Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 ☐ TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-37661 (Exact name of registrant as specified in its charter) | Tennessee | 62-1173944 | | --- | ...

SmartFinancial, Inc. (NYSE:SMBK) Q3 2021 Earnings Conference Call October 20, 2021 10:00 AM ET Company Participants Miller Welborn - Chairman Billy Carroll - President and Chief Executive Officer Ron Gorczynski - Chief Financial Officer Rhett Jordan - Chief Credit Officer Conference Call Participants Ben Gerlinger - Hovde Group Stephen Scouten - Piper Sandler Thomas Wendler - Stephens Inc Catherine Mealor - KBW Feddie Strickland - Janney Montgomery Scott William Wallace - Raymond James Kevin Fitzsimmons - D ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 ☐ TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-37661 (Exact name of registrant as specified in its charter) | Tennessee | 62-1173944 | | --- | --- ...

Financial Performance - SmartFinancial Inc reported net income of $8.8 million and operating earnings of $9.1 million for Q2 2021[5] - The company's ROAA (Return on Average Assets) was 0.98%, while the operating ROAA reached 1.01%[5] - ROATCE (Return on Average Tangible Common Equity) stood at 12.54%, with an operating ROATCE of 12.93%[5] - The efficiency ratio was 64.9%, and the operating efficiency ratio was 63.5%[5] Balance Sheet - As of June 30, 2021, SmartFinancial had total assets of $3.7 billion[5] - Gross loans and leases amounted to $2.5 billion[5] - Total deposits reached $3.1 billion[5] - Shareholders' equity was $373.4 million, with tangible common equity (Non-GAAP) at $282.4 million[5] Asset Quality - The ratio of Non-Performing Assets (NPAs) to total assets was 0.18%[5] - The allowance for loan and lease losses represented 0.74% of total loans and leases[5] Expansion and Acquisition - SmartBank added a new commercial banking team in Auburn, Alabama, with over 50 years of combined experience[8] - The acquisition of Sevier County Bank (SCB) is progressing, with a projected systems conversion in October 2021[11] - Fountain Equipment Finance, a small ticket construction equipment finance company, was acquired and integrated, resulting in ~$53 million in net leases and a ~13bps increase in net interest margin during Q2 '21[12]

Financial Data and Key Metrics Changes - Operating earnings for Q2 2021 were reported at $9.1 million or $0.60 per share, marking a 25% increase compared to the prior year quarter [10][18] - Tangible book value (TBV) increased to $18.69, reflecting a 10% year-over-year growth [10][23] - Net interest income for the quarter was over $27 million, slightly higher than the previous year's $26.4 million [26] - The interest margin was reported at 3.29%, a decline of 19 basis points from the prior quarter [27] Business Line Data and Key Metrics Changes - Net organic loan growth was over $87 million, or 16% annualized, excluding PPP loans [10][20] - Deposit growth was solid, with an increase of over $90 million during Q2 [11][25] - Non-interest income increased by almost 50% from the prior year quarter, with a forecast of $5.5 million for Q3 [32][34] Market Data and Key Metrics Changes - The loan portfolio saw a diversification with a 16% annualized organic loan growth, particularly in the commercial real estate (CRE) sector, which grew to approximately 39% of total portfolio outstandings [37][38] - The bank's asset quality metrics improved, with a non-performing asset (NPA) ratio of 0.17%, down from 0.29% in Q1 2021 [40][41] Company Strategy and Development Direction - The company is focusing on organic growth through team lift-outs and market expansions, particularly in Alabama and the Gulf Coast region [13][56] - The acquisition of Sevier County Bank is on track for closing, with plans for integration and rebranding [14][15] - The company aims to leverage its capital effectively while exploring additional lift-out opportunities as a strategic focus [69][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's positioning and growth potential, citing strong market conditions and a robust loan pipeline [7][57] - The Southeast region is expected to continue experiencing growth, driven by population trends and economic recovery [53][54] Other Important Information - The company reported no need for a provision for loan losses in the current quarter, indicating strong credit quality [47] - The allowance for originated loans and leases, excluding PPP loans, was reported at 0.86% [48] Q&A Session Summary Question: What are the expected total loan balances by the end of the year excluding Sevier County? - The expected total loan balance is approximately $2.52 billion, not including Sevier County [62][64] Question: Is the lift-out strategy viewed as the go-forward plan for inorganic growth? - The company is always looking for opportunities, with a current focus on lift-outs rather than mergers and acquisitions [68][69] Question: How big was the loan portfolio managed by the Auburn team at their prior institution? - The Auburn team managed around $0.5 billion in total loans at their previous institution [82] Question: What is the outlook for fees in the back half of the year? - The forecast for non-interest income in Q3 is around $5.5 million, similar to Q4 expectations [101][102] Question: What is the appetite for buybacks in the back half of the year? - The company is in a good capital position but does not foresee heavy buybacks due to current valuations [103][104]

Financial Performance - Net income for the first quarter of 2021 was $9.8 million, or $0.65 per diluted common share, compared to $2.7 million, or $0.19 per diluted common share, for the same period in 2020[147] - Net interest income increased to $26.4 million for the first quarter of 2021, up from $22.7 million for the first quarter of 2020[148] - Total noninterest income increased by $2.9 million, or 102.0%, in Q1 2021 compared to Q1 2020, driven by higher service charges, mortgage banking, and insurance commissions[153] - Noninterest expense increased by $671 thousand, or 3.6%, in Q1 2021 compared to Q1 2020, primarily due to higher salaries and employee benefits related to franchise growth[154] - The effective tax rate for Q1 2021 was approximately 21.5%, compared to 19.6% in Q1 2020, influenced by the utilization of an NOL carryforward in March 2020[154] Loan and Deposit Growth - Average loan balances increased by $445.5 million, and average interest-bearing deposits increased by $415.9 million from the first quarter of 2020 to the first quarter of 2021[148] - Organic net loans increased by $142.8 million, or 7.2%, from December 31, 2020, to $2.12 billion at March 31, 2021, including $119.5 million of PPP loans originated during the quarter[156] - Total net loans outstanding reached approximately $2.47 billion at March 31, 2021, up from $2.36 billion at December 31, 2020[155] - Total deposits as of March 31, 2021, were $3.05 billion, an increase of $243 million from December 31, 2020[175] Interest Income and Margin - The tax equivalent net interest margin decreased to 3.48% for the first quarter of 2021, down from 3.90% for the first quarter of 2020[147] - The yield on earning assets decreased from 4.83% for the first quarter of 2020 to 3.88% for the first quarter of 2021[148] - Total interest-earning assets amounted to $3,080,897 thousand with a yield of 3.88% in Q1 2021, down from 4.83% in Q1 2020[149] - The cost of average interest-bearing deposits decreased from 1.10% for the first quarter of 2020 to 0.44% for the first quarter of 2021[148] Asset Quality - Nonperforming loans as a percentage of total gross loans was 0.25% as of March 31, 2021, down from 0.24% as of December 31, 2020[160] - Total nonperforming assets as a percentage of total assets was 0.29% as of March 31, 2021, compared to 0.31% as of December 31, 2020[160] - The provision for loan losses for the three months ended March 31, 2021, was $67 thousand, a decrease of $3.1 million from $3.2 million in the same period of 2020[164] - The allowance for loan losses was $18.4 million as of March 31, 2021, representing 0.74% of total loans, compared to $18.3 million and 0.77% as of December 31, 2020[164] Liquidity and Interest Rate Risk - The company has established guidelines to limit the variance of net interest income in response to instantaneous changes in interest rates, with a maximum decline of 6.22% for a ±100 basis points change over the next 12 months[185] - For a ±200 basis points change, the maximum decline in net interest income is projected at 12.66% over the next 12 months[185] - The economic value of equity model indicates a maximum decline of 5.29% for a +100 basis points change and a decline of 7.48% for a -100 basis points change in prevailing interest rates[186] - The company has an unused borrowing capacity of $276.7 million available with the Federal Reserve, FHLB, and other institutions, ensuring adequate liquidity[191] - The company monitors liquidity needs through its Asset-Liability Committee (ALCO) and is subject to regulatory oversight regarding liquidity and capital resources[189]

| --- | --- | --- | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | INVESTOR CALL 1Q 2021 April 21, 2021, 10:00am Webcast: www.smartbank.com (Investor Relations) Audio Only: 888-317-6003 Confirmation #: 6293687 | | | | | | Miller Welborn Chairman of the Board Billy Carroll President & CEO | | | | | | | | | | | | | | ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from __________ to __________ Commission File Number: 001-37661 (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or org ...

| --- | --- | --- | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | INVESTOR CALL 4Q 2020 January 20, 2021, 10:00am Webcast: www.smartbank.com (Investor Relations) Audio Only: 888-317-6003 Confirmation #: 0205038 Miller Welborn Chairman of the Board Billy Carro ...

| --- | --- | --- | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | INVESTOR CALL 2Q 2020 July 22, 2020, 10:00am Webcast: www.smartbank.com (Investor Relations) Audio Only: 888-317-6003 Confirmation #: 5925756 Miller Welborn Chairman of the Board Billy Carroll Pre ...