SmartFinancial Q2 net income rises to $16.3 million, assets top $6 billion
SmartFinancial reported Q2 2026 net income of $16.3 million, or $0.96 per diluted share, up from $11.7 million in the prior year. Total assets surpassed $6 billion, driven by loan growth of $319.4 million since year-end. Net interest margin expanded to 3.52%, and the board declared a $0.09 per share dividend.
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SmartFinancial, Inc. reported second quarter 2026 net income of $16.3 million, or $0.96 per diluted common share, compared to net income of $11.7 million, or $0.69 per diluted common share, for the second quarter of 2025. The company surpassed $6 billion in total assets during the quarter, marking a significant milestone in its growth trajectory. Net interest income was $48.1 million for the second quarter of 2026, compared to $45.9 million for the prior quarter, with the tax equivalent net interest margin expanding to 3.52% from 3.48%.
Second Quarter 2026 Highlights
The following table summarizes key performance highlights for the second quarter of 2026:
| Metric: | Q2 2026 |
|---|---|
| Net Income: | $16.3 million |
| Diluted EPS: | $0.96 |
| Operating Earnings: | $16.3 million ($0.96 per diluted share) |
| Net Organic Loan & Lease Growth: | $165 million (15% annualized QoQ) |
| Total Assets: | Surpassed $6 billion |
| Core Deposit Growth: | $83 million (6% annualized QoQ) |
| Tangible Book Value per Share Growth: | 13% annualized QoQ |
Billy Carroll, President & CEO, stated: "Our second quarter results reflect steady progress in the execution of our strategy. During the quarter, we generated approximately 15% annualized loan growth and expanded our net interest margin to 3.52%, while maintaining excellent asset quality. Diluted earnings per share increased to $0.96, an improvement of $0.15 from the first quarter, and tangible book value per common share grew quarter over quarter by 13% annualized."
Net Interest Income and Net Interest Margin
Average earning assets totaled $5.52 billion, an increase of $131.7 million from the prior quarter. The expansion in net interest margin was primarily driven by asset yields outpacing the increase in liability costs. The yield on loans and leases, excluding loan fees, was 5.95% for the second quarter of 2026, compared to 5.93% for the prior quarter.
| Selected Interest Rates and Yields: | Jun 2026 | Mar 2026 | Change |
|---|---|---|---|
| Yield on loans and leases, excl. loan fees, FTE: | 5.95% | 5.93% | +0.02% |
| Yield on loans and leases, FTE: | 6.07% | 6.02% | +0.05% |
| Yield on earning assets, FTE: | 5.70% | 5.62% | +0.08% |
| Cost of interest-bearing deposits: | 2.62% | 2.60% | +0.02% |
| Cost of total deposits: | 2.15% | 2.12% | +0.03% |
| Cost of interest-bearing liabilities: | 2.74% | 2.72% | +0.02% |
| Net interest margin, FTE: | 3.52% | 3.48% | +0.04% |
Credit Quality and Allowance for Credit Losses
At June 30, 2026, the allowance for credit losses was $45.3 million. The allowance for credit losses to total loans and leases was 0.97% as of both June 30, 2026 and March 31, 2026. Nonperforming loans and leases as a percentage of total loans and leases was 0.25% as of June 30, 2026, compared to 0.27% as of March 31, 2026. Total nonperforming assets as a percentage of total assets was 0.23% as of June 30, 2026, compared to 0.25% as of March 31, 2026.
| ACL Rollforward: | Jun 2026 | Mar 2026 | Change |
|---|---|---|---|
| Beginning balance: | $43,950 | $40,906 | $3,044 |
| Charge-offs: | (658) | (229) | (429) |
| Recoveries: | 105 | 60 | 45 |
| Net charge-offs: | (553) | (169) | (384) |
| Provision for credit losses: | 1,855 | 3,213 | (1,358) |
| Ending balance: | $45,252 | $43,950 | $1,302 |
| ACL to total loans and leases: | 0.97% | 0.97% | — |
Noninterest Income and Noninterest Expense
Noninterest income decreased slightly by $55 thousand to $7.9 million for the second quarter of 2026, compared to $7.9 million for the prior quarter. Noninterest expense increased $1.0 million to $34.0 million for the second quarter of 2026, compared to $32.9 million for the prior quarter.
| Noninterest Income: | Jun 2026 | Mar 2026 | Change |
|---|---|---|---|
| Service charges on deposit accounts: | $1,881 | $1,853 | $28 |
| Gain on sale of securities, net: | 54 | 1 | 53 |
| Mortgage banking income: | 916 | 760 | 156 |
| Investment services: | 1,724 | 1,796 | (72) |
| Interchange and debit card transaction fees: | 1,676 | 1,418 | 258 |
| Other: | 1,635 | 2,113 | (478) |
| Total noninterest income: | $7,886 | $7,941 | (55) |
| Noninterest Expense: | Jun 2026 | Mar 2026 | Change |
|---|---|---|---|
| Salaries and employee benefits: | $21,015 | $20,414 | $601 |
| Occupancy and equipment: | 3,351 | 3,344 | 7 |
| FDIC insurance: | 920 | 750 | 170 |
| Data processing and technology: | 2,683 | 2,436 | 247 |
| Professional services: | 1,366 | 1,193 | 173 |
| Amortization of intangibles: | 454 | 457 | (3) |
| Other: | 2,952 | 3,142 | (190) |
| Total noninterest expense: | $33,955 | $32,915 | $1,040 |
Balance Sheet Trends
Total assets at June 30, 2026 were $6.12 billion compared to $5.86 billion at December 31, 2025, an increase of $254.5 million. Loans and leases grew to $4.68 billion at June 30, 2026 from $4.36 billion at December 31, 2025, an increase of $319.4 million. Total deposits increased $232.8 million to $5.39 billion at June 30, 2026.
| Selected Balance Sheet Information: | Jun 2026 | Dec 2025 | Change |
|---|---|---|---|
| Total assets: | $6,115,306 | $5,860,810 | $254,496 |
| Total liabilities: | $5,538,382 | $5,308,318 | $230,064 |
| Total equity: | $576,924 | $552,492 | $24,432 |
| Securities: | $679,913 | $662,003 | $17,910 |
| Loans and leases: | $4,682,935 | $4,363,582 | $319,353 |
| Deposits: | $5,385,550 | $5,152,789 | $232,761 |
Dividend Declaration
On July 16, 2026, the board of directors of SmartFinancial declared a quarterly cash dividend of $0.09 per share of SmartFinancial common stock, payable on August 17, 2026, to shareholders of record as of the close of business on July 31, 2026.
Can the 15% annualized loan growth rate be sustained throughout the remainder of 2026 given the rising interest rate environment?
How will the recent $1 million increase in noninterest expense, particularly in data processing and salaries, impact the company's efficiency ratio going forward?
With net charge-offs increasing significantly in Q2, does management anticipate a deterioration in asset quality or a need to increase provisions in the second half of the year?
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