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2020 SMARTBANK,
known for its progressive and innovative
style of banking, was organized in 2006 and
has been building a foundation of strong
leadership, forward thinking and a sincere
desire to provide incomparable client service.
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Billy Carroll & Miller Welborn
We begin
our annual letter
with a thank you
to our shareholders, clients,
and associates for their support
in helping our company
accomplish another year of
outstanding performance.
The word “unprecedented”
was used many times during
2020 and that is exactly what
was experienced in most all
businesses at some point during
the year. While challenging
in many ways there were
numerous bright spots, and our
company effectively utilized a
very unusual year to achieve
solid results.
Our performance for 2020
was strong with net income
for the year totaling $24.3
million, equating to a diluted
earnings per share of $1.62.
We experienced outstanding
growth of $856 million and
finished the year with assets
over $3.3 billion. We also
maintained our quarterly
dividend, an important part of
our shareholder return strategy.
We continued expansion of our
franchise with the acquisition
of Progressive Financial Group
during the first quarter of
2020. This positioned us with
new offices in the Cumberland
Plateau region in Tennessee,
$3.3+ Billion
in Assets
35 Full Service
Branches
475 Associates
LETTER TO THE SHAREHOLDERS
We also utilized the year to
focus on continued efficiency
gains and expense reduction
initiatives to better leverage
the acquisitions we have
made over the past couple of
years. This work is showing
outstanding results and will
prove very valuable as we
continue to scale the company.
Our team remains diligent on
growing the core earnings
with a key focus on earnings
per share. We now have a
foundation in place we can
leverage to accomplish those
goals and look forward to
watching this company become
even stronger.
The future continues to be
very bright for SmartFinancial.
Our resilient and growing
markets coupled with our
outstanding associates and
loyal clients make this an
extremely unique organization.
The culture of our company is
strong, as evidenced by our
fourth consecutive regional
Top Workplace Award, and the
passion of our team to grow
this company is tremendous.
On behalf of our fellow board
members, our management
team and our 475 associates,
thank you for your support and
loyalty to SmartFinancial and
SmartBank.
connecting our East and Middle
Tennessee branches. It also
moved us into a new line of
business – Insurance. We now
have a full service, independent
insurance brokerage business,
The Rains Agency, that allows
us to offer clients a wide range
of insurance products including
home and auto, commercial
business coverage, as well
as life and health products.
In addition to the expansion
in the Cumberland Plateau,
we opened a new branch in
Murfreesboro and a second in
Alcoa, Tennessee.
Another highlight for the year
was the tremendous work
our team did with the Small
Business Administration’s
Paycheck Protection Program
(PPP) which was created to
help businesses manage the
disruptions caused by the 2020
pandemic. Our team’s focus
was utilizing the program to
help our existing clients, and a
number of new clients, access
funds to help their businesses
weather financial impacts during
the year. Our team originated
approximately 2,950 PPP loans
totaling over $300 million
during the initial rounds of the
program. These loans provided
businesses critical funding
during a very uncertain time and
we were very proud to be able
to assist with this program.
Sincerely,
Miller Welborn
Chairman of the Board
SmartFinancial, Inc.
Billy Carroll
President & CEO
SmartFinancial, Inc.
3
VISION
Our vision is to build exceptional value for our brand and
for our SHAREHOLDERS, ASSOCIATES, CLIENTS, and
COMMUNITIES by delivering more than they think possible.
MISSION
We build exceptional value for our SHAREHOLDERS by managing growth and
maximizing profitability, return on investment, stock value, dividends, and liquidity.
We build exceptional value for our ASSOCIATES by fostering a more fulfilling environment that
respects individual needs, establishes high expectations and recognizes achievement.
We build exceptional value for our CLIENTS by demonstrating incomparable
care for their needs and increasing their financial wealth.
We build exceptional value in our COMMUNITIES by providing lasting
solutions to their problems and protecting their greatest assets.
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We’ve achieved this through the integrity and innovation of our
Associates and Directors – it’s THE SMARTBANK WAY.
BOARD OF
DIRECTORS
MILLER WELBORN
Chairman
BILL CARROLL
Vice-Chairman
BILLY CARROLL
President & CEO
VIC BARRETT
Co-founder and Partner of
The Track Recreation Center
MONIQUE BERKE
Vice President of Community
and Corporate Engagement
for the United Way
TED MILLER
Business Manager & Partner
of Dolly Parton Productions
DAVID OGLE
President and Co-founder of
Five Oaks Development Group
OTTIS PHILLIPS
Managing Partner of Phillips
Properties Partnership and
Eagle Properties
STEVE TUCKER
Principal in TriCo Resources
and BTI Real Estate
DR. KEITH WHALEY
Founder of Whaley
Family Eyecare
GEOFF WOLPERT
Owner of The Park Grill and
The Peddler Steakhouse
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2020 HIGHLIGHTS
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Successfully completed the acquisition and integration of Progressive Savings Bank which
added five new branches in the Cumberland Plateau region in Tennessee
Processed approximately 2,950 Paycheck Protection Program (“PPP”) loans
totaling over $300 million
Implemented Digital Transformation Initiative including the launch of Zelle, a
person to person payment feature within the SmartBank app
2
Opened two new branches in Murfreesboro and Alcoa, Tennessee
Awarded a Top Workplace designation for the fourth year in a row
Managed through an unprecedented COVID pandemic and responded quickly by adapting to
several changes. Closely monitored branches to keep them open safely whenever possible.
Implemented work-from-home procedures and granted extra COVID sick pay for SmartBank
associates. Assisted clients with short term loan modifications and other requests as
needed due to the country’s shutdown which began in March.
Continued to add talent to SmartBank’s team with key leadership hires
which positioned us to gain efficiencies in our processes and launch
several new initiatives throughout the year
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COOKEVILLE
CROSSVILLE
MURFREESBORO
TEAM
ALCOA
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2020
2019
2018
2017
2016
2015
2014
2013
8
Completed acquisition & integration of Tennessee-based Progressive Savings Bank and
opened a new branch in Alcoa and a second in Murfreesboro, Tennessee.
Completed acquisition & integration of Maryville, TN-based Foothills Bank & Trust. Opened a
LPO in Tallahassee, FL. Named to Fortune’s annual 100 Fastest-Growing Companies List.
Completed acquisition & integration of Tuscaloosa-based Capstone Bank, and Tullahoma-based
Southern Community Bank. Closed the acquisition of Maryville-based Foothills Bank and Trust.
Completed acquisition & integration of an FSG Bank branch in Cleveland, TN. Closed the
acquisition of Tuscaloosa, AL-based Capstone Bank.
Completed merger & integration with Chattanooga-based Cornerstone Community Bank,
becoming a $1 billion combined company.
SmartFinancial, Inc. announced trading on the Nasdaq Capital Market under the ticker
symbol: SMBK.
SmartFinancial, Inc. and Cornerstone Bancshares, Inc. jointly announced a definitive agreement
to merge, creating a combined company that will operate under the name SmartFinancial, Inc.
Opened the Panama City, FL LPO and a newly designed second location in Knoxville, TN.
STRATEGIC GROWTH
SmartBank organized in 2006 with the goal to build an innovative
and dynamic bank with unmatched client service. SmartBank
opened its first office in January 2007 in Pigeon Forge, Tennessee
and has expanded its footprint to total 35 branches across East and
Middle Tennessee, Alabama, and the Florida Panhandle and growing.
Pairing these strong and dynamic markets with the best people,
advanced technology and innovative products will continue to drive
the company’s expansion and future growth opportunities.
Acquired Destin-based GulfSouth Private Bank, adding
branches in the Florida Panhandle
Assets grew to over $325 million through organic growth
Formation of SmartFinancial, Inc. holding company
Expanded into the Knoxville market with its fourth branch
SmartBank opened its third branch in Gatlinburg, TN
Opened its corporate office in Pigeon Forge, TN and a
second branch four months later in Sevierville, TN
Organization of SmartBank
2012
2011
2010
2009
2008
2007
2006
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CULTURE
CREATE
POSITIVITY
EMBRACE
CHANGE
DEMONSTRATE
ACCOUNTABILITY
CORE VALUES
ACT WITH
INTEGRITY
BE
ENTHUSIASTIC
We will achieve
our desired position
to be the Southeast’s next
great community bank by:
CREATING “WOW” EXPERIENCES
EXHIBITING OVER-THE-TOP
ENTHUSIASM & POSITIVITY
DELIVERING
EXCEPTIONAL, PROFESSIONAL
& KNOWLEDGEABLE SERVICE
Proud to be
recognized as a
Top Workplace
FOUR YEARS
IN A ROW!
2017
2018
2019
10
2020 “WOW”
AWARD WINNER
Emily Rodriguez
Assistant Branch Manager
University Boulevard
(Tuscaloosa)
SENIOR LEADERSHIP
BILLY CARROLL
President
Chief Executive Officer
BEVERLY ATCHLEY
Senior Vice President
Senior Deposit Operations
& Administrative Officer
BECCA BOYD
Executive Vice President
Chief People Officer
CYNTHIA CAIN
Executive Vice President
Director of Financial
Planning & Analysis
GREG DAVIS
Executive Vice President
Chief Lending Officer
KELLEY FOWLER
Senior Vice President
Director of Marketing
& Public Relations
RON GORCZYNSKI
Executive Vice President
Chief Financial Officer
MONTY HATCHER
CFP®, AAMS®
Executive Vice President
Director of SmartBank
Investment Services
DANIEL HEREFORD
Executive Vice President
Chief Information Officer
MIKE HONEYCUTT
Regional President
Northeast Tennessee
RHETT JORDAN
Executive Vice President
Chief Credit Officer
ROBERT KUHN
Regional President
Alabama and Florida
TRAVIS LYTLE
Senior Vice President
Director of Community
Development & Community
Reinvestment Act Officer
GARY PETTY
Executive Vice President
Chief Risk Officer
BRYAN STUBBLEFIELD
Senior Vice President
Retail Sales
BARRY WATSON
Regional President
Southeast Tennessee
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2020 FINANCIAL HIGHLIGHTS
0.31%
Asset quality was outstanding with nonperforming assets to total assets of just 0.31%
$24.3M
Net income of $24.3 million
$3.3B
Record high total assets of $3.3 billion, net loans of $2.4 billion, and deposits of $2.8 billion
25.55%
Annual loan growth of $485 million, or 25.55%
$23.64
Book value of common stock, up 5.87% in 2020
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2020 FINANCIAL SUMMARY
13
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical consolidated financial data as of and for
the years ended December 31, 2020 and 2019 is derived from the audited
consolidated financial statements of the company. (Amounts are in
thousands, except ratios, per share data, and other data.)
SUMMARY OF OPERATIONS
Total interest income
Total interest expense
Net interest income
Provision for loan losses
Net interest income after
provision for loan losses
Non-interest income
Non-interest expense
Income before income taxes
Income tax expense
Consolidated net income
YEARS ENDED DECEMBER 31,
2019
2020
$117,613
16,747
100,866
8,683
92,183
15,426
76,719
30,890
6,558
$108,455
24,575
83,880
2,599
81,281
15,315
63,151
33,445
6,897
$ 24,332
$ 26,548
SHARE AND PER COMMON
SHARE DATA:
Basic earnings per share
Diluted earnings per share
Common equity per
common share outstanding
Tangible book value per share1
Dividends per common share
Actual common shares outstanding
Weighted average common shares outstanding
Diluted weighted average common shares outstanding
$ 1.63
1.62
$ 1.90
1.89
23.64
17.92
0.20
15,107
14,955
15,019
22.33
16.82
0.05
14,008
13,953
14,046
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1 Tangible book value per share equals stockholders’ equity minus goodwill and other intangible
assets divided by common shares outstanding.
YEARS ENDED DECEMBER 31,
2019
2020
BALANCE SHEET DATA:
Average total assets
Average gross loans, net of deferred loan fees
Average interest-earning assets
Average deposits
Average interest-bearing deposits
Average interest-bearing liabilities
Average total shareholders’ equity
SELECTED FINANCIAL RATIOS:
Return on average assets
Return on average equity
Average equity to average total assets
Efficiency ratio
Net interest margin1
Net interest spread2
CAPITAL RATIOS:3
Total Capital (to Risk-Weighted Assets)
Tier 1 Capital (to Risk-Weighted Assets)
Common Equity Tier 1 Capital
(to Risk-Weighted Assets)
Tier 1 Capital (to Average Assets)
ASSET QUALITY RATIOS:
Net charge-offs to average loans
Allowance to period end loans
Allowance for loan losses to non-performing loans
Non-performing assets to total assets
OTHER DATA:
Branches
Loan production offices
Operation centers
Total Associates
$3,063,435
2,289,612
2,812,480
2,481,985
1,910,703
2,127,208
341,170
0.79%
7.13%
11.14%
65.97%
3.61%
3.41%
13.57%
12.78%
12.78%
9.58%
0.03%
0.77%
315.16%
0.31%
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1
1
475
$2,339,340
1,836,963
2,137,364
1,964,017
1,620,406
1,681,148
298,729
1.13%
8.89%
12.77%
63.66%
3.95%
3.64%
13.31%
12.81%
12.81%
11.41%
0.03%
0.54%
305.76%
0.21%
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2
2
399
Table Assumptions
1 Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period.
2 Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities.
3 For SmartBank
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MARKETS
ALABAMA
SmartBank completed the integration of Tuscaloosa-based Capstone Bank in early 2018, adding
eight branches, including three in the Tuscaloosa region, and five spanning Southwest Alabama
to the coast. Later in the same year, SmartBank added a branch in Huntsville through the
acquisition of Southern Community Bank. Alabama is a great banking market with tremendous
growth in Fairhope, Huntsville and Tuscaloosa, several of the Southeast’s most desirable markets.
Huntsville’s growth exceeds a population boom, with the area attracting several high-profile
development projects including Mazda Toyota Manufacturing, the MidCity project, expanded
Facebook Data Center and the newly built FBI campus on Redstone Arsenal to name a few.
Tuscaloosa continues to prove its economic value with the successes of Mercedes-Benz U.S.
International and top employer, The University of Alabama. Fairhope, a vibrant town nestled in
Baldwin County that lies on Alabama’s Gulf Coast, has long been known for its lovely parks and
its sweeping panoramic views of Mobile Bay. Fairhope is the second fastest-growing city in the
state of Alabama (June 2020).
FLORIDA
SmartBank’s expansion into the Florida Panhandle by way of its first acquisition (2012) of
GulfSouth Private Bank has proven that growth in this thriving market continues to be strong
with lots of opportunities for continued success. SmartBank operates full services branches in
Pensacola, Destin and Panama City, and a Loan Production Office in Tallahassee. Northwest
Florida is home to six major military installations, all with aviation/aerospace-related missions
which have huge impact on the industries, R&D and talent pool in the region. The Panhandle also
includes strong tourism markets which account for one of the state’s biggest economic drivers.
TENNESSEE
SmartBank opened its first office in January 2007 in Pigeon Forge, Tennessee and has since
expanded its footprint across several of the Southeast’s strongest and most desired markets
with 35 full-service branches in total. The Middle and East Tennessee regions are home
to 23 SmartBank branches, with the company headquartered in Knoxville, TN. From the
beautiful Smoky Mountains to the Tennessee River, commerce-attracting cities Chattanooga,
Knoxville and Murfreesboro continue to thrive. In Chattanooga alone, Erlanger Health System,
the Hamilton County Board of Education, and Blue Cross Blue Shield of Tennessee employ
a combined 14,000+ Tennessee residents. According to WalletHub, Murfreesboro ranks the
19th fastest growing city in the U.S. (Oct 2020) and Knoxville is home to Oak Ridge National
Laboratory, Denso Manufacturing, Discovery Communications, and many others.
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TENNESSEE
HUNTSVILLE
TUSCALOOSA
DOWNTOWN
NORTHPORT
INDIAN HILLS
SOUTHWEST
ALABAMA
JACKSON
THOMASVILLE
CHATOM
MCINTOSH
BALDWIN
COUNTY
FAIRHOPE
SEVIER COUNTY
SEVIERVILLE (2)
GATLINBURG
PIGEON FORGE
BLOUNT COUNTY
ALCOA
MARYVILLE
KNOXVILLE
BEARDEN
CEDAR BLUFF
FARRAGUT
CHATTANOOGA
DOWNTOWN
GUNBARREL
OOLTEWAH
EAST RIDGE
HIXSON
CLEVELAND
MURFREESBORO (2)
TULLAHOMA
CUMBERLAND
PLATEAU
COOKEVILLE
JAMESTOWN
CROSSVILLE (2)
WARTBURG
FLORIDA
DESTIN
PENSACOLA
PANAMA CITY
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A
L
A
B
A
M
A
FLORIDA
CORPORATE SOCIAL
RESPONSIBILITY
On September 11, 2020,
SmartBank associates showed
appreciation to first responders
across our footprint in Alabama,
Florida & Tennessee.
The challenges of 2020 didn’t
slow down SmartBank giving,
and to date, we have donated
$126,550 to Friends of the Smokies.
In December, associates
gave back by collecting gifts
for Angel Trees, gathering
coats for the cold, delivering
goodies to the elderly, and
spearheading food drives
and empty stocking funds.
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Despite the social
challenges of 2020,
SmartBank Associates
continued to safely
support our communities
in 2020.
Stock Symbol
Nasdaq Capital Market:
SMBK
SmartFinancial, Inc.
Annual Shareholders’ Meeting
Thursday, May 27, 2021 at 3:00 pm
SmartBank - Pigeon Forge Branch
2430 Teaster Lane
Pigeon Forge, TN 37863
Meeting contact: Frank Hughes
frank.hughes@smartbank.com
Electronic Voting
To vote electronically, please go to
www.smartfinancialinc.com
You may also download a copy of the 2020
SmartFinancial, Inc. Annual Report.
INVESTOR RELATIONS
Investor Relations Contact
Ron Gorczynski
EVP, Chief Financial Officer
5401 Kingston Pike, Suite 600
Knoxville, TN 37919
865.437.5724
ron.gorczynski@smartbank.com
SmartFinancial, Inc.
5401 Kingston Pike #600
Knoxville, TN 37919
866.290.2554
Market Makers
Virtu Financial
USB AG
Raymond James & Associates
Analyst Coverage
Keefe, Bruyette & Woods, Inc
Credit Swiss 1st Boston
Raymond James & Associates
Merrill Lynch
Citi Group
Hovde Group
Stephens Inc.
J.P. Morgan Securities Inc.
Piper Sandler Companies
Cowen Inc.
Wells Fargo
Janney Montgomery Scott LLC
D.A. Davidson & Co.
Stock Transfer
Agent Info
American Stock Transfer
& Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
800.937.5449
Forward-Looking Statements
This annual report 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, including statements regarding the potential effects of the COVID-19 pandemic on the Company’s business and financial results and conditions,
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) risks related to the completed acquisition of Progressive Financial Group, Inc. (“PFG”); (7)
the risk that the anticipated benefits from the completed acquisition of PFG may not be realized in the time frame anticipated; (8) changes in management’s plans for the future; (9) prevailing, or changes in, economic or
political conditions, particularly in our market areas; (10) credit risk associated with our lending activities; (11) changes in interest rates, loan demand, real estate values, or competition; (12) changes in accounting principles,
policies, or guidelines; (13) changes in applicable laws, rules, or regulations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to COVID-19; (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;
(15) the impact of the COVID-19 pandemic on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; (16) potential increases in the provision for loan losses resulting
from the COVID-19 pandemic; and (17) 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.
We report our results in accordance with United States generally accepted accounting principles (“GAAP”). However, management believes that certain non-GAAP performance measures used in managing the business may
provide meaningful information about underlying trends in its business. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.
Non-GAAP Financial Measures
www.smartbank.com
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