SmartFinancial Reports Strong Third Quarter 2025 Results, Driven by Record Revenue, Solid Loan Growth, and Strategic Balance Sheet Moves
SmartFinancial, Inc., the parent company of SmartBank, announced robust financial results for the third quarter of 2025, highlighting its continued momentum across revenue, earnings, and strategic initiatives. The company reported net income of $13.7 million, or $0.81 per diluted common share, marking a sharp rise from $9.1 million, or $0.54 per diluted common share, in the third quarter of 2024. Compared to the prior quarter, SmartFinancial’s performance also reflected meaningful improvement over the $11.7 million, or $0.69 per diluted share, recorded in Q2 2025.
Operating earnings, which exclude non-recurring income and expenses, net of tax adjustments, climbed to $14.5 million, or $0.86 per diluted share, compared to $9.1 million, or $0.54 per share, in the same period last year. On a sequential basis, operating earnings also improved from $11.7 million, or $0.69 per share, in Q2 2025. The company attributed these results to a blend of organic growth, disciplined cost management, and strategic capital initiatives designed to enhance shareholder value.
Quarterly Highlights Show Broad-Based Strength
SmartFinancial’s third quarter reflected healthy operational expansion and balance sheet optimization. Among the most notable metrics were:
- Operating revenue exceeding $50 million for the quarter — a milestone reached ahead of schedule.
- Operating earnings of $14.5 million, translating to $0.86 per diluted share.
- Net organic loan and lease growth of $98 million, representing a 10% annualized increase from the prior quarter.
- Deposit growth of $179 million, or 15% annualized quarter-over-quarter.
- Tangible book value per common share up 26% quarter-over-quarter annualized.
- A $4.0 million pre-tax gain from the sale of SBK Insurance (“SBKI”), contributing to one-time noninterest income gains.
- Repositioning of $85 million in available-for-sale securities, resulting in a pre-tax loss of $3.9 million.
- Successful completion of a $100 million subordinated debt issuance, used to retire existing $40 million subordinated debt and support future growth.
Management Commentary: Strategic Execution and Sustained Growth
Billy Carroll, President and Chief Executive Officer of SmartFinancial, credited the company’s consistent focus on execution and disciplined growth for another successful quarter.
SmartFinancial continues to demonstrate improvement across all areas, as evidenced by our sixth consecutive quarter of positive operating leverage, 10% annualized organic loan growth, and 15% annualized deposit growth,” Carroll said. “Tangible book value per common share rose 26% quarter over quarter annualized, and asset quality remained solid.
Carroll emphasized that the sale of SBK Insurance (“SBKI”) was a strategic move that freed up capital while maintaining a valuable long-term partnership.
Our strategic actions with SBKI unlocked capital but allowed us to remain an invested partner, affording us the best of both worlds,” Carroll continued. “We look forward to watching the agency thrive in its next chapter. A special thanks to all our associates for their dedication in executing all the strategic actions this quarter while maintaining operational excellence and exemplifying what SmartBank culture is all about.
SmartFinancial’s Chairman, Miller Welborn, echoed those sentiments, highlighting how recent strategic steps have positioned the company for accelerated future growth.
The Board is thrilled that the Company achieved its $50 million in quarterly revenue target ahead of schedule — a true testament to the hard work and dedication of our associates,” Welborn stated. “Additionally, the SBKI partnership, subordinated debt issuance, and securities repositioning have strengthened our balance sheet and positioned us to take advantage of the opportunities ahead. On the heels of these achievements, we look forward to closing out 2025 with increased market share and laying the groundwork for an even stronger 2026.
Net Interest Income and Margin: Continued Expansion Despite Rising Costs
Net interest income — a key measure of core banking profitability — reached $42.4 million in the third quarter of 2025, up from $40.3 million in the prior quarter. Average earning assets totaled $5.23 billion, an increase of $271.4 million sequentially, driven primarily by growth in both loans and leases as well as higher interest-earning cash balances.
- Average loans and leases rose by $121.0 million, while average interest-earning cash grew by $152.6 million.
- These gains were partially offset by a modest decline of $2.1 million in average securities.
On the funding side, average interest-bearing liabilities increased by $249.4 million, largely due to a rise in average interest-bearing deposits of $207.4 million and an increase in subordinated debt of $45.4 million, following the new debt issuance.
SmartFinancial’s tax-equivalent net interest margin (NIM) came in at 3.25%, slightly lower than 3.29% in the prior quarter. The decline was primarily attributed to higher funding costs, particularly from the new subordinated debt, even as asset yields remained strong.
The yield on loans and leases, excluding fees and on a fully tax-equivalent basis, improved modestly to 6.05%, up from 5.99% in Q2 2025. The cost of total deposits edged up to 2.44% from 2.39%, reflecting the broader trend of deposit repricing amid higher interest rate conditions.
Overall, the cost of interest-bearing liabilities rose to 3.07%, compared with 2.99% in the prior quarter, while interest-bearing deposit costs increased by three basis points to 2.98%.
Credit Quality: Stable and Well-Reserved
Credit quality remained strong, underscoring SmartFinancial’s prudent risk management. As of September 30, 2025, the allowance for credit losses (ACL) stood at $39.1 million, representing 0.93% of total loans and leases, compared with 0.96% as of June 30, 2025.
The steady coverage ratio indicates that loan growth has been accompanied by careful underwriting and healthy asset performance. The company reported no major deterioration in credit trends, reflecting continued stability in its commercial and consumer portfolios.
Noninterest Income: Impacted by Portfolio Repositioning and SBKI Sale
Noninterest income for the third quarter totaled $8.6 million, down slightly from $8.9 million in the prior quarter. The decline primarily reflected a $3.9 million pre-tax loss from the sale of $85 million in available-for-sale securities as part of SmartFinancial’s balance sheet repositioning.
This loss, however, was largely offset by a $4.0 million pre-tax gain from the sale of SBK Insurance, partially mitigating the overall impact. The sale also resulted in reduced insurance commission income going forward, while capital markets income declined slightly within the “other noninterest income” category.
Noninterest Expense: Strategic Investments and Restructuring Costs
Noninterest expense increased modestly to $33.9 million in Q3 2025, up from $32.6 million in the prior quarter. The uptick was primarily due to higher restructuring costs associated with SmartFinancial’s strategic initiatives, including the divestiture of SBKI and operational streamlining efforts aimed at enhancing long-term efficiency.
Despite the temporary increase in expenses, management emphasized that these costs are part of a broader strategy to optimize the company’s structure, improve profitability, and fund future growth.
Positioned for Continued Momentum
SmartFinancial’s third-quarter results underscore a company in growth mode — balancing profitability, asset quality, and capital optimization. With its strategic initiatives yielding tangible benefits, management expressed confidence in the company’s trajectory heading into the final quarter of 2025 and beyond.
The combination of strong loan and deposit growth, a healthy net interest margin, controlled expenses, and sound credit quality places SmartFinancial in a strong position to expand its market presence while delivering sustained shareholder value.
As Chairman Miller Welborn summed up: “We are entering the final stretch of 2025 with solid momentum. The steps we’ve taken this year — from the SBKI transaction to our debt restructuring — have positioned SmartFinancial for sustainable growth and enhanced financial strength heading into 2026.”
With continued focus on disciplined expansion, strategic partnerships, and efficient balance sheet management, SmartFinancial is set to maintain its upward trajectory and reinforce its standing as one of the Southeast’s most dynamic regional financial institutions.
