SmartFinancial, Inc.

Hello everyone and welcome to Smart Financial Second Quarter 2024 Earnings Release and Conference Call. My name is Ezra and I will be coordinating your call today. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. I will now hand over to your host, Nate Stroll, Director of Investor Relations to begin. Nate, please go ahead.

Thanks, and good morning, everyone, and thank you for joining us for Smart Financial's second quarter 2024 earnings call. During today's call, we will reference the slides and press release that are available within the investor relations section on our website, smartbank.com. Billy Carroll, our president and chief executive officer, will begin our call, followed by Ron Gruchinsky, our chief financial officer, who will provide some additional commentary. We will be available to answer your questions at the end of the call. Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We will list the factors that might cause these results to differ materially in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements because of new information, early developments, or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendices of the earnings release and the investor presentation filed on July 22nd, 2024 with the SEC. And now, I'll turn it over to Billy Carroll to open our call.

Thanks, Nate, and good morning, everyone. Great to be with you, and thank you for joining us today and for your interest in SMBK. I'll open our call today with some commentary, then hand it over to Ron to walk through the numbers in greater detail. After our prepared comments, we'll open it up with Ron, Nate, Rhett, Miller, and myself available for Q&A. So let's jump right in. A pretty good quarter for us where we saw more of the inflection we've anticipated. We posted net income of $8 million for the quarter, or $0.48 per diluted share. On an operating basis, we came in at $7.8 million, or $0.46 per diluted share, the delta being a small gain on the sale of a piece of bank property. Jumping into the highlights, we'll be referring to the first few pages in our deck, pages three, four, and five. First, and in my opinion, one of the most important metrics, we continue to increase the tangible book value of our company, moving up from $21.66 per share, including the impacts of AOCI, and $23.18 excluding that impact. That's a 10% annualized quarter-over-quarter increase. Looking at the graph on the lower right on page five, you'll see the value growth we continued to deliver for our shares. We had a very solid loan growth quarter, over 11% annualized, as we saw continued growth and new relationships and an increase in funding on lines. There was some contraction in deposits that was expected after experiencing a fairly robust growth in the first quarter. While the balance sheet remained relatively flat, and continue to bring in some outstanding new client relationships. Our history of strong credit continues with the metric holding very low at 20 basis points in NPAs. As you know, we operate with a low risk profile in terms of credit. Our CRE ratios continue to hold flat, giving us the ability to add in those buckets when the right opportunities present. The only movement we've really seen on credit has been a few lingering small trucking company credits we've worked through in our found equipment portfolio. We've continued to be very pleased with the production of that team, just focusing a little more on the heavy equipment sector. Total revenue came in at $40.4 million. And that interest income continued to expand with the inflection point we've discussed. Non-interest expenses were relatively steady at $29.2 million for the quarter. The operating leverage that we've talked about on prior calls is starting to happen. as we continue to grow the revenue line with minimal investments on the expense side. Looking at the charts on page five, highlighting the operating PPNR chart, the movement up has started after a couple of flattish quarters. We're looking forward to and expecting to continue to see that trend to happen. Before Ron jumps into the details, just a couple of additional high-level comments from me on growth. We were pleased with the results. On the loan side, we were up $96 million, again, about 11% annualized for the quarter and 7.5% annualized year to date. Our regional sales teams are doing a nice job growing new clients. Yields on the loan side continue to expand with the full portfolio's average loan yield of nine basis points to 5.8%. Our mix was almost identical the first quarter. On the deposit side, we contracted a little, as I mentioned, after a higher than expected growth in Q1. The contraction was primarily some seasonality coupled with tax payments, plus the quarter we rolled off $15 million in wholesale funding that was not replaced. The leveraging of deposits was by design, bringing our loan to deposit ratio to 83%. I'm pleased with the work on the deposit cost as well, as average total costs were up only four basis points in the quarter to 2.56%. We also continue to hold our non-interest bearing mix at over 20%, which is not an easy feat in this environment. And I think, Ron, I think that is it on mine. I'm going to pass it over to you.