Executive Summary & Financial Highlights [Overall Performance](index=1&type=section&id=Overall%20Performance) SmartFinancial, Inc. reported strong financial results for Q2 2025, with significant increases in net income and diluted EPS compared to both the prior quarter and the same quarter last year, demonstrating sustained growth and positive operating leverage Q2 2025 Financial Performance Overview | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change (Q2 2025 vs Q2 2024) | QoQ Change (Q2 2025 vs Q1 2025) | | :----------------------- | :-------- | :-------- | :-------- | :-------------------------------- | :-------------------------------- | | Net Income | $11.7M | $11.3M | $8.0M | +46.25% | +3.54% | | Diluted EPS | $0.69 | $0.67 | $0.48 | +43.75% | +2.99% | | Operating Earnings | $11.7M | $11.3M | $7.8M | +50.00% | +3.54% | | Operating Diluted EPS | $0.69 | $0.67 | $0.46 | +50.00% | +2.99% | - The Company delivered **five consecutive quarters** of positive operating leverage, indicating efficient growth[3](index=3&type=chunk) - Asset quality remains solid with non-performing assets at **0.19%** of total assets[3](index=3&type=chunk) [Key Highlights for Q2 2025](index=1&type=section&id=Key%20Highlights%20for%20Q2%202025) Key achievements for the second quarter of 2025 include strong loan growth, improved tangible book value, and continued recognition for its workplace culture - Net organic loan and lease growth of **$132 million**, representing a **13%** annualized quarter-over-quarter increase[6](index=6&type=chunk) - Quarter-over-quarter tangible book value per share growth of **13.7%**[6](index=6&type=chunk) - Recertified as a Great Place to Work by over **92%** of SmartBank associates[6](index=6&type=chunk) - Three business production team members added to Commercial and Private Banking teams[6](index=6&type=chunk) Financial Performance Analysis [Net Interest Income and Net Interest Margin](index=1&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income increased to $40.3 million in Q2 2025, driven by growth in average earning assets, particularly loans and leases, and an improved tax equivalent net interest margin of 3.29% Net Interest Income and Margin Trends | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :-------------------------- | :-------- | :-------- | :----------- | | Net Interest Income | $40.3M | $38.2M | +$2.1M | | Average Earning Assets | $4.96B | $4.87B | +$87.8M | | Tax Equivalent Net Interest Margin | 3.29% | 3.21% | +0.08% | | Yield on Loans and Leases (FTE, excl. fees) | 5.99% | 5.88% | +0.11% | | Cost of Total Deposits | 2.39% | 2.37% | +0.02% | | Cost of Interest-Bearing Liabilities | 2.99% | 2.97% | +0.02% | - The increase in average earning assets was primarily due to a **$109.2 million** increase in average loans and leases and **$9.9 million** in securities, partially offset by a decrease in interest-earning cash[4](index=4&type=chunk) - The net interest margin was positively impacted by increased yield on interest-earning assets, despite an increase in the cost of interest-bearing liabilities[5](index=5&type=chunk) [Selected Interest Rates and Yields](index=3&type=section&id=Selected%20Interest%20Rates%20and%20Yields) Yields on earning assets and loans increased quarter-over-quarter, while the cost of deposits and interest-bearing liabilities also saw slight increases Selected Interest Rates and Yields (QoQ) | Selected Interest Rates and Yields | Jun 2025 | Mar 2025 | Increase (Decrease) | | :--------------------------------- | :------- | :------- | :------------------ | | Yield on loans and leases, excluding loan fees, FTE | 5.99 % | 5.88 % | 0.11 % | | Yield on loans and leases, FTE | 6.07 % | 5.97 % | 0.10 % | | Yield on earning assets, FTE | 5.65 % | 5.56 % | 0.09 % | | Cost of interest-bearing deposits | 2.95 % | 2.92 % | 0.03 % | | Cost of total deposits | 2.39 % | 2.37 % | 0.02 % | | Cost of interest-bearing liabilities | 2.99 % | 2.97 % | 0.02 % | | Net interest margin, FTE | 3.29 % | 3.21 % | 0.08 % | [Provision for Credit Losses and Credit Quality](index=3&type=section&id=Provision%20for%20Credit%20Losses%20and%20Credit%20Quality) The allowance for credit losses remained stable at 0.96% of total loans and leases, while the provision for credit losses increased significantly quarter-over-quarter. Credit quality metrics, including nonperforming assets, remained solid Provision for Credit Losses Rollforward (QoQ, $ thousands) | Provision for Credit Losses on Loans and Leases Rollforward | Jun 2025 | Mar 2025 | Increase (Decrease) | | :-------------------------------------------------- | :------- | :------- | :------------------ | | Beginning balance | $38,175 | $37,423 | $752 | | Net charge-offs | $(146) | $(91) | $(55) | | Provision for credit losses | $1,747 | $843 | $904 | | Ending balance | $39,776 | $38,175 | $1,601 | | Allowance for credit losses to total loans and leases, gross | 0.96 % | 0.96 % | - % | - Nonperforming loans and leases as a percentage of total loans and leases slightly decreased to **0.19%** from **0.20%** in the prior quarter[11](index=11&type=chunk) - Total nonperforming assets as a percentage of total assets remained stable at **0.19%** quarter-over-quarter[11](index=11&type=chunk) [Credit Quality Details](index=3&type=section&id=Credit%20Quality%20Details) Detailed credit quality metrics show a slight increase in nonaccrual loans and leases, but an overall stable nonperforming asset ratio Credit Quality (QoQ, $ thousands) | Credit Quality | Jun 2025 | Mar 2025 | Increase (Decrease) | | :--------------------------------------- | :------- | :------- | :------------------ | | Nonaccrual loans and leases | $7,889 | $7,624 | $265 | | Loans and leases past due 90 days or more and still accruing | $32 | $183 | $(151) | | Total nonperforming loans and leases | $7,921 | $7,807 | $114 | | Total nonperforming assets | $10,462 | $10,365 | $97 | | Nonperforming loans and leases to total loans and leases, gross | 0.19 % | 0.20 % | (0.01)% | | Nonperforming assets to total assets | 0.19 % | 0.19 % | - % | [Noninterest Income](index=5&type=section&id=Noninterest%20Income) Noninterest income increased by $301 thousand to $8.9 million in Q2 2025, primarily driven by increases in mortgage banking income, insurance commissions, and interchange and debit card transactions Noninterest Income (QoQ, $ thousands) | Noninterest Income | Jun 2025 | Mar 2025 | Increase (Decrease) | | :-------------------------------- | :------- | :------- | :------------------ | | Service charges on deposit accounts | $1,766 | $1,736 | $30 | | Mortgage banking income | $633 | $493 | $140 | | Investment services | $1,440 | $1,769 | $(329) | | Insurance commissions | $1,554 | $1,412 | $142 | | Interchange and debit card transaction fees | $1,342 | $1,220 | $122 | | Other | $2,167 | $1,967 | $200 | | Total noninterest income | $8,898 | $8,597 | $301 | [Noninterest Expense](index=5&type=section&id=Noninterest%20Expense) Total noninterest expense increased slightly to $32.6 million in Q2 2025, mainly due to higher salaries and employee benefits, partially offset by a decrease in professional services Noninterest Expense (QoQ, $ thousands) | Noninterest Expense | Jun 2025 | Mar 2025 | Increase (Decrease) | | :-------------------------------- | :------- | :------- | :------------------ | | Salaries and employee benefits | $19,602 | $19,234 | $368 | | Occupancy and equipment | $3,432 | $3,397 | $35 | | FDIC insurance | $992 | $960 | $32 | | Other real estate and loan related expenses | $757 | $658 | $99 | | Professional services | $1,153 | $1,368 | $(215) | | Total noninterest expense | $32,569 | $32,296 | $273 | - The increase in salaries and employee benefits was attributed to additional incentive accruals[14](index=14&type=chunk) [Income Tax Expense](index=5&type=section&id=Income%20Tax%20Expense) Income tax expense for Q2 2025 was $2.6 million, an increase of $250 thousand from the prior quarter Income Tax Expense (QoQ) | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :------------- | :-------- | :-------- | :----------- | | Income Tax Expense | $2.6M | $2.3M | +$0.25M | Balance Sheet Overview [Balance Sheet Trends](index=5&type=section&id=Balance%20Sheet%20Trends) Total assets and liabilities showed growth at June 30, 2025, primarily driven by increases in loans and leases and total deposits Balance Sheet Trends (YoY) | Metric | Jun 30, 2025 | Dec 31, 2024 | Increase | | :---------------- | :----------- | :----------- | :------- | | Total Assets | $5.49B | $5.28B | $215.0M | | Total Liabilities | $4.97B | $4.78B | $187.3M | - The increase in total assets was mainly due to a **$217.7 million** increase in loans and leases and **$17.7 million** in securities, partially offset by a **$22.5 million** decrease in cash and cash equivalents[17](index=17&type=chunk) - Total deposits increased by **$185.6 million**, driven by increases in other time deposits, money market deposits, interest-bearing demand deposits, and brokered deposits, partially offset by a decline in noninterest demand deposits[18](index=18&type=chunk) [Shareholders' Equity](index=7&type=section&id=Shareholders'%20Equity) Shareholders' equity increased by $27.7 million from December 31, 2024, primarily due to net income and a positive change in accumulated other comprehensive loss Shareholders' Equity Metrics | Metric | Jun 30, 2025 | Dec 31, 2024 | Increase | | :------------------------------------ | :----------- | :----------- | :------- | | Total Shareholders' Equity | $519.1M | $491.461M | $27.7M | | Tangible Book Value per Share | $24.42 | $22.85 | +$1.57 | | Tangible Common Equity to Tangible Assets | 7.71% | 7.48% | +0.23% | - The increase in equity was driven by **$23.0 million** in net income for the six months ended June 30, 2025, and a **$6.4 million** positive change in accumulated other comprehensive loss, offset by **$2.7 million** in dividends paid[19](index=19&type=chunk) [Selected Balance Sheet Information](index=7&type=section&id=Selected%20Balance%20Sheet%20Information) The table provides a snapshot of key balance sheet items, showing growth in total assets, liabilities, equity, loans, and deposits from December 2024 to June 2025 Selected Balance Sheet Information (YoY, $ thousands) | Selected Balance Sheet Information | Jun 2025 | Dec 2024 | Increase (Decrease) | | :--------------------------------- | :------- | :------- | :------------------ | | Total assets | $5,490,863 | $5,275,904 | $214,959 | | Total liabilities | $4,971,736 | $4,784,443 | $187,293 | | Total equity | $519,127 | $491,461 | $27,666 | | Securities | $626,670 | $608,987 | $17,683 | | Loans and leases | $4,124,062 | $3,906,340 | $217,722 | | Deposits | $4,872,120 | $4,686,483 | $185,637 | | Borrowings | $6,966 | $8,135 | $(1,169) | [Composition of Loans and Leases](index=14&type=section&id=Composition%20of%20Loans%20and%20Leases) The loan portfolio shows continued growth across most categories, with commercial real estate (non-owner occupied and owner occupied) and consumer real estate being the largest segments Composition of Loans and Leases ($ thousands) | Composition of Loans and Leases | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :-------------------------------- | :------- | :------- | :------- | :------- | :------- | | Commercial real estate, total | $2,073,122 | $2,002,788 | $1,948,082 | $1,899,785 | $1,815,363 | | Consumer real estate | $803,270 | $784,602 | $741,836 | $690,504 | $678,331 | | Construction & land development | $391,155 | $357,393 | $361,735 | $315,006 | $294,575 | | Commercial & industrial | $778,754 | $768,454 | $775,620 | $731,600 | $701,460 | | Leases | $62,495 | $64,208 | $64,878 | $67,052 | $70,299 | | Consumer and other | $15,266 | $14,762 | $14,189 | $13,531 | $14,130 | | Total loans and leases | $4,124,062 | $3,992,207 | $3,906,340 | $3,717,478 | $3,574,158 | [Capital Ratios](index=14&type=section&id=Capital%20Ratios) SmartFinancial Inc. and SmartBank maintained strong capital ratios, with Tier 1 leverage and total capital ratios well above regulatory minimums, indicating a solid capital base Capital Ratios (Estimated) | Capital Ratios (Estimated) | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :------------------------- | :------- | :------- | :------- | :------- | :------- | | **SmartFinancial, Inc.** | | | | | | | Tier 1 leverage | 8.25 % | 8.16 % | 8.29 % | 8.44 % | 8.32 % | | Common equity Tier 1 | 9.68 % | 9.79 % | 9.76 % | 10.06 % | 10.06 % | | Tier 1 capital | 9.68 % | 9.79 % | 9.76 % | 10.06 % | 10.06 % | | Total capital | 11.05 % | 11.18 % | 11.10 % | 11.62 % | 11.68 % | | **SmartBank** | | | | | | | Tier 1 leverage | 8.88 % | 8.76 % | 8.94 % | 9.17 % | 9.11 % | | Common equity Tier 1 | 10.43 % | 10.51 % | 10.51 % | 10.92 % | 11.02 % | | Tier 1 capital | 10.43 % | 10.51 % | 10.51 % | 10.92 % | 11.02 % | | Total capital | 11.27 % | 11.35 % | 11.30 % | 11.69 % | 11.79 % | Company Information [Conference Call Details](index=7&type=section&id=Conference%20Call%20Details) SmartFinancial hosted a conference call on July 22, 2025, to discuss Q2 2025 earnings, with replay available until September 20, 2025 - Conference call held on Tuesday, July 22, 2025, at 10:00 a.m. ET[21](index=21&type=chunk) - Access dial-in: (833) 470-1428 or (404) 975-4839, access code: 342904[21](index=21&type=chunk) - Replay available through September 20, 2025, dial-in: (866) 813-9403 or (929) 458-6194, access code: 216208[21](index=21&type=chunk) [About SmartFinancial, Inc.](index=7&type=section&id=About%20SmartFinancial%2C%20Inc.) SmartFinancial, Inc. is a Knoxville, Tennessee-based bank holding company for SmartBank, a full-service commercial bank operating across Tennessee, Alabama, and Florida, known for its strategic growth and client service - SmartFinancial, Inc. is the bank holding company for SmartBank, a full-service commercial bank founded in 2007[22](index=22&type=chunk) - SmartBank operates branches across Tennessee, Alabama, and Florida[22](index=22&type=chunk) - Success is attributed to recruiting top talent, exceptional client service, strategic branching, and disciplined lending[22](index=22&type=chunk) [Investor Contacts](index=7&type=section&id=Investor%20Contacts) Key investor contacts are Billy Carroll, President & CEO, and Nathan Strall, VP and Director of Strategy & Corporate Development - Billy Carroll, President & Chief Executive Officer: Phone (865) 868-0613, Email billy.carroll@smartbank.com[24](index=24&type=chunk) - Nathan Strall, Vice President and Director of Strategy & Corporate Development: Phone (865) 868-2604, Email nathan.strall@smartbank.com[24](index=24&type=chunk) Non-GAAP Financial Measures [Definition and Purpose](index=8&type=section&id=Definition%20and%20Purpose) SmartFinancial uses Non-GAAP financial measures to provide additional insights into its performance, excluding non-operating items and the impact of goodwill and other intangibles, to facilitate comparisons with peers and period-to-period results - Non-GAAP measures are used by management to evaluate ongoing performance and provide meaningful comparisons to peers[27](index=27&type=chunk) - These measures exclude non-operating related income and expense items, as well as goodwill and other intangible assets, from GAAP figures[26](index=26&type=chunk) - Non-GAAP measures should not be considered an alternative to GAAP measures and have limitations as analytical tools[28](index=28&type=chunk) [Non-GAAP Reconciliations](index=16&type=section&id=Non-GAAP%20Reconciliations) The report provides detailed reconciliations for various Non-GAAP measures, including operating earnings, operating noninterest income and expense, operating PPNR earnings, tangible common equity, and tangible book value per common share, to their most directly comparable GAAP financial measures Operating Earnings Reconciliation (QoQ, $ thousands) | Operating Earnings | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :----------------- | :------- | :------- | :------- | :------- | :------- | | Net income (GAAP) | $11,705 | $11,254 | $9,640 | $9,140 | $8,003 | | Operating earnings (Non-GAAP) | $11,708 | $11,254 | $9,593 | $9,140 | $7,793 | Tangible Common Equity Reconciliation (QoQ, $ thousands) | Tangible Common Equity | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :--------------------- | :------- | :------- | :------- | :------- | :------- | | Shareholders' equity (GAAP) | $519,127 | $505,941 | $491,461 | $489,023 | $472,465 | | Less goodwill and other intangible assets | $103,588 | $104,154 | $104,723 | $105,324 | $105,929 | | Tangible common equity (Non-GAAP) | $415,539 | $401,787 | $386,738 | $383,699 | $366,536 | Operating Efficiency Ratio Reconciliation (QoQ) | Operating Efficiency Ratio | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :------------------------- | :------- | :------- | :------- | :------- | :------- | | Efficiency ratio (GAAP) | 66.14 % | 68.96 % | 68.98 % | 69.83 % | 72.25 % | | Operating efficiency ratio (Non-GAAP) | 65.66 % | 68.46 % | 68.58 % | 69.28 % | 72.13 % | Forward-Looking Statements [Disclaimer and Risk Factors](index=9&type=section&id=Disclaimer%20and%20Risk%20Factors) The report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from expectations. These risks include those related to growth strategy, litigation, M&A, economic conditions, interest rate changes, technology, credit risk, and regulatory actions - Forward-looking statements are based on management's current estimates and expectations and are subject to risks and uncertainties[30](index=30&type=chunk) - Key risk factors include: risks associated with growth strategy, claims and litigation, general risks related to merger and acquisition activity, changes in economic or political conditions (including inflation and interest rates), ability to anticipate interest rate changes, increased technology and cybersecurity risks, credit risk, and changes in applicable laws or regulations[32](index=32&type=chunk) - SmartFinancial disclaims any obligation to update or revise any forward-looking statements[31](index=31&type=chunk) Condensed Consolidated Financial Information (Tables) [Balance Sheet](index=10&type=section&id=Balance%20Sheet) This section presents the condensed consolidated balance sheet, detailing assets, liabilities, and shareholders' equity over several quarters, highlighting the company's financial position Condensed Consolidated Balance Sheet (Selected Quarters, $ thousands) | | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :------------------------------------ | :------- | :------- | :------- | :------- | :------- | | Total assets | $5,490,863 | $5,411,217 | $5,275,904 | $4,908,934 | $4,891,009 | | Loans and leases, net | $4,084,286 | $3,954,032 | $3,868,917 | $3,681,869 | $3,539,468 | | Total deposits | $4,872,120 | $4,808,659 | $4,686,483 | $4,322,491 | $4,316,656 | | Total liabilities | $4,971,736 | $4,905,276 | $4,784,443 | $4,419,911 | $4,418,544 | | Total shareholders' equity | $519,127 | $505,941 | $491,461 | $489,023 | $472,465 | [Income Statement](index=11&type=section&id=Income%20Statement) This section provides the condensed consolidated income statement, detailing revenues, expenses, and net income for the three and six months ended June 30, 2025, and comparable periods Condensed Consolidated Income Statement (Selected Quarters, $ thousands) | | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :------------------------------------ | :------- | :------- | :------- | :------- | :------- | | Total interest income | $69,453 | $66,376 | $66,096 | $63,956 | $61,285 | | Total interest expense | $29,110 | $28,138 | $28,313 | $28,924 | $28,471 | | Net interest income | $40,343 | $38,238 | $37,783 | $35,032 | $32,814 | | Provision for credit losses | $2,411 | $979 | $2,135 | $2,575 | $883 | | Total noninterest income | $8,898 | $8,597 | $9,030 | $9,139 | $7,604 | | Total noninterest expense | $32,569 | $32,296 | $32,291 | $30,846 | $29,201 | | Net income | $11,705 | $11,254 | $9,640 | $9,140 | $8,003 | | Diluted EPS | $0.69 | $0.67 | $0.57 | $0.54 | $0.48 | [Yield Analysis (Quarterly)](index=12&type=section&id=Yield%20Analysis%20%28Quarterly%29) This table provides a detailed yield analysis for interest-earning assets and interest-bearing liabilities for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, showing trends in yields, costs, and net interest margin Yield Analysis (Three Months Ended, $ thousands) | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :------------ | | Yield/Cost - Loans and leases, including fees | 6.07 % | 5.97 % | 5.87 % | | Yield/Cost - Total interest-earning assets | 5.65 % | 5.56 % | 5.52 % | | Yield/Cost - Total interest-bearing deposits | 2.95 % | 2.92 % | 3.23 % | | Yield/Cost - Total interest-bearing liabilities | 2.99 % | 2.97 % | 3.29 % | | Net interest income, taxable equivalent | $40,693 | $38,578 | $33,165 | | Tax equivalent net interest margin | 3.29 % | 3.21 % | 2.97 % | [Yield Analysis (Six Months)](index=13&type=section&id=Yield%20Analysis%20%28Six%20Months%29) This table presents the yield analysis for interest-earning assets and interest-bearing liabilities for the six months ended June 30, 2025, and June 30, 2024, offering a broader view of interest rate trends Yield Analysis (Six Months Ended, $ thousands) | | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Yield/Cost - Loans and leases, including fees | 6.02 % | 5.84 % | | Yield/Cost - Total interest-earning assets | 5.61 % | 5.44 % | | Yield/Cost - Total interest-bearing deposits | 2.93 % | 3.19 % | | Yield/Cost - Total interest-bearing liabilities | 2.98 % | 3.26 % | | Net interest income, taxable equivalent | $79,272 | $64,979 | | Tax equivalent net interest margin | 3.25 % | 2.91 % | [Asset Quality and Performance Ratios](index=14&type=section&id=Asset%20Quality%20and%20Performance%20Ratios) This section provides detailed asset quality metrics and key performance ratios, both GAAP and Non-GAAP, offering insights into the company's operational efficiency and profitability Asset Quality and Additional Loan Data (Selected Quarters, $ thousands) | Asset Quality and Additional Loan Data | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :------------------------------------- | :------- | :------- | :------- | :------- | :------- | | Nonperforming loans and leases | $7,921 | $7,807 | $7,872 | $9,491 | $6,642 | | Total nonperforming assets | $10,462 | $10,365 | $10,088 | $12,619 | $9,975 | | Net charge-offs to average loans and leases (annualized) | 0.01 % | 0.01 % | 0.02 % | 0.15 % | 0.05 % | | Allowance for credit losses to loans and leases | 0.96 % | 0.96 % | 0.96 % | 0.96 % | 0.97 % | | Nonperforming assets to total assets | 0.19 % | 0.19 % | 0.19 % | 0.26 % | 0.20 % | Selected Performance Ratios (Annualized) | Selected Performance Ratios (Annualized) | Jun 2025 | Mar 2025 | Dec 2024 | Sep 2024 | Jun 2024 | | :--------------------------------------- | :------- | :------- | :------- | :------- | :------- | | Return on average assets | 0.88 % | 0.87 % | 0.75 % | 0.74 % | 0.66 % | | Return on average shareholders' equity | 9.19 % | 9.17 % | 7.84 % | 7.60 % | 6.90 % | | Efficiency ratio | 66.14 % | 68.96 % | 68.98 % | 69.83 % | 72.25 % | | Operating return on average assets | 0.88 % | 0.87 % | 0.75 % | 0.74 % | 0.64 % | | Operating efficiency ratio | 65.66 % | 68.46 % | 68.58 % | 69.28 % | 72.13 % | | Net interest margin, FTE | 3.29 % | 3.21 % | 3.24 % | 3.11 % | 2.97 % | | Net income, diluted | $0.69 | $0.67 | $0.57 | $0.54 | $0.48 |

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]

Financial Data and Key Metrics Changes - The company reported net income of $11.3 million, or 67 cents per diluted share, for the first quarter of 2025 [10] - Tangible book value increased to $23.61 per share, representing over 9% annualized growth quarter over quarter [10] - Total revenue reached $46.8 million, with net interest income expanding as anticipated [12] Business Line Data and Key Metrics Changes - Loan growth was at a 9% annualized pace for Q1, meeting expectations, while deposit growth was at 10% quarter over quarter annualized [11] - Noninterest income for the quarter totaled $8.6 million, exceeding guidance, driven by strong insurance and mortgage banking revenues [20] - Operating expenses remained stable at just over $32 million, consistent with the previous quarter [20] Market Data and Key Metrics Changes - The average portfolio yield, including fees, was 5.97%, slightly down from the previous quarter [15] - The loan to deposit ratio held steady at 83%, providing flexibility for future growth [15][17] - The company anticipates a net interest margin of around 3.25% for Q2 2025, with expectations of margin expansion of 2 to 3 basis points quarterly throughout the year [19] Company Strategy and Development Direction - The company is focused on leveraging its growth phase, aiming for continued EPS growth and achieving near-term revenue targets [24] - There is an emphasis on recruiting talented team members to enhance revenue-generating capabilities, particularly in private banking and treasury management [26] - The company remains committed to organic growth while being open to potential M&A opportunities if they align with strategic goals [125][126] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth prospects despite market volatility, citing strong client relationships and business performance [34][35] - The company is closely monitoring the impact of tariffs on clients but has received positive feedback regarding order volumes and pricing stability [37][38] - Management believes that credit quality remains strong, with nonperforming assets at 0.19% of total assets [20] Other Important Information - The effective corporate tax rate for the quarter was approximately 17%, with expectations of stabilization between 18% to 19% going forward [21] - The company's consolidated TCE ratio increased to 7.6%, and total risk-based capital ratio remained well above regulatory standards at 11.2% [21] 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 [34][35] Question: Balance sheet leverage and loan to deposit ratio - The company has room to increase its loan to deposit ratio while ensuring prudent growth and maintaining appropriate credit structures [42][43] Question: Share repurchase plans - The company has approximately $1.5 million left for share repurchases and will consider buying back shares as valuations improve [49][50] Question: Margin expectations with potential Fed rate cuts - Management indicated that they are well-positioned to benefit from Fed rate cuts, with potential upside to margin expansion if cuts occur earlier than expected [58][60] Question: Fee income outlook and performance of investment services - The company expects fee income in the low to mid $8 million range for Q2, with strong performance in insurance and mortgage banking contributing to growth [96][100] Question: Equipment financing and leasing business line - Management expressed satisfaction with the growth of the equipment financing segment, indicating plans for continued expansion in this area [131][132]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $11.3 million or 67 cents per diluted share, 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 strong insurance and mortgage banking revenues [28] - Operating expenses remained flat at just over $32 million, indicating effective cost management [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 3.21%, slightly down from the previous quarter but in line with guidance [24] Company Strategy and Development Direction - The company is focused on organic growth, with plans to leverage its strong market position and experienced team [33][39] - Talent acquisition remains a priority, with recent hires aimed at enhancing private banking and treasury management [36] - The company is optimistic about maintaining growth in EPS and achieving near-term revenue targets [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of their markets and customer sentiment, despite economic uncertainties [45][46] - The company anticipates continued loan growth and margin expansion, driven by new loan production and favorable market conditions [26][39] - Management remains cautious about potential impacts from tariffs but reports positive feedback from clients regarding order volumes [49][50] 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's consolidated TCE ratio increased to 6%, and total risk-based capital ratio remained well above regulatory standards at 11.2% [31] - The company welcomed a new board member, Kelly Showmaker, enhancing its governance and regional perspective [40] Q&A Session Summary Question: Customer sentiment and loan growth outlook - Management noted strong customer sentiment and confidence in maintaining loan growth despite market volatility [45][46] Question: Balance sheet leverage and deposit ratios - Management indicated room for prudent growth in the balance sheet while maintaining a strong loan to deposit ratio [53][58] Question: Share repurchases and capital actions - The company has $1.5 million left for share repurchases and is considering actions based on stock valuation [60][63] Question: Margin expectations and Fed rate cuts - Management expects two to three basis points of margin expansion quarterly, benefiting slightly from Fed rate cuts [68][70] Question: Fee income trends and investment services - Management anticipates low to mid $8 million range for non-interest income in Q2, with strong performance in insurance and mortgage banking [28][113] Question: Equipment financing and leasing business line - Management expressed satisfaction with the growth and performance of the equipment financing segment, indicating plans for further development [146][148]

Core Insights - SmarFinancial (SMBK) reported revenue of $46.84 million for Q1 2025, a year-over-year increase of 16.8% and a surprise of +1.84% over the Zacks Consensus Estimate of $45.99 million [1] - The EPS for the same period was $0.67, compared to $0.49 a year ago, resulting in a surprise of +21.82% over the consensus estimate of $0.55 [1] Financial Performance Metrics - Efficiency Ratio was reported at 69%, better than the estimated 70.3% [4] - Net Interest Margin remained stable at 3.2%, matching the analyst estimate [4] - Net charge-offs to average loans were 0%, outperforming the estimate of 0.1% [4] - Average Balance of Total interest earning assets was $4.87 billion, exceeding the estimate of $4.81 billion [4] - Total noninterest income reached $8.60 million, surpassing the estimate of $7.90 million [4] - Mortgage banking income was $0.49 million, above the estimate of $0.38 million [4] - Net interest income (FTE) was $38.58 million, compared to the estimate of $38.21 million [4] - Interchange and debit card transaction fees were $1.22 million, below the estimate of $1.38 million [4] - Service charges on deposit accounts totaled $1.74 million, slightly above the estimate of $1.69 million [4] - Investment services income was $1.77 million, exceeding the estimate of $1.52 million [4] - Other noninterest income was reported at $1.97 million, significantly above the estimate of $1.38 million [4] - Insurance commissions were $1.41 million, slightly below the estimate of $1.42 million [4] Stock Performance - SmarFinancial shares have returned -7% over the past month, compared to the Zacks S&P 500 composite's -5.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

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].