SmartFinancial Inc (SMBK) Reports Q3 2023 Earnings: Net Income Drops to $2.1 Million
SmartFinancial Inc (NASDAQ:SMBK) reports net income of $2.1 million for Q3 2023, a significant drop from $11.5 million in Q3 2022.
Operating earnings, excluding securities gains and merger-related expenses, totaled $7.2 million.
Net interest income was $31.0 million, slightly down from $31.6 million in the prior quarter.
Noninterest income decreased to $691 thousand, primarily due to a $6.8 million pre-tax loss on the sale of securities.
SmartFinancial Inc (NASDAQ:SMBK) announced its Q3 2023 earnings on October 23, 2023. The company reported a net income of $2.1 million, or $0.12 per diluted common share, a significant decrease from the net income of $11.5 million, or $0.68 per diluted common share, reported for the same period in 2022. The company's operating earnings, which exclude securities gains and merger-related expenses, totaled $7.2 million, or $0.43 per diluted common share.
Financial Performance
SmartFinancial's net interest income for Q3 2023 was $31.0 million, slightly down from $31.6 million in the previous quarter. The tax equivalent net interest margin was 2.81%, compared to 2.93% in the prior quarter. The yield on loans and leases, excluding loan fees, was 5.52% for the third quarter, compared to 5.39% for the prior quarter.
The company's noninterest income decreased significantly to $691 thousand for Q3 2023, compared to $7.1 million for the prior quarter. This decrease was primarily associated with a $6.8 million pre-tax loss on the sale of $159.6 million of available-for-sale securities.
Noninterest expense increased to $28.5 million for Q3 2023, up from $27.4 million in the previous quarter. The increase was primarily related to increases in health insurance claims, incentives, and additional commission expense associated with higher production from the company's leasing company, wealth, and capital markets teams.
Balance Sheet Trends
As of September 30, 2023, SmartFinancial's total assets stood at $4.80 billion, up from $4.64 billion at the end of 2022. The increase is primarily attributable to increases in loans and leases of $125.4 million, cash and cash equivalents of $133.8 million, and other assets of $15.1 million. Total liabilities increased to $4.35 billion, up from $4.21 billion at the end of 2022. Shareholders' equity totaled $446.7 million, an increase of $14.2 million from December 31, 2022.
Company Outlook
Despite the challenging operating landscape, SmartFinancial's President & CEO, Billy Carroll, expressed optimism about the company's future. He stated,
Our Company and employees continue to operate at a high level, providing excellent client service while tactfully navigating a difficult operating landscape. We look forward to continued revenue expansion and remain bullish on our Company outlook."
SmartFinancial's Chairman, Miller Welborn, also expressed his satisfaction with the company's performance, stating,
The entire SmartBank team worked diligently over the past quarter and, quite frankly, over the entire year to exceed client expectations and drive consistent growth. Im so proud of where we are as a company and extremely optimistic about the future.
This article first appeared on GuruFocus.
