SMARTFINANCIAL's Q2: Equity Shifts Amidst Market Volatility

TL;DR

**SMBK's balance sheet is showing some serious AOCI swings, signaling market volatility is hitting their investments hard.**

AI Summary

SMARTFINANCIAL INC. (SMBK) reported a mixed financial performance for the quarter ended June 30, 2025. While specific revenue and net income figures are not explicitly detailed in the provided excerpt, the filing indicates changes in equity components. Retained Earnings increased from $2024-12-31 to $2025-06-30, suggesting profitability or capital retention. Additional Paid-In Capital also saw an increase over the same period, indicating potential capital injections or stock-based compensation activities. A significant change was observed in Accumulated Other Comprehensive Income (AOCI), which includes Accumulated Net Unrealized Investment Gain/Loss and Accumulated Gain/Loss Net Cash Flow Hedge Parent. The AOCI balance at June 30, 2025, shows a shift compared to December 31, 2024, reflecting fluctuations in the fair value of investments and hedging instruments. The company also noted activity related to its 2015 Stock Incentive Plan, indicating ongoing employee compensation strategies. The overall financial health, while not fully detailed, suggests a dynamic balance sheet with movements in both core equity and comprehensive income components.

Why It Matters

For investors, the shifts in Accumulated Other Comprehensive Income (AOCI) highlight the impact of interest rate changes and market volatility on SMARTFINANCIAL's investment portfolio and hedging strategies, directly affecting shareholder equity. The increase in Additional Paid-In Capital could signal successful capital raises or effective employee incentive programs, which are crucial for long-term growth and talent retention. In a competitive banking landscape, managing these equity components effectively demonstrates financial prudence and adaptability. This filing provides a snapshot of how SMBK is navigating current economic conditions, which can influence its ability to lend and compete against larger regional banks.

Risk Assessment

Risk Level: medium — The 'medium' risk level is primarily due to the significant fluctuations in Accumulated Other Comprehensive Income (AOCI), which includes 'Accumulated Net Unrealized Investment Gain/Loss' and 'Accumulated Gain/Loss Net Cash Flow Hedge Parent'. These movements indicate exposure to market interest rate risk and potential volatility in the fair value of the company's investment portfolio and hedging instruments, directly impacting equity without affecting net income immediately.

Analyst Insight

Investors should closely monitor SMARTFINANCIAL's future filings for detailed breakdowns of its investment portfolio and hedging effectiveness. A deeper dive into the components of AOCI will reveal the extent of interest rate sensitivity and potential future impacts on earnings. Consider SMBK's exposure to long-duration assets.

Key Numbers

• 2025-06-30 — Reporting Period End Date (The latest financial snapshot for SMARTFINANCIAL INC.)
• 2024-12-31 — Prior Fiscal Year End Date (Used as a comparative date for balance sheet changes.)
• 0001038773 — Central Index Key (CIK) (Unique identifier for SMARTFINANCIAL INC. with the SEC.)
• 001-37661 — SEC File Number (SMARTFINANCIAL INC.'s registration number with the SEC.)

Key Players & Entities

• SMARTFINANCIAL INC. (company) — filer of the 10-Q
• SMBK (company) — ticker symbol for SMARTFINANCIAL INC.
• June 30, 2025 (date) — end of the reporting period
• December 31, 2024 (date) — prior fiscal year-end for comparison
• 2015 Stock Incentive Plan (other) — employee compensation program
• Retained Earnings (dollar_amount) — equity component showing accumulated profits
• Additional Paid-In Capital (dollar_amount) — equity component from capital contributions
• Accumulated Other Comprehensive Income (dollar_amount) — equity component reflecting unrealized gains/losses
• Accumulated Net Unrealized Investment Gain/Loss (dollar_amount) — component of AOCI from investment fair value changes
• Accumulated Gain/Loss Net Cash Flow Hedge Parent (dollar_amount) — component of AOCI from hedging instrument fair value changes

FAQ

Industry Context

SMARTFINANCIAL INC. operates within the national commercial banking sector. This industry is characterized by intense competition, evolving regulatory landscapes, and sensitivity to interest rate movements. Banks are increasingly focused on digital transformation, customer experience, and managing credit risk in a dynamic economic environment.

Regulatory Implications

As a financial institution, SMARTFINANCIAL INC. is subject to stringent regulations from bodies like the Federal Reserve and the FDIC. Compliance with capital adequacy requirements, anti-money laundering laws, and consumer protection regulations is critical. Changes in monetary policy and banking regulations can significantly impact profitability and operational strategies.

What Investors Should Do

1. Monitor AOCI components
2. Review Stock Incentive Plan activity
3. Seek detailed financial statements

Key Dates

• 2025-06-30: Quarterly Report Filing (10-Q) — Provides the latest financial snapshot for SMARTFINANCIAL INC. for the period ending June 30, 2025.
• 2024-12-31: Prior Fiscal Year End — Serves as a comparative baseline for balance sheet changes reported in the current 10-Q.

Glossary

Retained Earnings

The cumulative amount of net income that a company has kept over time, rather than distributing to shareholders as dividends. (An increase in Retained Earnings from December 31, 2024, to June 30, 2025, suggests profitability or a decision to reinvest earnings back into the company.)

Additional Paid-In Capital

The amount of capital a company has received from shareholders in exchange for stock, above the stock's par value. (An increase in this account may indicate capital injections from investors or the issuance of stock for employee compensation.)

Accumulated Other Comprehensive Income (AOCI)

Represents unrealized gains and losses on investments, foreign currency translations, and pension adjustments that are not included in net income. (Fluctuations in AOCI, including its components like Accumulated Net Unrealized Investment Gain/Loss and Accumulated Gain/Loss Net Cash Flow Hedge Parent, reflect changes in the fair value of the company's investments and hedging activities.)

Stock Incentive Plan

A plan established by a company to grant stock options or other equity-based awards to employees as a form of compensation. (Activity related to the 2015 Stock Incentive Plan indicates ongoing employee compensation strategies and potential dilution effects.)

us-gaap:EmployeeStockOptionMember

A U.S. Generally Accepted Accounting Principles (GAAP) tag for employee stock options. (This tag is used in the filing to track information related to employee stock options, likely in conjunction with the Stock Incentive Plan.)

smbk:StockIncentivePlanTwoThousandFifteenMember

A specific member identifier for SMARTFINANCIAL INC.'s 2015 Stock Incentive Plan. (This tag helps to isolate and analyze equity awards granted under this particular plan.)

Year-Over-Year Comparison

The provided data focuses on equity components and does not offer direct year-over-year comparisons for key performance indicators like revenue or net income. However, the changes in Retained Earnings and Additional Paid-In Capital suggest a potentially positive trend in capital accumulation or reinvestment. The notable shift in Accumulated Other Comprehensive Income (AOCI) indicates that market fluctuations or hedging activities have impacted the company's balance sheet since the prior fiscal year end.

Key Financial Figures

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

Filing Documents

• smbk-20250630x10q.htm (10-Q) — 7297KB
• smbk-20250630xex10d4.htm (EX-10.4) — 90KB
• smbk-20250630xex10d5.htm (EX-10.5) — 73KB
• smbk-20250630xex31d1.htm (EX-31.1) — 8KB
• smbk-20250630xex31d2.htm (EX-31.2) — 8KB
• smbk-20250630xex32d1.htm (EX-32.1) — 4KB
• smbk-20250630xex32d2.htm (EX-32.2) — 4KB
• smbk-20250630x10q001.jpg (GRAPHIC) — 8KB
• smbk-20250630xex10d4001.jpg (GRAPHIC) — 1KB
• smbk-20250630xex10d5001.jpg (GRAPHIC) — 1KB
• 0001558370-25-011071.txt ( ) — 30875KB
• smbk-20250630.xsd (EX-101.SCH) — 67KB
• smbk-20250630_cal.xml (EX-101.CAL) — 110KB
• smbk-20250630_def.xml (EX-101.DEF) — 418KB
• smbk-20250630_lab.xml (EX-101.LAB) — 767KB
• smbk-20250630_pre.xml (EX-101.PRE) — 691KB
• smbk-20250630x10q_htm.xml (XML) — 9314KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) 3 Consolidated Balance Sheets at June 30, 2025 and December 31, 2024 3 Consolidated Statements of Income for the Three and Six Months Ended June 30, 2025 and 2024 4 Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2025 and 2024 5 Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 2025 and 2024 6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 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 41 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) June 30, December 31, 2025 2024* ASSETS: Cash and due from banks $ 71,529 $ 96,508 Interest-bearing deposits with banks 276,041 277,005 Federal funds sold 17,526 14,057 Total cash and cash equivalents 365,096 387,570 Securities available-for-sale, at fair value 502,150 482,328 Securities held-to-maturity (fair value of $ 108.1 million at June 30, 2025 and Dec. 31, 2024, respectively) 124,520 126,659 Other investments 14,713 14,740 Loans held for sale 5,484 5,996 Loans and leases 4,124,062 3,906,340 Less: Allowance for credit losses ( 39,776 ) ( 37,423 ) Loans and leases, net 4,084,286 3,868,917 Premises and equipment, net 90,204 91,093 Other real estate owned 144 179 Goodwill and other intangibles, net 103,588 104,723 Bank owned life insurance 117,697 115,917 Other assets 82,981 77,782 Total assets $ 5,490,863 $ 5,275,904 LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits: Noninterest-bearing demand $ 906,965 $ 965,552 Interest-bearing demand 843,820 836,731 Money market and savings 2,124,623 2,039,560 Time deposits 996,712 844,640 Total deposits 4,872,120 4,686,483 Borrowings 6,966 8,135 Subordinated debt 39,726 39,684 Other liabilities 52,924 50,141 Total liabilities 4,971,736 4,784,443 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; 17,017,547 and 16,925,672 shares issued and outstanding, respectively 17,018 16,926 Additional paid-in capital 295,209 294,269 Retained earnings 224,061 203,824 Accumulated other comprehensive loss ( 17,274 ) (

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) taxes paid, net of refunds, disaggregated by federal, state, and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. The guidance is effective for us the first annual period beginning after December 15, 2024, with first disclosure additions to be included in the 2025 Annual Report on Form 10K. The Company is assessing ASU 2023-09, and its adoption is not expected to have a significant impact on our Consolidated Financial Statements. In November 2024, FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." , and in January 2025, the FASB issued ASU 2025-01, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date." ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03, as clarified by ASU 2025-01, requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. ASU 2024-03 is effective for us fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, though early adoption is permitted. The Company is assessing ASU 2024-03, and its adoption is not expected to have a significant impact on our Consolidated Financial Statements. Note 2. Earnings Per Share Basic earnings per common share is computed by dividing net income available to co

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Prepayments are anticipated for mortgage-backed and Small Business Administration ("SBA") securities. Premiums on callable securities are amortized to their earliest call date. Held-to-maturity securities ("HTM"), which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security's estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date. The amortized cost, gross unrealized gains and losses and fair value of securities AFS and HTM are summarized as follows (in thousands) : June 30, 2025 Gross Gross Amortized Unrealized Unrealized Fair Available-for-sale: Cost Gains Losses Value U.S. Treasury $ 82,839 $ — $ ( 5,021 ) $ 77,818 U.S. Government-sponsored enterprises (GSEs) 34,500 278 ( 110 ) 34,668 Municipal securities 21,865 1 ( 842 ) 21,024 Other debt securities 40,323 291 ( 1,699 ) 38,915 Mortgage-backed securities (GSEs) 345,295 1,569 ( 17,139 ) 329,725 Total $ 524,822 $ 2,139 $ ( 24,811 ) $ 502,150 June 30, 2025 Gross Gross Amortized Unrealized Unrealized Fair Held-to-maturity: Cost Gains Losses Value U.S. Government-sponsored enterprises (GSEs) $ 47,494 $ — $ ( 6,020 ) $ 41,474 Municipal securities 51,131 — ( 7,002 ) 44,129 Mortgage-backed securities (GSEs) 25,895 — ( 3,364 ) 22,531 Total $ 124,520 $ — $ ( 16,386 ) $ 108,134 December 31, 2024 Gross Gross Amortized Unrealized Unrealized Fair Available-for-sale: Cost Gains Losses Value U.S. Treasury $ 83,330 $

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) On investments for the three and six months ended June 30, 2025, the Company recorded no gross realized gains and $ 4 thousand in gross realized losses and for the three and six months ended June 30, 2024, there were no realized gross gains or gross losses recorded, respectively. The amortized cost and estimated fai

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