The cost of total deposits for the third quarter of 2025 was 2.44%
October 21, 2025 – 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 third quarter of 2025, compared to net income of $9.1 million, or $0.54 per diluted common share, for the third quarter of 2024, and compared to prior quarter net income of $11.7 million, or $0.69 per diluted common share.
Operating earnings, which excludes non-recurring income and expenses, net of tax adjustments, totaled $14.5 million, or $0.86 per diluted common share, in the third quarter of 2025, compared to $9.1 million, or $0.54 per diluted common share, in the third quarter of 2024, and compared to $11.7 million, or $0.69 per diluted common share, in the second quarter of 2025.
Highlights for the Third Quarter of 2025
- Achieved over $50 million in quarterly operating revenue
- Operating earnings of $14.5 million, or $0.86 per diluted common share
- Net organic loan and lease growth of $98 million with 10% annualized quarter-over-quarter increase
- Deposit growth of $179 million or 15% annualized quarter-over-quarter
- Quarter over quarter tangible book value per common share1 growth of 26%
- $4.0 million pre-tax gain associated with the sale of SBK Insurance (“SBKI”)
- Repositioned $85 million of available-for-sale securities, resulting in a pre-tax loss of $3.9 million
- $100 million subordinated debt issuance to retire existing $40 million subordinated debt and fund additional growth
Billy Carroll, President & CEO, stated: “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. Tangible book value per common share1 rose 26% quarter over quarter annualized and asset quality remained solid. Our strategic actions with SBKI unlocked capital but allowed us to remain an invested partner, affording us the best of both worlds. We look forward to a long partnership with SBKI and 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, concluded: “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. Additionally, the SBKI partnership, subordinated debt issuance, and securities repositioning has 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 Net Interest Margin
Net interest income was $42.4 million for the third quarter of 2025, compared to $40.3 million for the prior quarter. Average earning assets totaled $5.23 billion, an increase of $271.4 million from the prior quarter. The balances of average earnings assets changed quarter-over-quarter, primarily from an increase in average loans and leases of $121.0 million and average interest-earning cash of $152.6 million, offset by a decrease in average securities of $2.1 million. Average interest-bearing liabilities increased by $249.4 million from the prior quarter, primarily attributable to an increase in average interest-bearing deposits of $207.4 and average subordinated debt of $45.4 million, offset by a decrease in borrowings of $3.4 million.
The tax equivalent net interest margin was 3.25% for the third quarter of 2025, down from 3.29% for the prior quarter. Asset yields stayed strong, but interest-bearing liability costs rose more rapidly than yields on interest-earning assets, partly due to the new subordinated debt issuance. The yield on loans and leases, excluding loan fees, on a fully tax equivalent basis (“FTE”) was 6.05% for the third quarter of 2025, compared to 5.99% for the prior quarter.
The cost of total deposits for the third quarter of 2025 was 2.44%, compared to 2.39% in the prior quarter. The cost of interest-bearing liabilities was 3.07% for the third quarter of 2025, compared to 2.99% in the prior quarter. The cost of average interest-bearing deposits was 2.98% for the third quarter of 2025, compared to 2.95% for the prior quarter, an increase of three basis points.
The following table presents selected interest rates and yields for the periods indicated:
Provision for Credit Losses on Loans and Leases and Credit Quality
At September 30, 2025, the allowance for credit losses was $39.1 million. The allowance for credit losses to total loans and leases was 0.93% as of September 30, 2025, and 0.96% as of June 30, 2025.
The following table presents detailed information related to the provision for credit losses for the periods indicated (dollars in thousands):
Nonperforming loans and leases as a percentage of total loans and leases was 0.24% as of September 30, 2025, and 0.19% as of June 30, 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 0.22% as of September 30, 2025, and 0.19% as of June 30, 2025.
The following table presents detailed information related to credit quality for the periods indicated (dollars in thousands):
Noninterest Income
Noninterest income decreased $261 thousand to $8.6 million for the third quarter of 2025, compared to $8.9 million for the prior quarter. The third quarter decrease was associated with a pre-tax loss of $3.9 million on the sale of $85 million of available-for-sale securities and the reduction of insurance commissions from the sale of SBKI and lower capital markets income included in other noninterest income. These decreases were offset by a pre-tax gain on the sale of SBKI of $4.0 million.
The following table presents detailed information related to noninterest income for the periods indicated (dollars in thousands):
Noninterest Expense
Noninterest expense increased $1.3 million to $33.9 million for the third quarter of 2025, compared to $32.6 million for the prior quarter. The third quarter’s increase was primarily attributable to an increase in restructuring expenses.
The following table presents detailed information related to noninterest expense for the periods indicated (dollars in thousands):
Income Tax Expense
Income tax expense was $3.3 million for the third quarter of 2025, an increase of $729 thousand, compared to $2.6 million for the prior quarter.
Balance Sheet Trends
Total assets at September 30, 2025, were $5.78 billion compared to $5.28 billion at December 31, 2024. The $509.1 million increase is primarily attributable to increases in loans and leases of $316.0 million, cash and cash equivalents of $169.6 million, securities of $25.5 million, other investments of $3.9 million and bank owned life insurance of $2.7 million, offset by a decrease in goodwill and other intangibles of $8.9 million, primarily associated with the sale of SBKI.
Total liabilities were $5.25 billion at September 30, 2025, compared to $4.78 billion at December 31, 2024, an increase of $462.1 million. Total deposits increased $364.4 million, which was driven primarily by increases in money market deposits of $178.8 million, other time deposits of $174.4 million, and interest-bearing demand deposits of $92.7 million, offset by a decline in brokered deposits of $47.4 million and noninterest demand deposits of $34.1 million. In addition, subordinated debt increased by $98.9 million.
Shareholders’ equity at September 30, 2025, totaled $538.5 million, an increase of $47.0 million, from December 31, 2024. The increase in shareholders’ equity was primarily driven by net income of $36.6 million for the nine months ending September 30, 2025, and a positive change of $12.9 million in accumulated other comprehensive loss, offset by dividends paid of $4.1 million. Tangible book value per common share was $26.00 at September 30, 2025, compared to $22.85 at December 31, 2024.
Tangible common equity as a percentage of tangible assets was 7.78% at September 30, 2025, compared with 7.48% at December 31, 2024.
The following table presents selected balance sheet information for the periods indicated (dollars in thousands):
Conference Call Information
SmartFinancial issued this earnings release for the third quarter of 2025 on Tuesday, October 21, 2025, and will host a conference call on Wednesday, October 22, 2025, at 10:00 a.m. ET.
To access this interactive teleconference, dial (833) 470-1428 or (646) 844-6383 and enter the access code, 241226. A replay of the conference call will be available through December 31, 2025, by dialing (866) 813-9403 or (929) 458-6194 and enter the access code, 307268.
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.
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