SmartFinancial(US:SMBK)2025-10-22 15:00Financial Data and Key Metrics Changes - The company reported operating earnings of $14.5 million or $0.86 per diluted share, achieving a quarterly revenue target of $50 million ahead of schedule [6][12] - Tangible book value increased to $26 per share, representing over 26% annualized growth quarter over quarter [5] - Total operating revenue was $50.8 million, with net interest income expanding and non-interest income remaining solid [7][12] Business Line Data and Key Metrics Changes - Loans grew at an annualized rate of 10%, while deposits increased by 15% annualized, amounting to $179 million for the quarter [6][10] - Non-brokered deposit growth was strong, with an increase of $283 million, representing over 24% growth on an annualized basis [12] - Operating non-interest income was $8.4 million, slightly lower than the previous quarter due to the sale of insurance operations [16] Market Data and Key Metrics Changes - The loan-to-deposit ratio was at 84%, down quarter over quarter despite loan growth [11] - The average portfolio yield, including fees, rose to 6.14%, with new loan production contributing positively to overall yield levels [10] Company Strategy and Development Direction - The company aims to deepen its market presence and continue organic growth, with a focus on recruiting talented bankers [21][22] - Strategic initiatives include technology enhancements and a focus on operational efficiency, with an improved operating efficiency ratio of 64% [17][19] - The company is positioned as one of the Southeast's strongest regional community banks, with a commitment to maintaining a strong credit quality [11][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued revenue growth and operating leverage, projecting a margin of 3.3% to 3.35% for Q4 [15][19] - The company anticipates a stable credit environment with low non-performing assets at 0.22% of total assets [16] - Future margin expansion is expected to be in the range of 5 to 7 basis points per quarter in 2026 [51][86] Other Important Information - The company was named to Fortune's list of best workplaces, highlighting its strong internal culture [22] - The total consolidated risk-based capital ratio rose to 13.3%, indicating a strong capital position [17] Q&A Session Summary Question: Update on Alabama franchise growth outlook - Management noted that hiring has been evenly spread across regions, with positive momentum in Alabama and other markets [28][30] Question: Margin guidance for Q4 and balance sheet size - The company plans to deploy cash on hand to fund loan production, expecting no significant change in asset size [34] Question: Technology initiatives and expense impact - New technology initiatives are expected to enhance efficiency without significantly increasing expenses [36][39] Question: Future of positive operating leverage - Management is confident in maintaining positive operating leverage through revenue growth outpacing expense increases [46][49] Question: Deposit beta expectations with rate cuts - The company aims for a deposit beta of around 40% with future rate cuts, having already seen some success in reducing deposit costs [58][60] Question: Fee revenue outlook for next year - Management expects fee revenues to trend upward, with several initiatives in place to drive growth [61][65] Question: Loan pipeline and growth into 2026 - The company anticipates maintaining loan growth around the 10% mark, supported by a strong pipeline [70][72] Question: M&A strategy - The focus remains on organic growth, but management is open to evaluating strategic M&A opportunities that align with their goals [92][94]