• Net Income: $11.3 million or $0.67 per diluted share.
• Tangible Book Value: $23.61 per share including AOCI impacts; $24.76 excluding AOCI impacts.
• Loan Growth: 9% annualized pace for Q1.
• Deposit Growth: 10% quarter-over-quarter annualized.
• Nonperforming Assets: 19 basis points.
• Total Revenue: $46.8 million.
• Net Interest Margin: 3.21%.
• Non-Interest Income: $8.6 million.
• Non-Interest Expenses: Just over $32 million.
• Loan-to-Deposit Ratio: 83%.
• Average Portfolio Yield: 5.97%.
• Provision Expense for Credit Losses: $979,000.
• Net Charge-Offs: 0.01% on an annualized basis.
• Allowance for Credit Losses: 0.96% of total loans.
• Effective Tax Rate: Approximately 17%.
• Consolidated TCE Ratio: 7.6%.
• Total Risk-Based Capital Ratio: 11.2%.

• Warning! GuruFocus has detected 1 Warning Sign with SMBK.

Release Date: April 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• SmartFinancial Inc (NYSE:SMBK) reported a strong start to 2025 with a net income of $11.3 million or $0.67 per diluted share.
• The company achieved a 9% annualized growth in loans and a 10% growth in deposits, demonstrating solid balance sheet growth.
• Tangible book value increased to $23.61 per share, reflecting a 9% annualized growth quarter-over-quarter.
• Non-interest income was robust at $8.6 million, driven by strong insurance and mortgage banking revenues.
• The company maintained a low loan-to-deposit ratio of 83%, providing flexibility to fund future growth.

Negative Points

• The net interest margin slightly decreased to 3.21%, reflecting the impact of prior quarter rate cuts.
• There was a minor reduction in non-interest-bearing deposits, affecting the deposit composition.
• The weighted average yield on new loan originations decreased slightly, impacting overall portfolio yield.
• Operating expenses remained flat at $32.3 million, indicating limited cost reduction efforts.
• The company faces competitive pressure in loan pricing, which could impact future growth margins.

Q & A Highlights

Q: Can you talk about what you're seeing at a ground level with your customers and why you believe in your ability to hit loan growth targets? A: William Carroll, President and CEO, stated that despite market volatility, their markets remain strong. They are in constant communication with clients, who report stable business conditions. Rhett Jordan, Chief Credit Officer, added that clients are optimistic and not seeing significant impacts from tariffs, maintaining positive business outlooks.

Q: How should we think about expectations around leveraging the balance sheet and the loan-to-deposit ratio? A: William Carroll explained that they have room to grow prudently, focusing on maintaining strong returns and appropriate loan structures. Ronald Gorczynski, CFO, mentioned they have about $150 million in cash that could be lent out, indicating potential for balance sheet growth without drastic changes.

Q: What are your thoughts on share repurchases given the current stock price? A: Ronald Gorczynski noted they have $1.5 million left in their current authorization for share repurchases. William Carroll added that traditionally, they consider buybacks closer to book value, and they are positioned to make purchases if needed.

Q: How would potential Fed rate cuts impact your margin guidance? A: Ronald Gorczynski stated that being slightly liability sensitive, they would benefit slightly from rate cuts. They anticipate a neutral to positive impact on margins if rate cuts occur earlier than expected.

Q: Can you discuss the competitive landscape for new loan pricing? A: William Carroll mentioned that new loan production is coming in around 7%, with some competitive pressure in the market. They are maintaining their pricing and structure, which has not deterred growth. Rhett Jordan added that they are seeing some competitors pushing pricing aggressively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.