SmartFinancial profit rises 36.1% from a year earlier to $18.6 million

SmartFinancial, Inc. reported third-quarter 2026 net income of $18.6 million, or $1.10 per diluted share, up from $13.7 million, or $0.81 a diluted share, a year earlier. The quarter included a $2.6 million tax benefit from purchasing transferable energy tax credits; income before income taxes rose 20.7% from a year earlier to $20.5 million. Operating revenue, a non-GAAP measure, rose 13.2% from a year earlier to $57.5 million, while the tax-equivalent net interest margin narrowed to 3.45% from 3.52% in the second quarter.

Loan growth outruns a thinner margin

Average earning assets rose $193.1 million from the prior quarter to $5.71 billion, and average loans and leases increased $165.5 million, the release said. Net interest income climbed 16.4% from a year earlier to $49.4 million, but the tax-equivalent net interest margin slipped to 3.45% from 3.52% in the second quarter. The margin was still wider than the 3.25% reported a year earlier. The company attributed the compression to higher funding costs that more than offset better earning-asset yields. The cost of total deposits rose to 2.26% from 2.15% in the second quarter, though it was below the 2.44% of a year earlier, while the yield on loans and leases excluding fees, on a fully taxable equivalent basis, edged up to 5.99% from 5.95% in the second quarter. Carroll said the quarter was highlighted by "continued organic growth, with $174 million in net loan and lease growth and $163 million in core deposit growth, representing annualized increases of 15% and 12%, respectively."

A tax credit and a small provision lift the bottom line

Provision for credit losses was $687,000, down from $1.5 million in the prior quarter. The third-quarter figure included $1.1 million related to loans and leases, partly offset by a $371,000 release of the reserve for unfunded commitments. The allowance for credit losses covered 0.94% of loans and leases, down from 0.97% at June 30, while nonperforming assets were 0.25% of total assets, up from 0.23%. Income tax expense fell to $1.9 million from $4.2 million in the prior quarter, which the company tied to a $2.6 million benefit from purchasing transferable energy tax credits. With no adjustments in the quarter, operating earnings of $18.6 million matched reported net income, and operating diluted earnings per share of $1.10 compared with $0.86 a year earlier. Operating earnings a year earlier were $14.48 million: they added back $3.72 million of securities losses and $1.31 million of restructuring costs, removed a $3.96 million gain on the sale of SBKI and reflected $276,000 of related tax effects, so operating earnings grew 28.6% from a year earlier to $18.6 million while reported net income rose 36.1%. Because the company made no adjustment for the energy-tax-credit benefit, that $2.6 million remains inside the operating figure.

Expenses rise with the franchise; tangible book value per share at $28.50

Noninterest expense rose to $36.4 million from $34.0 million in the second quarter, an increase of 7.1%, driven by a $994,000 rise in other real estate and loan-related expenses and a $601,000 increase in salaries and employee benefits. Even so, the efficiency ratio improved to 63.19% from 66.32% a year earlier as revenue grew faster than costs, though it rose from 60.69% in the second quarter. Tangible book value per common share was $28.50, up from $26.00 a year earlier. Chairman Miller Welborn said tangible book value per share "grew 4% annualized during the quarter, including the effects of accumulated other comprehensive income, and 15% annualized excluding those effects." Tangible common equity was 7.83% of tangible assets, down from 7.93% at December 31, 2025, and the accumulated other comprehensive loss widened by $16.9 million over the same period.

Deposit mix and the October 20 conference call

Total deposits were $5.58 billion at September 30, up 10.4% from a year earlier, but noninterest-bearing demand deposits fell $142.8 million from December 31, 2025, while money market and savings deposits rose $321.5 million. The release gave no financial outlook and no consensus estimate, and it contained no market reaction. Management will discuss the quarter on a conference call on Tuesday, October 20, 2026, at 10:00 a.m. ET. Beyond that call, the release does not date the next quarterly update, so the margin and deposit-cost trend it describes is the main open question for the fourth quarter.