KNOXVILLE, Tenn., April 22, 2024 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ((", SmartFinancial", or the ", Company", , NYSE:SMBK), today announced net income of $9.4 million, or $0.55 per diluted common share, for the first quarter of 2024, compared to net income of $11.5 million, or $0.68 per diluted common share, for the first quarter of 2023, and compared to prior quarter net income of $6.2 million, or $0.37 per diluted common share. Operating earnings1, which excludes non-recurring income related to the gain on sale of a branch location, net of tax adjustments, totaled $8.4 million, or $0.49 per diluted common share, in the first quarter of 2024, compared to $11.5 million, or $0.68 per diluted common share, in the first quarter of 2023, and compared to $6.9 million, or $0.41 per diluted common share, in the fourth quarter of 2023. Highlights for the First Quarter of 2024 Operating earnings1 of $8.4 million, or $0.49 per diluted common share Net organic loan and lease growth of $34 million - 4% annualized quarter-over-quarter increase Credit quality remains solid with nonperforming assets to total assets of 0.18% Deposit growth of $126.3 million – 12% annualized quarter-over-quarter increase ______________________________1 Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliation Billy Carroll, President & CEO, stated: "Our company started 2024 with nice momentum.  The first quarter was highlighted by continued growth in both loans and deposits, each growing 4% and 12%, respectively, along with expense discipline and focus on operating leverage improvement.  The investments we've made over the last few years have positioned us well and with a margin inflection point on the horizon, we remain very bullish." SmartFinancial's Chairman, Miller Welborn, concluded: "Our team continued to make substantial forward progress on our key strategic initiatives in the first quarter. Our associates worked diligently to grow revenue and control expenses, setting the stage for operating leverage gains for the remainder of 2024. Continued commitment to EXCELLENT client service and growing shareholder value remains "top of mind" for our team." Net Interest Income and Net Interest Margin Net interest income was $31.7 million for the first quarter of 2024, compared to $31.5 million for the prior quarter. Average earning assets totaled $4.50 billion, an increase of $116.4 million from the prior quarter. The increase in average earnings assets was primarily driven by an increase in average interest-earning cash of $64.0 million, average loans and leases of $49.7 million and average securities of $2.7 million. Average interest-bearing liabilities increased by $144.2 million from the prior quarter, attributable to an increase in average deposits of $146.3 million, offset by a decrease in average borrowings of $2.2 million. The tax equivalent net interest margin was 2.85% for the first quarter of 2024, compared to 2.86% for the prior quarter. The tax equivalent net interest margin was negatively impacted by the increased cost of interest-bearing liabilities, coupled with a slower rise on yield on interest-earning assets, quarter-over-quarter. The yield on loans and leases, excluding loan fees, was 5.71% for the first quarter, compared to 5.61% for the prior quarter. The cost of total deposits for the first quarter of 2024 was 2.52% compared to 2.35% in the prior quarter. The cost of interest-bearing liabilities increased to 3.23% for the first quarter of 2024, compared to 3.07% for the prior quarter. The cost of average interest-bearing deposits was 3.16% for the first quarter of 2024, compared to 3.00% for the prior quarter, an increase of 16 basis points.   The following table presents selected interest rates and yields for the periods indicated:     Three Months Ended           Mar   Dec   Increase   Selected Interest Rates and Yields   2024   2023   (Decrease)   Yield on loans and leases, excluding loan fees   5.71   % 5.61   % 0.10   % Yield on loans and leases   5.82   % 5.68   % 0.14   % Yield on earning assets, on a fully tax equivalent basis (FTE)   5.36   % 5.22   % 0.14   % Cost of interest-bearing deposits   3.16   % 3.00   % 0.16   % Cost of total deposits   2.52   % 2.35   % 0.17   % Cost of interest-bearing liabilities   3.23   % 3.07   % 0.16   % Net interest margin, FTE   2.85   % 2.86   % (0.01 ) % Provision for Credit Losses on Loans and Leases and Credit Quality At March 31, 2024, the allowance for credit losses was $34.2 million. The allowance for credit losses to total loans and leases was 0.98% as of March 31, 2024, compared to 1.02% as of December 31, 2023.   The following table presents detailed information related to the provision for credit losses for the periods indicated (dollars in thousands):     Three Months Ended             Mar   Dec         Provision for Credit Losses on Loans and Leases Rollforward     2024       2023     Change   Beginning balance   $ 35,066     $ 33,687     $ 1,379     Charge-offs     (920 )     (424 )     (496 )   Recoveries     135       302       (167 )   Net (charge-offs) recoveries     (785 )     (122 )     (663 )   Provision for credit losses (1)     (78 )     1,501       (1,579 )   Ending balance   $ 34,203     $ 35,066     $ (863 )                         Allowance for credit losses to total loans and leases, gross     0.98   %   1.02   %   (0.04 ) %   (1) The current quarter-ended and prior quarter-ended excludes unfunded commitments release of $362 thousand and a provision of $69 thousand, respectively. At March 31, 2024, the unfunded commitment liability totaled $2.0 million.       Nonperforming loans and leases as a percentage of total loans and leases was 0.18% as of March 31, 2024, a decrease of 6 basis points from the 0.24% reported in the fourth quarter of 2023. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.18% as of March 31, 2024, and 0.20% on December 31, 2023. The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):     Three Months Ended               Mar       Dec     Increase   Credit Quality     2024       2023     (Decrease)   Nonaccrual loans and leases   $ 6,171     $ 7,931     $ (1,760 )   Loans and leases past due 90 days or more and still accruing     95       170       (75 )   Total nonperforming loans and leases     6,266       8,101       (1,835 )   Other real estate owned     696       517       179     Other repossessed assets     2,033       1,117       916     Total nonperforming assets   $ 8,995     $ 9,735     $ (740 )                             Nonperforming loans and leases to total loans and leases, gross     0.18   %   0.24   %   (0.06 ) % Nonperforming assets to total assets     0.18   %   0.20   %   (0.02 ) % Noninterest Income Noninterest income increased $801 thousand to $8.4 million for the first quarter of 2024 compared to $7.6 million for the prior quarter. The current quarter increase was primarily associated with the $1.3 million pre-tax gain on the sale of a former branch building.   The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):     Three Months Ended             Mar       Dec     Increase Noninterest Income     2024       2023     (Decrease) Service charges on deposit accounts   $ 1,612     $ 1,673     $ (61 ) Mortgage banking income     280       227       53   Investment services     1,380       1,339       41   Insurance commissions     1,103       1,133       (30 ) Interchange and debit card transaction fees     1,253       1,370       (117 ) Other     2,752       1,837       915   Total noninterest income   $ 8,380     $ 7,579     $ 801   Noninterest Expense Noninterest expense decreased $1.1 million to $28.6 million for the first quarter of 2024 compared to $29.7 million for the prior quarter. The current quarter decrease was primarily related to a decrease in other noninterest expenses associated with a Community Reinvestment Act donation of a former branch location and accruals in respect of pending litigation in the prior quarter. The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):     Three Months Ended             Mar       Dec     Increase Noninterest Expense     2024       2023     (Decrease) Salaries and employee benefits   $ 16,639     $ 16,275     $ 364   Occupancy and equipment     3,396       3,378       18   FDIC insurance     915       915       -   Other real estate and loan related expenses     584       781       (197 ) Advertising and marketing     302       336       (34 ) Data processing and technology     2,465       2,458       7   Professional services     924       1,136       (212 ) Amortization of intangibles     612       643       (31 ) Merger related and restructuring expenses     -       -       -   Other     2,716       3,773       (1,057 ) Total noninterest expense   $ 28,553     $ 29,695     $ (1,142 ) Income Tax Expense Income tax expense was $2.6 million for the first quarter of 2024, an increase of $990 thousand, compared to $1.6 million for the prior quarter. The effective tax rate was 21.94% for the first quarter of 2024 and 20.95% for the prior quarter. Balance Sheet Trends Total assets at March 31, 2024 were $4.95 billion compared to $4.83 billion at December 31, 2023. The $125.3 million increase is primarily attributable to increases in cash and cash equivalents of $125.7 million and loans and leases of $33.1 Asset increases were offset by a decrease in securities of $35.1 million. Total liabilities increased to $4.49 billion at March 31, 2024 from $4.37 billion at December 31, 2023. The increase of $118.4 million was primarily from organic deposit growth of $126.3 million, offset by a decrease in borrowings of $3.2 million and other liabilities of $4.7 million. Shareholders' equity at March 31, 2024, totaled $466.8 million, an increase of $6.9 million, from December 31, 2023. The increase in shareholders' equity was primarily driven by net income of $9.4 million for the three months ended March 31, 2024, offset by the negative change of $1.5 million in accumulated other comprehensive income and dividends paid of $1.3 million.   Tangible book value per share1 was $21.12 at March 31, 2024, compared to $20.76 at December 31, 2023. Tangible common equity1 as a percentage of tangible assets1 was 7.43% at March 31, 2024, compared with 7.47% at December 31, 2023. ______________________________1 Non-GAAP measure. See "Non-GAAP Financial Measures" for more information and see the Non-GAAP reconciliation The following table presents selected balance sheet information for the periods indicated (dollars in thousands):     Mar   Dec   Increase Selected Balance Sheet Information   2024   2023   (Decrease) Total assets   $ 4,954,690     $ 4,829,387     $ 125,303   Total liabilities     4,487,894       4,369,501       118,393   Total equity     466,796       459,886       6,910   Securities     654,516       689,646       (35,130 ) Loans and leases     3,477,555       3,444,462       33,093   Deposits     4,394,121       4,267,854       126,267   Borrowings     9,849       13,078       (3,229 ) Conference Call Information SmartFinancial issued this earnings release for the first quarter of 2024 on Monday, April 22, 2024, and will host a conference call on Tuesday, April 23, 2024, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and entering the access code, 060240. A replay of the conference call will be available through June 22, 2024, by dialing (866) 813-9403 or (929) 458-6194 and entering the access code, 672905. Conference call materials will be published on the Company's webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call. About SmartFinancial, Inc. SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and Florida. Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank's success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com. Source   SmartFinancial, Inc.       Investor Contacts   Billy Carroll   President & CEO   (865)       Ron Gorczynski   Executive Vice President, Chief Financial Officer   (865) 437-5724        Media Contact   Kelley Fowler   Senior Vice President, Public Relations & Marketing   (865) 868-0611        Non-GAAP Financial Measures Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles ("GAAP") and therefore are considered non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures, including: (i) operating earnings, (ii) operating return on average assets, (iii) operating pre-provision net revenue return on average assets, (iv) operating return on average shareholders' equity, (v) return on average tangible common equity, (vi) operating return on average tangible common equity, (vii) operating efficiency ratio, (viii) operating noninterest income, (ix) operating pre-provision net revenue earnings, (x) operating noninterest expense, (xi) tangible common equity, (xii) average tangible common equity, (xiii) tangible book value per common share, (xiv) tangible assets; and ratios derived therefrom, in its analysis of the company's performance. Operating earnings excludes the following from net income: securities gains and losses and merger related and restructuring expenses. Operating return on average assets is the annualized operating earnings (Non-GAAP) divided by average assets. Operating pre-provision net revenue return on average assets is the annualized operating pre-provision net revenue income earnings (Non-GAAP) by average assets. Operating return on average shareholders' equity is the annualized operating earnings (Non-GAAP) divided by average equity. Return on average tangible common equity is the annualized net income divided by average tangible common equity (Non-GAAP). Operating return on average tangible common equity is the annualized operating earnings (Non-GAAP) divided by average tangible common equity (Non-GAAP). The operating efficiency ratio includes an adjustment for taxable equivalent yields and excludes securities gains and losses and merger related and restructuring expenses from the efficiency ratio. Operating noninterest income excludes the following from noninterest income: securities gains and losses. Operating pre-provision net revenue earnings is net interest income plus operating noninterest income (Non-GAAP) less operating noninterest expense (Non-GAAP). Operating noninterest interest income and operating noninterest expense exclude non-operating related income and expense items. A detailed reconciliation of these items are available in the Non-GAAP reconciliations. Tangible common equity (Non-GAAP) and average tangible common equity (Non-GAAP) excludes goodwill and other intangible assets from shareholders' equity and average shareholders' equity, respectively. Tangible book value per common share (Non-GAAP) is tangible common equity (Non-GAAP) divided by common shares outstanding. Tangible assets (Non-GAAP) excludes goodwill and other intangibles from total assets. Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers. Management believes these Non-GAAP financial measures also enhance investors' ability to compare period-to-period financial results and allow investors and company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Forward-Looking Statements This news release may contain statements that are based on management's current estimates or expectations of future events or future results, and that may be deemed to constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and can generally be identified by such words as "expect," "anticipate," "intend," "plan," "believe," "seek," "may," "estimate," and similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors that may cause the actual results of SmartFinancial to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, and other factors include, among others, (1) risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively; (2) claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters; (3) the risk that cost savings and revenue synergies from recently completed acquisitions may not be realized or may take longer than anticipated to realize; (4) disruption from recently completed acquisitions with customer, supplier, employee, or other business relationships; (5) our ability to successfully integrate the businesses acquired as part of previous acquisitions with the business of SmartBank; (6) changes in management's plans for the future; (7) prevailing, or changes in, economic or political conditions, particularly in our market areas, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers as a result of the foregoing; (8) increased technology and cybersecurity risks, including generative artificial intelligence risks; (9) credit risk associated with our lending activities; (10) changes in loan demand, real estate values, or competition; (11) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; (12) changes in accounting principles, policies, or guidelines; (13) changes in applicable laws, rules, or regulations; (14) adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company's participation in and execution of government programs related to the COVID-19 pandemic and related variants; (15) potential impacts of adverse developments in the banking industry highlighted by high-profile bank failures, including impacts on customer confidence, deposit outflows, liquidity and the regulatory response thereto; (16) significant turbulence or a disruption in the capital or financial markets and the effect of a fall in stock market prices on our investment securities; (17) the effects of war or other conflicts including the impacts related to or resulting from Russia's military action in Ukraine or the conflict in Israel and surrounding areas; and (18) other general competitive, economic, political, and market factors, including those affecting our business, operations, pricing, products, or services. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial's most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the "SEC") and available on the SEC's website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise. SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands)   Ending Balances   Mar      Dec      Sep      Jun      Mar   2024   2023   2023   2023   2023 Assets:                                 Cash and cash equivalents $ 477,941     $ 352,271     $ 400,258     $ 238,898     $ 306,934   Securities available-for-sale, at fair value   474,347       408,410       385,131       540,308       560,418   Securities held-to-maturity, at amortized cost   180,169       281,236       282,313       283,564       284,776   Other investments   13,718       13,662       13,805       14,396       14,059   Loans held for sale   4,861       4,418       2,734       986       3,324   Loans and leases   3,477,555       3,444,462       3,378,999       3,337,790       3,281,787   Less: Allowance for credit losses   (34,203 )     (35,066 )     (33,687 )     (32,747 )     (32,279 ) Loans and leases, net   3,443,352       3,409,396       3,345,312       3,305,043       3,249,508   Premises and equipment, net   92,694       92,963       92,020       92,351       92,190   Other real estate owned   696       517       1,370       1,708       1,708   Goodwill and other intangibles, net   106,537       107,148       107,792       108,439       109,114   Bank owned life insurance   83,957       83,434       82,914       82,419       81,938   Other assets   76,418       75,932       83,522       77,688       65,836   Total assets $ 4,954,690     $ 4,829,387     $ 4,797,171     $ 4,745,800     $ 4,769,805   Liabilities:                                  Deposits:                                  Noninterest-bearing demand $ 907,254     $ 898,044     $ 923,763     $ 1,003,432     $ 989,753   Interest-bearing demand   996,298       1,006,915       993,717       938,758       989,738   Money market and savings   1,952,410       1,812,427       1,766,409       1,720,202       1,761,847   Time deposits   538,159       550,468       562,620       537,192       488,208   Total deposits   4,394,121       4,267,854       4,246,509       4,199,584       4,229,546   Borrowings   9,849       13,078       14,117       15,496       16,546   Subordinated debt   42,120       42,099       42,078       42,057       42,036   Other liabilities   41,804       46,470       47,815       43,816       38,278   Total liabilities   4,487,894       4,369,501       4,350,519       4,300,953       4,326,406   Shareholders' Equity:                             Common stock   17,057       16,989       16,995       17,004       17,004   Additional paid-in capital   296,061       295,699       295,542       295,296       294,930   Retained earnings   181,103       173,105       168,271       167,564       160,085   Accumulated other comprehensive income (loss)   (27,425 )     (25,907 )     (34,156 )     (35,017 )     (28,620 ) Total shareholders' equity   466,796       459,886       446,652       444,847       443,399   Total liabilities & shareholders' equity $ 4,954,690     $ 4,829,387     $ 4,797,171     $ 4,745,800     $ 4,769,805   SmartFinancial, Inc. and SubsidiaryCondensed Consolidated Financial Information - (unaudited)(dollars in thousands except share and per share data)   Three Months Ended   Mar      Dec      Sep      Jun      Mar   2024   2023   2023   2023   2023 Interest income:                                        Loans and leases, including fees $ 50,020     $ 48,767     $ 47,539     $ 45,446     $ 44,728   Investment securities:                                        Taxable   4,548       4,344       4,335       4,335       3,651   Tax-exempt   352       352       356       357       353   Federal funds sold and other earning assets   4,863       4,032       3,045       1,956       4,446   Total interest income   59,783       57,495