Net operating earnings (Non-GAAP) of $5.0 million for the quarter

Performance Highlights

• Return on average assets of 0.85 percent and net operating return on average assets (non-GAAP) of 0.98 percent.
• Yield on earning assets, taxable equivalent, of 5.03 percent, an increase of 0.33 percentage points from a year ago.
• Noninterest expense to average assets of 2.90 percent, a decrease of 0.44 percentage points from a year ago.
• Completed subordinated debt offering of $40 million during the quarter.

KNOXVILLE, Tenn., Oct. 23, 2018 (GLOBE NEWSWIRE) -- SmartFinancial, Inc. ("SmartFinancial"; NASDAQ: SMBK), today announced net income of $4.3 million for the third quarter of 2018, compared to $1.7 million a year ago. Diluted net income per share was $0.34 for the third quarter of 2018, compared to $0.20 during the third quarter of 2017. Net operating earnings (Non-GAAP), which excludes securities gains and merger expenses, totaled $5.0 million in the third quarter of 2018 compared to $1.8 million in the third quarter of 2017.

Billy Carroll, President & CEO, stated: "I am pleased to report a very solid quarter with record earnings for SmartFinancial. As we execute on our growth strategy, we continue to make strides on building a very solid foundation for our company. We had another successful conversion, as we integrated and rebranded the middle Tennessee and northern Alabama offices of Tennessee Bancshares, Inc. while planning for our upcoming acquisition of east Tennessee-based Foothills Bancorp, Inc. Also highlighting this quarter was our successful $40 million subordinated debt raise that positions the company for our next phase of growth."

SmartFinancial's Chairman, Miller Welborn, concluded: “I am excited about our continued growth and accomplishments this quarter. Also, being assigned an investment grade BBB senior unsecured debt rating and BBB-subordinated debt rating from the Kroll Bond Rating Agency during the quarter is an accolade we are extremely proud to obtain. We also have all necessary approvals for the acquisition of Foothills Bancorp, Inc. and anticipate a closing of November 1.”

Third Quarter 2018 compared to Second Quarter 2018

Net income was $4.3 million for the third quarter of 2018, compared to $3.9 million in the prior quarter. Diluted net income per share was $0.34 for the third quarter of 2018, compared to $0.32 during the second quarter of 2018. Net operating earnings (non-GAAP), which is net income excluding securities gains and merger expenses, totaled $5.0 million in the third quarter of 2018 compared to $4.8 million in the previous quarter.

Net interest income to average assets of 3.70 percent for the quarter decreased from 4.03 percent in the second quarter of 2018, primarily due to lower accretion on acquired loans. Net interest income totaled $18.9 million in the third quarter of 2018, compared to $19.5 million in the second quarter of 2018. Net interest margin, taxable equivalent, decreased from 4.54 percent in the second quarter of 2018 to 4.11 percent in the third quarter of 2018 as a result of lower accretion income on acquired loans and higher deposit costs.

Provision for loan losses was $302 thousand in the third quarter of 2018, compared to $617 thousand in the second quarter of 2018. The decrease in provision for loan losses was due to slower growth of the organic loan portfolio during the period. The allowance for loan losses and leases ("ALLL") was $7.2 million, or 0.45 percent of total loans as of September 30, 2018, compared to $7.1 million, or 0.45 percent of total loans, as of June 30, 2018.

Nonperforming loans as a percentage of total loans was 0.16 percent as of September 30, 2018, which was an increase from 0.11 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 0.27 percent as of September 30, 2018, compared to 0.25 percent as of June 30, 2018.

Noninterest income to average assets of 0.36 percent for the period increased slightly from 0.33 percent in the second quarter of 2018. Noninterest income totaled $1.9 million in the third quarter of 2018, compared to $1.6 million in the second quarter of 2018, primarily due to higher gains on sale of loans and other assets.

Noninterest expense to average assets of 2.90 percent for the quarter decreased from 3.15 percent in the second quarter of 2018. Noninterest expense totaled $14.8 million in the third quarter of 2018, a decrease of $0.5 million from the second quarter of 2018, primarily due to lower merger expenses. Income tax expense was $1.3 million in the third quarter of 2018 compared to $1.3 million in the second quarter of 2018. The company's effective tax rate decreased to 23.2 percent in the third quarter of 2018 compared to 24.8 percent in the second quarter of 2018, due to lower nondeductible merger expenses and an increase in exercised options with associated tax benefits.

Third Quarter 2018 compared to Third Quarter 2017

Net income totaled $4.3 million in the third quarter of 2018, or $0.34 per diluted share, compared to $1.7 million, or $0.20 per diluted share, in the third quarter of 2017. Net operating earnings (non-GAAP), which excludes securities gains and merger expenses, totaled $5.0 million in the third quarter of 2018 compared to $1.8 million in the third quarter of 2017.

Net interest income to average assets of 3.70 percent for the quarter decreased from 3.81 percent in the third quarter of 2017. Net interest income totaled $18.9 million in the third quarter of 2018, compared to $10.9 million in the third 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, decreased from 4.17 percent in the third quarter of 2017 to 4.11 percent in the third quarter of 2018 as a result of increases on the cost of deposits.

Provision for loan losses was $302 thousand in the third quarter of 2018, compared to $30 thousand in the third quarter of 2017. The increase in provision for loan losses was due to faster growth of the organic loan portfolio during the period. The ALLL was $7.2 million, or 0.45 percent of total loans as of September 30, 2018, compared to $5.4 million, or 0.62 percent of total loans, as of September 30, 2017.

Nonperforming loans as a percentage of total loans was 0.16 percent as of September 30, 2018, an increase from 0.15 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 0.27 percent as of September 30, 2018, compared to 0.37 percent as of September 30, 2017.

Noninterest income to average assets of 0.36 percent for the quarter decreased from 0.43 percent in the third quarter of 2017. Noninterest income totaled $1.9 million in the third quarter of 2018, compared to $1.2 million in the third quarter of 2017.

Noninterest expense to average assets of 2.90 percent for the quarter decreased from 3.34 percent in the third quarter of 2017. Noninterest expense totaled $14.8 million in the third quarter of 2018, compared to $9.6 million in the third quarter of 2017. The increases in noninterest expense over the prior year in salaries and employee benefits and occupancy expense were primarily due to the acquisitions of Capstone Bancshares, Inc. in the fourth quarter of 2017 and Tennessee Bancshares, Inc. in the second quarter of 2018. The company's effective tax rate was 23.2 percent in the third quarter of 2018 compared to 34.4 percent in the third quarter of 2017, primarily due to the decrease in the federal tax rate for 2018.

Conference Call Information

SmartFinancial plans to issue its earnings release for the third quarter of 2018 on Tuesday, October 23, 2018, and will host a conference call on Wednesday, October 24, 2018 at 10:00 a.m. ET. To access this interactive teleconference, dial (888) 317-6003 or (412) 317-6061 and enter the confirmation number, 2373912. A replay of the conference call will be available through October 24, 2019, by dialing (877) 344-7529 or (412) 317-0088 and entering the confirmation number, 10125644. Conference call materials (earnings release & conference call presentation will be published on the company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile), 9:00 am EDT 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 25 branches across Tennessee, Alabama, and the 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.

SourceSmartFinancial, Inc.

Investor ContactsBilly Carroll President & CEO (865) 868-0613 [email protected]

Ron GorczynskiExecutive Vice President, Chief Administrative Officer(865) 437-5724 [email protected]

Media ContactKelley FowlerSenior Vice President, Public Relations & Marketing(865) 868-0611 [email protected]

Non-GAAP Financial MattersStatements 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; (iii) tangible common equity; and (iv) net operating return on average assets, 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, merger related expenses, and the 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 and merger related expenses from the efficiency ratio. Tangible common equity excludes goodwill and other intangible assets. Net operating return on average assets is annualized net operating income divided by GAAP total average 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 StatementsCertain of the statements made in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements, including statements regarding the intent, belief, or current expectations of SmartFinancial’s management regarding the company’s strategic direction, prospects, or future results or the benefits of the proposed merger with Foothills Bancorp, Inc. (the “Foothills merger”), are subject to numerous risks and uncertainties. Such risks and uncertainties include, among others, (1) the risk that the cost savings and revenue synergies anticipated in connection with the Foothills merger may not be realized or may take longer than anticipated to be realized, (2) disruption from the Foothills merger with customers, suppliers, or employee or other business relationships, (3) the occurrence of any event, change, or other circumstances that could give rise to the termination of the merger agreement with Foothills Bancorp, (4) the risk of successful integration of our business with that of Foothills Bancorp, (5) the amount of costs, fees, expenses, and charges related to the Foothills merger, (6) our ability to successfully integrate the businesses acquired as part of previous mergers with that of SmartBank, (7) reputational risk and the reaction of our customers and Foothills Bancorp’s customers to the Foothills merger, (8) the failure of the conditions to closing of the Foothills merger to be satisfied, (9) the risk that the integration of our merger partner's business into our operations will be materially delayed or will be more costly or difficult than expected, (10) the possibility that the Foothills merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (11) the dilution caused by SmartFinancial’s issuance of additional shares of its common stock in the Foothills merger, (12) changes in management’s plans for the future, (13) prevailing economic and political conditions, particularly in our market areas, (14) credit risk associated with our lending activities, (15) changes in interest rates, loan demand, real estate values, and competition, (16) changes in accounting principles, policies, or guidelines, (17) changes in applicable laws, rules, or regulations, and (18) other competitive, economic, political, and market factors affecting our business, operations, pricing, products, and services. Certain additional factors which could affect the forward-looking statements can be found in SmartFinancial’s 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 SEC and available on the SEC’s website (www.sec.gov). SmartFinancial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands except per share data)
		As of and for the three months ending
		September 30, 2018				June 30, 2018				March 31, 2018				December 31, 2017				September 30, 2017
Selected Performance Ratios (Annualized)
Return on average assets			0.85	%			0.81	%			0.80	%			0.01	%			0.59	%
Net operating return on average assets (Non-GAAP)			0.98	%			1.00	%			0.89	%			0.99	%			0.63	%
Return on average shareholder equity			6.86	%			6.76	%			6.25	%			0.08	%			4.91	%
Return on average tangible common equity (Non-GAAP)			9.44	%			8.96	%			8.10	%			0.10	%			5.20	%
Net operating return on average shareholder equity (Non-GAAP)			7.88	%			8.33	%			6.97	%			7.98	%			5.30	%
Net operating return on average tangible common equity (Non-GAAP)			10.84	%			11.04	%			9.04	%			9.94	%			5.61	%
Net interest income / average assets			3.70	%			4.03	%			3.93	%			4.09	%			3.81	%
Yield on earning assets			5.02	%			5.34	%			5.02	%			5.04	%			4.69	%
Yield on earning assets, TE			5.03	%			5.34	%			5.03	%			5.05	%			4.70	%
Cost of interest-bearing liabilities			1.15	%			1.00	%			0.82	%			0.70	%			0.68	%
Net interest margin			4.11	%			4.53	%			4.36	%			4.49	%			4.16	%
Net interest margin, TE			4.11	%			4.54	%			4.36	%			4.49	%			4.17	%
Noninterest income / average assets			0.36	%			0.33	%			0.34	%			0.42	%			0.43	%
Noninterest expense / average assets			2.90	%			3.15	%			3.09	%			3.35	%			3.34	%
Efficiency ratio			71.37	%			72.34	%			72.39	%			74.26	%			78.67	%
Operating efficiency ratio (Non-GAAP)			67.21	%			64.82	%			69.12	%			60.64	%			76.72	%
Pre-tax pre-provision income / average assets			1.23	%			1.21	%			1.18	%			1.16	%			0.90	%
Per Common Share
Net income, basic		$	0.34			$	0.32			$	0.30			$	—			$	0.20
Net income, diluted			0.34				0.32				0.30				—				0.20
Net operating earnings, basic (Non-GAAP)			0.39				0.40				0.34				0.35				0.22
Net operating earnings, diluted (Non-GAAP)			0.39				0.39				0.34				0.34				0.22
Book value			19.74				19.48				18.60				18.46				16.57
Tangible book value (Non-GAAP)			14.38				14.09				14.09				13.90				15.67
Common shares outstanding			12,750				12,705				11,234				11,153				8,243

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands except per share data)
		As of and for the three months ending
		September 30, 2018				June 30, 2018				March 31, 2018				December 31, 2017				September 30, 2017
Composition of Loans
Real estate commercial
owner occupied		$	364,164			$	360,294			$	288,666			$	281,297			$	210,489
non-owner occupied			400,275				385,536				375,028				361,691				237,131
Real estate commercial, total			764,439				745,830				663,694				642,988				447,620
Commercial & industrial			289,732				279,341				256,333				238,087				119,782
Real estate construction & development			166,089				179,361				142,702				135,409				98,212
Real estate residential			351,948				355,755				299,148				293,457				199,704
Other loans			12,986				15,148				12,380				13,317				6,361
Total loans		$	1,585,194			$	1,575,435			$	1,374,257			$	1,323,258			$	871,679
Asset Quality and Additional Loan Data
Nonperforming loans		$	2,604			$	1,730			$	1,931			$	1,764			$	1,264
Foreclosed assets			2,941				3,524				2,665				3,254				2,888
Total nonperforming assets		$	5,545			$	5,254			$	4,596			$	5,018			$	4,152
Restructured loans not included in nonperforming loans		$	369			$	660			$	40			$	41			$	42
Net charge-offs (recoveries) to average loans (annualized)			0.06	%			0.02	%			0.02	%			(0.01)	%			(0.02)	%
Allowance for loan losses to loans			0.45	%			0.45	%			0.47	%			0.44	%			0.62	%
Nonperforming loans to total loans, gross			0.16	%			0.11	%			0.14	%			0.13	%			0.15	%
Nonperforming assets to total assets			0.27	%			0.25	%			0.26	%			0.29	%			0.37	%
Acquisition accounting discounts to loans			19,500				20,748				16,323				17,862				8,167
Accretion income on acquired loans			1,208				2,583				1,274				2,411				888
Capital Ratios
Equity to Assets			12.27	%			12.00	%			11.87	%			11.96	%			12.03	%
Tangible equity to tangible assets (Non-GAAP)			9.25	%			8.98	%			9.26	%			9.28	%			11.45	%
Tangible common equity to tangible assets (Non-GAAP)			9.25	%			8.98	%			9.26	%			9.28	%			11.45	%
SmartFinancial, Inc.:		Estimated1
Tier 1 leverage			9.26	%			9.82	%			9.59	%			10.48	%			11.46	%
Common equity Tier 1			10.70	%			10.83	%			10.84	%			10.59	%			13.37	%
Tier 1 capital			10.70	%			10.83	%			10.84	%			10.59	%			13.37	%
Total capital			13.34	%			11.25	%			11.27	%			10.98	%			13.93	%
SmartBank:		Estimated1
Tier 1 leverage			10.08	%			10.43	%			10.17	%			11.26	%			10.57	%
Common equity Tier 1			11.65	%			11.41	%			11.12	%			10.90	%			12.30	%
Tier 1 risk-based capital			11.65	%			11.41	%			11.12	%			10.90	%			12.30	%
Total risk-based capital			12.06	%			11.83	%			11.56	%			11.30	%			12.86	%
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
		September 30, 2018				June 30, 2018				March 31, 2018				December 31, 2017				September 30, 2017
Assets
Cash & cash equivalents		$	130,104			$	170,235			$	96,710			$	113,027			$	84,098
Securities available for sale			173,039				156,577				156,210				151,945				115,535
Other investments			10,735				8,273				7,808				6,431				6,081
Total loans			1,585,194				1,575,435				1,374,257				1,323,258				871,679
Allowance for loan losses			(7,156	)			(7,074	)			(6,477	)			(5,860	)			(5,393	)
Loans, net			1,578,038				1,568,361				1,367,780				1,317,398				866,286
Premises and equipment			52,427				52,203				44,202				43,000				33,778
Foreclosed assets			2,941				3,524				2,665				3,254				2,888
Goodwill and other intangibles			68,254				68,449				50,660				50,837				7,414
Cash surrender value of life insurance			22,088				21,944				21,797				21,647				11,484
Other assets			13,320				12,666				12,593				13,232				8,258
Total assets		$	2,050,946			$	2,062,232			$	1,760,425			$	1,720,771			$	1,135,822
Liabilities
Noninterest demand		$	301,197			$	301,318			$	276,249			$	220,520			$	185,386
Interest-bearing demand			267,146				246,942				278,965				231,644				156,953
Money market and savings			570,172				632,518				491,243				543,645				306,358
Time deposits			568,796				535,879				453,276				442,774				311,490
Total deposits			1,707,311				1,716,657				1,499,733				1,438,583				960,187
Repurchase agreements			16,787				18,635				15,968				24,055				26,542
FHLB & other borrowings			25,324				72,040				30,000				43,600				6,000
Subordinated debt			39,158				—				—				—				—
Other liabilities			10,724				7,413				5,775				8,681				6,505
Total liabilities			1,799,304				1,814,745				1,551,476				1,514,919				999,234
Shareholders' Equity
Common stock			12,750				12,705				11,234				11,152				8,243
Additional paid-in capital			208,999				208,513				174,981				174,009				107,065
Retained earnings			33,559				29,235				25,303				21,889				21,654
Accumulated other comprehensive loss			(3,666	)			(2,966	)			(2,569	)			(1,198	)			(374	)
Total shareholders' equity			251,642				247,487				208,949				205,852				136,588
Total liabilities & shareholders' equity		$	2,050,946			$	2,062,232			$	1,760,425			$	1,720,771			$	1,135,822

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands, except per share amounts)
INCOME STATEMENT
					Three months ending
					September 30, 2018			June 30, 2018				March 31, 2018			December 31, 2017			September 30, 2017
Interest Income
Loans, including fees					$	21,572		$	21,652			$	18,228		$	16,357		$	11,491
Investment securities and interest bearing due froms						1,326			1,198				1,049			770			740
Other interest income						170			144				101			117			86
Total interest income						23,068			22,993				19,378			17,244			12,317
Interest Expense
Deposits						3,968			3,238				2,401			1,806			1,373
Repurchase agreements						12			11				13			15			15
Subordinated debt						19			—				—			—			—
FHLB and other borrowings						209			207				153			81			5
Total interest expense						4,208			3,455				2,567			1,902			1,393
Net interest income						18,860			19,538				16,811			15,342			10,924
Provision for loan losses						302			617				689			442			30
Net interest income after provision for loan losses						18,558			18,921				16,122			14,900			10,894
Noninterest income
Service charges on deposit accounts						623			557				578			524			294
(Loss) gain on securities						—			(1	)			—			—			144
Gain on sale of loans and other assets						519			327				325			366			224
Interchange and debit card transaction fees						144			121				146			304			233
Other noninterest income						570			579				406			386			352
Total noninterest income						1,856			1,583				1,455			1,580			1,247
Noninterest expense
Salaries and employee benefits						7,934			7,649				7,176			6,272			5,035
Occupancy expense						1,638			1,522				1,533			1,217			1,114
FDIC premiums						158			317				102			150			102
Foreclosed asset expense						105			245				189			59			47
Marketing						228			215				185			167			177
Data processing						407			600				526			583			483
Professional expenses						922			918				898			602			472
Amortization of other intangibles						248			229				188			155			78
Service contracts						507			492				479			426			363
Merger expense						838			1,123				498			1,694			303
Other noninterest expense						1,800			1,968				1,448			1,242			1,400
Total noninterest expense						14,785			15,278				13,222			12,567			9,574
Earnings before income taxes						5,629			5,226				4,355			3,913			2,567
Income tax expense						1,305			1,295				940			3,875			882
Net income					$	4,324		$	3,931			$	3,415		$	38		$	1,685
NET INCOME PER COMMON SHARE
Basic					$	0.34		$	0.32			$	0.30		$	—		$	0.20
Diluted						0.34			0.32				0.30			—			0.20
Weighted average common shares outstanding
Basic						12,719			12,201				11,211			10,552			8,235
Diluted						12,817			12,320				11,324			10,709			8,333

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands)
YIELD ANALYSIS
	Three Months Ended September 30, 2018									Three Months Ended June 30, 2018									Three Months Ended September 30, 2017
	Average						Yield/			Average						Yield/			Average						Yield/
	Balance			Interest1			Cost1			Balance			Interest1			Cost1			Balance			Interest1			Cost1
Assets
Loans	$	1,577,222		$	21,573		5.43	%		$	1,508,351		$	21,654		5.76	%		$	868,357		$	11,496		5.25	%
Investment securities and interest bearing due froms		232,041			1,361		2.33	%			211,587			1,218		2.31	%			142,467			757		2.11	%
Federal funds and other		13,033			170		5.17	%			9,616			144		6.01	%			31,864			86		1.07	%
Total interest-earning assets		1,822,296			23,104		5.03	%			1,729,554			23,016		5.34	%			1,042,305			12,339		4.70	%
Non-interest-earning assets		198,215									194,517									96,147
Total assets	$	2,020,511								$	1,924,071								$	1,138,452
Liabilities and Stockholders’ Equity
Interest-bearing demand deposits	$	239,220		$	283		0.47	%		$	244,208		$	265		0.44	%		$	153,838		$	118		0.30	%
Money market and savings deposits		615,334			1,595		1.03	%			597,353			1,418		0.95	%			329,933			519		0.62	%
Time deposits		564,945			2,090		1.47	%			510,445			1,555		1.22	%			311,668			736		0.94	%
Total interest-bearing deposits		1,419,499			3,969		1.11	%			1,352,006			3,238		0.96	%			795,439			1,373		0.68	%
Securities sold under agreement to repurchase		17,694			12		0.27	%			15,643			11		0.28	%			20,589			15		0.29	%
Federal Home Loan Bank advances, sub debt and other borrowings		17,719			228		5.11	%			22,780			207		3.64	%			381			5		5.21	%
Total interest-bearing liabilities		1,454,912			4,208		1.15	%			1,390,429			3,455		1.00	%			816,409			1,393		0.68	%
Noninterest-bearing deposits		307,007									283,413									179,968
Other liabilities		8,529									16,944									5,978
Total liabilities		1,770,448									1,690,786									1,002,355
Shareholders’ equity		250,063									233,285									136,097
Total liabilities and stockholders’ equity	$	2,020,511								$	1,924,071								$	1,138,452
Net interest income, taxable equivalent				$	18,896								$	19,561								$	10,946
Interest rate spread							3.88	%								4.34	%								4.02	%
Tax equivalent net interest margin							4.11	%								4.54	%								4.17	%
Percentage of average interest-earning assets to average interest-bearing liabilities							125.25	%								124.39	%								127.67	%
Percentage of average equity to average assets							12.38	%								12.12	%								11.95	%
1 Taxable equivalent

SmartFinancial, Inc. and Subsidiary
Condensed Consolidated Financial Information (unaudited)
(In thousands)
NON-GAAP RECONCILIATIONS	Three months ending
	September 30, 2018				June 30, 2018				March 31, 2018				December 31, 2017				September 30, 2017
Operating Earnings
Net income (GAAP)	$	4,324			$	3,931			$	3,415			$	38			$	1,685
Securities (gains) losses		—				1				—				—				(144	)
Merger expenses		838				1,123				498				1,694				303
Revaluation of deferred tax assets due to change in tax law		—				—				—				2,440				—
Income tax effect of adjustments		(196	)			(211	)			(103	)			(506	)			(25	)
Net operating earnings (Non-GAAP)	$	4,966			$	4,844			$	3,810			$	3,666			$	1,819
Net operating earnings per common share (Non-GAAP):
Basic	$	0.39			$	0.40			$	0.34			$	0.35			$	0.22
Diluted		0.39				0.39				0.34				0.34				0.22
Non-GAAP Return Ratios
Net operating return on average assets (Non-GAAP) 1		0.98	%			1.00	%			0.89	%			0.99	%			0.63	%
Return on average tangible common equity (Non-GAAP) 2		9.44	%			8.96	%			8.10	%			0.10	%			5.20	%
Net operating return on average shareholder equity (Non-GAAP) 3		7.88	%			8.33	%			6.97	%			7.98	%			5.30	%
Net operating return on average tangible common equity (Non-GAAP) 4		10.84	%			11.04	%			9.04	%			9.94	%			5.61	%
Operating Efficiency Ratio
Efficiency ratio (GAAP)		71.37	%			72.34	%			72.39	%			74.26	%			78.67	%
Adjustment for taxable equivalent yields		(0.17)	%			(0.15)	%			(0.09)	%			(0.13)	%			(0.23)	%
Adjustment for securities gains (losses)		—	%			(0.01)	%			—	%			—	%			1.54	%
Adjustment for merger related costs		(3.99)	%			(7.35)	%			(3.76)	%			(13.48)	%			(3.26)	%
Operating efficiency ratio (Non-GAAP)		67.21	%			64.82	%			69.12	%			60.64	%			76.72	%
Tangible Common Equity
Shareholders' equity (GAAP)	$	251,642			$	247,487			$	208,949			$	205,852			$	136,588
Less goodwill and other intangible assets		68,254				68,449				50,660				50,837				7,414
Tangible common equity (Non-GAAP)	$	183,388			$	179,037			$	158,289			$	155,015			$	129,174
Average Tangible Common Equity
Average shareholders' equity (GAAP)	$	250,063			$	233,285			$	221,711			$	184,295			$	136,097
Less average goodwill and other intangible assets		68,389				57,251				50,780				36,267				7,465
Average tangible common equity (Non-GAAP)	$	181,674			$	176,034			$	170,931			$	148,028			$	128,631
1 Net operating return on average assets (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average assets.
2 Return on average tangible common equity (non-GAAP) is the annualized net income divided by average tangible common equity (non-GAAP).
3 Net operating return on average equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average equity.
4 Net operating return on average tangible common equity (non-GAAP) is the annualized net operating earnings (non-GAAP) divided by average tangible common equity (non-GAAP).

Source: SmartFinancial, Inc.

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SmartFinancial (SMBK) Tops Q3 EPS by 6cOctober 23, 2018 5:49 PM