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SmartFinancial’s Earnings Call Reveals Robust Growth

SmartFinancial’s Earnings Call Reveals Robust Growth

SmartFinancial, Inc. ((SMBK)) has held its Q2 earnings call. Read on for the main highlights of the call.

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SmartFinancial, Inc. recently held its earnings call, revealing a strong performance for the quarter. The company reported significant growth in net income, book value, and both loan and deposit growth, backed by solid credit metrics and an improved net interest margin. Despite facing seasonal deposit outflows and increased deposit costs, the overall performance was robust, indicating a positive sentiment among the company’s leadership.

Strong Net Income and Earnings Per Share

SmartFinancial posted a net income GAAP and operating of $11.7 million, or $0.69 per diluted share. This marks the fifth consecutive quarter of positive leverage, showcasing the company’s consistent financial strength and profitability.

Tangible Book Value Growth

The tangible book value per share increased to $24.42, reflecting a growth of over 13% on an annualized basis quarter-over-quarter. This growth underscores the company’s ability to enhance shareholder value effectively.

Loan and Deposit Growth

Loan growth was impressive, achieving a 13% annualized pace for the second quarter, while deposit growth was 5% quarter-over-quarter on an annualized basis. This growth trajectory highlights SmartFinancial’s expanding market presence and customer base.

Strong Credit Metrics

The company maintained strong credit metrics, with non-performing assets at just 19 basis points and net charge-offs to average loans remaining at a low 0.01% annualized. These metrics reflect SmartFinancial’s prudent risk management strategies.

Net Interest Margin Improvement

SmartFinancial’s net interest margin increased to 3.29%, representing an improvement of 8 basis points over the previous quarter. This improvement is indicative of the company’s effective interest rate management and operational efficiency.

Noninterest Income and Revenue Expansion

Total revenue for the quarter was $49.2 million, with noninterest income rising to $8.9 million, exceeding projections. This revenue expansion demonstrates the company’s diversified income streams and growth potential.

Seasonal Deposit Outflows

The company experienced typical seasonal deposit outflows, including tax payments and the utilization of public funds, which affected deposit growth. Despite this, SmartFinancial managed to maintain a stable financial position.

Higher Deposit Costs

Total interest-bearing costs rose by 3 basis points to 2.95%. While this represents an increase, it is a manageable cost in the context of the company’s overall financial health.

Provision Expense for Credit Losses

The quarterly provision expense for credit losses reached $2.4 million, primarily due to higher loan growth. This expense is a reflection of the company’s proactive approach to managing potential credit risks.

Forward-Looking Guidance

During the earnings call, SmartFinancial provided detailed guidance for the upcoming quarters. The company projected a net interest margin in the range of 3.3% to 3.35% for the third quarter, with noninterest income expected to be around $9 million. Noninterest expenses are anticipated to be between $33.8 million and $34 million, with a focus on talent acquisition and maintaining a strong growth trajectory. These projections indicate a continued positive outlook for SmartFinancial’s financial performance.

In summary, SmartFinancial’s earnings call highlighted a strong quarter with significant growth across various financial metrics. The company’s robust performance, coupled with positive forward-looking guidance, suggests a promising future. Investors and stakeholders can remain optimistic about SmartFinancial’s ability to sustain its growth momentum and navigate potential challenges effectively.

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