SmartFinancial earnings increased to $18.6 million, or $1.10 per diluted share, in the third quarter of 2026 as loan growth lifted net interest income and a tax benefit supported profit. The Knoxville-based parent of SmartBank announced the results on October 19, 2026. Record operating revenue accompanied the improvement, although higher funding costs narrowed its lending margin.
Key Takeaways
- Net income rose from $13.7 million a year earlier and $16.3 million in the preceding quarter.
- Loan and lease growth reached a 15% annualized pace, while core deposits grew at a 12% annualized rate.
- Net interest margin narrowed seven basis points, and earnings included a $2.6 million tax benefit.
Table of Contents
- SmartFinancial earnings benefit from growth and a tax credit
- Loan growth lifts interest income despite higher deposit costs
- Credit measures soften while operating expenses rise
- Conclusion
SmartFinancial earnings benefit from growth and a tax credit
SmartFinancial’s third-quarter results announcement showed diluted earnings per share increasing from $0.81 a year earlier and $0.96 in the second quarter. The company also reported record operating revenue of $57.5 million.
Operating earnings, a company-defined non-GAAP measure, matched reported net income at $18.6 million. Operating revenue is also a non-GAAP measure and should be considered alongside the company’s reported financial results.
A $2.6 million tax benefit from purchasing transferable energy tax credits helped the bottom line. Income tax expense fell to $1.9 million from $4.2 million in the second quarter, meaning the profit increase did not come solely from growth in banking revenue.
| Item | Details |
|---|---|
| Total assets at September 30, 2026 | $6.32 billion, compared with $5.86 billion at December 31, 2025. |
| Total loans and leases | $4.86 billion, up $493.1 million from December 31, 2025. |
| Total deposits | $5.58 billion, up $423.4 million from December 31, 2025. |
| Shareholders’ equity | $581.3 million, compared with $552.5 million at December 31, 2025. |
Loan growth lifts interest income despite higher deposit costs
Net organic loan and lease growth totaled $174 million during the quarter, while core deposits increased by $163 million. The respective 15% and 12% growth rates are annualized quarter-over-quarter measures, not year-over-year increases.
Net interest income rose to $49.4 million from $48.1 million in the second quarter as average earning assets increased by $193.1 million to $5.71 billion. A larger lending balance sheet therefore generated more interest income despite a narrower margin.
Tax-equivalent net interest margin declined to 3.45% from 3.52%. Higher funding costs more than offset improved earning-asset yields: total deposit costs rose to 2.26% from 2.15%, while loan and lease yields excluding fees increased to 5.99% from 5.95%.
SmartBank also opened a full-service financial center in Columbus, Georgia, during the quarter. CEO Billy Carroll identified growing deposits alongside lending as an important priority.
Credit measures soften while operating expenses rise
Nonperforming loans and leases increased to 0.28% of total loans and leases at September 30, from 0.25% at June 30. The allowance for credit losses stood at $45.6 million, equivalent to 0.94% of loans and leases, down from 0.97%.
The quarterly provision for credit losses nevertheless declined to $687,000 from $1.5 million. That provision included a $371,000 release of reserves for unfunded commitments.
Noninterest expenses increased to $36.4 million from $34.0 million, primarily reflecting higher real estate and loan-related expenses, salaries and employee benefits. Noninterest income increased more modestly, to $8.1 million from $7.9 million, supported by deposit service charges and mortgage banking income.
Conclusion
The quarter combined expanding lending and deposits with higher funding costs and a tax-assisted profit increase. In the next quarterly results, the key comparison will be whether balance-sheet growth continues to offset margin pressure as expenses and credit measures evolve.
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