SMARTFINANCIAL INC.

Previous wording

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. The Company 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.

Current wording

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). Readers should not place undue reliance on forward-looking statements. The Company disclaims any obligation to update or revise any forward-looking statements contained in this report, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise.

Previous wording

Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. These factors include among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. The accounting policies which we believe to be most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During this quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. See Note 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes. There have been no other significant changes in the Company’s application of critical accounting policies since December 31, 2025.

Current wording

Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. These factors include among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. The accounting policies which we believe to be most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During the quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. See Note 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes. There have been no other significant changes in the Company’s application of critical accounting policies since December 31, 2025.

Previous wording

The following is a summary of the Company’s financial highlights and significant events during the first quarter of 2026:

Current wording

The following is a summary of the Company’s financial highlights and significant events during the second quarter and first six months of 2026:

Previous wording

The following is a summary of certain financial information for the three-month periods ended March 31, 2026, and 2025 and as of March 31, 2026, and December 31, 2025*(dollars in thousands, except per share data)*:

Current wording

The following is a summary of certain financial information for the three and six month periods ended June 30, 2026 and 2025, and as of June 30, 2026, and December 31, 2025*(dollars in thousands, except per share data)*:

Previous wording

Net income was $13.7 million, or $0.81 per diluted common share, for the first quarter of 2026, compared to $11.3 million, or $0.67 per diluted common share, for the first quarter of 2025. For the three months ended March 31, 2026, when compared to the comparable period in 2025, the increase in net income of $2.4 million was due to an increase in net interest income after provision for loan and lease losses of $4.5 million, offset by a decrease on noninterest income of $656 thousand and an increase in noninterest expense of $619 thousand and income tax expense of $777 thousand. The tax equivalent net interest margin was 3.48% for the first quarter of 2026, compared to 3.21% for the first quarter of 2025. Noninterest income to average assets was 0.56% for the first quarter of 2026, decreasing from 0.66% for the first quarter of 2025. Noninterest expense to average assets decreased to 2.31% in the first quarter of 2026, from 2.48% in the first quarter of 2025.

Current wording

Net income was $16.3 million, or $0.96 per diluted common share, for the second quarter of 2026, compared to $11.7 million, or $0.69 per diluted common share, for the second quarter of 2025. For the three months ended June 30, 2026, when compared to the comparable period in 2025, the increase in net income of $4.6 million was due to an increase in net interest income after provision for loan and lease losses of $8.7 million, offset by a decrease in noninterest income of $1.0 million, an increase in noninterest expense of $1.4 million and an increase in income tax expense of $1.7 million. The tax equivalent net interest margin was 3.52% for the second quarter of 2026, compared to 3.29% for the second quarter of 2025. Noninterest income to average assets was 0.53% for the second quarter of 2026, decreasing from 0.67% for the second quarter of 2025. Noninterest expense to average assets decreased to 2.29% in the second quarter of 2026, from 2.44% in the second quarter of 2025.

Previous wording

Net interest income, taxable equivalent, increased to $46.2 million for the first quarter of 2026, up from $38.6 million for the first quarter of 2025. Net interest income increased due to higher loan and lease balances, higher yields on these assets, and lower cost of interest-bearing libailities. Average interest-earning assets increased from $4.87 billion for the first quarter of 2025, to $5.39 billion for the first quarter of 2026, primarily from the increase in our average loan and lease balances and average securities, which was offset by decreases in average cash balances. Over this period, average loan and lease balances increased by $492.9 million and average interest-bearing deposits increased by $342.6 million. Average securities increased by $46.1 million, average federal funds sold and other interest earning assets decreased by $20.4 million, average borrowings decreased by $4.7 million and noninterest-bearing deposits increased by $47.8 million. The tax equivalent net interest margin increased to 3.48% for the first quarter of 2026, compared to 3.21% for the first quarter of 2025. The yield on earning assets increased from 5.56% for the first quarter of 2025, to 5.62% for the first quarter of

Current wording

Net interest income, taxable equivalent, increased to $48.4 million for the second quarter of 2026, up from $40.7 million for the second quarter of 2025. Net interest income increased due to higher loan and lease balances, higher yields on these assets, and lower cost of interest-bearing liabilities. Average interest-earning assets increased from $4.96 billion for the second quarter of 2025, to $5.52 billion for the second quarter of 2026, primarily from the increase in our average loan and lease balances and average securities balances, which was offset by decreases in cash balances. Over this period, average loan and lease balances increased by $560.0 million and average interest-bearing deposits increased by $395.7 million. Average securities increased by $46.0 million, average federal funds sold and other interest earning assets decreased by $43.4 million, average subordinated debt increased by $59.0 million, average borrowings increased by $33.5 million and noninterest-bearing deposits increased by $25.5 million. The tax equivalent net interest margin increased to 3.52% for the second quarter of 2026, compared to 3.29% for the second quarter of 2025. The yield on earning assets increased from 5.65% for the second quarter of 2025, to 5.70% for the second quarter of 2026, primarily due to the deployment of excess cash and cash equivalents into loans and leases. The cost of average interest-bearing deposits decreased from 2.95% for the second quarter of 2025, to 2.62% for the second quarter of 2026, primarily due to the decrease in rates by the Federal Reserve.

Previous wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $218 thousand and $246 thousand for the three months ended March 31, 2026, and 2025, respectively.

Current wording

1 Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $194 thousand and $245 thousand for the three months ended June 30, 2026, and 2025, respectively.

Previous wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $148 thousand and $94 thousand for the three months ended March 31, 2026, and 2025, respectively.

Current wording

2 Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $150 thousand and $105 thousand for the three months ended June 30, 2026, and 2025, respectively.

Previous wording

Noninterest income decreased by $656 thousand during the first quarter of 2026 compared to the same period in 2025. This quarterly change in total noninterest income primarily resulted from the following:

Current wording

Noninterest income decreased by $1.0 million during the second quarter of 2026 compared to the same period in 2025. This quarterly change in total noninterest income primarily resulted from the following:

Previous wording

Noninterest expense increased by $619 thousand in the first quarter of 2026 as compared to the same period in 2025. The quarterly increase in total noninterest expense primarily resulted from the following:

Current wording

Noninterest expense increased by $1.4 million in the second quarter of 2026 as compared to the same period in 2025. The quarterly increase in total noninterest expense primarily resulted from the following:

Previous wording

In the first quarter of 2026 income tax expense totaled $3.1 million compared to $2.3 million in the first quarter of 2025. The effective tax rate was approximately 18.39% in the first quarter of 2026 compared to 17.01% in the first quarter of 2025. The increase in the effective tax rate is primarily due to a higher estimated annual effective tax rate for 2026. The higher annual rate reflects an increase in projected pre-tax book income while permanent tax benefits remain relatively consistent, resulting in a higher overall tax rate.

Current wording

In the second quarter of 2026 income tax expense totaled $4.2 million as compared to $2.6 million in same period of 2025. The effective tax rate was approximately 20.5% in the second quarter of 2026 compared to 17.9% in the second quarter of 2025. The increase is primarily due to a higher projected annual effective tax rate resulting from increased forecasted taxable income relative to non-taxable income.

Previous wording

The Company had total net loans and leases outstanding of approximately $4.47 billion at March 31, 2026, compared to $4.32 billion at December 31, 2025. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

Current wording

The Company had total net loans and leases outstanding of approximately $4.64 billion at June 30, 2026, compared to $4.32 billion at December 31, 2025. Loans secured by real estate, consisting of commercial and residential property, are the principal component of our loan and lease portfolio.

Previous wording

Nonperforming loans and leases, as a percentage of total gross loans and leases, net of deferred fees, was 0.27% as of March 31, 2026, and 0.22% as of December 31, 2025 respectively. Total nonperforming assets, as a percentage of total assets, was 0.25% as of March 31, 2026, and 0.22% as of December 31, 2025, respectively.

Current wording

Nonperforming loans and leases, as a percentage of total gross loans and leases, net of deferred fees, were 0.25% as of June 30, 2026, and 0.22% December 31, 2025. Total nonperforming assets, as a percentage of total assets, were 0.23% at June 30, 2026, and 0.22% at December 31, 2025.

Previous wording

We maintain the allowance at a level that we deem appropriate to adequately cover change in the loan and lease portfolio. Our provision for credit losses for loans and leases for the three months ended March 31, 2026, is $3.2 million compared to $843 thousand in the same period of 2025, an increase of $2.4 million. As of March 31, 2026, and December 31, 2025, our allowance for credit losses was $44.0 million and $40.9 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit loss as a percentage of total loans and leases was 0.97% at March 31, 2026, and 0.94% at December 31, 2025. During this quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. See Note 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes.

Current wording

We maintain the allowance at a level that we deem appropriate to adequately cover change in the loan and lease portfolio. Our provision for credit losses for loans and leases for the six months ended June 30, 2026, was $5.1 million compared to $2.6 million in the same period of 2025, an increase of $2.5 million. As of June 30, 2026, and December 31, 2025, our allowance for credit losses was $45.3 million and $40.9 million, respectively, which we deemed to be adequate at each of the respective dates. Our allowance for credit loss as a percentage of total loans and leases was 0.97% at June 30, 2026, and 0.94% at December 31, 2025. During the quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. See Note 1. Recently Modified Accounting Policies and Allowance for Credit Lossesin the Notes to our Consolidated Financial Statements in this Form 10-Q for further information related to these changes.

Previous wording

The allowance associated with the individually evaluated loans and leases were approximately $3.7 million at March 31, 2026, compared to $4.9 million at December 31, 2025.

Current wording

The allowance associated with the individually evaluated loans and leases was approximately $3.5 million at June 30, 2026, and $4.9 million at December 31, 2025.

Previous wording

Our available-for-sale securities portfolio is carried at fair market value and our held-to-maturity securities portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our securities portfolio increased from $662.0 million at December 31, 2025, to $673.1 million at March 31, 2026, primarily as a result of available-for-sale securities purchases Our securities to asset ratio increased from 11.3% at December 31, 2025, to 11.4% at March 31, 2026.

Current wording

Our available-for-sale securities portfolio is carried at fair market value and our held-to-maturity securities portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our securities portfolio increased from $662.0 million at December 31, 2025, to $679.9 million at June 30, 2026, primarily as a result of available-for-sale securities purchases. Our securities to asset ratio has decreased from 11.3% at December 31, 2025, to 11.1% at June 30, 2026.

Previous wording

The following table presents the contractual maturity of the Company’s securities by contractual maturity date and average yields based on amortized cost (for all obligations on a fully taxable basis) at March 31, 2026*(dollars in thousands)*. The

Current wording

The following table presents the contractual maturity of the Company’s securities by contractual maturity date and average yields based on amortized cost (for all obligations on a fully taxable basis) at June 30, 2026*(dollars in thousands)*. The composition and maturity/repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.

Previous wording

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, Individual Retirement Accounts and Certificates of Deposits. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of March 31, 2026, and December 31, 2025, the Company had $0 and $51.9 million in brokered deposits, respectively.

Current wording

Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, Individual Retirement Accounts and certificates of deposit. These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of June 30, 2026, and December 31, 2025, the Company had $106.2 and $51.9 million in brokered deposits, respectively.

Previous wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three month periods ending March 31, 2026, and 2025, respectively (dollars in thousands):

Current wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and six month periods ending June 30, 2026, and 2025, respectively (dollars in thousands):

Previous wording

The Company believes its deposit product offerings are properly structured to attract and retain core deposit relationships. The average cost of interest-bearing deposits for the three months ended March 31, 2026, and 2025, was 2.60% and 2.92%, respectively. The cost decrease was primarily attributable to the rate decreases by the Federal Reserve.

Current wording

The Company believes its deposit product offerings are properly structured to attract and retain core deposit relationships. The average cost of interest-bearing deposits for the three months ended June 30, 2026, and 2025, was 2.15% and 2.39%, respectively. The cost decrease was primarily attributable to the rate decreases by the Federal Reserve. The average cost of interest-bearing deposits for the six months ended June 30, 2026, and 2025, was 2.14% and 2.38%, respectively. The cost decrease was primarily attributable to rate decreases by the Federal Reserve.

Previous wording

Total deposits as of March 31, 2026, were $5.20 billion, which was an increase of $43.4 million from December 31, 2025. This overall increase was driven primarily by increases in money market deposits of $182.3 million, other time deposits of $16.1 million, interest-bearing demand deposits of $8.6, offset by a decline in noninterest demand deposits of $111.6 million and brokered deposits of $51.9 million. As of March 31, 2026, the Company had outstanding time deposits under $250,000 with balances of $366.3 million and time deposits over $250,000 with balances of $468.3 million.

Current wording

Total deposits as of June 30, 2026, were $5.39 billion, which was an increase of $232.8 million from December 31, 2025. This increase was driven primarily by increases in money market deposits of $181.2 million, interest-bearing demand deposits of $76.4 million, certificate time deposits of $62.0 million and brokered deposits of $54.3 million, offset by a decline in noninterest demand deposits of $141.0 million. As of June 30, 2026, the Company had outstanding time deposits under $250,000 with balances of $474.6 million and time deposits over $250,000 with balances of $512.2 million.

Previous wording

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be down-streamed as Tier 1 capital to the Bank. Borrowings totaled $3.2 million at March 31, 2026, and consisted entirely of securities sold under repurchase agreements. Long-term debt totaled $98.7 million at March 31, 2026, and December 31, 2025, respectively, and consisted entirely of subordinated debt. For more information regarding our borrowings, see “Part I - Item 1. Consolidated Financial Statements – Note 6 –Borrowings, Line of Credit and Subordinated Debt” of this report.

Current wording

The Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be down-streamed as Tier 1 capital to the Bank. Borrowings totaled $603 thousand at June 30, 2026, and consisted entirely of securities sold under repurchase agreements. Long-term debt totaled $98.8 million at June 30, 2026, and $98.7 million at December 31, 2025, respectively, and consisted entirely of subordinated debt. For more information regarding our borrowings, see “Part I - Item 1. Consolidated Financial Statements – Note 6 –Borrowings, Line of Credit and Subordinated Debt” of this report.

Previous wording

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At March 31, 2026, we had $1.04 billion of pre-approved but unused lines of credit and $23.7 million of standby letters of credit. These commitments generally have fixed expiration dates, and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase federal funds from other financial institutions. For more information regarding our off-balance sheet arrangements, see “Part I - Item 1. Consolidated Financial Statements – Note 8 –Commitments and Contingent Liabilities” of this report.

Current wording

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing and depository needs of its customers. At June 30, 2026, we had $1.04 billion of pre-approved but unused lines of credit and $23.3 million of standby letters of credit. These commitments generally have fixed expiration dates, and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase federal funds from other financial institutions. For more information regarding our off-balance sheet arrangements, see “Part I - Item 1. Consolidated Financial Statements – Note 8 –Commitments and Contingent Liabilities” of this report.

Previous wording

Economic Value of Equity Our economic value of equity model measures the extent that estimated economic values of our assets, liabilities and off-balance sheet items will change as a result of interest rate changes. Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case economic value of equity.

Current wording

Economic Value of Equity Our economic value of equity model measures the extent that estimated economic values of our assets, liabilities and off-balance sheet items will change as a result of interest rate changes. Economic values are

Previous wording

The Company has $3.1 million in securities that mature throughout the next 12 months. The Company also has unused borrowing capacity in the amount of $1.06 billion available with the Federal Reserve, Federal Home Loan Bank, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.

Current wording

The Company has $2.7 million in securities that mature throughout the next 12 months. The Company also has unused borrowing capacity in the amount of $1.12 billion available with the Federal Reserve, Federal Home Loan Bank, several correspondent banks and a line of credit. With these sources of funds, the Company currently anticipates adequate liquidity to meet the expected obligations of its customers.