SmartFinancial, Inc. (“SmartFinancial” or the “Company”; NYSE: SMBK), today announced net income of $13.7 million, or $0.81 per diluted common share, for the first quarter of 2026, compared to net income of $11.3 million, or $0.67 per diluted common share, for the first quarter of 2025, and compared to prior quarter net income of $13.7 million, or $0.81 per diluted common share.
Highlights for the First Quarter of 2026
- Operating earnings1 of $13.7 million, or $0.81 per diluted common share
- Net organic loan and lease growth of $155 million with 14% annualized quarter-over-quarter increase
- Deposit growth, excluding brokered deposits, of $95 million or 7% annualized quarter-over-quarter
- Net interest margin, fully tax equivalent basis (“FTE”) expanded to 3.48%, reflecting lower deposit and funding costs
- Allowance for credit losses (“ACL”) model change resulting in ACL to total loans and leases increase of 3bps to 0.97%
- Nashville expansion with Director of Private Banking and Wealth Management and additional commercial banker hires
| ___________________________________ |
| 1 Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP Reconciliations. |
Billy Carroll, President & CEO, stated: “As anticipated, 2026 began with strong momentum due to the robust business pipeline established prior to year end and the diligent work of our associates in securing new business. Quarterly net balance loan growth of $155 million while core deposits increased by $95 million, surpassing initial forecasts. Deposit growth was particularly notable, especially after accounting for a projected $68 million seasonal withdrawal from a significant client relationship. Operating earnings per share were solid at $0.81, supported by an expansion of over 10 basis points in net interest margin quarter-over-quarter and disciplined expense management. Additionally, we maintained our quarter-over-quarter earnings per share despite a higher provision associated with a change in our ACL model, which we expect to normalize next quarter. Overall, this represents an excellent start to the year, made possible by the dedicated efforts of our over 580 associates. Thank you all for your continued commitment and positivity!”
SmartFinancial’s Chairman, Miller Welborn, concluded: “The Board is grateful to all our associates for delivering a strong start to 2026, which is a reflection of the team’s hard work and dedication. We appreciate the energy our teams are bringing, not only to our strategic initiatives, but also to the many operational and efficiency-enhancing projects underway. We truly value these contributions and are excited about the benefits these efforts will deliver for our Company and our stakeholders. Looking ahead, we remain confident in our strategic direction and focused on executing our priorities to build on this momentum through the remainder of 2026.”
Net Interest Income and Net Interest Margin
Net interest income was $45.9 million for the first quarter of 2026, compared to $45.1 million for the prior quarter. Average earning assets totaled $5.39 billion, an increase of $47.1 million from the prior quarter. The balances of average earnings assets increased quarter-over-quarter, primarily from an increase in average loans and leases of $138.7 million and average securities of $5.7 million, offset by a decrease in average federal funds sold and other earning assets of $97.3 million. Average interest-bearing liabilities increased by $66.9 million from the prior quarter, primarily attributable to an increase in average interest-bearing deposits of $66.8 million.
The tax equivalent net interest margin was 3.48% for the first quarter of 2026, up from 3.38% for the prior quarter. This increase is primarily related to declines in deposit costs, outpacing a modest decrease in asset yields. The yield on loans and leases, excluding loan fees, FTE was 5.93% for the first quarter of 2026, compared to 6.00% for the prior quarter.
The cost of total deposits for the first quarter of 2026 was 2.12%, compared to 2.26% in the prior quarter. The cost of interest-bearing liabilities was 2.72% for the first quarter of 2026, compared to 2.90% in the prior quarter. The cost of average interest-bearing deposits was 2.60% for the first quarter of 2026, compared to 2.79% for the prior quarter, a decrease of 19 basis points.
The following table presents selected interest rates and yields for the periods indicated:
| Three Months Ended | |||||||||
| Mar | Dec | Increase | |||||||
| Selected Interest Rates and Yields | 2026 | 2025 | (Decrease) | ||||||
| Yield on loans and leases, excluding loan fees, FTE | 5.93 | % | 6.00 | % | (0.07 | )% | |||
| Yield on loans and leases, FTE | 6.02 | % | 6.08 | % | (0.06 | )% | |||
| Yield on earning assets, FTE | 5.62 | % | 5.65 | % | (0.03 | )% | |||
| Cost of interest-bearing deposits | 2.60 | % | 2.79 | % | (0.19 | )% | |||
| Cost of total deposits | 2.12 | % | 2.26 | % | (0.14 | )% | |||
| Cost of interest-bearing liabilities | 2.72 | % | 2.90 | % | (0.18 | )% | |||
| Net interest margin, FTE | 3.48 | % | 3.38 | % | 0.10 | % | |||
Allowance for Credit Losses on Loans and Leases and Credit Quality
At March 31, 2026, the allowance for credit losses was $44.0 million. During the quarter, changes were made to SmartBank’s ACL loss model, which included the adoption of a discounted cash flow methodology, refinements to key assumptions and qualitative factors, and improved use of macroeconomic drivers. As a result, the allowance for credit losses to total loans and leases rose to 0.97% as of March 31, 2026, up from 0.94% as of December 31, 2025.
The following table presents detailed information related to the provision for credit losses for the periods indicated (dollars in thousands):
| Three Months Ended | ||||||||||||
| Mar | Dec | Increase | ||||||||||
| Allowance for Credit Losses on Loans and Leases Rollforward | 2026 | 2025 | (Decrease) | |||||||||
| Beginning balance | $ | 40,906 | $ | 39,074 | $ | 1,832 | ||||||
| Charge-offs | (229 | ) | (1,993 | ) | 1,764 | |||||||
| Recoveries | 60 | 101 | (41 | ) | ||||||||
| Net charge-offs | (169 | ) | (1,892 | ) | 1,723 | |||||||
| Provision for credit losses (1) | 3,213 | 3,724 | (511 | ) | ||||||||
| Ending balance | $ | 43,950 | $ | 40,906 | $ | 3,044 | ||||||
| Allowance for credit losses to total loans and leases | 0.97 | % | 0.94 | % | 0.03 | % | ||||||
| (1) | The current quarter-ended and prior quarter-ended excludes an unfunded commitments provision of $926 thousand and $408 thousand, respectively. At March 31, 2026, and December 31, 2025, the unfunded commitment liability totaled $4.5 million and $3.6 million, respectively. |
Nonperforming loans and leases as a percentage of total loans and leases was 0.27% as of March 31, 2026, and 0.22% as of December 31, 2025. Total nonperforming assets (which include nonaccrual loans and leases, loans and leases past due 90 days or more and still accruing, other real estate owned and other repossessed assets) as a percentage of total assets was 0.25% as of March 31, 2026, and 0.22% as of December 31, 2025.
The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):
| Three Months Ended | ||||||||||||
| Mar | Dec | Increase | ||||||||||
| Credit Quality | 2026 | 2025 | (Decrease) | |||||||||
| Nonaccrual loans and leases | $ | 12,257 | $ | 9,442 | $ | 2,815 | ||||||
| Loans and leases past due 90 days or more and still accruing | – | – | – | |||||||||
| Total nonperforming loans and leases | 12,257 | 9,442 | 2,815 | |||||||||
| Other real estate owned | – | – | – | |||||||||
| Other repossessed assets | 2,798 | 3,248 | (450 | ) | ||||||||
| Total nonperforming assets | $ | 15,055 | $ | 12,690 | $ | 2,365 | ||||||
| Nonperforming loans and leases to total loans and leases | 0.27 | % | 0.22 | % | 0.05 | % | ||||||
| Nonperforming assets to total assets | 0.25 | % | 0.22 | % | 0.03 | % | ||||||
Noninterest Income
Noninterest income decreased $278 thousand to $7.9 million for the first quarter of 2026, compared to $8.2 million for the prior quarter. The first quarter decrease was primarily attributable to the reduction in capital markets’ income included in other noninterest income.
The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):
| Three Months Ended | ||||||||||
| Mar | Dec | Increase | ||||||||
| Noninterest Income | 2026 | 2025 | (Decrease) | |||||||
| Service charges on deposit accounts | $ | 1,853 | $ | 1,828 | $ | 25 | ||||
| Gain on sale of securities, net | 1 | – | 1 | |||||||
| Mortgage banking income | 760 | 837 | (77 | ) | ||||||
| Investment services | 1,796 | 1,683 | 113 | |||||||
| Interchange and debit card transaction fees | 1,418 | 1,375 | 43 | |||||||
| Other | 2,113 | 2,496 | (383 | ) | ||||||
| Total noninterest income | $ | 7,941 | $ | 8,219 | $ | (278 | ) | |||
Noninterest Expense
Noninterest expense increased $444 thousand to $32.9 million for the first quarter of 2026, compared to $32.5 million for the prior quarter. The first quarter’s increase was primarily attributable to an increase in salaries and employee benefits and other expenses, offset by a decrease in FDIC insurance expense.
The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):
| Three Months Ended | ||||||||||
| Mar | Dec | Increase | ||||||||
| Noninterest Expense | 2026 | 2025 | (Decrease) | |||||||
| Salaries and employee benefits | $ | 20,414 | $ | 19,917 | $ | 497 | ||||
| Occupancy and equipment | 3,344 | 3,388 | (44 | ) | ||||||
| FDIC insurance | 750 | 1,025 | (275 | ) | ||||||
| Other real estate and loan related expenses | 792 | 858 | (66 | ) | ||||||
| Advertising and marketing | 387 | 393 | (6 | ) | ||||||
| Data processing and technology | 2,436 | 2,413 | 23 | |||||||
| Professional services | 1,193 | 1,132 | 61 | |||||||
| Amortization of intangibles | 457 | 479 | (22 | ) | ||||||
| Restructuring expenses | – | 16 | (16 | ) | ||||||
| Other | 3,142 | 2,850 | 292 | |||||||
| Total noninterest expense | $ | 32,915 | $ | 32,471 | $ | 444 | ||||
Income Tax Expense
Income tax expense was $3.1 million for the first quarter of 2026, an increase of $76 thousand, compared to $3.0 million for the prior quarter.
Balance Sheet Trends
Total assets at March 31, 2026, were $5.91 billion compared to $5.86 billion at December 31, 2025. The $46.9 million increase is primarily attributable to increases in loans and leases of $154.8 million, securities of $11.0 million, premises and equipment of $5.0 million, and bank owned life insurance of $913 thousand, offset by a decrease in cash and cash equivalents of $118.3 million, loans held for sale of $3.6 million and an increase in provision of credit losses of $3.0 million.
Total liabilities were $5.35 billion at March 31, 2026, compared to $5.31 billion at December 31, 2025, an increase of $37.2 million. Total deposits increased $43.4 million, which was driven primarily by increases in money market deposits of $182.3 million, other time deposits of $16.1 million, and interest-bearing demand deposits of $8.6 million, offset by a decline in noninterest demand deposits of $111.6 million and brokered deposits of $51.9 million. In addition, other liabilities decreased by $6.0 million.
Shareholders’ equity at March 31, 2026, totaled $562.1 million, an increase of $9.7 million, from December 31, 2025. The increase in shareholders’ equity was primarily driven by net income of $13.7 million for the three months ending March 31, 2026, offset by an increase of $3.0 million in accumulated other comprehensive loss and dividends paid of $1.4 million. Tangible book value per common share1 was $27.33 at March 31, 2026, compared to $26.85 at December 31, 2025. Tangible common equity1 as a percentage of tangible assets1 was 8.04% at March 31, 2026, compared with 7.93% at December 31, 2025.
The following table presents selected balance sheet information for the periods indicated (dollars in thousands):
| Mar | Dec | Increase | |||||||
| Selected Balance Sheet Information | 2026 | 2025 | (Decrease) | ||||||
| Total assets | $ | 5,907,685 | $ | 5,860,810 | $ | 46,875 | |||
| Total liabilities | 5,345,524 | 5,308,318 | 37,206 | ||||||
| Total equity | 562,161 | 552,492 | 9,669 | ||||||
| Securities | 673,051 | 662,003 | 11,048 | ||||||
| Loans and leases | 4,518,391 | 4,363,582 | 154,809 | ||||||
| Deposits | 5,196,236 | 5,152,789 | 43,447 | ||||||
Conference Call Information
SmartFinancial issued this earnings release for the first quarter of 2026 on Monday, April 20, 2026, and will host a conference call on Monday, April 20, 2026, at 10:00 a.m. ET. To access this interactive teleconference, dial (833) 470-1428 or (404) 975-4839 and enter the access code, 156265. A replay of the conference call will be available through July 19, 2026, by dialing (866) 813-9403 or (929) 458-6194 and enter the access code, 215769. Conference call materials will be published on the Company’s webpage located at http://www.smartfinancialinc.com/CorporateProfile, at 9:00 a.m. ET prior to the conference call.
| ___________________________________ |
| 1 Non-GAAP measure. See “Non-GAAP Financial Measures” for more information and see the Non-GAAP Reconciliations. |
About SmartFinancial, Inc.
SmartFinancial, Inc., based in Knoxville, Tennessee, is the bank holding company for SmartBank. SmartBank is a full-service commercial bank founded in 2007, with branches across Tennessee, Alabama, and Florida and loan servicing centers in Tennessee and Georgia. Recruiting the best people, delivering exceptional client service, strategic branching, and a disciplined approach to lending have contributed to SmartBank’s success. More information about SmartFinancial can be found on its website: www.smartfinancialinc.com.
Non-GAAP Financial Measures
Statements included in this earnings release include measures not recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered Non-GAAP financial measures (“Non-GAAP”) and should be read along with the accompanying tables, which provide a reconciliation of Non-GAAP financial measures to GAAP financial measures. SmartFinancial management uses several Non-GAAP financial measures and ratios derived therefrom in its analysis of the Company’s performance, including:
| (1) Operating earnings | (10) Operating return on average assets |
| (2) Operating noninterest income | (11) Operating PPNR return on average assets |
| (3) Operating noninterest expense | (12) Operating return on average shareholders’ equity |
| (4) Operating pre-provision net revenue (“PPNR”) earnings | (13) Return on average tangible common equity |
| (5) Tangible common equity | (14) Operating return on average tangible common equity |
| (6) Average tangible common equity | (15) Operating noninterest income/average assets |
| (7) Tangible book value per common share | (16) Operating noninterest expense/average assets |
| (8) Tangible assets | (17) Tangible common equity to tangible assets |
| (9) Operating efficiency ratio |
Operating earnings, operating PPNR earnings, operating noninterest income and operating noninterest expense exclude non-operating related income and expense items from net income, noninterest income and noninterest expense, respectively. Tangible common equity and average tangible common equity exclude goodwill and other intangible assets from shareholders’ equity and average shareholders’ equity, respectively. Tangible book value per common share is tangible common equity divided by common shares outstanding. Tangible assets excludes goodwill and other intangibles from total assets. Operating efficiency ratio is the quotient of operating noninterest expense divided by the sum of net interest income adjusted for taxable equivalent yields plus operating noninterest income. A detailed reconciliation of these items and the ratios derived therefrom is available in the Non-GAAP reconciliations.
Management believes that Non-GAAP financial measures provide additional useful information that allows investors to evaluate the ongoing performance of the Company and provide meaningful comparisons to its peers. Management also believes these Non-GAAP financial measures enhance investors’ ability to compare period-to-period financial results and allow investors and Company management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance.
Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider SmartFinancial’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.
