SmartFinancial(US:SMBK)2025-10-22 15:02Financial Data and Key Metrics Changes - The tangible book value increased to $26 per share, representing over 26% annualized growth quarter over quarter [5] - Operating earnings for the quarter were $14.5 million or $0.86 per diluted share, marking the sixth consecutive quarter of positive operating leverage [5] - Total operating revenue reached $50.8 million, with net interest income expanding and non-interest income remaining stable [6][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 [5][7] - The average portfolio yield, including fees and accretion, rose to 6.14% [7] - Operating non-interest expenses were $32.6 million, aligning with prior quarter results [15] Market Data and Key Metrics Changes - Non-brokered deposit growth was strong, with an increase of $283 million, representing over 24% annualized growth [10] - The loan-to-deposit ratio decreased to 84%, providing flexibility for balance sheet management [8] - The overall liquidity position at quarter end was approximately 21% [10] Company Strategy and Development Direction - The company is focused on organic growth, enhancing client relationships, and expanding its market presence in the Southeast [8][19] - There is a commitment to maintaining a strong operational efficiency ratio, which improved to 64% from 66% in the previous quarter [15] - The company aims to continue leveraging its balance sheet and grow revenue, EPS, and book value while managing expenses prudently [19] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the future, projecting continued growth in revenue and operating leverage [17][18] - The company anticipates a fourth-quarter margin in the range of 3.3% to 3.35% [13] - There is confidence in the ability to maintain positive operating leverage and achieve revenue growth in 2026 [38] Other Important Information - The company was named to Fortune's list of best workplaces, highlighting its strong internal culture [19] - The capital ratios improved significantly due to subordinated debt issuance, with the total consolidated risk-based capital ratio rising to 13.3% [16] Q&A Session Summary Question: Update on Alabama franchise growth outlook - Management noted that hires have been evenly spread across regions, with positive momentum in Alabama, particularly in Birmingham and Auburn [22][23] Question: Margin guidance for Q4 - Management indicated that cash on the balance sheet will be deployed to fund loan production, with no significant change in asset size expected [26][27] Question: Technology initiatives and expense impact - Management discussed ongoing tech initiatives aimed at increasing efficiency without significantly raising expenses, focusing on enhancing client experience [28][29] Question: Future of positive operating leverage - Management expressed confidence in maintaining positive operating leverage into 2026, with a focus on balanced growth and expense management [36][38] Question: Deposit beta expectations - Management aims for a deposit beta of around 40% for future rate cuts, with current rates being managed effectively [48][50] Question: Fee growth outlook - Management expects fee growth to continue, driven by improvements in mortgage and treasury management services [52][53] Question: M&A strategy - Management clarified that while organic growth remains the primary focus, they are open to evaluating strategic M&A opportunities that align with their goals [78][80]