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 [6][10] - Operating non-interest expenses were $32.6 million, aligning with targets [15] Business Line Data and Key Metrics Changes - Loans grew at an annualized rate of 10%, while deposits increased by 15% or $179 million for the quarter [5][7] - The average portfolio yield, including fees and accretion, rose to 6.14% [7] - Operating non-interest income, after adjustments, was $8.4 million, which is $500,000 lower than the previous quarter [14] Market Data and Key Metrics Changes - Non-brokered deposit growth was strong, with an increase of $283 million, representing over 24% growth on an annualized basis [10] - The overall interest-bearing cost rose by three basis points to 2.98% [10] - The loan-to-deposit ratio decreased to 84% despite loan growth [8] Company Strategy and Development Direction - The company is focused on organic growth and expanding client relationships, aiming to become one of the Southeast's strongest regional community banks [8][19] - There is a commitment to maintaining a level expense base while growing revenue, EPS, and book value [19] - The company plans to continue investing in technology and enhancing operational efficiency [29][30] 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%-3.35% [13] - Credit quality remains strong, with non-performing assets at 0.22% of total assets [14] Other Important Information - The company was named to Fortune's list of best workplaces, highlighting its strong internal culture [19] - The consolidated risk-based capital ratio rose to 13.3%, indicating a strong capital position [16] Q&A Session Summary Question: Update on Alabama franchise growth outlook - Management noted that hiring has been evenly spread across regions, with optimism about growth in Alabama, particularly in cities like Birmingham and Auburn [22][23] Question: Margin guidance for the fourth quarter - Management indicated that cash on the balance sheet will be deployed to fund production, with no significant changes expected in asset size [26][27] Question: Technology initiatives and expense impact - Management discussed ongoing tech initiatives aimed at increasing efficiency without significantly raising expenses [28][29] Question: Future operating leverage expectations - Management expressed confidence in maintaining positive operating leverage into 2026, with a focus on balanced growth [38][40] Question: Deposit beta expectations with rate cuts - Management aims for a deposit beta of around 40% for future rate cuts, with current rates being managed effectively [49][50] Question: Fee growth outlook - Management expects fee growth to continue, driven by improvements in mortgage and treasury management services [52][53] Question: Loan loss reserve release and future expectations - Management confirmed that the reserve ratio may remain stable or see modest increases as growth continues [69][70] Question: M&A strategy - Management clarified that while organic growth remains the primary focus, they are open to evaluating strategic M&A opportunities if they arise [82][84]