SmartFinancial earnings rose to $18.6 million, or $1.10 per diluted share, in the third quarter of 2026, supported by lending growth and a $2.6 million tax benefit. The SmartBank parent announced the results on October 19, 2026, reporting higher net interest income despite a narrower lending margin.
Key Takeaways
- Net income increased from $13.7 million a year earlier and $16.3 million in the second quarter.
- Loans and leases grew by $174 million, while core deposits increased by $163 million during the quarter.
- Higher funding costs narrowed the interest margin, while a tax benefit supported bottom-line growth.
Table of Contents
- SmartFinancial earnings get a lift from lower taxes
- Lending growth outweighs a narrower interest margin
- Expenses rise as credit indicators edge higher
- Conclusion
SmartFinancial earnings get a lift from lower taxes
SmartFinancial’s third-quarter results announcement showed diluted earnings per share rising from $0.81 a year earlier and $0.96 in the preceding quarter. The Knoxville, Tennessee-based company also reported record operating revenue of $57.5 million, a company-defined non-GAAP measure.
The quarter included a $2.6 million tax benefit connected with the purchase of transferable energy tax credits. Income tax expense consequently fell to $1.9 million from $4.2 million in the second quarter. That benefit is important when assessing the profit increase: stronger earnings did not come solely from lending and fee income.
Operating earnings, another non-GAAP measure, matched reported net income at $18.6 million. These measures supplement rather than replace the company’s GAAP financial results.
| Item | Details |
|---|---|
| Total assets | $6.32 billion at September 30, 2026, versus $5.86 billion at December 31, 2025. |
| Total deposits | $5.58 billion at September 30, up $423.4 million from year-end 2025. |
| Shareholders’ equity | $581.3 million at September 30, up $28.8 million from year-end 2025. |
| Tangible book value per common share | Non-GAAP measure of $28.50 at September 30, versus $26.85 at year-end 2025. |
Lending growth outweighs a narrower interest margin
Net interest income increased to $49.4 million from $48.1 million in the second quarter as average earning assets expanded by $193.1 million. Average loans and leases accounted for $165.5 million of that increase.
The tax-equivalent net interest margin fell seven basis points to 3.45%. SmartFinancial attributed the decline primarily to higher funding costs, which more than offset improved earning-asset yields. The cost of total deposits rose to 2.26% from 2.15%.
Quarterly net organic loan and lease growth represented a 15% annualized pace, compared with 12% annualized growth in core deposits. Chief Executive Billy Carroll said growing deposits alongside lending remained a priority. The bank also opened a full-service financial center in Columbus, Georgia.
Expenses rise as credit indicators edge higher
Noninterest expense increased by $2.4 million from the second quarter to $36.4 million, led by higher real estate and loan-related costs, salaries and employee benefits. Noninterest income increased by $245,000 to $8.1 million, helped by deposit service charges and mortgage banking income.
The credit-loss provision declined to $687,000 from $1.5 million, although problem-loan ratios moved higher. Nonperforming loans and leases represented 0.28% of total loans and leases at September 30, compared with 0.25% at June 30. The allowance for credit losses was $45.6 million, or 0.94% of loans and leases.
Conclusion
Balance-sheet growth supported SmartFinancial’s quarterly income, but higher funding costs and expenses tempered that improvement, while a tax benefit helped lift profit. The next scheduled event was the company’s October 20, 2026, earnings call at 10:00 a.m. ET.
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