"Good morning," Tom said with a smile.

Literal

"Good morning" [quotative-と] Tom [topic-は] smiling-[while-ながら] said.

Another ~ながら example, 微笑みながら ('while smiling'). The verb 微笑む ('to smile') uses the kanji 微 ('faint, slight') — a smile is etymologically a 'faint smile.' おはよう is the casual morning greeting; the polite form is おはようございます.