SmartFinancial, Inc. Reports Robust Q1 2026 Results: Momentum Continues, Margin Expands, Deposit Growth Surges

Key Highlights for Investors

• Net Income: \$13.7 million, or \$0.81 per diluted share, unchanged from Q4 2025 and up from \$11.3 million (\$0.67 per diluted share) in Q1 2025.
• Operating Earnings: \$13.7 million, or \$0.81 per diluted share.
• Organic Loan and Lease Growth: \$155 million for the quarter, representing a 14% annualized increase.
• Deposit Growth (Excluding Brokered Deposits): \$95 million, or 7% annualized.
• Net Interest Margin (FTE): Expanded to 3.48% from 3.38% in Q4 2025, primarily due to lower deposit and funding costs.
• Allowance for Credit Losses (ACL): Model change increased ACL to total loans and leases by 3bps to 0.97%.
• Nashville Expansion: Strategic hires including Director of Private Banking & Wealth Management and additional commercial bankers.
• Shareholders’ Equity: Increased to \$562.1 million, with tangible book value per share rising to \$27.33.

Management Commentary

Billy Carroll, President & CEO, stated: “2026 began with strong momentum due to the robust business pipeline and diligent work of our associates. Quarterly net balance loan growth of \$155 million while core deposits increased by \$95 million, surpassing initial forecasts. Deposit growth was especially notable, given a projected \$68 million seasonal withdrawal from a significant client. Operating earnings per share were solid at \$0.81, supported by net interest margin expansion and disciplined expense management. We maintained quarter-over-quarter earnings despite a higher provision tied to the ACL model change, which is expected to normalize next quarter. This is an excellent start to the year, thanks to our dedicated team of over 580 associates.”

Chairman Miller Welborn added: “The Board is grateful to all associates for delivering a strong start to 2026, reflecting hard work and dedication. The energy our teams bring to strategic and operational initiatives is valued, and we are confident in our direction for the remainder of 2026.”

Financial Performance Details

Net Interest Income & Margin

• Net Interest Income: \$45.9 million for Q1 2026, up from \$45.1 million in Q4 2025.
• Average Earning Assets: \$5.39 billion, up \$47.1 million quarter-over-quarter, primarily from a \$138.7 million increase in average loans/leases and a \$5.7 million increase in securities.
• Cost Reductions: Deposit costs decreased from 2.26% to 2.12%; interest-bearing liabilities down from 2.90% to 2.72%.
• Yield on Loans and Leases (Excluding Fees, FTE): 5.93%, down slightly from 6.00%.
• Net Interest Margin (FTE): 3.48%, up from 3.38%.

Credit Quality & Allowance for Credit Losses

• ACL Model Change: Adoption of discounted cash flow methodology and refined assumptions increased ACL to 0.97% from 0.94%.
• Provision for Credit Losses: \$3.2 million, down from \$3.7 million in Q4 2025.
• Nonperforming Loans and Leases: \$12.3 million (0.27% of total loans/leases), up from \$9.4 million (0.22%) in Q4 2025.
• Total Nonperforming Assets: \$15.1 million, up from \$12.7 million.
• Nonperforming Assets to Total Assets: 0.25%, up from 0.22%.

Noninterest Income & Expense

• Noninterest Income: \$7.94 million, down \$278 thousand from Q4 2025, due to lower capital markets income.
• Breakdown: Service charges (\$1.85M), mortgage banking (\$760k), investment services (\$1.80M), interchange fees (\$1.42M), other (\$2.11M).
• Noninterest Expense: \$32.92 million, up \$444k from Q4 2025. Key increases in salaries, professional services, and other expenses; FDIC insurance and real estate expenses decreased.
• Efficiency Ratio: 61.16% (GAAP), 60.75% (Operating Non-GAAP).

Balance Sheet Trends

• Total Assets: \$5.91 billion, up \$46.9 million from Q4 2025.
• Total Loans and Leases: \$4.52 billion, up \$154.8 million.
• Total Deposits: \$5.20 billion, up \$43.4 million, driven by growth in money market, time deposits, and interest-bearing demand deposits despite a decline in noninterest-bearing demand deposits.
• Shareholders’ Equity: \$562.1 million, up \$9.7 million, with tangible common equity at 8.04% of tangible assets.

Capital Ratios & Shareholder Metrics

• Equity to Assets: 9.52%
• Tangible Common Equity to Tangible Assets: 8.04% (up from 7.93%)
• Tier 1 Leverage: 8.41%
• Common Equity Tier 1: 9.77%
• Total Capital: 12.68%
• Book Value per Common Share: \$32.88
• Tangible Book Value per Common Share: \$27.33
• Return on Average Assets: 0.96%
• Return on Average Shareholders’ Equity: 9.90%
• Return on Average Tangible Common Equity: 11.93%

Strategic and Price-Sensitive Developments

• Nashville Expansion: SmartFinancial announced expansion in Nashville with key hires, indicating further strategic growth and regional diversification.
• ACL Model Change: Increase in ACL ratio due to model enhancement may signal a more conservative approach to credit risk and could impact future provisions and earnings.
• Deposit Growth: Surpassed initial forecasts, demonstrating strong business pipeline and client acquisition despite seasonal withdrawals.
• Margin Expansion: Net interest margin increased by 10 basis points, reflecting improved funding costs, which is a positive signal for future profitability.
• Stable Earnings: Maintained earnings per share quarter-over-quarter even with higher credit loss provision, showing resilience in core operations.
• Noninterest Income Decline: A drop in capital markets income may warrant monitoring for future quarters, as this could affect overall profitability.
• Increase in Nonperforming Assets: Nonperforming loans and assets increased, though ratios remain within industry norms; investors should monitor potential credit risk trends.

Conference Call & Investor Information

SmartFinancial will host a conference call on April 20, 2026, at 10:00 a.m. ET to discuss results. Materials will be available on the company’s website.

Outlook and Forward-Looking Statements

Management remains confident in its strategic direction and anticipates normalization of credit loss provisioning in Q2 2026. With continued investments in expansion, operational efficiency, and disciplined expense management, SmartFinancial is poised for further growth, though investors should remain aware of macro risks such as credit quality, interest rate fluctuations, and potential noninterest income volatility.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All forward-looking statements are subject to risks, uncertainties, and changes in circumstances that may cause actual results to differ materially from those projected. Readers should consult official filings and conduct their own due diligence before making investment decisions. The author does not guarantee the accuracy or completeness of the information presented and disclaims any liability for actions taken based on this article.

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