SmartFinancial, Inc.

Hello all and welcome to Smart Financial Third Quarter 2024 Earnings Release and Conference Call. My name is Ezra and I will be your coordinator 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 you over to your host, Nate Stroll, Director of Strategy, to begin. Nate, please go ahead.

Thanks, Debra. Thanks, Ezra. And good morning, everyone, and welcome to the Smart Financial's third quarter 2024 earnings conference call. During today's conference call, we will reference the slides and press release that is available in the investor relations section on our website, smartbank.com. Billy Carroll, our president and chief executive officer, will begin our call, followed by Ron Garzinski, our chief financial officer, who will provide some additional commentary. We will be able 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 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, as they may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You will see the reconciliation of these measures in the appendices of the earnings release and investor presentation filed on October 21, 2024, with the SEC. And now, I'll turn it over to Billy Carroll, our President and Chief Executive Officer, to open our call. Billy?

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 and hand it over to Ron to walk through the numbers in some 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. We really had a nice quarter and executed on what we've been messaging. We posted net income gap and operating of $9.1 million for the quarter, or 54 cents per diluted share. I'm proud of the way our team is performing, and I'm excited to watch us gain operating leverage as we've anticipated. We had a couple of pennies of boost from a tax strategy as well that we implemented, but even without that, we had outstanding earnings trajectory. Jumping into the highlights, I'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 to $22.67 per share, including the impacts of AOCI, and $23.69 excluding that impact. That's a 19% annualized quarter-over-quarter increase, including AOCI movement and 9% excluding it. Very nice tangible book growth. Looking at the graph on the lower right on page five, you'll see the value increase we continue to deliver for our shares. We again had a very solid loan growth quarter, over 16% annualized, and that's coming off an 11% annualized prior quarter. We saw continued growth and new relationships as well as an increase in funding online. On the deposit side of the balance sheet, we used the quarter to reposition some funding. We had an opportunity to exit a public funds relationship we felt had gotten a little larger and a little more costly than we had wanted. So we leveraged our strong liquidity position and utilized a wholesale funding ladder to fill the gap. Net of that account and wholesale adjustments, core growth was over 5%. So when we drill down on deposits, we had a very nice core growth quarter and continue to bring in some outstanding relationships. We also saw our overall cost tick down to 2.54%. Our history of strong credit continues with the metrics holding very low at 26 basis points and NPAs. Both NPAs and charge-offs were just slightly higher than the prior quarter, but still extremely low. That movement continued to be a few lingering fountain equipment credits we've worked through in our equipment finance subsidiary. That group continues to be a very profitable arm for us, and we anticipate those isolated items slowing soon. Total revenue came in at $44.1 million, and net interest income continued to expand with an inflection point we've discussed. We also had a stronger than expected non-interest income quarter that Ron will talk about in a bit. Non-interest expenses were just slightly up at 30.8 million. I still feel very good that we can hold our expense growth to very reasonable levels as we look forward. The operating leverage 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 end. Looking at the chart on page five, highlighting the operating PPNR slide, The movement up has started after a couple of flattish quarters. We're looking forward and expecting to see that trend continue. So just a couple of additional high-level comments for me on growth. We're very pleased with the results. On the loan side, we were up $114 million, again, about 16% annualized for the quarter and over 10% annualized year-to-date. Our regional sales teams are doing a very nice job growing our clients. Yields on the loan side expanded with the full portfolio's average loan yield of 15 basis points to 5.95%, and our loan mix was almost identical to the second quarter. I mentioned the remixing of the deposit side. I really like the work we've done here, particularly this quarter, leveraging our position of strength to move out of larger, chunkier deposits to lower our overall cost and focus on replacing with more granularity. We pushed the loan-to-deposit ratio up to 86%, which is a nice spot for us. We also continued to hold our non-interest-bearing mix around 20%, not an easy feat in this environment. Our balance sheet pipelines feel very solid, and I'm still holding to our past guidance of mid to high single digits on growth as we look at a couple of quarters, even though we've been able to beat that so far this year. I also think we can pace deposits to organically fund this growth. Also, kudos to Ron and his finance team as well as their tax advisors on executing a nice strategy that should lower our go-forward tax rate. That should be a nice little tailwind added as well. So let me go ahead and hand it over to Ron to dive into the details. Ron?