SMARTFINANCIAL INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.2 - EXHIBIT 99.2 - SMARTFINANCIAL INC.	microsofpowerpointearnin.htm
8-K - 8-K 033118 EARNINGS RELEASE COVER - SMARTFINANCIAL INC.	a33118earningsreleasecover.htm

Exhibit 99.1

1Q 2018

SmartFinancial Reports Record $0.30 Earnings per Common Share for the First Quarter 2018

Net operating earnings per common share was $0.35 for the quarter

Performance Highlights


•	Record high net income of $3.4 million for the quarter, up 108 percent from a year ago.


•	ROAA of 0.80 percent, a new record, for the quarter and net operating ROAA of 0.91 percent.


•	Organic loan growth of $51 million, over 15 percent annualized during the quarter.


•	Transaction accounts are over 37 percent of total deposits, a new high point for the company.


•	Efficiency ratio decreased to 72.66 percent, a new record and down by more than 3 percentage points from a year ago.


•	Net interest margin, taxable equivalent, of 4.38 percent which is up 0.31 percent from a year ago.


•	Asset quality was outstanding with nonperforming assets to total assets decreasing to just 0.26 percent.

KNOXVILLE, TN - April 24, 2018 - SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), announced today net income of $3.4 million in its first quarter of 2018, compared to $1.6 million a year ago. Diluted net income per common share was$0.30 for first quarter of 2018, compared to $0.19 during the first quarter of 2017.

Billy Carroll, President & CEO, stated: "We had a great first quarter with a new record high return on average assets and earnings per share. We achieved these milestones by growing loans at over a 15 percent pace while simultaneously maintaining a very strong net margin. Demand deposits increased significantly, and while a large portion was conversion related reclassifications, organic demand deposit growth for the quarter was over $25 million. As an organization we continue to improve on our efficiencies as we capture further economies of scale, even with over half a million in merger related costs. Our team has done a great job of integrating Capstone, planning for the Tennessee Bancshares acquisition, and growing the core bank."

SmartFinancial's Chairman, Miller Welborn, concluded: "We are looking forward to completing the acquisition of Tennessee Bancshares in the second quarter. Our resulting company will have assets approaching $2.0 billion by quarter end, setting us up for the next stage of growth. The opportunities before the company and in turn for our shareholders have never been greater. We are well on our way in creating one of the Southeast’s next great community banking franchises."

First Quarter 2018 compared to Fourth Quarter 2017

Net income available to common shareholders totaled $3.4 million in the first quarter of 2018, or $0.30 per diluted share, compared to $38 thousand, or $0.00 per diluted share, in the fourth quarter of 2017, which was negatively impacted by the revaluation and write down of deferred tax assets due to the Tax Cuts and Jobs Act which resulted in a lower federal tax rate for corporations. Net operating earnings available to common shareholders (Non-GAAP), which excludes securities gains, foreclosed assets gains and losses, and merger and conversion costs, totaled $3.9 million in the first quarter of 2018 compared to $3.7 million in the previous quarter.

Net interest income to average assets of 3.93 percent for the quarter was down 4.09 percent from the fourth quarter of 2017. Net interest income totaled $16.8 million in the first quarter of 2018 compared to $15.3 million in the fourth quarter of 2017. Net interest income was negatively impacted approximately $368 thousand due to the two less days in the current period. Net interest margin, taxable equivalent, decreased from 4.51 percent in the fourth quarter of 2017 to 4.38 percent in the first quarter of 2018 primarily as a result of less income from purchase accounting adjustments on acquired loans and increases on the cost of interest-bearing liabilities.

Provision for loan losses was $689 thousand in the first quarter of 2018, compared to $442 thousand in the fourth quarter of 2017. The increase in provision for loan losses was due to higher loan growth during the period. The allowance for loan losses and leases

("ALLL") was $6.5 million, or 0.47 percent of total loans as of March 31, 2018, compared to $5.9 million, or 0.44 percent of total loans, as of December 31, 2017.

Nonperforming loans as a percentage of total loans was 0.14 percent as of March 31, 2018, which was up slightly from 0.13 percent in the prior quarter. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and foreclosed assets) as a percentage of total assets was 0.26 percent as of March 31, 2018, compared to 0.29 percent as of December 31, 2017. In addition to the allowance there were $16.3 million additional discounts on $492.9 million of purchased loans as of March 31, 2018 compared to $17.9 million on $513.5 million of purchased loans as of December 31, 2017.

Noninterest income to average assets of 0.38 percent for the period was down from 0.42 percent in the fourth quarter of 2017. Noninterest income totaled $1.6 million in the first quarter of 2018, compared to $1.6 million in the fourth quarter of 2017. The slight increase in noninterest income was primarily due to higher service charges on deposit accounts.

Noninterest expense to average assets of 3.13 percent for the quarter was down from 3.35 percent in the fourth quarter of 2017. Noninterest expense totaled $13.4 million in the first quarter of 2018, which was up $843 thousand from the fourth quarter of 2017, primarily due to three months of salaries and employee benefits for associates in Alabama compared to two months in the prior quarter. Income tax expense was $940 thousand in the first quarter of 2018 compared to $3.9 million in the fourth quarter of 2017, which was elevated by the revaluation and write down of deferred tax assets due to the Tax Cuts and Jobs Act which resulted in a lower federal tax rate for corporations. The company's effective tax rate decreased to 21.6 percent in the first quarter of 2018 compared to 99.0 percent in the fourth quarter of 2017.

First Quarter 2018 compared to First Quarter 2017

Net income available to common shareholders totaled $3.4 million in the first quarter of 2018, or $0.30 per diluted share, compared to $1.4 million, or $0.19 per diluted share, in the first quarter of 2017. Net operating earnings available to common shareholders (Non-GAAP), which excludes securities gains, foreclosed assets gains and losses, and merger and conversion costs, totaled $3.9 million in the first quarter of 2018 compared to $1.5 million in the first quarter of 2017.

Net interest income to average assets of 3.93 percent for the quarter increased from 3.81 percent in the first quarter of 2017 as the average earning asset balances and yields increased compared to the prior year. Net interest income totaled $16.8 million in the first quarter of 2018 compared to $9.8 million in the first quarter of 2017. Net interest income was positively impacted compared to the prior year due to increases in loan and securities balances and increases in the yields of the loan and securities portfolios. Net interest margin, taxable equivalent, increased from 4.07 percent in the first quarter of 2017 to 4.38 percent in the first quarter of 2018 as a result of increases in the yield on earning assets.

Provision for loan losses was $689 thousand in the first quarter of 2018, compared to $12 thousand in the first quarter of 2017. The increase in provision for loan losses was due to faster loan growth during the period. The ALLL was $6.5 million, or 0.47 percent of total loans as of March 31, 2018, compared to $5.2 million, or 0.64 percent of total loans, as of March 31, 2017.

Nonperforming loans as a percentage of total loans was 0.14 percent as of March 31, 2018, which was down from 0.18 percent in the prior year. Total nonperforming assets (which include nonaccrual loans, loans past due 90 days or more and still accruing, and foreclosed assets) as a percentage of total assets was 0.26 percent as of March 31, 2018, compared to 0.36 percent as of March 31, 2017.

Noninterest income to average assets of 0.38 percent for the quarter was down from 0.36 percent in the first quarter of 2017. Noninterest income totaled $1.6 million in the first quarter of 2018, compared to $0.9 million in the first quarter of 2017.

Noninterest expense to average assets of 3.13 percent for the quarter was down from 3.16 percent in the first quarter of 2017. Noninterest expense totaled $13.4 million in the first quarter of 2018, compared to $8.2 million in the first quarter of 2017. The Company's effective tax rate was 21.6 percent in the first quarter of 2018 compared to 37.0 percent in the first quarter of 2017.

Conference Call Information

SmartFinancial plans to issue its earnings release for the first quarter of 2018 on Tuesday, April 24, 2018, and will host a conference call on Wednesday, April 25, at 10:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number 6173081. A replay of the conference call will be available through April 25, 2019, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number 10119695. Conference call materials (earnings release and conference call presentation) will be published on the company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile at 9:00 am EST prior to the morning of 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 22 branches, four loan production offices, spanning East Tennessee, Tuscaloosa and Southwest Alabama, and Florida Panhandle. 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 Frank Hughes

President & CEO Executive Vice President, Investor Relations

(865) 868-0613 (423) 385-3009

Media Contact

Kelley Fowler

Senior Vice President, Public Relations & Marketing

(865) 868-0611 kelley.fowler@smartbank.com

Non-GAAP Financial Matters

Statements included in this press release include 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) net operating earnings available to common shareholders; (ii) operating efficiency ratio; and (iii) tangible common equity, in its analysis of the company's performance. Net operating earnings available to common shareholders excludes the following from net income available to common shareholders: securities gains and losses, OREO gain and losses, merger and conversion expenses, effect of the December, 2017 tax law change on deferred tax assets, and the income tax effect of adjustments. The operating efficiency ratio excludes securities gains and losses, adjustment for OREO gains and losses, and merger and conversion costs from the efficiency ratio. Tangible common equity excludes total preferred stock, preferred stock paid in capital, goodwill, and other intangible assets.

Management believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers. 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 release contains forward-looking statements. SmartFinancial cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: the expected revenue synergies and cost savings from the proposed merger with Tennessee Bancshares, Inc. (the “Tennessee Bancshares merger”) and/or the recently completed merger with Capstone Bancshares, Inc. (the “Capstone merger”) may not be fully realized or may take longer than anticipated to be realized; the disruption from either the Tennessee Bancshares merger or the Capstone merger with customers, suppliers or employees or other business partners’ relationships; the risk of successful integration of our business with that of Tennessee Bancshares or Capstone; the amount of costs, fees, expenses, and charges related to Tennessee Bancshares merger; risks of expansion into new geographic or product markets, like the proposed expansion into the Nashville, TN MSA associated with the proposed Tennessee Bancshares merger; changes in management’s plans for the future, prevailing economic and political conditions, particularly in our market area; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services and other factors that may be described in our annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.

The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, SmartFinancial assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands except per share data)
	As of and for the three months ending
	March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
Selected Performance Ratios (Annualized)
Return on average assets	0.80		%	0.01		%	0.59		%	0.61		%	0.64		%
Net operating return on average assets (Non-GAAP)	0.91		%	0.99		%	0.63		%	0.61		%	0.44		%
Return on average shareholder equity	6.25		%	0.08		%	4.91		%	4.95		%	5.18		%
Net operating return on average shareholder equity (Non-GAAP)	7.12		%	7.99		%	5.25		%	4.91		%	3.55		%
Net interest income / average assets	3.93		%	4.09		%	3.81		%	3.81		%	3.81		%
Yield on Earning Assets	5.04		%	5.07		%	4.69		%	4.66		%	4.54		%
Yield on earning assets, TE (Non-GAAP)	5.05		%	5.09		%	4.70		%	4.66		%	4.54		%
Cost of interest-bearing liabilities	0.82		%	0.70		%	0.68		%	0.65		%	0.60		%
Net Interest margin	4.37		%	4.51		%	4.16		%	4.14		%	4.07		%
Net interest margin, TE (Non-GAAP)	4.38		%	4.51		%	4.17		%	4.15		%	4.07		%
Noninterest income / average assets	0.38		%	0.42		%	0.43		%	0.47		%	0.36		%
Noninterest expense / average assets	3.13		%	3.35		%	3.34		%	3.29		%	3.16		%
Efficiency ratio	72.66		%	74.26		%	78.67		%	76.77		%	75.79		%
Operating efficiency ratio (Non-GAAP)	67.62		%	60.73		%	76.46		%	78.98		%	81.34		%
Pre-tax pre-provision income / average assets	1.07		%	1.16		%	0.97		%	0.96		%	1.09		%

Per Common Share
Net income, basic	$	0.30		$	—		$	0.20		$	0.20		$	0.19
Net income, diluted	0.30			—			0.20			0.20			0.19
Net operating earnings, basic (Non-GAAP)	0.35			0.35			0.22			0.20			0.15
Net operating earnings, diluted (Non-GAAP)	0.34			0.35			0.22			0.20			0.15
Book value as of	18.60			18.46			16.57			16.39			16.14
Tangible book value (Non-GAAP) as of	14.09			13.90			15.67			15.48			15.34

Common shares outstanding as of	11,234			11,153			8,243			8,219			8,211

Composition Of Loans
Real estate commercial
owner occupied	$	288,666		$	281,297		$	210,489		$	211,469		$	197,032
non-owner occupied	375,028			361,691			237,131			233,707			210,901
Real Estate Commercial, Total	663,694			642,988			447,620			445,176			407,933
Commercial & industrial	256,333			238,087			119,782			105,129			90,649
Real estate construction & development	142,702			135,409			98,212			101,151			115,675
Real estate residential	299,148			293,457			199,704			206,667			186,344
Other loans	12,380			13,317			6,361			7,298			6,938
Total loans	$	1,374,257		$	1,323,258		$	871,679		$	865,421		$	807,539





SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands except per share data)
	As of and for the three months ending
	March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
Asset Quality Data and Ratios
Nonperforming loans	$	1,931		$	1,764		$	1,264		$	1,147		$	1,445
Foreclosed assets	2,665			3,254			2,888			2,369			2,371
Total nonperforming assets	$	4,596		$	5,018		$	4,152		$	3,516		$	3,816
Restructured loans not included in nonperforming loans	$	40		$	41		$	42		$	—		$	301
Net charge-offs (recoveries) to average loans (annualized)	0.02		%	(0.01		)%	(0.02		)%	(0.04		)%	(0.02		)%
Allowance for loan losses to loans	0.47		%	0.44		%	0.62		%	0.64		%	0.64		%
Nonperforming loans to total loans, gross	0.14		%	0.13		%	0.15		%	0.13		%	0.18		%
Nonperforming assets to total assets	0.26		%	0.29		%	0.37		%	0.31		%	0.36		%

Capital Ratios
Tangible equity to tangible assets (Non-GAAP)	9.26		%	9.28		%	11.45		%	11.18		%	12.06		%
Tangible common equity to tangible assets (Non-GAAP)	9.26		%	9.28		%	11.45		%	11.18		%	12.06		%
SmartFinancial, Inc.:	Estimated¹
Tier 1 leverage	9.29		%	10.48		%	11.46		%	11.91		%	12.18		%
Common equity Tier 1	10.57		%	10.59		%	13.37		%	13.43		%	14.46		%
Tier 1 capital	10.57		%	10.59		%	13.37		%	13.43		%	14.46		%
Total capital	10.99		%	10.98		%	13.93		%	14.00		%	15.05		%
SmartBank:	Estimated¹
Tier 1 leverage	9.57		%	11.26		%	10.57		%	10.98		%	11.17		%
Common equity Tier 1	10.89		%	10.90		%	12.30		%	12.32		%	13.13		%
Tier 1 risk-based capital	10.89		%	10.90		%	12.30		%	12.32		%	13.13		%
Total risk-based capital	11.32		%	11.30		%	12.86		%	12.89		%	13.71		%

¹ Current period capital ratios are estimated as of the date of this earnings release.



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands)
BALANCE SHEET
	Ending Balances
	March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
Assets
Cash & cash equivalents	$	96,710		$	113,027		$	84,098		$	82,835		$	55,548
Securities available for sale	156,210			151,945			115,535			132,762			137,133
Other investments	7,808			6,431			6,081			6,080			5,628
Total loans	1,374,257			1,323,258			871,679			865,421			807,539
Allowance for loan losses	(6,477		)	(5,860		)	(5,393		)	(5,498		)	(5,152		)
Loans, net	1,367,780			1,317,398			866,286			859,923			802,387
Premises and equipment	44,202			43,000			33,778			33,765			30,802
Foreclosed assets	2,665			3,254			2,888			2,369			2,371
Goodwill and other intangibles	50,660			50,837			7,414			7,492			6,583
Cash surrender value of life insurance	21,797			21,647			11,484			11,392			1,329
Other assets	12,593			13,232			8,258			8,861			9,305
Total assets	$	1,760,425		$	1,720,771		$	1,135,822		$	1,145,479		$	1,051,086

Liabilities
Noninterest demand	$	276,249		$	220,520		$	185,386		$	183,324		$	160,673
Interest-bearing demand	278,965			231,644			156,953			156,150			167,433
Money market and savings	491,243			543,645			306,358			324,014			274,994
Time deposits	453,276			442,774			311,490			318,147			286,600
Total deposits	1,499,733			1,438,583			960,187			981,635			889,700
Repurchase agreements	15,968			24,055			26,542			22,946			23,153
FHLB & other borrowings	30,000			43,600			6,000			—			60
Other liabilities	5,775			8,681			6,505			6,164			5,622
Total liabilities	1,551,476			1,514,919			999,234			1,010,745			918,535
Shareholders' Equity
Preferred stock	—			—			—			—			—
Common stock	11,234			11,152			8,243			8,219			8,211
Additional paid-in capital	174,981			174,009			107,065			106,794			106,703
Retained earnings	25,303			21,889			21,654			19,969			18,320
Accumulated other comprehensive loss	(2,569		)	(1,198		)	(374		)	(248		)	(683		)
Total shareholders' equity	208,949			205,852			136,588			134,734			132,551
Total liabilities & shareholders' equity	$	1,760,425		$	1,720,771		$	1,135,822		$	1,145,479		$	1,051,086



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands)
INCOME STATEMENT
	Three months ending
	March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017		March 31, 2017
Interest Income
Loans, including fees	$	18,228	$	16,357	$	11,491	$	10,747	$	10,210
Investment securities and interest bearing due froms	1,049		770		740		692		661
Other interest income	101		117		86		78		73
Total interest income	19,378		17,244		12,317		11,517		10,944
Interest Expense
Deposits	2,401		1,806		1,373		1,241		1,098
Repurchase agreements	13		15		15		16		16
FHLB and other borrowings	153		81		5		12		15
Total interest expense	2,567		1,902		1,393		1,268		1,129
Net interest income	16,811		15,342		10,924		10,249		9,815
Provision for loan losses	689		442		30		298		12
Net interest income after provision for loan losses	16,122		14,898		10,894		9,951		9,803
Noninterest income
Service charges on deposit accounts	578		524		294		291		264
Gain on securities	—		—		144		—		—
Gain on sale of loans and other assets	325		366		224		405		281
Other non-interest income	739		691		585		556		402
Total noninterest income	1,642		1,581		1,247		1,252		947
Noninterest expense
Salaries and employee benefits	7,176		6,272		5,035		4,758		4,679
Occupancy expense	1,533		1,217		1,114		963		978
FDIC premiums	102		150		102		61		153
Foreclosed asset expense	189		59		47		12		14
Marketing	185		167		177		129		164
Data Processing	713		583		483		475		333
Professional expenses	898		602		472		473		538
Amortization of other intangibles	188		155		78		61		53
Service contracts	479		426		363		313		296
Merger Expense	498		1,694		303		420		—
Other noninterest expense	1,448		1,242		1,400		1,164		952
Total noninterest expense	13,409		12,566		9,574		8,829		8,160
Earnings before income taxes	4,355		3,913		2,567		2,374		2,589
Income tax expense	940		3,875		882		726		946
Net income	3,415		38		1,685		1,648		1,644
Dividends on preferred stock	—		—		—		—		195
Net income available to common shareholders	$	3,415	$	38	$	1,685	$	1,648	$	1,449

NET INCOME PER COMMON SHARE
Basic	$	0.30	$	—	$	0.20	$	0.20	$	0.19
Diluted	0.30		—		0.20		0.20		0.19

Weighted average common shares outstanding
Basic	11,211		10,552		8,235		8,217		7,525
Diluted	11,324		10,709		8,333		8,326		7,631



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands)
YIELD ANALYSIS
	Three Months Ended March 31, 2018						Three Months Ended December 31, 2017						Three Months Ended March 31, 2017
	Average				Yield/		Average				Yield/		Average				Yield/
	Balance		Interest ¹		Cost¹		Balance		Interest ¹		Cost¹		Balance		Interest ¹		Cost¹
Assets
Loans	$	1,346,179	$	18,230	5.49	%	$	1,160,599	$	16,362	5.61	%	$	811,522	$	10,220	5.11	%
Investment securities and interest bearing due froms	203,923		1,059		2.11	%	179,768		781		1.73	%	161,392		677		1.70	%
Federal funds and other	8,414		101		4.87	%	9,947		117		4.68	%	6,621		73		4.47	%
Total interest-earning assets	1,558,516		19,390		5.05	%	1,350,314		17,260		5.09	%	979,535		10,970		4.54	%
Non-interest-earning assets	176,646						137,846						66,208
Total assets	$	1,735,162					$	1,488,160					$	1,045,743

Liabilities and Stockholders’ Equity
Interest-bearing demand deposits	$	249,846	$	320	0.52	%	$	195,783	$	213	0.43	%	$	159,255	$	93	0.24	%
Money market and savings deposits	526,093		870		0.67	%	462,674		488		0.42	%	275,576		328		0.48	%
Time deposits	454,660		1,211		1.08	%	398,142		1,106		1.11	%	302,256		677		0.91	%
Total interest-bearing deposits	1,230,599		2,401		0.79	%	1,056,599		1,807		0.68	%	737,087		1,098		0.60	%
Securities sold under agreement to repurchase	16,186		13		0.33	%	20,226		15		0.30	%	18,682		16		0.35	%
Federal Home Loan Bank advances and other borrowings	26,655		153		2.33	%	8,281		81		3.90	%	7,446		15		0.82	%
Total interest-bearing liabilities	1,273,440		2,567		0.82	%	1,085,106		1,903		0.70	%	763,215		1,129		0.60	%
Noninterest-bearing deposits	231,355						203,457						149,305
Other liabilities	8,656						15,302						4,580
Total liabilities	1,513,451						1,303,865						917,100
Shareholders’ equity	221,711						184,295						128,643
Total liabilities and stockholders’ equity	$	1,735,162					$	1,488,160					$	1,045,743

Net interest income, taxable equivalent			$	16,823					$	15,357					$	9,841
Interest rate spread					4.23	%					4.39	%					3.94	%
Tax equivalent net interest margin					4.38	%					4.51	%					4.07	%

Percentage of average interest-earning assets to average interest-bearing liabilities					122.39	%					124.44	%					128.34	%
Percentage of average equity to average assets					12.78	%					12.38	%					12.30	%

¹Taxable equivalent



SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands)
NON-GAAP RECONCILIATIONS	Three months ending
	March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
Net interest income, Taxable Equivalent
Net interest income (GAAP)	$	16,811		$	15,341		$	10,924		$	10,248		$	9,815
Taxable equivalent adjustment	32			16			22			21			21
Net interest income, Taxable Equivalent (Non-GAAP)	$	16,823		$	15,357		$	10,946		$	10,269		$	9,836

Operating Earnings
Net income (loss) (GAAP)	$	3,415		$	38		$	1,685		$	1,648		$	1,644
Securities (gains) losses	—			—			(144		)	—			—
Foreclosed assets losses	146			5			27			—			15
Merger and conversion costs	498			1,694			303			420			—
Revaluation of deferred tax assets due to change in tax law	—			2,482			—			—			—
Income tax effect of adjustments	(168		)	(508		)	(36		)	(3		)	(6		)
Net operating earnings (Non-GAAP)	3,891			3,711			1,835			2,065			1,653
Dividends on preferred stock	—			—			—			—			(195		)
Net operating earnings available to common shareholders (Non-GAAP)	$	3,891		$	3,711		$	1,835		$	2,065		$	1,458
Net operating earnings per common share (Non-GAAP):
Basic	$	0.35		$	0.35		$	0.22		$	0.25		$	0.19
Diluted	0.34			0.35			0.22			0.25			0.19

Operating Efficiency Ratio
Efficiency ratio (GAAP)	72.66		%	74.25		%	78.62		%	76.77		%	75.79		%
Adjustment for taxable equivalent yields	(0.24		)%	—		%	(0.22		)%	(0.22		)%	(0.25		)%
Adjustment for securities gains (losses)	—		%	—		%	1.51		%	—		%	—		%
Adjustment for OREO gains (losses)	(1.09		)%	(0.04		)%	(0.28		)%	—		%	(0.18		)%
Adjustment for merger & conversion costs	(3.71		)%	(13.49		)%	(3.18		)%	(4.76		)%	—		%
Operating efficiency ratio (Non-GAAP)	67.62		%	60.72		%	76.45		%	71.79		%	75.36		%

Loan Discount Data
Allowance for loan losses (GAAP)	$	6,477		$	5,860		$	5,393		$	5,498		$	5,152
Net acquisition accounting fair value discounts to loans	16,323			17,862			8,167			9,086			9,831

Tangible Common Equity
Shareholders' equity (GAAP)	$	208,949		$	205,852		$	136,588		$	134,734		$	132,551
Less goodwill and other intangible assets	50,660			50,837			7,414			7,492			6,583
Tangible common equity (Non-GAAP)	$	158,289		$	155,015		$	129,174		$	127,242		$	125,968

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