growth of $86 million, reflecting a 9% annualized increase quarter-over-quarter[6]. - Loans and leases net amount reached $3,954,032 thousand, an increase from $3,868,917 thousand in December 2024, reflecting a growth of 2.2%[37]. - Total loans and leases increased to $3,992,207 thousand as of March 2025, up 2.2% from $3,906,340 thousand in December 2024[42]. - Nonperforming loans and leases decreased to $7,807 thousand, down from $7,872 thousand in the previous quarter, indicating improved asset quality[42]. Income and Expense Analysis - Total interest income for Q1 2025 was $66,376,000, an increase of 1% from $66,096,000 in Q4 2024 and up 4% from $63,956,000 in Q3 2024[38]. - Net interest income after provision for credit losses for Q1 2025 was $37,259,000, compared to $35,648,000 in Q4 2024, reflecting a 4.5% increase[38]. - Total noninterest expense for Q1 2025 was $32,296,000, slightly up from $32,291,000 in Q4 2024[38]. - Noninterest income decreased by $433 thousand to $8.6 million for Q1 2025, primarily due to declines in insurance commissions and transaction fees[13]. Capital and Equity - Shareholders' equity increased to $505.9 million, up $14.5 million from December 31, 2024, driven by net income and a positive change in accumulated other comprehensive loss[22]. - The total shareholders' equity attributable to SmartFinancial Inc. increased to $505,828 thousand from $491,348 thousand in December 2024, a rise of 2.8%[37]. - Book value per share increased to $29.73 in Q1 2025, up from $29.04 in Q4 2024, reflecting growth in shareholder equity[44]. - Tangible common equity (Non-GAAP) rose to $401,787,000 in Q1 2025, up from $386,738,000 in Q4 2024, reflecting an increase of 3.0%[50]. Operational Efficiency - The efficiency ratio continued to improve, reflecting the company's focus on enhancing profitability and shareholder value[3]. - The efficiency ratio improved to 68.96% in Q1 2025, compared to 68.98% in Q4 2024, indicating better operational efficiency[44]. - The provision for credit losses decreased to $979,000 in Q1 2025 from $2,135,000 in Q4 2024, indicating improved credit quality[38]. Dividends and Shareholder Returns - The company declared a quarterly cash dividend of $0.08 per share, payable on May 19, 2025[24].

Group 1 - Analysts expect SmarFinancial (SMBK) to report quarterly earnings of $0.55 per share, reflecting a year-over-year increase of 12.2% [1] - Revenue projections for SmarFinancial are set at $45.99 million, which indicates a 14.7% increase from the same quarter last year [1] - There has been no revision in the consensus EPS estimate over the past 30 days, indicating stability in analysts' projections [1] Group 2 - The 'Efficiency Ratio' is estimated to be 70.3%, an improvement from the previous year's figure of 71.2% [4] - Analysts predict the 'Average Balance - Total interest earning assets' will reach $4.81 billion, up from $4.50 billion reported in the same quarter last year [4] - 'Total noninterest income' is forecasted to be $7.90 million, down from $8.38 million in the same quarter last year [5] Group 3 - 'Net interest income (FTE)' is projected to be $38.21 million, compared to $31.81 million from the previous year [5] - The consensus for 'Net interest income' stands at $37.89 million, an increase from $31.72 million reported in the same quarter last year [6] - SmarFinancial shares have decreased by 11.3% over the past month, contrasting with a 3.9% decline in the Zacks S&P 500 composite [6]

Asset Quality and Credit Losses - SmartFinancial's asset quality may decline, leading to greater loan losses than anticipated, influenced by economic conditions in local markets, particularly Tennessee[9]. - The allowance for credit losses is calculated using a qualitative framework and adjustments based on risk factors not included in quantitative modeling[341]. - The allowance for credit losses (ACL) for unfunded commitments was recorded at $2.5 million as of December 31, 2024, compared to $2.4 million in 2023, reflecting a slight increase of 4.2%[392]. - The company employs a credit risk management process with defined policies and routine reporting to manage credit risk in the loan and lease portfolio segments[470]. - The total provision charged to expense for credit losses in 2024 was $5.066 million, compared to $3.755 million in 2023[469]. - The company adopted ASU 2016-13 on January 1, 2023, impacting the allowance for credit losses across various segments[467]. - The total amount of consumer and other loans reached $14,189 million in 2024, up from $13,535 million in 2023, reflecting a growth of approximately 4.8%[485]. - The total past due loans as of December 31, 2024, amounted to $13,650,000, with a total loan portfolio of $3,906,340,000[487]. - The total impaired loans and leases amounted to $4,302,000, with interest income recognized on a cash basis of $201,000 for the year ended December 31, 2022[489]. Financial Performance - Net income for 2024 was $36,141 thousand, a 26.4% increase from $28,593 thousand in 2023[355]. - Comprehensive income for 2024 was $38,377 thousand, slightly up from $38,010 thousand in 2023, indicating a marginal increase of about 1.0%[357]. - Net income for the year ended December 31, 2023, was $36,141,000, compared to $28,593,000 in 2022, representing an increase of about 26.8%[360]. - Basic earnings per share for 2024 increased to $2.16 from $1.70 in 2023, while diluted earnings per share rose to $2.14 from $1.69[441]. - Net income available to common shareholders for 2024 was $36.141 million, compared to $28.593 million in 2023, reflecting a year-over-year increase of approximately 26.5%[441]. Revenue and Income Sources - Noninterest income increased to $34,152 thousand in 2024, compared to $22,325 thousand in 2023, showing a significant rise of about 53.0%[355]. - Revenue from service charges on deposit accounts is recognized at the end of the statement period when the performance obligation has been satisfied[407]. - Revenue from investment services is recognized over the period in which services are performed, based on a percentage of the value of the assets under management[408]. - Insurance commissions are recognized when the commission payment is remitted, typically upon the issuance of the insurance policy[409]. Assets and Liabilities - Total assets increased to $5,275,904 thousand in 2024, up from $4,829,387 thousand in 2023, representing an increase of approximately 9.3%[353]. - Total deposits rose to $4,686,483 thousand in 2024, compared to $4,267,854 thousand in 2023, marking an increase of about 9.8%[353]. - The company reported a total of $3,906,340 thousand in loans and leases for 2024, an increase from $3,444,462 thousand in 2023, which is an increase of approximately 13.4%[353]. - The total fair value of available-for-sale securities as of December 31, 2024, was $482.328 million, down from $408.410 million in 2023[445]. - The total amount of related party deposits decreased to $70.6 million in 2024 from $85.0 million in 2023[502]. Internal Controls and Compliance - The company maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in the Internal Control – Integrated Framework (2013)[344]. - The independent auditor expressed an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024[331]. - The audit included evaluating the design and operating effectiveness of internal controls related to the allowance for credit losses[343]. - The company is subject to inherent limitations in its internal control over financial reporting, which may not prevent or detect misstatements[350]. Market and Economic Conditions - The company is exposed to market risk from interest rate fluctuations, which can significantly impact net interest income[314]. - Inflation may influence interest rates, affecting operating expenses, particularly personnel costs and supplies[323]. - The impact of recent bank failures in 2023 has raised concerns about customer confidence and liquidity in the banking industry[9]. - The company is focused on managing the balance between interest rate-sensitive assets and liabilities to maintain profitability[319]. Acquisitions and Goodwill - The acquisition of Sunbelt Group, LLC resulted in the establishment of goodwill amounting to $4.6 million, reflecting the intangible value of Sunbelt's business and reputation[436]. - The total consideration paid for the acquisition was $6.5 million, with $5.2 million paid in cash at closing and the remainder to be paid in equal installments in 2023 and 2024[436]. - The company recognized an intangible asset related to customer relationships valued at $1.9 million, amortized over 14 years[437]. Stock and Shareholder Information - The company declared a common stock dividend of $0.32 per share for 2023, totaling $5,427,000, up from $0.28 per share in 2022[360]. - The total number of common shares outstanding as of December 31, 2023, was 16,988,879, a slight increase from 16,900,805 shares at the end of 2022[360]. - The company repurchased common stock totaling $2,967,000 during the year ended December 31, 2023[360].

Financial Data and Key Metrics Changes - The company reported its fourth quarter 2024 earnings, with specific financial metrics discussed during the call [2][3] Business Line Data and Key Metrics Changes - Detailed performance across various business lines was expected to be covered in the presentation, but specific data was not provided in the excerpts [2] Market Data and Key Metrics Changes - The call indicated that market conditions and performance metrics would be addressed, but no specific market data was included in the provided content [2] Company Strategy and Development Direction and Industry Competition - The company’s strategic direction and competitive landscape were likely to be discussed, particularly by the CEO and CFO, but specific strategies were not detailed in the excerpts [2] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the presence of forward-looking statements, indicating that actual results could differ due to various risks and uncertainties, but specific comments on the operating environment were not included [3] Other Important Information - The company referenced non-GAAP financial measures related to its performance, with reconciliations available in the earnings release and investor presentation [3] Q&A Session All Questions and Answers Question: Inquiry about financial performance metrics - The management team indicated that they would address questions regarding financial performance metrics at the end of the call, but specific questions and answers were not provided in the excerpts [2]

Group 1 - SmarFinancial reported revenue of $46.81 million for the quarter ended December 2024, representing a 19.7% increase year-over-year [1] - The company's EPS for the quarter was $0.57, up from $0.41 in the same period last year, exceeding the consensus estimate of $0.54 by 5.56% [1] - The reported revenue surpassed the Zacks Consensus Estimate of $45.04 million, resulting in a surprise of +3.93% [1] Group 2 - Key metrics for SmarFinancial include an efficiency ratio of 69%, matching analyst estimates, and a net interest margin of 3.2%, slightly above the 3.1% estimate [4] - Total noninterest income was reported at $9.03 million, exceeding the average estimate of $8.27 million [4] - Net interest income (FTE) was $38.11 million, compared to the average estimate of $37.11 million [4] Group 3 - Over the past month, SmarFinancial shares returned +0.9%, underperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]

Core Viewpoint - SmarFinancial (SMBK) reported quarterly earnings of $0.57 per share, exceeding the Zacks Consensus Estimate of $0.54 per share, and showing an increase from $0.41 per share a year ago, indicating a positive earnings surprise of 5.56% [1][2] Financial Performance - The company achieved revenues of $46.81 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.93% and up from $39.1 million year-over-year [2] - Over the last four quarters, SmarFinancial has consistently exceeded consensus EPS estimates and revenue estimates [2] Stock Performance and Outlook - SmarFinancial shares have increased approximately 1.9% since the beginning of the year, compared to a 2% gain in the S&P 500 [3] - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $0.55 for the upcoming quarter and $2.40 for the current fiscal year [4][7] Industry Context - The Banks - Northeast industry, to which SmarFinancial belongs, is currently ranked in the top 25% of over 250 Zacks industries, suggesting a favorable environment for performance [8] - The performance of SmarFinancial's stock may also be influenced by the overall industry outlook and trends in earnings estimate revisions [5][8]

Financial Performance - SmartFinancial reported net income of $9.6 million, or $0.57 per diluted common share, for Q4 2024, a 55% increase from $6.2 million, or $0.37 per diluted common share, in Q4 2023[3]. - Net income for the three months ended December 31, 2024, was $9,640 thousand, representing an increase of 5.5% from $9,140 thousand in the previous quarter[38]. - Net income (GAAP) for the year ended December 2024 was $36,141, compared to $28,593 for the previous year, representing a year-over-year increase of 26.5%[49]. - Operating earnings for Q4 2024 reached $9,641, up from $9,140 in Q3 2024, reflecting a growth of 5.5%[49]. Asset Growth - Total assets increased by $446.5 million to $5.28 billion as of December 31, 2024, primarily due to a $461.9 million increase in loans and leases[19][23]. - Total assets increased to $5,275,904 thousand as of December 2024, up from $4,829,387 thousand in December 2023, representing a growth of 9.2%[37]. - The company's total assets increased to $4,939,586 thousand as of December 31, 2024, compared to $4,756,276 thousand as of December 31, 2023[42]. - Tangible assets (Non-GAAP) increased to $5,171,181 thousand in December 2024, compared to $4,722,239 thousand in December 2023, reflecting a growth of 9.5% year-over-year[52]. Loan and Lease Growth - The company achieved 13% year-over-year loan and lease growth, with average earning assets increasing to $4.7 billion, up $151 million from the prior quarter[4][5]. - Loans and leases reached $3,906,340 thousand in December 2024, an increase of 13.4% compared to $3,444,462 thousand in December 2023[37]. - Total loans and leases reached $3,906,340 thousand as of December 31, 2024, a significant increase from $3,444,462 thousand as of December 31, 2023[45]. Deposit Growth - Total deposits rose by $418.6 million to $4.69 billion, with significant contributions from money market deposits and brokered deposits[20][23]. - Total deposits rose to $4,686,483 thousand in December 2024, up 9.8% from $4,267,854 thousand in December 2023[37]. - Noninterest-bearing demand deposits increased to $965,552 thousand, a rise of 7.5% from $898,044 thousand in December 2023[37]. Income and Expense Management - Noninterest income decreased by $109 thousand to $9.03 million, primarily due to a $499 thousand decline in investment services[14][15]. - Noninterest expense increased by $1.4 million to $32.3 million, mainly due to higher salaries and employee benefits[16][17]. - Operating noninterest expense (Non-GAAP) for Q4 2024 was $32,291, compared to $30,846 in Q3 2024, indicating a rise of 4.7%[49]. Credit Quality - The allowance for credit losses was $37.4 million, representing 0.96% of total loans and leases, indicating stable credit quality[11][12]. - Nonperforming loans and leases decreased to $7,872 thousand as of December 31, 2024, down from $8,101 thousand a year earlier, indicating improved asset quality[45]. - The allowance for credit losses to loans and leases remained stable at 0.96% as of December 31, 2024, consistent with the previous quarter[45]. Efficiency and Profitability - The operating efficiency ratio improved, indicating better management of noninterest expenses relative to income[30]. - The efficiency ratio improved to 68.98% for the quarter, down from 69.83% in the previous quarter, reflecting better cost management[47]. - The operating return on average tangible common equity was 9.94%, up from 9.75% in the previous quarter, indicating improved returns for shareholders[47]. Capital Position - Shareholders' equity increased by $31.6 million to $491.5 million, driven by net income of $36.1 million for the year[22][23]. - The Tier 1 capital ratio stood at 9.83% as of December 31, 2024, slightly down from 10.06% in the previous year, reflecting a stable capital position[45]. - The company reported a total capital ratio of 11.17% as of December 31, 2024, compared to 11.62% a year earlier, indicating a slight decrease in capital adequacy[45]. Future Outlook - SmartFinancial plans to continue its growth strategy, focusing on strategic branching and disciplined lending practices[36]. - The company is actively managing interest rate risks amid changing economic conditions, including elevated interest rates[36]. - SmartFinancial is committed to enhancing its technology and cybersecurity measures to mitigate associated risks[36]. - The company anticipates potential impacts from economic and political factors, including inflation and market conditions, on its future performance[36].