SmartFinancial, Inc. ((SMBK)) has held its Q3 earnings call. Read on for the main highlights of the call.
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SmartFinancial, Inc.’s recent earnings call conveyed a positive sentiment, highlighting the company’s robust performance across various financial metrics. Despite some temporary challenges in net interest margin and non-interest income, the overall achievements, including growth in tangible book value, revenue, and balance sheet metrics, were noteworthy. The recognition for workplace culture further underscored the company’s strong internal environment.
Tangible Book Value Growth
SmartFinancial, Inc. reported a significant increase in tangible book value, reaching $26 per share. This marks an impressive over 26% annualized growth quarter over quarter, showcasing the company’s strong financial health and strategic management.
Revenue and Earnings Milestones
The company achieved a major milestone by reaching $14.5 million in operating earnings, or $0.86 per diluted share. Additionally, SmartFinancial surpassed its $50 million quarterly revenue target ahead of schedule, reflecting its effective revenue generation strategies.
Balance Sheet Growth
SmartFinancial’s balance sheet exhibited robust growth, with loans growing at an annualized rate of 10% and deposits at 15%. This growth indicates strong demand for the company’s financial products and services.
Strong Credit Performance
The company’s credit performance remained solid, with nonperforming assets maintained at a low 22 basis points. This demonstrates effective risk management and credit quality maintenance.
Non-Broker Deposit Growth
SmartFinancial experienced substantial non-broker deposit growth, amounting to $283 million, which represents more than 24% growth on an annualized basis. This growth is indicative of the company’s ability to attract and retain customer deposits.
Improved Efficiency Ratio
The operating efficiency ratio improved to 64% from 66% in the previous quarter, highlighting the company’s efforts to enhance operational efficiency and cost management.
Strong Capital Ratios
The consolidated risk-based capital ratio rose to 13.3% from 11.1%, with the TCE ratio improving to 7.8%. These strong capital ratios reflect the company’s solid financial foundation and ability to support growth initiatives.
Recognition for Workplace Culture
SmartFinancial was named to Fortune’s list of best workplaces, underscoring the company’s commitment to fostering a positive and productive work environment.
Temporary Net Interest Margin Compression
The net interest margin experienced a temporary decline of four basis points to 3.25%. However, this is expected to be a short-term issue, with projections indicating expansion in the coming quarters.
Brokered Deposit Costs
The cost of new non-brokered production was 3.47%, while brokered deposits had a higher cost of 4.27%. This highlights the company’s strategic approach to managing deposit costs.
Decrease in Non-Interest Income
Operating non-interest income saw a decrease of $500,000 compared to the previous quarter, reflecting some challenges in generating non-interest revenue.
Forward-Looking Guidance
Looking ahead, SmartFinancial, Inc. provided optimistic guidance for the future. The company expects the net interest margin to expand by five to seven basis points each quarter in 2026. Non-interest income is projected to be approximately $7 million, with non-interest expenses between $32.5 million and $33 million for the fourth quarter. The company remains focused on organic growth, talent acquisition, and leveraging technology to enhance efficiency and client experience, while cautiously exploring strategic M&A opportunities.
In conclusion, SmartFinancial, Inc.’s earnings call highlighted a strong performance and positive outlook. The company’s achievements in tangible book value, revenue, and balance sheet growth, alongside recognition for workplace culture, were significant. Despite some temporary setbacks, the forward-looking guidance suggests continued growth and strategic focus, making SmartFinancial an interesting prospect for investors.