SmartFinancial, Inc. Q2 FY2025 earnings call

• Billy Carroll highlighted a strong quarter with execution on revenue, returns, and prudent expense growth, mentioning tangible book value growth, loan and deposit growth, solid credit metrics, and total revenue of $49.2 million. - Ron Gorczynski discussed deposit results, net interest margin improvement, provision expense for credit losses, and noninterest income growth. - William Carroll emphasized execution, growth from sales teams, talent acquisition, culture as a great place to work, and continued focus on revenue, EPS, and book value, noting 5 consecutive quarters of positive operating leverage.

For the second quarter of 2025, SmartFinancial posted net income GAAP and operating of $11.7 million or $0.69 per diluted share. Total revenue came in at $49.2 million, with net interest income expanding as anticipated and noninterest income also strong. Noninterest expenses were $32.6 million. Loan growth was at a 13% annualized pace, deposit growth at 5% quarter-over-quarter annualized. NPAs were 19 basis points. Tangible book value moved up to $24.42 per share including AOCI and $25.43 including that impact, with over 13% annualized quarter-over-quarter growth. Net interest margin increased to 3.29%, net interest income expanded by $2.1 million to $40.3 million, and noninterest income rose by $300,000 to $8.9 million.

• Ron Gorczynski maintained the previous quarter's guidance of 2 to 3 basis points of margin expansion per quarter for the second half of 2025, forecasting a third quarter margin in the 3.3% to 3.35% range. - Anticipated margin expansion due to new loan originations and amortization of lower-yielding loans. - 2026 planning underway with focus on deeper market penetration and continuing to grow revenue, EPS, and book value.

Q: Stephen Scouten asks about loan growth and upside potential.

A: William Carroll states that pipelines are solid, hedges a bit due to potential payoffs/paydowns but sees potential for mid-single to low double-digit growth.

Q: Catherine Mealor inquires about margin, deposit costs, and loan yields.

A: Ron Gorczynski provides details on deposit costs (new production around 3.50%-3.60%), loan yields (7.11% for the quarter), and expects 2-3 bps margin expansion per quarter.

Q: Russell Gunther asks about loan pipelines, recruitment, and revenue targets.

A: William Carroll and Rhett Jordan discuss pipeline strength, recruitment focus on expansion markets, and progress towards revenue targets with ROA expected to improve in the back half of the year.

Q: Thomas Reid asks about credit metrics and stress testing.

A: Rhett Jordan mentions strong credit metrics and that the team has stress tested loans for renewals, with no signs of weakness in existing book.

Q: Christopher Marinac asks about recruiting across state lines and loan size.

A: William Carroll and Rhett Jordan discuss recruitment focus on existing markets and that loan size average isn't expected to move considerably, with focus on singles and doubles in tertiary MSAs