SmartFinancial Inc. Q3 2024 10-Q Filing

TL;DR

**SMARTFINANCIAL INC. (SMBK) FILED ITS Q3 2024 10-Q. CHECK FINANCIALS.**

AI Summary

SmartFinancial Inc. filed its 10-Q for the period ending September 30, 2024. The company, formerly known as Cornerstone Bancshares Inc. and East Ridge Bancshares Inc., is a national commercial bank based in Knoxville, TN. The filing details financial performance and operations for the third quarter of 2024.

Why It Matters

This filing provides investors and analysts with the latest financial performance data for SmartFinancial Inc., crucial for understanding the bank's health and strategic direction.

Risk Assessment

Risk Level: medium — As a financial institution, SmartFinancial Inc. is subject to various market and regulatory risks inherent in the banking sector.

Key Players & Entities

• SMARTFINANCIAL INC. (company) — Filer
• CORNERSTONE BANCSHARES INC (company) — Former Company Name
• EAST RIDGE BANCSHARES INC (company) — Former Company Name
• 20240930 (date) — Reporting Period End Date
• 20241112 (date) — Filing Date
• Knoxville, TN (location) — Business Address

FAQ

Key Financial Figures

• $1.00 — ch Registered Common Stock, par value $1.00 SMBK The New York Stock Exchange

Filing Documents

• smbk-20240930x10q.htm (10-Q) — 6862KB
• smbk-20240930xex31d1.htm (EX-31.1) — 8KB
• smbk-20240930xex31d2.htm (EX-31.2) — 8KB
• smbk-20240930xex32d1.htm (EX-32.1) — 4KB
• smbk-20240930xex32d2.htm (EX-32.2) — 4KB
• smbk-20240930x10q001.jpg (GRAPHIC) — 8KB
• 0001558370-24-015345.txt ( ) — 28640KB
• smbk-20240930.xsd (EX-101.SCH) — 67KB
• smbk-20240930_cal.xml (EX-101.CAL) — 117KB
• smbk-20240930_def.xml (EX-101.DEF) — 412KB
• smbk-20240930_lab.xml (EX-101.LAB) — 764KB
• smbk-20240930_pre.xml (EX-101.PRE) — 663KB
• smbk-20240930x10q_htm.xml (XML) — 8617KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) 3 Consolidated Balance Sheets at September 30, 2024 and December 31, 2023 3 Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2024 and 2023 4 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2024 and 2023 5 Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended September 30, 2024 and 2023 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 7 Condensed Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 40 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 56 Item 4.

Controls and Procedures

Controls and Procedures 56

– OTHER INFORMATION

PART II – OTHER INFORMATION 57 Item 1.

Legal Proceedings

Legal Proceedings 57 Item 1A.

Risk Factors

Risk Factors 57 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 57 Item 3. Defaults Upon Senior Securities 57 Item 4. Mine Safety Disclosures 58 Item 5. Other Information 58 Item 6. Exhibits 58 2 Table of Contents

–FINANCIAL INFORMATION

PART I –FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS SMARTFINANCIAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except for share data) (Unaudited) September 30, December 31, 2024 2023* ASSETS: Cash and due from banks $ 65,109 $ 61,586 Interest-bearing deposits with banks 125,298 233,237 Federal funds sold 2,507 57,448 Total cash and cash equivalents 192,914 352,271 Securities available-for-sale, at fair value 501,336 408,410 Securities held-to-maturity, at amortized cost 127,779 281,236 Other investments 20,352 13,662 Loans held for sale 5,804 4,418 Loans and leases 3,717,478 3,444,462 Less: Allowance for credit losses ( 35,609 ) ( 35,066 ) Loans and leases, net 3,681,869 3,409,396 Premises and equipment, net 91,055 92,963 Other real estate owned 179 517 Goodwill and other intangibles, net 105,324 107,148 Bank owned life insurance 105,025 83,434 Other assets 77,297 75,932 Total assets $ 4,908,934 $ 4,829,387 LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits: Noninterest-bearing demand $ 863,949 $ 898,044 Interest-bearing demand 834,207 1,006,915 Money market and savings 1,854,777 1,812,427 Time deposits 769,558 550,468 Total deposits 4,322,491 4,267,854 Borrowings 8,997 13,078 Subordinated debt 39,663 42,099 Other liabilities 48,760 46,470 Total liabilities 4,419,911 4,369,501 Commitments and contingent liabilities - see Note 8 — — Shareholders' equity: Preferred stock, $ 1 par value; 2,000,000 shares authorized; No shares issued and outstanding — — Common stock, $ 1 par value; 40,000,000 shares authorized; 16,926,374 and 16,988,879 shares issued and outstanding, respectively 16,926 16,989 Additional paid-in capital 293,909 295,699 Retained earnings 195,537 173,105 Accumulated other comprehensive income (loss) ( 17,349 ) ( 25,907 ) Total shareholders' equity 489,023

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Presentation of Financial Information Nature of Business: SmartFinancial, Inc. (the "Company," "SmartFinancial," "we," "our" or "us") is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the "Bank"). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, and Florida. The Bank's primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans. Basis of Presentation and Accounting Estimates: The accounting and financial reporting policies of the Company and its wholly owned subsidiary conform to U.S. generally accepted accounting principles ("GAAP") and reporting guidelines of banking regulatory authorities and regulators. The accompanying interim consolidated financial statements for the Company and its wholly owned subsidiary have not been audited. All material intercompany balances and transactions have been eliminated. In management's opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of foreclosed assets and deferred taxes, the fair value of financial instruments, goodwill, and the fair value of assets acquired, and liabilities assumed in acquisitions. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods. The follo

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) program giving rise to the related income tax credits. Previously, this method was only available for qualifying tax equity investments in low-income housing tax credit structures. The guidance is effective for fiscal years beginning after December 15, 2023. ASU 2023-02 did not have an impact on the Company's Consolidated Financial Statements. Recently Issued Not Yet Effective Accounting Pronouncements: During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements for the year ended December 31, 2023, as filed in its Annual Report on Form 10-K with the SEC. The following is a summary of recent authoritative pronouncements issued but not yet effective that could impact the accounting, reporting, and/or disclosure of financial information by the Company. In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." ASU 2023-07 expands segment disclosure requirements for public entities to require disclosure of significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is assessing ASU 2023-07, and its adoption is not expected to have a significant impact on our Consolidated Financial Statements. In December 2023, FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." ASU 2023-09 requires public business entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the recon

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) presented below. There were no antidilutive shares for the three and nine months ended September 30, 2024, and September 30, 2023, respectively. The following is a summary of the basic and diluted earnings per share computation (dollars in thousands, except share and per share data) : Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Basic earnings per share computation: Net income available to common shareholders $ 9,140 $ 2,067 $ 26,500 $ 22,403 Average common shares outstanding – basic 16,726,658 16,807,548 16,782,200 16,801,840 Basic earnings per share $ 0.55 $ 0.12 $ 1.58 $ 1.33 Diluted earnings per share computation: Net income available to common shareholders $ 9,140 $ 2,067 $ 26,500 $ 22,403 Average common shares outstanding – basic 16,726,658 16,807,548 16,782,200 16,801,840 Incremental shares from assumed conversions: Stock options and restricted stock 113,340 111,087 92,116 105,485 Average common shares outstanding - diluted 16,839,998 16,918,635 16,874,316 16,907,325 Diluted earnings per common share $ 0.54 $ 0.12 $ 1.57 $ 1.33 Note 3. Securities Available-for-sale securities ("AFS"), which include any security for which the Company has no immediate plan to sell, but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in accumulated other comprehensive income (loss). Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and Small Business Administration ("SBA") securities. Premiums o

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The amortized cost, gross unrealized gains and losses and fair value of securities AFS and HTM are summarized as follows (in thousands) : September 30, 2024 Gross Gross Amortized Unrealized Unrealized Fair Available-for-sale: Cost Gains Losses Value U.S. Treasury $ 83,576 $ — $ ( 5,665 ) $ 77,911 U.S. Government-sponsored enterprises (GSEs) 41,964 710 ( 108 ) 42,566 Municipal securities 18,319 78 ( 300 ) 18,097 Other debt securities 42,254 243 ( 2,265 ) 40,232 Mortgage-backed securities

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