SMARTFINANCIAL INC. (SMBK)
SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6021 National Commercial Banks
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1038773. Latest filing source: 0001104659-26-028542.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 248,666,000 | USD | 2025 | 2026-03-16 |
| Net income | 50,347,000 | USD | 2025 | 2026-03-16 |
| Assets | 5,860,810,000 | USD | 2025 | 2026-03-16 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-16. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001038773.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.
| Metric | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 39,763,582 | 48,805,647 | 86,469,000 | 101,002,000 | 112,312,000 | 118,582,000 | 136,381,000 | 186,479,000 | 213,562,000 | 248,666,000 | |
| Net income | 26,548,000 | 24,332,000 | 34,790,000 | 43,022,000 | 28,593,000 | 36,141,000 | 50,347,000 | ||||
| Diluted EPS | 0.78 | 0.55 | 1.45 | 1.89 | 1.62 | 2.22 | 2.55 | 1.69 | 2.14 | 2.98 | |
| Operating cash flow | 4,906,072 | 1,240,126 | 20,824,000 | 29,866,000 | 29,069,000 | 46,182,000 | 56,793,000 | 39,716,000 | 52,700,000 | 61,724,000 | |
| Capital expenditures | 6,994,729 | 2,798,898 | 3,847,000 | 6,269,000 | 5,439,000 | 2,377,000 | 12,487,000 | 6,270,000 | 6,405,000 | 2,389,000 | |
| Dividends paid | 0.00 | 700,000 | 2,986,000 | 3,728,000 | 4,724,000 | 5,427,000 | 5,422,000 | 5,452,000 | |||
| Share buybacks | 4,308,000 | 1,208,000 | 2,967,000 | ||||||||
| Assets | 1,062,456,285 | 1,720,770,682 | 2,274,409,000 | 2,449,123,000 | 3,304,949,000 | 4,611,579,000 | 4,637,498,000 | 4,829,387,000 | 5,275,904,000 | 5,860,810,000 | |
| Liabilities | 957,216,145 | 1,514,918,842 | 1,991,398,000 | 2,136,376,000 | 2,947,781,000 | 4,182,149,000 | 4,205,046,000 | 4,369,501,000 | 4,784,443,000 | 5,308,318,000 | |
| Stockholders' equity | 105,240,140 | 205,853,000 | 283,011,000 | 312,747,000 | 357,168,000 | 429,430,000 | 432,452,000 | 459,886,000 | 491,348,000 | 552,379,000 | |
| Cash and cash equivalents | 68,748,308 | 113,026,884 | 115,822,000 | 183,971,000 | 481,719,000 | 1,045,077,000 | 266,424,000 | 352,271,000 | 387,570,000 | 464,417,000 | |
| Free cash flow | -1,558,772 | 16,977,000 | 23,597,000 | 23,630,000 | 43,805,000 | 44,306,000 | 33,446,000 | 46,295,000 | 59,335,000 |
Ratios
| Metric | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net margin | 26.28% | 21.66% | 29.34% | 31.55% | 15.33% | 16.92% | 20.25% | ||||
| Return on equity | 8.49% | 6.81% | 8.10% | 9.95% | 6.22% | 7.36% | 9.11% | ||||
| Return on assets | 1.08% | 0.74% | 0.75% | 0.93% | 0.59% | 0.69% | 0.86% | ||||
| Liabilities / equity | 9.10 | 7.36 | 7.04 | 6.83 | 8.25 | 9.74 | 9.72 | 9.50 | 9.74 | 9.61 |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001038773.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2021-Q4 | 2021-12-31 | 6,656,000 | derived Q4 = FY annual - nine-month YTD | ||
| 2022-Q1 | 2022-03-31 | 8,259,000 | reported discrete quarter | ||
| 2022-Q2 | 2022-06-30 | 0.61 | reported discrete quarter | ||
| 2022-Q3 | 2022-09-30 | 0.68 | reported discrete quarter | ||
| 2022-Q4 | 2022-12-31 | 13,004,000 | derived Q4 = FY annual - nine-month YTD | ||
| 2023-Q1 | 2023-03-31 | 11,500,000 | 0.68 | reported discrete quarter | |
| 2023-Q2 | 2023-06-30 | 45,446,000 | 0.52 | reported discrete quarter | |
| 2023-Q3 | 2023-09-30 | 47,539,000 | 0.12 | reported discrete quarter | |
| 2023-Q4 | 2023-12-31 | 48,767,000 | 6,190,000 | derived Q4 = FY annual - nine-month YTD | |
| 2024-Q1 | 2024-03-31 | 50,020,000 | 9,358,000 | 0.55 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 50,853,000 | 0.48 | reported discrete quarter | |
| 2024-Q3 | 2024-09-30 | 54,738,000 | 0.54 | reported discrete quarter | |
| 2024-Q4 | 2024-12-31 | 57,951,000 | 9,641,000 | derived Q4 = FY annual - nine-month YTD | |
| 2025-Q1 | 2025-03-31 | 57,762,000 | 11,254,000 | 0.67 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 61,049,000 | 11,705,000 | 0.69 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 64,282,000 | 13,686,000 | 0.81 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 65,572,000 | 13,703,000 | derived Q4 = FY annual - nine-month YTD | |
| 2026-Q1 | 2026-03-31 | 65,638,000 | 13,680,000 | 0.81 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0001104659-26-058728.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SmartFinancial, Inc. (the “Company,” “SmartFinancial,” “we,” “our” or “us”) is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, SmartBank (the “Bank”). The Company provides a variety of financial services to individuals and corporate customers through its offices in East and Middle Tennessee, Alabama, and Florida. The Bank’s primary deposit products are noninterest-bearing and interest-bearing demand deposits, savings and money market deposits, and time deposits. Its primary lending products are commercial, residential, and consumer loans. While we offer a wide range of commercial banking services, we focus on making loans secured primarily by commercial real estate and other types of secured and unsecured commercial loans to small and medium-sized businesses in a number of industries, as well as loans to individuals for a variety of purposes. Our principal sources of funds for loans and investing in securities are deposits and, to a lesser extent, borrowings. We offer a broad range of deposit products, including checking (“NOW”), savings, money market accounts and time deposits. We actively pursue business relationships by utilizing the business contacts of our senior management, other bank officers and our directors, thereby capitalizing on our knowledge of our local market areas. Forward-Looking Statement The Company may from time to time make written or oral statements, including statements contained in this Quarterly Report on Form 10-Q (this “report”) and information incorporated by reference herein (including, without limitation, certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2), that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on assumptions and estimates and are not guarantees of future performance. Any statements that do not relate to historical or current facts or matters are forward-looking statements. You can identify some of the forward-looking statements by the use of forward-looking words (and their derivatives), such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” and the like, the negatives of such expressions, or the use of the future tense. Statements concerning current conditions may also be forward-looking if they imply a continuation of a current condition. These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, financial condition, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to: ● general economic and business conditions in our local markets (particularly Tennessee), including conditions affecting employment levels, interest rates, inflation, supply chains, the threat of recession, volatile equity capital markets, property and casualty insurance costs, collateral values, customer income, creditworthiness and confidence, spending and savings that may affect customer bankruptcies, defaults, charge-offs and deposit activity; and the impact of the foregoing on customer and client behavior (including the velocity and levels of deposit withdrawals and loan repayment); ● the risks of changes in interest rates on the level and composition of deposits (as well as the cost of, and competition for, deposits), loan demand, liquidity and the values of loan collateral, securities and market fluctuations, and interest rate sensitive assets and liabilities; ● the possibility that our asset quality would decline or that we experience greater loan and lease losses than anticipated; ● the impact of liquidity needs on our results of operations and financial condition; ● competition from financial institutions and other financial service providers; ● adverse developments in the banking industry highlighted by high-profile bank failures such as those in 2023, and the impact of such developments on customer confidence, liquidity and regulatory responses to such developments (including increases in the cost of our deposit insurance assessments and increased regulatory scrutiny), our ability to effectively manage our liquidity risk and any growth plans and the availability of capital and funding; ● the impact of negative developments in the financial industry and U.S. and global capital and credit markets; 41 Table of Contents ● the impact of recently enacted and future legislation and regulation on our business; ● the impact of recent or proposed changes in fiscal, monetary and economic policy, laws, and regulations, or the interpretation or application thereof, and the uncertainty of future implementation and enforcement of these policies and regulations, including persistent inflationary pressures, potential interest rate fluctuations, and potential changes to government policies related to immigration, trade, and government spending; ● weakness in the real estate market, including the secondary residential mortgage market, which can affect, among other things, the value of collateral securing mortgage loans, mortgage loan originations and delinquencies, profits on sales of mortgage loans, and the value of mortgage servicing rights; ● risks associated with our growth strategy, including a failure to implement our growth plans or an inability to manage our growth effectively; ● claims and litigation arising from our business activities and from the companies we acquire, which may relate to contractual issues, environmental laws, fiduciary responsibility, and other matters; ● the risks of mergers, acquisitions and divestitures, including our ability to continue to identify acquisition targets, successfully acquire and integrate desirable financial institutions and realize expected revenues and revenue synergies; ● our ability to identify and addres cybersecurity risks, such as cyber-attacks, computer viruses or other malware that may breach the security of our websites or other systems we operate or rely upon for services to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage our systems and negatively impact our operations and our reputation in the market,; ● results of examinations by our primary regulators, the TDFI, the Federal Reserve, and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for credit losses, write-down assets, require us to reimburse customers, change the way we do business, or limit or eliminate certain other banking activities; ● government intervention in the U.S. financial system and the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, other legislative, tax and regulatory changes that impact the money supply and inflation, the imposition of tariffs and retaliatory responses, and the possibility that the U.S. could default on its debt obligations; ● our inability to pay dividends at current levels, or at all, because of inadequate future earnings, regulatory restrictions or limitations, and changes in the composition of qualifying regulatory capital and minimum capital requirements; ● the relatively greater credit risk of commercial real estate loans and construction and land development loans in our loan portfolio; ● our ability to maintain expenses in line with current projections; ● unanticipated credit deterioration in our loan portfolio or higher than expected loan and lease losses within one or more segments of our loan portfolio; ● unexpected significant declines in the loan portfolio due to the lack of economic expansion, increased competition, large prepayments, changes in regulatory lending guidance or other factors; ● unanticipated loan delinquencies, loss of collateral, decreased service revenues, and other potential negative effects on our business caused by severe weather, natural disasters, acts of war or terrorism and other external events; ● changes in expected income tax expense or tax rates, including changes resulting from revisions in tax laws, regulations and case law; ● our ability to retain the services of key personnel; ● a deterioriation in the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget; ● political instability, acts of God, or of war or terrorism, natural disasters, including in the Company’s footprint, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions; ● risks related to our corporate responsibility strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations; and ● the impact of Tennessee’s anti-takeover statutes and certain of our charter provisions on potential acquisitions of us. 42 Table of Contents These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in SmartFinancial’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, in each case filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website (www.sec.gov). Undue reliance should not be placed on forward-looking statements. The Company disclaims any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events, or otherwise. Critical Accounting Estimates Our Consolidated Financial Statements were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and follow general practices within the industries in which we operate. The most significant accounting policies we follow are presented in Note 1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Application of these principles requires us to make estimates, assumptions, and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of the Consolidated Financial Statements. These factors include among other things, whether the policy requires management to make difficult, subjective, and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. The accounting policies which we believe to be most critical in preparing our Consolidated Financial Statements are presented in the section titled “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During this quarter ending March 31, 2026, the Bank enhanced its ACL loss model for loans and leases. See Note 1. Recently Modified Accounting Policies and Allowance for Credit [Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Selected Financial Data
Set forth below is certain selected financial data related to the Company’s operations for 2025, 2024 and 2023: (dollars in thousands, except per share data)
2025
2024
2023
Balance Sheet:
Total assets
$
5,860,810
$
5,275,904
$
4,829,387
Loans and leases
4,363,582
3,906,340
3,444,462
Allowance for credit losses
(40,906)
(37,423)
(35,066)
Total securities
662,003
608,987
689,646
Goodwill and other intangibles, net
95,328
104,723
107,148
Total deposits
5,152,789
4,686,483
4,267,854
Borrowings
3,009
8,135
13,078
Subordinated debt
98,662
39,684
42,099
Shareholders' equity
552,492
491,461
459,886
Income Statement:
Interest income
$
285,972
$
251,119
$
218,043
Interest expense
119,868
113,769
87,963
Net interest income
166,104
137,350
130,080
Provision for loan and lease losses
7,750
5,153
3,029
Net interest income after provision for loan and lease losses
158,354
132,197
127,051
Noninterest income
34,352
34,152
22,325
Noninterest expense
131,205
120,890
113,150
Income before income taxes
61,501
45,459
36,226
Income tax expense
11,154
9,318
7,633
Net income
$
50,347
$
36,141
$
28,593
Per Share Data:
Earnings per common share - basic
$
3.00
$
2.16
$
1.70
Weighted average common shares outstanding - basic
16,779,019
16,768,956
16,805,068
Earnings per common share - diluted
$
2.98
$
2.14
$
1.69
Weighted average common shares outstanding - diluted
16,896,519
16,875,456
16,911,185
Common dividends per share
$
0.32
$
0.32
$
0.32
Book value per share
$
32.44
$
29.04
$
27.07
Common shares outstanding at end of period
17,029,317
16,925,672
16,988,879
Performance Ratios:
Return on average assets
0.91
%
0.73
%
0.60
%
Return on average shareholders' equity
9.67
%
7.63
%
6.45
%
Tax equivalent net interest margin
3.29
%
3.04
%
2.97
%
Interest rate spread
2.65
%
2.32
%
2.32
%
Noninterest income to average assets
0.62
%
0.69
%
0.47
%
Noninterest expense to average assets
2.38
%
2.45
%
2.38
%
Efficiency ratio
65.45
%
70.49
%
74.24
%
Credit Quality Ratios:
Net (charge-offs) to average loans and leases
(0.08)
%
(0.08)
%
(0.02)
%
Allowance for loan and leases to total loans and leases
0.94
%
0.96
%
1.02
%
Nonperforming loans and leases to total loans and leases, gross
0.22
%
0.20
%
0.24
%
Nonperforming assets to total assets
0.22
%
0.19
%
0.20
%
Capital Ratios1:
Tier 1 leverage
8.30
%
8.29
%
8.27
%
Common equity Tier 1
9.83
%
9.76
%
10.16
%
Tier 1 capital
9.83
%
9.76
%
10.16
%
Total capital
12.71
%
11.10
%
11.80
%
1Capital Ratios are for SmartFinancial, Inc.
39
Table of Contents
Business Overview
The following is a discussion of our financial condition and results of our operations for the years ended December 31, 2025, 2024 and 2023. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements. The following discussion and analysis should be read along with our consolidated financial statements and the related notes included. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth in the “Forward-Looking Statements” and “Risk Factors” sections of this Annual Report on Form 10K, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements.
We are a bank holding company that was incorporated on September 19, 1983 under the laws of the State of Tennessee, and operate primarily through our wholly-owned bank subsidiary, SmartBank. As of December 31, 2025 the Bank provides a comprehensive suite of commercial and consumer banking services to clients through 42 full-service bank branches and one loan production office in select markets in East and Middle Tennessee, Alabama and Florida.
While we offer a wide range of commercial banking services, we focus on making loans secured primarily by commercial real estate and other types of secured and unsecured commercial loans to small and medium-sized businesses in a number of industries, as well as loans and leases to individuals for a variety of purposes. Our principal sources of funds for loans and leases and investing in securities are deposits and, to a lesser extent, borrowings. We offer a broad range of deposit products, including checking (“NOW”), savings, money market accounts and certificates of deposit. We actively pursue business relationships by utilizing the business contacts of our senior management, other bank officers and our directors, thereby capitalizing on our knowledge of our local market areas.
In addition to our banking services, we offer loans and leases for heavy equipment through Fountain Equipment Finance, LLC, which is a subsidiary of the Bank. The Bank also contracts with RJFS, a registered broker-dealer and investment adviser, to offer and sell various securities and other financial products to the public through associates who are employed by both the Bank and RJFS. RJFS is a subsidiary of Raymond James Financial, Inc.
Executive Summary
The following is a summary of the Company’s financial highlights and significant events during 2025:
●
Net income totaled $50.3 million, or $2.98 per diluted common share, during the year ended of 2025 compared to $36.1 million, or $2.14 per diluted common share, for the same period in 2024.
●
Net loans and leases growth of $453.8 million from December 31, 2024, with a record high net loans and leases of $4.3 billion at December 31, 2025.
●
Total deposits growth of $466.3 million from December 31, 2024, with a record high total deposits of $5.2 billion at December 31, 2025.
●
Return on average assets was 0.91% for the year ended December 31, 2025, compared to 0.73% for the year ended December 31, 2024.
●
During the third quarter of 2025, SmartBank, a wholly-owned subsidiary of the Company, sold 100% of the equity interests of SBK Insurance (“SBKI”) and ceased to provide insurance-related activities for the Company. The sale provided a pre-tax gain of $4.0 million.
●
During the third quarter of 2025, the Company issued $100 million in subordinated debt and subsequently in the fourth quarter of 2025, retired $40 million of existing subordinated debt.
●
During the third quarter of 2025 the Company, repositioned $85 million of available-for-sale securities, resulting in a $3.9 million pre-tax loss.
40
Table of Contents
Analysis of Results of Operations
2025 compared to 2024
Net income was $50.3 million, or $2.98 per diluted common share in 2025, compared to $36.1 million, or $2.14 per diluted common share in 2024. The tax equivalent net interest margin for 2025 was 3.29% compared to 3.04% for 2024. Noninterest income to average assets was 0.62% for 2025, decreasing from 0.69% for 2024. Noninterest expense to average assets decreased to 2.38% in 2025, compared to 2.45% in 2024. Income tax expense was $11.2 million in 2025 with an effective tax rate of 18.1%, compared to $9.3 million in 2024 with an effective tax rate of 20.5%.
2024 compared to 2023
Net income was $36.1 million, or $2.14 per diluted common share in 2024, compared to $28.6 million, or $1.69 per diluted common share in 2023. The tax equivalent net interest margin for 2024 was 3.04% compared to 2.97% for 2023. Noninterest income to average assets was 0.69% for 2024, increasing from 0.47% for 2023. Noninterest expense to average assets increased to 2.45% in 2024, up from 2.38% in 2023. Income tax expense was $9.3 million in 2024 with an effective tax rate of 20.5%, compared to $7.6 million in 2023 with an effective tax rate of 21.1%.
Net Interest Income and Yield Analysis
The management of interest income and expense is fundamental to our financial performance. Net interest income, the difference between interest income and interest expense, is the largest component of the Company’s total revenue. Management closely monitors both total net interest income and the net interest margin (net interest income divided by average earning assets). We seek to maximize net interest income without exposing the Company to an excessive level of interest rate risk through our asset and liability policies. Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-earning assets and interest-bearing liabilities. Our net interest margin can also be adversely impacted by the reversal of interest on nonaccrual loans and the reinvestment of loan payoffs into lower yielding investment securities and other short-term investments.
2025 compared to 2024
Net interest income, taxable equivalent, increased to $167.5 million in 2025 from $138.5 million in 2024. Average earning assets increased from $4.6 billion in 2024 to $5.1 billion in 2025, primarily from organic loan and lease growth. Over this period, average loan and lease balances increased by $508.2 million and interest-earning cash increased by $49.0 million, offset by a decrease in average securities of $10.1 million. Average interest-bearing deposits increased by $475.1 million, average noninterest-bearing deposits increased $28.1 million and average subordinated debt increased by $24.9 million, offset by a decrease in average borrowings of $15.9 million. The tax equivalent net interest margin increased to 3.29% for 2025, compared to 3.04% for 2024. The yield on earning assets increased from 5.54% for 2024, to 5.64% for 2025, primarily due to the Company’s deployment of excess cash and cash equivalents into loans and leases and securities during 2025. The cost of average interest-bearing deposits decreased from 3.15% for 2024, to 2.91% for 2025, primarily due to the impact of lower Federal Reserve rates.
2024 compared to 2023
Net interest income, taxable equivalent, increased to $138.5 million in 2024 from $130.5 million in 2023. Average earning assets increased from $4.4 billion in 2023 to $4.6 billion in 2024, primarily from organic loan and lease growth. Over this period, average loan and lease balances increased by $273.0 million and interest-earning cash increased by $27.2 million, offset by a decrease in average securities of $134.8 million. Average interest-bearing deposits increased by $220.6 million, average noninterest-bearing deposits decreased $74.2 million and average borrowings increased by $3.9 million. The tax equivalent net interest margin increased to 3.04% for 2024, compared to 2.97% for 2023. The yield on earning assets increased from 4.98% for 2023, to 5.54% for 2024, primarily due to the Company’s deployment of excess cash and cash equivalents into loans and leases and securities during 2024 and higher yields on cash deposits in the Federal Reserve System. The cost of average interest-bearing deposits increased from 2.59% for 2023, to 3.15% for 2024, primarily due to
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the impact of rising Federal Reserve rates, and such increases significantly contributing to the increase in interest expense in 2024.
Summary of Average Balances, Interest and Rates
The following table presents (dollars in thousands), for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin.
2025
2024
2023
Average
Yield/
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Balance
Interest
Cost
Assets:
Loans and leases, including fees1
$
4,115,793
$
249,636
6.07
%
$
3,607,558
$
214,310
5.94
%
$
3,334,523
$
186,479
5.59
%
Taxable Securities
563,978
20,161
3.57
%
580,001
20,151
3.47
%
713,637
16,665
2.34
%
Tax-exempt securities2
69,620
2,185
3.14
%
63,679
1,780
2.80
%
64,816
1,795
2.77
%
Federal funds and other earning assets
349,105
15,419
4.42
%
300,081
16,000
5.33
%
272,864
13,481
4.94
%
Total interest-earning assets
5,098,496
287,401
5.64
%
4,551,319
252,241
5.54
%
4,385,840
218,420
4.98
%
Noninterest-earning assets
405,205
388,267
370,436
Total assets
$
5,503,701
$
4,939,586
$
4,756,276
Liabilities and Shareholders' Equity:
Interest-bearing demand deposits
$
863,772
15,394
1.78
%
$
932,598
21,074
2.26
%
$
959,639
20,214
2.11
%
Money market and savings deposits
2,152,812
63,535
2.95
%
1,913,673
64,116
3.35
%
1,768,869
50,468
2.85
%
Time deposits
928,404
35,818
3.86
%
623,652
24,070
3.86
%
520,799
13,578
2.61
%
Total interest-bearing deposits
3,944,988
114,747
2.91
%
3,469,923
109,260
3.15
%
3,249,307
84,260
2.59
%
Borrowings
5,826
155
2.66
%
21,719
1,075
4.95
%
17,824
936
5.25
%
Subordinated debt
66,110
4,966
7.51
%
41,184
3,434
8.34
%
42,055
2,767
6.58
%
Total interest-bearing liabilities
4,016,924
119,868
2.98
%
3,532,826
113,769
3.22
%
3,309,186
87,963
2.66
%
Noninterest-bearing deposits
911,988
883,923
958,078
Other liabilities
54,300
48,949
46,052
Total liabilities
4,983,212
4,465,698
4,313,316
Shareholders' equity
520,489
473,888
442,960
Total liabilities and shareholders’ equity
$
5,503,701
$
4,939,586
$
4,756,276
Net interest income, taxable equivalent
$
167,533
$
138,472
$
130,457
Interest rate spread
2.65
%
2.32
%
2.32
%
Tax equivalent net interest margin
3.29
%
3.04
%
2.97
%
Percentage of average interest-earning assets to average interest-bearing liabilities
126.93
%
128.83
%
132.54
%
Percentage of average equity to average assets
9.46
%
9.59
%
9.31
%
1Yields related to tax-exempt loans exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0%. The taxable-equivalent adjustment was $970 thousand, $748 thousand and $0 for the years ended December 31, 2025, 2024 and 2023, respectively.
2Yields related to investment securities exempt from income taxes are stated on a taxable-equivalent basis assuming a federal income tax rate of 21.0% in 2025, 2024 and 2023. The taxable-equivalent adjustment was $459 thousand, $374 thousand and $377 thousand for the years ended December 31, 2025, 2024 and 2023, respectively.
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Rate and Volume Analysis
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. Net interest income, taxable equivalent, increased by $29.1 million between the years ended December 31, 2025, and 2024 and increased by $8.0 million between the years ended December 31, 2024, and 2023. The following is an analysis of the changes in net interest income comparing the changes attributable to rates and those attributable to volumes (in thousands):
2025 Compared to 2024
2024 Compared to 2023
Increase (decrease) due to
Increase (decrease) due to
Rate
Volume
Net
Rate
Volume
Net
Interest-earning assets:
Loans and leases
$
5,133
$
30,193
$
35,326
$
12,563
$
15,268
$
27,831
Taxable Securities
(283)
293
10
5,707
(2,221)
3,486
Tax-exempt securities
188
217
405
15
(30)
(15)
Federal funds and other earning assets
(3,163)
2,582
(581)
1,184
1,335
2,519
Total interest-earning assets
1,875
33,285
35,160
19,469
14,352
33,821
Interest-bearing demand deposits
(4,125)
(1,555)
(5,680)
1,430
(570)
860
Money market and savings deposits
(8,592)
8,011
(581)
9,516
4,132
13,648
Time deposits
(15)
11,763
11,748
7,812
2,680
10,492
Total interest-bearing deposits
(12,732)
18,219
5,487
18,758
6,242
25,000
Borrowings
(12)
(908)
(920)
(172)
311
139
Subordinated debt
(546)
2,078
1,532
724
(57)
667
Total interest-bearing liabilities
(13,290)
19,389
6,099
19,310
6,496
25,806
Net interest income
$
15,165
$
13,896
$
29,061
$
159
$
7,856
$
8,015
Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. The change attributed to rates and volumes (change in rate times change in volume) is considered above as a change in volume.
Noninterest Income
Noninterest income is an important component of our total revenues. A significant portion of our noninterest income is associated with service charges on deposit accounts, capital markets income and interchange and debit card transaction fees.
The following table provides a summary of noninterest income for the periods presented (in thousands):
Year Ended
Year Ended
December 31,
December 31,
2024 - 2023
2025
2024
Change
2023
Change
Service charges on deposit accounts
$
7,161
$
6,862
$
299
$
6,511
$
351
Gain (loss) on sale of securities, net
(3,719)
64
(3,783)
(6,801)
6,865
Mortgage banking
2,673
1,579
1,094
1,040
539
Investment services
6,582
5,945
637
5,105
840
Insurance commissions
4,016
5,696
(1,680)
4,684
1,012
Interchange and debit card transaction fees, net
5,275
5,277
(2)
5,457
(180)
Gain on sale of SBKI
3,955
—
3,955
—
—
Other
8,409
8,729
(320)
6,329
2,400
Total noninterest income
$
34,352
$
34,152
$
200
$
22,325
$
11,827
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2025 compared to 2024
Noninterest income increased $200 thousand to $34.4 million in 2025, compared to $34.2 million in 2024. The primary components of the changes in noninterest income were as follows:
●
During 2025, loss on sale of securities, net, primarily associated with a $3.7 million pre-tax loss on the sale of $85.4 million in available-for-sale securities, reinvesting into higher yielding assets;
●
Increase in mortgage banking income, attributable largely to an increase in gains on sale of mortgage loans;
●
Decrease in insurance commissions, because of the sale of SBKI in the third quarter of 2025; and
●
Gain on sale of SBKI.
2024 compared to 2023
Noninterest income increased $11.8 million to $34.2 million in 2024, compared to $22.3 million in 2023. The primary components of the changes in noninterest income were as follows:
●
During 2023, loss on sale of securities, associated with a $6.8 million pre-tax loss on the sale of $159.6 million in available-for-sale securities, reinvesting into higher yielding assets;
●
Increase in investment services, stemming from increased production;
●
Increase in insurance commissions, driven by organic growth; and
●
Increase in other, primarily related to $1.3 million pre-tax gain on the sale of a former branch building, income on bank owned life insurance, and fees from capital market activity.
Noninterest Expense
The following table provides a summary of noninterest expense for the periods presented (in thousands):
Year Ended
Year Ended
December 31,
December 31,
2024 - 2023
2025
2024
Change
2023
Change
Salaries and employee benefits
$
78,297
$
72,100
$
6,197
$
65,749
$
6,351
Occupancy and equipment
13,686
13,617
69
13,451
166
FDIC insurance
4,002
3,390
612
3,156
234
Other real estate and loan-related expense
3,242
2,823
419
2,397
426
Advertising and marketing
1,619
1,321
298
1,342
(21)
Data processing and technology
10,316
9,930
386
9,235
695
Professional services
4,775
4,207
568
3,443
764
Amortization of intangibles
2,150
2,425
(275)
2,624
(199)
Restructuring expenses
1,326
—
1,326
110
(110)
Other
11,792
11,077
715
11,643
(566)
Total noninterest expense
$
131,205
$
120,890
$
10,315
$
113,150
$
7,740
2025 compared to 2024
Noninterest expense increased $10.3 million to $131.2 million in 2025, compared to $120.9 million in 2024. The primary components of the changes in noninterest expense were as follows:
●
Increase in salary and employee benefits, primarily related to incentive accruals for production performance, overall employee benefits and new hires; and
●
Increase in restructuring expenses, related to the sale of SBKI.
2024 compared to 2023
Noninterest expense increased $7.7 million to $120.9 million in 2024, compared to $113.2 million in 2023. The primary components of the changes in noninterest expense were as follows:
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●
Increase in salary and employee benefits, primarily related to incentive accruals for production performance and overall employee benefits;
●
Increase in data processing and technology, primarily from continued infrastructure build and overall growth; and
●
Increases in professional services, primarily related to increases in legal fees, audit/accounting fees, and other professional services fees.
Income Taxes
2025 compared to 2024
In 2025, income tax expense totaled $11.2 million compared to $9.3 million in 2024. The effective tax rate was approximately 18.1% for 2025 compared to 20.5% in 2024. The decrease in the effective tax rate is primarily related to the full-year impact of the Company’s Real Estate Investment Trust (“REIT”) structure, which as implemented in the fourth quarter of 2024. The REIT lowered the Bank’s state income tax expense during this period.
2024 compared to 2023
In 2024, income tax expense totaled $9.3 million compared to $7.6 million in 2023. The effective tax rate was approximately 20.5% for 2024 compared to 21.1% in 2023.
Loan and Lease Portfolio
Our loans and leases represent the largest portion of our earning assets, substantially greater than the securities portfolio or any other asset category, and the quality and diversification of the loan and lease portfolio is an important consideration when reviewing our financial condition. The Company had total net loans and leases outstanding of approximately $4.32 billion at December 31, 2025, and $3.87 billion at December 31, 2024. The year-over-year increase of $453.8 million, or 11.7%, was related to organic loan growth throughout all markets. Loans secured by real estate, consisting of commercial or residential property, are the principal component of our loan and lease portfolio.
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The following tables summarize the composition of our loan and lease portfolio for the periods presented (dollars in thousands):
% of
% of
December 31,
Gross
December 31,
Gross
2025
Total
2024
Total
Commercial real estate:
Non-owner occupied
$
1,196,758
27.5
%
$
1,080,404
27.5
%
Owner occupied
1,022,871
23.4
%
867,678
22.2
%
Consumer real estate
834,626
19.1
%
741,836
19.0
%
Construction and land development
419,176
9.6
%
361,735
9.3
%
Commercial and industrial
817,595
18.7
%
775,620
19.9
%
Leases
55,422
1.3
%
64,878
1.7
%
Consumer and other
17,134
0.4
%
14,189
0.4
%
Total loans and leases
4,363,582
100.0
%
3,906,340
100.0
%
Less: Allowance for credit losses
(40,906)
(37,423)
Loans and leases, net
$
4,322,676
$
3,868,917
Loan and Lease Portfolio Maturities
The following table sets forth the maturity distribution of our loans and leases, including the interest rate sensitivity for loans and leases maturing after one year (in thousands):
Rate Structure for Loans and Leases
Maturing Over One Year
One Year
One through
Five through
Over Fifteen
Fixed
Floating
or Less
Five Years
Fifteen Years
Years
Total
Rate
Rate
Commercial real estate:
Non-owner occupied
$
187,484
$
767,188
$
218,856
$
23,230
$
1,196,758
$
458,295
$
550,979
Owner occupied
79,643
621,469
302,735
19,024
1,022,871
470,207
473,021
Consumer real estate-mortgage
64,109
249,172
98,661
422,684
834,626
254,772
515,745
Construction and land development
116,553
217,120
27,477
58,026
419,176
53,274
249,349
Commercial and industrial
324,346
394,865
76,582
21,802
817,595
333,797
159,452
Leases
2,512
52,910
—
—
55,422
52,910
—
Consumer and other
11,915
5,112
68
39
17,134
5,036
183
Total loans and leases
$
786,562
$
2,307,836
$
724,379
$
544,805
$
4,363,582
$
1,628,291
$
1,948,729
Past Due, Nonaccrual, and Loan Modifications for Loans and Leases
Loans and leases are considered past due when the contractual amounts due with respect to principal and interest are not received within 30 days of the contractual due date. Loans and leases are generally classified as nonaccrual if they are past due for a period of 90 days or more, unless such loans and leases are well secured and in the process of collection. If a loan or lease, or a portion of a loan or lease is classified as doubtful or as partially charged off, the loan or lease is generally classified as nonaccrual. Loans and leases that are on a current payment status or past due less than 90 days may also be classified as nonaccrual if repayment in full of principal and interest is in doubt. Loans and leases may be returned to accrual status when all principal and interest amounts contractually due are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance of interest and principal by the borrower in accordance with the contractual terms.
While a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections of interest and principal are generally applied as a reduction to the principal outstanding, except in the case of loans and leases with scheduled amortizations where the payment is generally applied to the oldest payment due. When the future collectability of the recorded loan and lease balance is expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan and lease had been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan and lease balance at the contractual interest rate. Receipts in excess of that amount are recorded as recoveries to the allowance for credit losses until prior charge-offs have been fully recovered.
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Assets acquired as a result of foreclosure are recorded at estimated fair value in other real estate owned. Any excess of cost over estimated fair value at the time of foreclosure is charged to the allowance for credit losses. Valuations are periodically performed on these properties, and any subsequent write-downs are charged to earnings. Routine maintenance and other holding costs are included in noninterest expense.
Nonperforming loans and leases as a percentage of gross loans and leases, net of deferred fees, was 0.22% as of December 31, 2025, and 0.20% as of December 31, 2024, respectively. Total nonperforming assets as a percentage of total assets as of December 31, 2025, totaled 0.22% compared to 0.19% as of December 31, 2024.
The following table is a summary of our loans and leases that were past due at least 30 days but not more than 89 days and 90 days or more past due as of December 31, 2025, and 2024 (dollars in thousands):
Accruing Loans
Accruing Loans
30-89 Days
90 Days or More
Total Accruing
Past Due
Past Due
Past Due Loans
Percentage of
Percentage of
Percentage of
Total
Loans in
Loans in
Loans in
Loans
Amount
Category
Amount
Category
Amount
Category
December 31, 2025
Commercial real estate:
Non-owner occupied
$
1,196,758
$
-
-
%
$
-
-
$
-
-
%
Owner occupied
1,022,871
803
0.08
-
-
803
0.08
Consumer real estate
834,626
2,673
0.32
-
-
2,673
0.32
Construction and land development
419,176
68
0.02
-
-
68
0.02
Commercial and industrial
817,595
1,287
0.16
-
-
1,287
0.16
Leases
55,422
1,404
2.53
-
-
1,404
2.53
Consumer and other
17,134
120
0.70
-
-
120
0.70
Total
$
4,363,582
$
6,355
0.15
%
$
-
-
%
$
6,355
0.15
%
December 31, 2024
Commercial real estate:
Non-owner occupied
$
1,080,404
$
378
0.03
%
$
-
-
%
$
378
0.03
%
Owner occupied
867,678
411
0.05
-
-
411
0.05
Consumer real estate
741,836
2,748
0.37
-
-
2,748
0.37
Construction and land development
361,735
523
0.14
-
-
523
0.14
Commercial and industrial
775,620
1,745
0.22
144
0.02
1,889
0.24
Leases
64,878
1,453
2.24
-
-
1,453
2.24
Consumer and other
14,189
118
0.83
18
0.13
136
0.96
Total
$
3,906,340
$
7,376
0.19
%
$
162
-
%
$
7,538
0.19
%
The following table is a summary of our nonaccrual loans and leases as of December 31, 2025, and 2024 (dollars in thousands):
December 31, 2025
December 31, 2024
Nonaccrual Loans
Nonaccrual Loans
Percentage of
Percentage of
Total
Loans in
Total
Loans in
Loans
Amount
Category
Loans
Amount
Category
Commercial real estate:
Non-owner occupied
$
1,196,758
$
672
0.06
%
$
1,080,404
$
514
0.05
%
Owner occupied
1,022,871
1,934
0.19
867,678
906
0.10
Consumer real estate
834,626
2,300
0.28
741,836
1,995
0.27
Construction and land development
419,176
-
-
361,735
39
0.01
Commercial and industrial
817,595
1,828
0.22
775,620
1,820
0.23
Leases
55,422
2,858
5.16
64,878
2,433
3.75
Consumer and other
17,134
9
0.05
14,189
2
0.01
Total
$
4,363,582
$
9,601
0.22
%
$
3,906,340
$
7,709
0.20
%
Allowance for credit losses to nonaccrual loans
426.06%
485.45%
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Potential Problem Loans and Leases
At December 31, 2025, substandard or problem loans and leases, which are defined in “Part II – Item 8. Financial Statements and Supplementary Data – Note 5 – Loans and Leases and Allowance for Credit Losses”, amounted to approximately $10.6 million or 0.24% of total loans and leases outstanding. Potential problem loans and leases, which are not included in nonperforming loans and leases, represent those loans and leases with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower’s ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by the Bank’s primary regulators, for loans classified as substandard or worse, but not considered nonperforming loans and leases.
Allocation of the Allowance for Credit Losses
On January 1, 2023, we adopted FASB ASU 2016-13, which introduced the current expected credit losses ("CECL") methodology and required us to estimate all expected credit losses over the remaining life of our loan portfolio. For additional information relating to CECL, see Note 1—Summary of Significant Accounting Policies to our audited consolidated financial statements. Accordingly, the allowance for credit losses represents an amount that, in management's evaluation, is adequate to provide coverage for all expected future credit losses on outstanding loans. As of December 31, 2025, and 2024, our allowance for credit losses on loans and leases was $40.9 million and $37.4 million, respectively, which our management deemed to be adequate at each of the respective dates. Our allowance for credit losses as a percentage of total loans was 0.94% and 0.96% at December 31, 2025, and 2024, respectively.
The current methodology for assessing the appropriate allowance includes: (1) a collective quantified reserve determined by non-discounted cash flow analysis for the loan portfolio, (2) a collective quantified reserve determined by the open-pool methodology for the bank’s lease portfolio, (3) collective qualitative factors to adjust expected credit losses for information not already captured in the loss estimation and (4) individual allowances on collateral-dependent loans where the bank may be inadequately protected by current paying capacity of the borrower. At December 31, 2025, 42% of the allowance is attributable to the collective qualitative factors, a slight decline from 45% at December 31, 2024.
Management considers forward-looking information in estimating expected credit losses. The Company uses an average of Fannie Mae and Federal Open Market Committee projections of the national unemployment rate as a regression tool to determine the best estimate of probability of default expectations. For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to the long term mean of historical factors using a straight-line approach. The Company uses an eight-quarter forecast and a four-quarter reversion period. Since adoption, the procedure for estimating probability of default expectations remains unchanged.
Management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation. The qualitative categories and the measurements used to quantify the risks within each of these categories are subjectively selected by management but measured by objective measurements period over period. The data for each measurement may be obtained from internal or external sources. The Company considers the qualitative factors that are relevant as of the reporting date, which may include, but are not limited to: independent loan review results, portfolio concentrations, lending strategies, quality of assets, regulatory review results and associate retention. The qualitative allowance will increase, or decrease, based on the assessment of these various factors.
We assess the adequacy of the allowance for credit losses on a quarterly basis. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management's evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay the loan (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off.
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Based upon our evaluation of the loan portfolio, we believe the allowance for credit losses on loans and leases to be adequate to absorb our estimate of expected future credit losses on loans outstanding at December 31, 2025. While our policies and procedures used to estimate the allowance for credit losses as well as the resultant provision for credit losses charged to operations are considered adequate by management, they are necessarily approximate and imprecise. There are factors beyond our control, such as conditions in the local and national economy, local real estate market or a particular industry or borrower which may negatively impact, materially, our asset quality and the adequacy of our allowance for credit losses and, thus, the resulting provision for credit losses.
The following table sets forth, based on management’s best estimate, the allocation of the allowance for credit losses on loans and leases to categories of loans and leases and loan and lease balances by category and the percentage of loans and leases in each category to total loans and leases and allowance for credit losses as a percentage of total loans and leases within each loan and lease category as of December 31 for each of the past two years (dollars in thousands):
Percentage of Loans
Ratio of Allowance
Amount of
in Each Category
Total
Allocated to Loans in
Allowance Allocated
to Total Loans
Loans
Each Category
December 31, 2025
Commercial real estate:
Non-owner occupied
$
8,044
27.5
%
$
1,196,758
0.67
%
Owner occupied
8,876
23.4
1,022,871
0.87
Consumer real estate
8,767
19.1
834,626
1.05
Construction and land development
4,298
9.6
419,176
1.03
Commercial and industrial
8,611
18.7
817,595
1.05
Leases
2,173
1.3
55,422
3.92
Consumer and other
137
0.4
17,134
0.80
Total
$
40,906
100.0
%
$
4,363,582
0.94
%
December 31, 2024
Commercial real estate:
Non-owner occupied
$
6,972
27.5
%
$
1,080,404
0.65
%
Owner occupied
8,341
22.2
867,678
0.96
Consumer real estate
8,355
19.0
741,836
1.13
Construction and land development
4,168
9.3
361,735
1.15
Commercial and industrial
8,552
19.9
775,620
1.10
Leases
919
1.7
64,878
1.42
Consumer and other
116
0.4
14,189
0.82
Total
$
37,423
100.0
%
$
3,906,340
0.96
%
The allowance associated with the individually evaluated loans and leases were approximately $4.9 million at December 31, 2025, compared to $3.9 million at December 31, 2024.
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The following table presents information related to credit losses on loans and lease by loan segment for each of the years in the three year period ended December 31, (dollars in thousands):
Ratio of Net (charge-offs)
Provision for
Net (charge-offs)
Average
Recoveries to
Credit Losses
Recoveries
Loans
Average Loans
Year Ended December 31, 2025
Commercial real estate:
Non-owner occupied
$
1,072
$
-
$
1,124,759
-
%
Owner occupied
529
6
955,955
-
Consumer real estate
366
46
796,842
0.01
Construction and land development
(70)
200
384,028
0.05
Commercial and industrial
1,984
(1,925)
778,583
(0.25)
Leases
2,501
(1,247)
59,739
(2.09)
Consumer and other
284
(263)
15,887
(1.66)
Total
$
6,666
$
(3,183)
$
4,115,793
(0.08)
%
Year Ended December 31, 2024
Commercial real estate:
Non-owner occupied
$
126
$
-
$
992,390
-
%
Owner occupied
(113)
36
828,270
-
Consumer real estate
1,102
4
680,895
-
Construction and land development
(265)
(441)
317,890
(0.14)
Commercial and industrial
2,397
(769)
707,125
(0.11)
Leases
1,583
(1,304)
67,389
(1.94)
Consumer and other
236
(235)
13,599
(1.73)
Total
$
5,066
$
(2,709)
$
3,607,558
(0.08)
%
For the year ended December 31, 2023
Commercial real estate:
Non-owner occupied
$
577
$
-
$
886,701
-
%
Owner occupied
329
6
771,173
-
Consumer real estate
1,059
44
624,972
0.01
Construction and land development
(380)
25
367,421
0.01
Commercial and industrial
1,637
(188)
602,413
(0.03)
Leases
347
(345)
67,318
(0.51)
Consumer and other
186
(220)
14,525
(1.51)
Total
$
3,755
$
(678)
$
3,334,523
(0.02)
%
Investment Portfolio
Our investment portfolio is the second largest component of our interest earning assets. The portfolio serves the following purposes: (i) to optimize the Bank’s income consistent with the investment portfolio’s liquidity and risk objectives; (ii) to balance market and credit risks of other assets and the Bank’s liability structure; (iii) to profitably deploy funds which are not needed to fulfill loan demand, deposit redemptions or other liquidity purposes; and (iv) provide collateral which the Bank is required to pledge against public funds.
Our available-for-sale (“AFS”) investment portfolio is carried at fair market value, and our held-to-maturity investment portfolio is carried at amortized cost, and consists primarily of Federal agency bonds, mortgage-backed securities, state and municipal securities and other debt securities. Our investment portfolio increased from $609.0 million at December 31, 2024, to $662.0 million at December 31, 2025. The $53.0 million increase is primarily related to the strategic decision to restructure a portion of the portfolio in the third quarter of 2025, and the impact of lower market interest rates, which improved the fair value of the AFS portfolio. The Company purchased $215.3 million of securities during the year ended December 31, 2025, which was offset by $174.7 million of sales, maturities, and prepayments received during the same period. New purchases were focused on prepayment protected mortgage-backed securities to provide cash flow, liquidity and to support interest rate risk objectives. Our investment to asset ratio decreased from 11.5% at December 31, 2024, to 11.3% at December 31, 2025, primarily due to deploying principal cash flow away from the investment portfolio.
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Net unrealized losses in our AFS securities portfolio were $11.6 million as of December 31, 2025, compared to $30.4 million at December 31, 2024. The decrease was attributable to changes in market interest rates related to our securities, relative to when the securities were purchased. Principal paydowns/maturities on lower yielding securities, as well as the decision to sell a portion of the bank’s AFS securities, also played a role in a decrease in the net unrealized loss change over the period.
The following table presents the contractual maturity of the Company’s securities by contractual maturity date and average yields based on amortized cost (for all obligations on a fully taxable basis) at December 31, 2025 (dollars in thousands). The composition and maturity/repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.
One Year
One through
Five through
Over Ten
or Less
Five Years
Ten Years
Years
Total
Weighted
Weighted
Weighted
Weighted
Weighted
Average
Average
Average
Average
Average
Available-for-sale:
Amount
Yield (1)
Amount
Yield (1)
Amount
Yield (1)
Amount
Yield (1)
Amount
Yield (1)
U.S. Treasury
$
—
-
%
$
31,688
1.27
%
$
—
-
%
$
—
-
%
$
31,688
1.27
%
U.S. Government agencies
—
-
—
-
19,012
4.99
—
-
19,012
4.99
State and political subdivisions
1,595
3.77
3,322
3.04
5,526
3.60
24,933
4.04
35,376
4.62
Other debt securities
—
-
6,928
7.12
14,745
5.44
—
-
21,673
5.98
Mortgage-backed securities
—
-
30,396
4.25
71,149
4.29
342,214
4.17
443,759
4.21
Total securities
$
1,595
3.77
$
72,334
3.16
$
110,432
4.53
$
367,147
4.25
$
551,508
4.17
Held-to-maturity:
U.S. Treasury
$
—
-
%
$
—
-
%
$
—
-
%
$
—
-
%
$
—
-
%
U.S. Government agencies
—
-
19,123
1.94
27,741
1.80
—
-
46,864
1.86
State and political subdivisions
—
-
740
1.33
14,164
1.82
35,612
2.28
50,516
2.13
Other debt securities
—
-
—
-
—
-
—
-
—
-
Mortgage-backed securities
—
-
2,672
2.10
1,991
2.19
20,078
2.13
24,741
2.13
Total securities
$
—
-
$
22,535
1.94
$
43,896
1.82
$
55,690
2.22
$
122,121
2.03
1Based on amortized cost, taxable equivalent basis.
Deposits
Deposits are the primary source of funds for the Company’s lending and investing activities. The Company provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts, Individual Retirement Accounts (“IRAs”) and certificates of deposit (“CDs”). These accounts generally earn interest at rates the Company establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Company’s primary focus is on establishing customer relationships to attract core deposits, at times, the Company uses brokered deposits and other wholesale deposits to supplement its funding sources. As of December 31, 2025, brokered deposits represented approximately 1.01% of total deposits.
The following table summarizes the average balances outstanding and average interest rates for each major category of deposits for 2025, 2024 and 2023 (dollars in thousands):
2025
2024
2023
Average
% of
Average
Average
% of
Average
Average
% of
Average
Balance
Total
Rate
Balance
Total
Rate
Balance
Total
Rate
Noninterest-bearing demand
$
911,988
18.8
%
—
$
883,923
20.3
%
—
$
958,078
22.8
%
—
Interest-bearing demand
863,772
17.8
%
1.78
%
932,598
21.4
%
2.26
%
959,639
22.8
%
2.11
%
Money market and savings
2,152,812
44.3
%
2.95
%
1,913,673
44.0
%
3.35
%
1,768,869
42.0
%
2.85
%
Time deposits
928,404
19.1
%
3.86
%
623,652
14.3
%
3.86
%
520,799
12.4
%
2.61
%
Total average deposits
$
4,856,976
100.0
%
2.36
%
$
4,353,846
100.0
%
2.51
%
$
4,207,385
100.0
%
2.00
%
During 2025, average deposits increased in noninterest-bearing demand, money market and savings and time deposits, with decreases in interest-bearing demand deposits. The Company believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of deposits was 2.36% in 2025 compared to 2.51% in 2024.
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Total deposits as of December 31, 2025, were $5.2 billion, which was an increase of $466.3 million from December 31, 2024. This increase is related to organic deposit growth. As of December 31, 2025, the Company had outstanding time deposits under $250,000 of $417.8 million, time deposits over $250,000 of $452.7 million, and a time deposit fair value adjustment of $7 thousand. The following table summarizes the maturities of time deposits of $250,000 or more as of December 31, 2025 (in thousands):
December 31,
2025
Three months or less
$
193,839
Three to six months
79,701
Six to twelve months
150,456
More than twelve months
28,729
Total
$
452,725
Borrowings and Subordinated Debt
Other than deposits, the Company uses short-term borrowings and long-term debt to provide both funding and, to a lesser extent, regulatory capital using debt at the Company level which can be down streamed as Tier 1 capital to the Bank. Total borrowings at December 31, 2025 and 2024, were $3.0 million and $8.1 million, respectively. The $5.1 million reduction in borrowings was primarily the repayment of $4.0 million on a line of credit, that had a $0 balance at December 31, 2025. Short-term borrowings, included in borrowings, totaled $3.0 million at December 31, 2025 and $4.1 million at December 31, 2024 and consisted entirely of securities sold under repurchase agreements. Long-term debt totaled $98.7 million at December 31, 2025 and $39.7 million at December 31, 2024 and consisted entirely of subordinated debt. The $59.0 million increase in long-term debt is related to the Company issuing $100 million in subordinated debt during the third quarter of 2025, and subsequently retiring $40 million of existing subordinated debt in the fourth quarter of 2025. For more information regarding our borrowings and subordinated debt, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 9 – Borrowings and Line of Credit” and “Note 10 – Subordinated Debt.”
Liquidity
Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.
Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale deposits, and additional borrowings from correspondent banks, FHLB advances, and the Federal Reserve discount window.
Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.
As part of our liquidity management strategy, we open federal funds lines with our correspondent banks. As of December 31, 2025, we had $96.0 million of unsecured federal funds lines with no funds advanced. In addition, we have access to the Federal Reserve’s discount window in the amount of $402.2 million with no borrowings outstanding as of December 31, 2025. The Federal Reserve discount window line is collateralized by a pool of commercial real estate loans and commercial and industrial loans totaling $491.3 million as of December 31, 2025.
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Table of Contents
At December 31, 2025, we had no FHLB advances outstanding. For more information regarding the FHLB advances, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 9 – Borrowings and Line of Credit.” Based on the values of loans pledged as collateral, we had $610.0 million of additional borrowing availability with the FHLB as of December 31, 2025. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts.
The Company has a revolving line of credit for an aggregate amount of $35.0 million, with a maturity date of May 1, 2027. At December 31, 2025, $0 was outstanding under the line of credit, and all $35.0 million of the line of credit remained available to the Company.
Capital Requirements
The Company and Bank are required under federal law to maintain certain minimum capital levels based on ratios of capital to total assets and capital to risk-weighted assets. The required capital ratios are minimums, and the federal banking agencies may determine that a banking organization, based on its size, complexity or risk profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s exposure to a decline in the economic value of its capital due to changes in interest rates, and an institution’s ability to manage those risks are important factors that are to be taken into account by the federal banking agencies in assessing an institution’s overall capital adequacy. The Company uses leverage analysis to examine the potential of the institution to increase assets and liabilities using the current capital base. The key measurements included in this analysis are the Company and Bank’s Common Equity Tier 1 capital, Tier 1 capital, leverage and total capital ratios. At December 31, 2025, and 2024, our capital ratios, including our Company and Bank’s capital ratios, exceeded regulatory minimum capital requirements. From time to time we may be required to support the capital needs the Bank. For more information regarding our capital, leverage and total capital ratios, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 15 – Regulatory Matters.”
The table below (dollars in thousands) summarizes the capital requirements applicable to the Company and Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as the Company and Bank’s capital ratios as of December 31, 2025 and 2024. The Company and Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of December 31, 2025 and 2024. As of December 31, 2025, the FDIC categorized the Bank as well-capitalized under the prompt corrective action framework. There have been no conditions or events since December 31, 2025, that management believes would change this classification.
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Table of Contents
Minimum to be
well
capitalized under
Minimum for
prompt
capital
corrective action
Actual
adequacy purposes
provisions1
Amount
Ratio
Amount
Ratio
Amount
Ratio
December 31, 2025
SmartFinancial:
Total Capital (to Risk Weighted Assets)
$
606,158
12.71
%
$
381,470
8.00
%
N/A
N/A
Tier 1 Capital (to Risk Weighted Assets)
468,641
9.83
%
286,103
6.00
%
N/A
N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)
468,641
9.83
%
214,577
4.50
%
N/A
N/A
Tier 1 Capital (to Average Assets)2
468,641
8.30
%
225,852
4.00
%
N/A
N/A
SmartBank:
Total Capital (to Risk Weighted Assets)
$
586,675
12.32
%
$
380,891
8.00
%
$
476,114
10.00
%
Tier 1 Capital (to Risk Weighted Assets)
547,820
11.51
%
285,668
6.00
%
380,891
8.00
%
Common Equity Tier 1 Capital (to Risk Weighted Assets)
547,820
11.51
%
214,251
4.50
%
309,474
6.50
%
Tier 1 Capital (to Average Assets)2
547,820
9.71
%
225,566
4.00
%
281,957
5.00
%
December 31, 2024
SmartFinancial:
Total Capital (to Risk Weighted Assets)
$
470,635
11.10
%
$
339,044
8.00
%
N/A
N/A
Tier 1 Capital (to Risk Weighted Assets)
413,616
9.76
%
254,283
6.00
%
N/A
N/A
Common Equity Tier 1 Capital (to Risk Weighted Assets)
413,616
9.76
%
190,712
4.50
%
N/A
N/A
Tier 1 Capital (to Average Assets)
413,616
8.29
%
199,585
4.00
%
N/A
N/A
SmartBank:
Total Capital (to Risk Weighted Assets)
$
478,368
11.30
%
$
338,774
8.00
%
$
423,467
10.00
%
Tier 1 Capital (to Risk Weighted Assets)
445,159
10.51
%
254,080
6.00
%
338,774
8.00
%
Common Equity Tier 1 Capital (to Risk Weighted Assets)
445,159
10.51
%
190,560
4.50
%
275,253
6.50
%
Tier 1 Capital (to Average Assets)
445,159
8.94
%
199,214
4.00
%
249,017
5.00
%
1The prompt corrective action provisions are applicable at the Bank level only.
2Average assets for the above calculations were based on the most recent quarter.
Contractual Obligations
The following tables present, as of December 31, 2025, our significant fixed and determinable contractual obligations (in thousands):
As of December 31, 2025, payments due in
More
Less than
1 to 3
3 to 5
than 5
1 year
years
years
years
Total
Operating leases
$
1,802
$
3,044
$
2,806
$
6,682
$
14,334
Time deposits
807,820
48,077
14,646
—
870,543
Securities sold under agreement to repurchase
3,009
—
—
—
3,009
FHLB advances and other borrowings
—
—
—
—
—
Subordinated debt
—
—
—
100,000
100,000
Total
$
812,631
$
51,121
$
17,452
$
106,682
$
987,886
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Table of Contents
Off-Balance Sheet Arrangements
At December 31, 2025, we had $1.09 billion pre-approved but unused lines of credit and $15.6 million of standby letters of credit. These commitments generally have fixed expiration dates and many will expire without being drawn upon. The total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Bank has the ability to liquidate Federal funds sold or securities available-for-sale, or on a short-term basis to borrow and purchase Federal funds from other financial institutions. Additional information about our off-balance sheet risk exposure is presented in Note 14 – Commitments and Contingent Liabilities to our audited consolidated financial statements.
Critical Accounting Policies
The Company has identified accounting policies that are the most critical to fully understand and evaluate its reported financial results and require management’s most difficult, subjective or complex judgments. Management has reviewed the following critical accounting policies and related disclosures with the Audit Committee of the Board of Directors. These policies, along with a brief discussion of the material implications of the uncertainties of each policy, are below. For a full description of these critical accounting policies, see Note 1 – Summary of Significant Accounting Policies to our audited consolidated financial statements.
Allowance for credit losses – Loans – As described in Note 1 – Summary of Significant Accounting Policies in the notes to our consolidated financial statements, we adopted FASB ASU 2016-13 effective January 1, 2023, which requires the estimation of an allowance for credit losses in accordance with the CECL methodology. Our management assesses the adequacy of the allowance on a quarterly basis. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management’s evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay a loan (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. The level of the allowance for credit losses maintained by management is believed adequate to absorb all expected future losses inherent in the loan portfolio at the balance sheet date. The allowance is increased through provision for credit losses and decreased by charge-offs, net of recoveries of amounts previously charged-off.
Fair values for acquired assets and assumed liabilities – Assets and liabilities acquired are recorded at their respective fair values as of the date of the acquisition. The excess of the purchase price over the net estimated fair values of the acquired assets and liabilities is allocated to identifiable intangible assets with the remaining excess allocated to goodwill. Goodwill has an indefinite useful life and is evaluated for impairment annually, or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. As of December 31, 2025, there was approximately $90.4 million in goodwill. The Company performs its annual goodwill impairment test as of December 31, of each year, and for 2025 the results of the qualitive assessment provided no indication of potential impairment. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes.