📄 What This Document Is 📅

This filing is an 8-K report containing SmartFinancial, Inc.'s earnings release for the first quarter of 2026. Think of this as the bank's detailed performance report card for the three months ended March 31, 2026. It tells investors how much money the company made, where the money came from, and what the management thinks the future holds.

👉 Why it matters: By reviewing these numbers, you can understand the bank's current health, how it's managing risk (like bad loans), and if its strategic plans are working.

🏦 What The Company Does 🏘️

SmartFinancial, Inc. is the holding company for SmartBank. SmartBank is a full-service commercial bank established in 2007. It operates across multiple states, with branches in Tennessee, Alabama, and Florida, and loan servicing centers in Tennessee and Georgia.

👉 In simple terms: SmartFinancial is a regional bank that supports its business by offering various financial services—from managing everyday deposits to issuing loans and providing wealth management. Their success depends on recruiting good people, expanding strategically, and managing lending risks carefully.

💰 Quarterly Financial Highlights 📈

The headline numbers for Q1 2026 show a solid, if slightly variable, start to the year. The company reported a net income of $13.7 million, or $0.81 per diluted common share.

• Net Income: The reported net income was $13.7 million in Q1 2026. While this is an increase compared to the prior quarter (Q4 2025, which also showed $13.7 million), it was compared favorably to the first quarter of 2025, which reported $11.3 million.
• Operating Earnings: Operating earnings for the quarter were also $13.7 million per share. This measures the core profitability before certain non-operating items, giving a clear picture of operational success.
• Loan and Deposit Growth: The bank saw strong core growth in both its loan book and deposit base. Net organic loan and lease growth reached $155 million, showing a 14% annualized quarter-over-quarter increase. Deposit growth, excluding brokered deposits, was $95 million, representing a 7% annualized quarter-over-quarter increase.

👉 Why it matters: The increase in both loan growth and deposit growth shows that the bank is actively earning money from lending (loans) and that clients are trusting them with their funds (deposits).

⚖️ Interest Rate and Lending Efficiency 🚀

A bank's core profit comes from the difference between the interest it earns on loans and the interest it pays out on deposits. This difference is critical to their profitability.

• Net Interest Margin (NIM): The fully tax equivalent Net Interest Margin (FTE) expanded to 3.48% for Q1 2026, up from 3.38% in the prior quarter.
• Rate Drivers: This expansion was attributed to lower deposit and funding costs, which grew slower than the bank's asset yields.
• Cost Control: The cost of total deposits for Q1 2026 was 2.12%, which improved compared to the prior quarter's cost of 2.26%.

👉 Why it matters: The Net Interest Margin is a key profitability metric. When this percentage increases, it means the bank is doing a better job of keeping the difference between what it earns and what it pays, suggesting strong core business management.

🚨 Credit Risk Management (ACL) 🛡️

Banks must set aside money for potential loan losses, and this process is called the Allowance for Credit Losses (ACL). Management made a specific, technical change to how they calculate this amount.

• Model Change: The bank adopted a discounted cash flow methodology and refined key assumptions for its ACL model.
• ACL Increase: As a result of the model change, the allowance for credit losses to total loans and leases increased to 0.97% as of March 31, 2026. This was up from 0.94% as of December 31, 2025.
• Impact: The change resulted in a minor increase in the provision for credit losses, which the bank expects to normalize next quarter.

👉 Why it matters: This section signals how the bank views risk. While the increase in ACL might look like a drag on immediate income, the bank is simply adopting more sophisticated tools to better predict future risks, which is generally a sign of robust financial governance.

💸 Operational Revenue and Expenses 💰

Beyond just interest, banks earn money from fees and services, which are called noninterest items. Management also tracks operational costs here.

• Noninterest Income: Total noninterest income was $7.94 million, a decrease of $278 thousand compared to the prior quarter. This decrease was mainly due to a reduction in capital markets' income.
• Key Revenue Sources: The largest parts of the income came from investment services ($1,796 thousand) and service charges on deposit accounts ($1,853 thousand).
• Noninterest Expense: Total noninterest expense increased to $32.9 million in Q1 2026, up from $32.5 million in the prior quarter. The increase was primarily driven by higher salaries and employee benefits.

👉 Why it matters: Monitoring these expenses and non-interest revenues shows if the bank is able to grow its non-lending business (like account services or wealth management) to offset any dips in interest-related income.

💼 Balance Sheet Health Check 💪

This section provides a snapshot of what the bank owns (assets) versus what it owes (liabilities) at the end of the reporting periods.

• Total Assets: Total assets reached $5.91 billion at March 31, 2026, up from $5.86 billion at December 31, 2025.
• Total Liabilities: Total liabilities were $5.35 billion, up from $5.31 billion at December 31, 2025.
• Deposits Growth: Total deposits increased by $43.4 million. This was mainly driven by increases in money market deposits ($182.3 million) and other time deposits ($16.1 million).
• Equity Strength: Shareholders' equity stood at $562.1 million, an increase of $9.7 million from December 31, 2025.

👉 Why it matters: Stable and growing assets and equity suggest the bank has a strong foundation to weather economic downturns. The increase in deposits shows continued client trust.

🗣️ Executive Commentary and Outlook 🗣️

SmartFinancial’s leadership provided several strong statements regarding the current momentum and future strategy.

• Billy Carroll (President & CEO): He noted, "As anticipated, 2026 began with strong momentum due to the robust business pipeline established prior to year end and the diligent work of our associates in securing new business." He pointed to the $155 million in net balance loan growth and $95 million in core deposits, emphasizing that these figures surpassed initial forecasts.
• Miller Welborn (Chairman): He concluded, "Looking ahead, we remain confident in our strategic direction and focused on executing our priorities to build on this momentum through the remainder of 2026.”

👉 Why it matters: This commentary confirms that management is pleased with the strong start and remains confident in their long-term strategy, despite any minor fluctuations in quarterly numbers.

📅 Key Dates and Contacts 📞

For investors looking for more information or who need to follow up, the filing provided several key details.

• Conference Call: The earnings release was hosted on Monday, April 20, 2026.
• Materials Access: Conference call materials were published at 9:00 a.m. ET on the Company’s webpage.
• Investor Contacts: The filing listed primary contacts:
  • Billy Carroll (President & CEO): [email protected] / (865) 868-0613
  • Miller Welborn (Chairman): [email protected] / 423.385.3067
  • Ron Gorczynski (CFO): [email protected] / 865.437.5724

👉 Why it matters: These are the immediate resources for investors who want to hear management answer detailed questions or who need the contact information for financial reporting teams.

🧠 The Analogy 🚂

Running a bank is like operating a major regional train system. 🚄

The deposits are the tickets people buy and hand over to you—they are cash you can immediately use. The loans are the train routes you build and the tickets you sell years into the future—they are the structured ways you make money. The bank's profit (NIM) is simply the revenue generated from the difference between the interest you charge for using the tracks (loans) versus the interest you have to pay to keep the ticket holders happy (deposits).

🧩 Final Takeaway 💡

SmartFinancial had a robust start to 2026, driven by strong loan and deposit growth and an expanding Net Interest Margin. The bank successfully managed its balance sheet while also making visible, sophisticated adjustments to its credit risk models.