SmartFinancial (SMBK) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $8.0 million ($0.48 per diluted share), down from $8.8 million ($0.52) in Q2 2023; operating net income was $7.8 million ($0.46 per share), with the difference due to a property sale gain.

• Annualized organic loan growth was 11.1% quarter-over-quarter, with net loans and leases up $130.1 million year-to-date.

• Tangible book value per share increased to $21.66 (including AOCI) and $23.18 (excluding AOCI), up 3% sequentially and 9% year-over-year.

• Deposit contraction was expected after Q1 growth, mainly due to seasonality and tax payments; deposits declined 5.7% annualized, excluding a $15M brokered deposit maturity.

• Credit quality remains strong, with nonperforming assets at 0.20% of total assets and allowance for credit losses at $34.7 million (0.97% of loans/leases).

Financial highlights

• Total revenue reached $40.4 million; net interest income rose to $32.8 million, up $1.2 million year-over-year and 3% sequentially.

• Noninterest income for Q2 2024 was $7.6 million, up $0.5 million year-over-year but down 9% from Q1 2024.

• Noninterest expenses were $29.2 million, supporting operating leverage as revenue grows.

• Net interest margin (tax equivalent) expanded to 2.97% from 2.85% in the prior quarter.

• Yield on loans and leases (FTE) was 5.80%, up from 5.71% sequentially; deposit costs rose to 2.56%.

Outlook and guidance

• Management expects continued margin expansion and operating leverage in H2 2024, targeting a NIM of 3.05% for Q3.

• Forecasting Q3 noninterest income in the mid-$7 million range and noninterest expense around $30.5 million.

• Targeting quarterly operating revenue above $42 million, with a longer-term goal of $50 million by Q3 2025, assuming $200 million balance sheet growth and NIM in the 3.35%-3.40% range.

• Loan growth guidance remains mid to high single digits for the year, with a focus on organic growth in core Southeast markets.