SmartFinancial profit rises to $18.6 million, beats third-quarter estimates

Key Facts

SmartFinancial's net income rose to $18.6 million in the third quarter of 2026, according to its earnings release issued on October 19, with earnings per share exceeding analysts' estimates. The announcement covered the financial period ended September 30, 2026, with profit improving from the previous quarter and the same period last year. Net income was $16.3 million in the second quarter, while the company reported $13.7 million in the third quarter of the previous year. Diluted earnings per share rose to $1.10 from $0.96 in the previous quarter, according to the release filed with the U.S. Securities and Exchange Commission. Diluted earnings per share were $0.81 in the same period last year, marking an improvement on both a quarterly and annual basis.

Earnings for the period included a $2.6 million tax benefit that the company said in its release resulted from the purchase of transferable energy tax credits. The item was included in third-quarter results, alongside a decline in the provision for credit losses from the previous quarter. The provision was $687 thousand, compared with $1.5 million in the second quarter, according to the earnings release, coinciding with the increase in net income during the period. Operating revenue totaled $57,533 thousand, according to the investor presentation filed with the U.S. regulator, an increase from the previous quarter. Operating revenue was $55,896 thousand in the second quarter, with results combining an increase in this item, a lower credit loss provision and the tax benefit from the credit purchases.

Meanwhile, the tax-equivalent net interest margin fell to 3.45% in the third quarter from 3.52% in the second quarter, according to the company's release. SmartFinancial attributed the decline to "higher funding costs," despite an increase in net interest income from the previous quarter, according to figures in the investor presentation. Net interest income totaled $49,402 thousand, compared with $48,064 thousand in the second quarter, with the increase in income accompanied by a decline in the margin over the same period. In lending, the company recorded annualized quarterly organic loan growth of 15%, according to the presentation. Core deposits recorded annualized quarterly growth of 12%, alongside loan expansion and continued pressure from funding costs on the margin.

The bank's network comprised 43 branches at the end of the third quarter, according to the investor presentation, which also reported quarterly improvements in profitability metrics and tangible book value per share. Operating return on average assets rose to 1.20% during the period from 1.10% in the second quarter, according to the comparison in the presentation. Operating return on average tangible equity reached 15.1%, up from 13.7% in the previous quarter, alongside the improvement in return on assets. Tangible book value per share rose to $28.50 at the end of the third quarter, according to figures the company presented to investors. The company compared that level with $28.22 per share in the second quarter, alongside the higher quarterly comparisons for operating returns on assets and tangible equity.

In comparing the results with market expectations, Investing.com reported that actual earnings per share exceeded analysts' third-quarter estimate by $0.14. Analysts had expected earnings of $0.96 per share, compared with the reported result of $1.10, according to the comparison in the website's earnings coverage. In separate coverage dated October 20, 2026, the website reported a slight rise in the company's shares following the presentation of results to investors. The share price cited in that coverage was $50.76, following the announcement of financial results the previous day, according to the chronology of the announcement and coverage. The shares rose 0.49% following the presentation, according to the website, with earnings per share exceeding estimates for the period ended in September.

For the fourth quarter of 2026, SmartFinancial's management expects the net interest margin to remain stable, according to Investing.com's coverage of the earnings call. Management put the expected margin at about 3.45% for the following quarter as part of its guidance for the coming period presented on the call. On non-interest revenue, management forecast a decline in fee income in the fourth quarter, according to the same coverage of the results discussion and operating outlook. It estimated fee income of about $7.5 million during that period, while expecting the net interest margin to remain stable. Management attributed the expected decline in fees to seasonality in mortgage activity as part of its projections for the company's performance in the fourth quarter of 2026.