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What changed in SMARTFINANCIAL INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SMARTFINANCIAL INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+231 added−244 removedSource: 10-K (2026-03-16) vs 10-K (2025-03-17)

Top changes in SMARTFINANCIAL INC.'s 2025 10-K

231 paragraphs added · 244 removed · 205 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

63 edited+9 added−17 removed146 unchanged
Biggest changeThe survey results mold our initiatives so that we can focus on being a great place to work and do business with. In 2024, we certified as A Great Place to Work®. Additionally, beginning in 2017 through 2024, we were nominated as a Top Workplace USA by USA Today and Top Workplace by the Knoxville News Sentinel.
Biggest changeWe hold ourselves accountable by taking part in annual engagement surveys to ask for feedback from our associates. The survey results mold our initiatives so that we can focus on being a great place to work and do business with.
In addition, effective January 1, 2019, the capital rules required a capital conservation buffer of CET1 of 2.5% above each of the minimum capital ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress.
In addition, effective January 1, 2019, the capital rules required a capital conservation buffer of 2.5% above each of the minimum capital ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress.
Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In addition, undercapitalized depository institutions may not accept brokered deposits absent a waiver from the FDIC, are subject to growth limitations and are required to submit capital restoration plans for regulatory approval.
Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In addition, undercapitalized depository institutions may not accept brokered deposits absent a waiver from the FDIC and are subject to growth limitations and are required to submit capital restoration plans for regulatory approval.
In addition to their obligations to safeguard customer information under GLB Act regulations, financial institutions, like SmartBank, are subject to regulations that require the institutions when they become aware of an incident of unauthorized access to sensitive customer information, to conduct a reasonable investigation to promptly determine the likelihood that the information has been or will be misused.
In addition to their obligations to safeguard customer information under GLB regulations, financial institutions, like SmartBank, are subject to regulations that require the institutions when they become aware of an incident of unauthorized access to sensitive customer information, to conduct a reasonable investigation to promptly determine the likelihood that the information has been or will be misused.
Additionally, the Company participates in the Federal Reserve discount window borrowings program. The Company also enters into repurchase agreements and these are treated as short-term borrowings. ​ Investment and Insurance Services ​ The Bank contracts with Raymond James Financial Services, Inc.
Additionally, the Company participates in the Federal Reserve discount window borrowings program. The Company also enters into repurchase agreements and these are treated as short-term borrowings. ​ Investment Services ​ The Bank contracts with Raymond James Financial Services, Inc.
In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce certain federal consumer financial protection law.
In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce certain federal consumer financial protection laws.
These laws and regulations include, among numerous other things, provisions that: ● limit the interest and other charges collected or contracted for by SmartBank, including rules respecting the terms of credit cards and of debit card overdrafts; ● govern SmartBank’s disclosures of credit terms to consumer borrowers; ● require SmartBank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the communities it serves; ● prohibit SmartBank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; ● govern the manner in which SmartBank may collect consumer debts; and ● prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.
These laws and regulations include, among numerous other things, provisions that: ● limit the interest and other charges collected or contracted for by SmartBank, including rules respecting the terms of credit cards and of debit card overdrafts; ● govern SmartBank’s disclosures of credit terms to consumer borrowers; ● require SmartBank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the communities it serves; 19 Table of Contents ● prohibit SmartBank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; ● govern the manner in which SmartBank may collect consumer debts; and ● prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.
Detailed reports, by product, collateral, accrual status, etc., are reviewed by Director and Management Loan Committees. Investment Activities ​ Our investment policy is designed to provide income from funds not needed to meet loan demand in a manner consistent with appropriate liquidity and risk management objectives.
Detailed reports, by product, collateral, accrual status, etc., are reviewed by the Director Loan Committee and the Management Loan Committees. Investment Activities ​ Our investment policy is designed to provide income from funds not needed to meet loan demand in a manner consistent with appropriate liquidity and risk management objectives.
Financial Statements and Supplementary Data - Note 15 - Regulatory Matters.” In 2019, the federal banking agencies issued a final rule that, among other provisions, revised the agencies’ regulatory capital rule and included a transition option that allows institutions to phase in over a 3-year transition period the day-one 14 Table of Contents effects of adopting the current expected credit losses methodology (CECL) on their regulatory capital ratios (“2019 CECL rule”).
Financial Statements and Supplementary Data - Note 15 - Regulatory Matters.” In 2019, the federal banking agencies issued a final rule that, among other provisions, revised the agencies’ regulatory capital rule and included a transition option that allows institutions to phase in over a 3-year transition period the day-one effects of adopting the current expected credit losses methodology (CECL) on their regulatory capital ratios (“2019 CECL rule”).
All of the federal bank regulatory agencies have adopted regulations establishing relevant capital measures and relevant capital levels for federally insured depository institutions. SmartBank was well capitalized at December 31, 2024, and brokered deposits are not restricted.
All of the federal bank regulatory agencies have adopted regulations establishing relevant capital measures and relevant capital levels for federally insured depository institutions. SmartBank was well capitalized at December 31, 2025, and brokered deposits are not restricted.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as that applicable to SmartBank, the Company’s capital ratios as of December 31, 2024 would exceed such revised well-capitalized standard.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as that applicable to SmartBank, the Company’s capital ratios as of December 31, 2025 would exceed such revised well-capitalized standard.
If our regulators were to take such additional 10 Table of Contents supervisory actions, then we could, among other things, become subject to significant restrictions on our ability to develop any new business, as well as restrictions on our existing business, and we could be required to raise additional capital, dispose of certain assets and liabilities within a prescribed period of time, or both.
If our regulators were to take such additional supervisory actions, then we could, among other things, become subject to significant restrictions on our ability to develop any new business, as well as restrictions on our existing business, and we could be required to raise additional capital, dispose of certain assets and liabilities within a prescribed period of time, or both.
This rule and the earlier such policy statements and regulations indicate that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution.
This rule and the earlier such policy statements and regulations indicate that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer 18 Table of Contents credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution.
Department of the Treasury, requires financial institutions to establish anti-money laundering programs with minimum standards that include: ● the development of internal policies, procedures, and controls; 17 Table of Contents ● the designation of a compliance officer; ● an ongoing employee training program; ● an independent audit function to test the programs; and ● identify and verify the identity of beneficial owners of legal entity customers .
Department of the Treasury, requires financial institutions to establish anti-money laundering programs with minimum standards that include: ● the development of internal policies, procedures, and controls; ● the designation of a compliance officer; ● an ongoing employee training program; ● an independent audit function to test the programs; and ● identify and verify the identity of beneficial owners of legal entity customers .
In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.
In addition, the Federal Deposit Insurance Act provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors, and certain claims for administrative 16 Table of Contents expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution, including those of the parent bank holding company.
This trend is expected to continue to expand, requiring continual monitoring of developments in the states and nations in which our customers are located and ongoing investments in our information systems and compliance capabilities. 19 Table of Contents ​ Other laws and regulations impact SmartFinancial and SmartBank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes.
This trend is expected to continue to expand, requiring continual monitoring of developments in the states and nations in which our customers are located and ongoing investments in our information systems and compliance capabilities. ​ Other laws and regulations impact SmartFinancial and SmartBank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes.
Through this policy, we strive to carry out our banking activities in a responsible manner, placing the financial needs of our clients and economic health of our communities at the core of our focus. ​ ​ 8 Table of Contents Talent Acquisition, Development, and Retention We foster a work environment that respects individual needs, establishes high expectations, and recognizes achievement.
Through this policy, we strive to carry out our banking activities in a responsible manner, placing the financial needs of our clients and economic health of our communities at the core of our focus. Talent Acquisition, Development, and Retention We foster a work environment that respects individual needs, establishes high expectations, and recognizes achievement.
A financial institution is expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack. ​ Federal statutes and regulations, including the Gramm-Leach-Bliley Act and the Right to Financial Privacy Act of 1978, limits SmartFinancial and SmartBank’s ability to disclose non-public information about consumers, customers and employees to nonaffiliated third parties.
A financial institution is expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack. ​ Federal statutes and regulations, including the GLB and the Right to Financial Privacy Act of 1978, limits SmartFinancial and SmartBank’s ability to disclose non-public information about consumers, customers and employees to nonaffiliated third parties.
Tennessee-chartered banks are also subject to regulation by the TDFI with regard to capital requirements and the payment of dividends. In addition, as discussed in more detail below, SmartBank and any other of our subsidiaries that offer consumer financial products and services are subject to regulation and potential supervision by the Consumer Financial Protection (“CFPB”).
Tennessee-chartered banks are also subject to regulation by the TDFI with regard to capital requirements and the payment of dividends. 15 Table of Contents In addition, as discussed in more detail below, SmartBank and any other of our subsidiaries that offer consumer financial products and services are subject to regulation and potential supervision by the Consumer Financial Protection (“CFPB”).
The say-on-pay, the say-on-parachute and the say-on-frequency votes are explicitly nonbinding and cannot override a decision of our Board of Directors. 12 Table of Contents Other Regulatory Matters We are subject to oversight by the SEC, the Public Company Accounting Oversight Board, New York Stock Exchange and various state securities and insurance regulators.
The say-on-pay, the say-on-parachute and the say-on-frequency votes are explicitly nonbinding and cannot override a decision of our Board of Directors. Other Regulatory Matters We are subject to oversight by the SEC, the Public Company Accounting Oversight Board, New York Stock Exchange and various state securities and insurance regulators.
Concentrations in Lending During 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) and advised financial institutions of the risks posed by CRE lending concentrations. The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations.
Concentrations in Lending During 2006, the federal bank regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) and advised financial institutions of the risks posed by CRE lending concentrations. The 17 Table of Contents Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations.
The Department of Justice (the “DOJ”), and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, 20 Table of Contents how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices.
The Department of Justice (the “DOJ”), and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices.
To assist with this responsibility, we have adopted a Code of Ethics and Business Conduct Policy to address any concerns into our daily business activities and our approach to stakeholder relationships.
To assist with this responsibility, we have adopted a Code of Ethics and Business Conduct Policy to address any concerns in our daily business activities and our approach to stakeholder relationships.
These nontraditional financial service providers have been successful in developing digital and other products and services that effectively compete with traditional banking services but are in some cases subject to fewer regulatory restrictions than banks and bank holding companies, allowing them to operate with greater flexibility and lower cost structures. 9 Table of Contents ​ We encounter strong pricing competition in providing our services.
These nontraditional financial service providers have been successful in developing digital and other products and services that effectively compete with traditional banking services but are in some cases subject to fewer regulatory restrictions than banks and bank holding companies, allowing them to operate with greater flexibility and lower cost structures. ​ We encounter strong pricing competition in providing our services.
A depository institution’s holding company must guarantee any required capital restoration plan, up to an amount equal to the lesser of 5% of the depository institution’s assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan.
A depository institution’s holding company must guarantee any required capital restoration plan, up to an amount equal to the lesser of 5% of the depository institution’s assets at the time it becomes undercapitalized or the amount of the capital deficiency 13 Table of Contents when the institution fails to comply with the plan.
Under this policy, our Company may invest in federal, state and municipal obligations, corporate obligations, public housing authority bonds and securities issued by Government-Sponsored Enterprises (“GSEs”). Investments in our portfolio must satisfy certain quality criteria. Our Company’s investments purchases should be “investment-grade” as determined by a nationally recognized investment rating service.
Under this policy, our Company may invest in federal, state and municipal obligations, corporate obligations, public housing authority bonds and securities issued by Government-Sponsored Enterprises (“GSEs”). Investments in our portfolio must satisfy certain quality criteria. Our Company’s investments purchases are typically “investment-grade” as determined by a nationally recognized investment rating service.
Under the federal Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to the Federal Reserve before acquiring control of any bank holding company, 11 Table of Contents such as the Company, or before acquiring control of any state member bank, such as SmartBank.
Under the federal Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to the Federal Reserve before acquiring control of any bank holding company, such as the Company, or before acquiring control of any state member bank, such as SmartBank.
The overall effect of such laws is to make it more difficult to acquire a bank holding company and a bank by tender offer or similar means than it might be to acquire control of another type of corporation.
The overall effect of such laws is to make it more difficult to acquire a bank holding company and a bank by tender offer or similar means than it might be to acquire 11 Table of Contents control of another type of corporation.
FDICIA establishes five regulatory capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” A depository institution’s capital tier will depend upon how its capital levels compare to various relevant capital measures and certain 13 Table of Contents other factors, as established by regulation.
FDICIA establishes five regulatory capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” A depository institution’s capital tier will depend upon how its capital levels compare to various relevant capital measures and certain other factors, as established by regulation.
The Gramm-Leach-Bliley Act also requires the SmartFinancial and SmartBank to implement a comprehensive information security program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information and, if applicable state law is more protective of customer privacy than the Gramm-Leach-Bliley Act, financial institutions, including SmartBank, will be required to comply with such state law.
The GLB also requires the SmartFinancial and SmartBank to implement a comprehensive information security program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information and, if applicable state law is more protective of customer privacy than the GLB, financial institutions, including SmartBank, will be required to comply with such state law.
The FDIC, as required under the Federal Deposit Insurance Act, established a plan on September 15, 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years.
As of September 30, 2025, the DIF reserve ratio reached 1.40%, exceeding the statutory minimum of 1.35%. The FDIC, as required under the Federal Deposit Insurance Act, established a plan on September 15, 2020, to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years.
Specifically, the Gramm-Leach-Bliley Act requires disclosure of our privacy policies and practices relating to sharing non-public information and enables retail customers to opt out of the institution’s ability to share information with unaffiliated third parties under certain circumstances.
Specifically, the GLB requires disclosure of our privacy policies and practices relating to sharing non-public information and enables retail customers to opt out of the institution’s ability to share information with unaffiliated third parties under certain circumstances.
The DOJ has increased its efforts to prosecute what it regards as violations of the ECOA and FHA.
The DOJ has increased its efforts to prosecute what it regards as violations of the ECOA and FHA. ​ 20 Table of Contents ​
The written investment policy is reviewed annually by the Company’s ALCO of the Board and updated as needed. ​ The Company’s securities are held in safekeeping accounts at approved correspondent banks. ​ Deposits ​ The Company provides a full range of deposit accounts and services to both retail and commercial customers.
The written investment policy is reviewed annually by the Company’s ALCO of the Board and updated as needed. ​ The Company’s securities are held in safekeeping accounts at approved correspondent banks, and the Bank safekeeps a small subset of physical securities in a secured bank owned facility. ​ Deposits ​ The Company provides a full range of deposit accounts and services to both retail and commercial customers.
For the other portfolio segments, the risk management process focuses on underwriting new business and, on an ongoing basis, monitoring the credit of the portfolios, including a third party review of the largest credits on an annual basis or more frequently, as needed.
For the other portfolio segments, the risk management process focuses on underwriting new business and, on an ongoing basis, monitoring the credit of the portfolios, including a third party review, with a goal of reviewing 55% of the total loan portfolio on an annual basis or more frequently, as needed.
None of these associates are represented by a collective bargaining agreement. During 2024, we successfully onboarded 112 new associates. Over 66% of the Company’s associates are women, and 9% are minorities. Among the Company’s 320-person banking officers, women make up approximately 55% of these associates, while minorities account for 6% of the banking officer members.
None of these associates are represented by a collective bargaining agreement. During 2025, we successfully onboarded 87 new associates. Over 66% of the Company’s associates are women, and 10% are minorities. Among the Company’s 336-person banking officers, women make up approximately 55% of these associates, while minorities account for 7% of the banking officer members.
We and our subsidiaries have from time to time received requests for information from regulatory authorities in various states, including state attorneys general, securities regulators and other regulatory authorities, concerning our business practices. Such requests are considered incidental to the normal conduct of business.
We and our subsidiaries have from time to time received requests for information from regulatory authorities in various states, including state attorneys general, securities regulators and other regulatory authorities, concerning our business practices.
In addition, we compete with other financial intermediaries and investment alternatives such as mortgage companies, credit card issuers, leasing companies, finance companies, financial technology (fintech) companies, money market mutual funds, brokerage firms, governmental and corporation bond issuers, and other securities firms.
In addition, we compete with other financial intermediaries and investment alternatives such as mortgage companies, credit card issuers, leasing companies, personal and commercial finance companies, financial technology (fintech) companies, money market mutual funds, brokerage firms, governmental and corporation bond issuers, peer-to-peer lending businesses, crowdfunding, stablecoins, cryptocurrency exchanges, and other securities firms.
As of March 1, 2025, SmartBank has 42 full-service bank branches in select markets in East and Middle Tennessee, Alabama and Florida.
As of March 1, 2026, SmartBank has 42 full-service bank branches and two loan production offices in select markets in East and Middle Tennessee, Alabama, Florida and Georgia.
At December 31, 2024, our net loan and lease portfolio totaled approximately $3.9 billion, representing approximately 73% of our total assets.
At December 31, 2025, our net loan and lease portfolio totaled approximately $4.3 billion, representing approximately 74% of our total assets.
Pursuant to Tennessee banking law, the Bank may not, without the prior consent of the Commissioner of the TDFI, pay any dividends to the Company in a calendar year in excess of the total of the Bank’s retained net income for that year plus the retained net income for the preceding two years.
Various federal and state statutory provisions and regulations limit the amount of dividends that SmartBank may pay. 14 Table of Contents Pursuant to Tennessee banking law, the Bank may not, without the prior consent of the Commissioner of the TDFI, pay any dividends to the Company in a calendar year in excess of the total of the Bank’s retained net income for that year plus the retained net income for the preceding two years.
The FDIC calculates quarterly deposit insurance assessments based on an institution’s average 16 Table of Contents total consolidated assets less its average tangible equity, and applies one of four risk categories determined by reference to its capital levels, supervisory ratings, and certain other factors.
The FDIC calculates quarterly deposit insurance assessments based on an institution’s average total consolidated assets less its average tangible equity, and applies one of four risk categories determined by reference to its capital levels, supervisory ratings, and certain other factors. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits.
In 2016, the banking agencies also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2024, these rules have not been implemented by the banking agencies.
In 2016, the banking agencies also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping.
In addition to our banking services, our wholly owned subsidiary Fountain Equipment Finance, LLC, offers loans and leases for heavy equipment, semis, and trailers to small and medium sized businesses throughout the Southeast, and maintains offices offering such services in Knoxville, Atlanta, Charlotte, Memphis, Nashville, and Birmingham, and we offer insurance products through SBK Insurance, Inc., within our full-service branches.
In addition to our banking services, our wholly owned subsidiary Fountain Equipment Finance, LLC, offers loans and leases for heavy equipment, semi-trucks and trailers, to small and medium sized businesses throughout the Southeast, and maintains offices offering such services in Knoxville, Atlanta, Memphis, Nashville, and Birmingham.
Capital Requirements We and SmartBank are each required under federal law to maintain certain minimum capital levels based on ratios of capital to total average assets and capital to risk-weighted assets.
Such requests are considered incidental to the normal conduct of business. 12 Table of Contents Capital Requirements We and SmartBank are each required under federal law to maintain certain minimum capital levels based on ratios of capital to total average assets and capital to risk-weighted assets.
Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by a bank’s federal regulatory agency.
The FDIC could further increase the deposit insurance assessments for certain insured depository institutions, including the Bank, if the DIF reserve ratio is not maintained Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by a bank’s federal regulatory agency.
Associates are inspired to be involved in their communities and show great care for clients. We refer to that as creating “WOW” experiences. Our leadership team empowers associates to make decisions and find opportunities to add value.
Associates are inspired to be involved in their communities and show great care for clients. We refer to that as creating “WOW” experiences.
The following is a brief summary that does not purport to be a complete description of all regulations that affect us or all aspects of those regulations.
Supervision and Regulation We are extensively regulated under federal and state law. The following is a brief summary that does not purport to be a complete description of all regulations that affect us or all aspects of those regulations.
These resources provide associates with the skills they need to promote advancement and become stronger leaders. ​ Health and Welfare ​ We provide a competitive compensation and benefits program to help meet the needs of our associates.
These tools equip our associates with the capabilities they need to advance and excel as effective leaders. ​ Health and Welfare ​ We provide a competitive compensation and benefits program to help meet the needs of our associates.
The Bank has chosen not to opt into the CBLR at this time. In 2024, our and SmartBank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer. Based on current estimates, we believe that we and SmartBank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2025.
The Bank has chosen not to opt into the CBLR at this time. In 2025, the Company’s and SmartBank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer.
The Bank remains responsible for various expenses associated with the program, including furnishings, equipment and promotional expenses and general personnel costs, including commissions paid to licensed brokers. ​ Additionally, SBK Insurance, Inc., a subsidiary of the Bank, provides insurance products in the property and casualty area, commercial, transportation, and life and health to their respective clients. ​ Human Capital Resources The Bank is committed to building a culture where associates thrive and are empowered to be leaders.
The Bank remains responsible for various expenses associated with the program, including furnishings, equipment and promotional expenses and general personnel costs, including commissions paid to licensed brokers. ​ Human Capital Resources The Bank is committed to building a culture where associates thrive and are empowered to be leaders and grow from within.
Federal CRA regulations require, among other things, that evidence of discrimination against applicants on a prohibited basis, and illegal or abusive lending practices be considered in the CRA evaluation.
Federal CRA regulations require, among other things, that evidence of discrimination against applicants on a prohibited basis, and illegal or abusive lending practices be considered in the CRA evaluation. SmartBank has a rating of “Satisfactory” in its most recent CRA evaluation. In 2023 the Federal Reserve, OCC, and FDIC issued a final rule to modernize their respective CRA regulations.
Presently, the senior leadership team includes six associates, two of whom are women. ​ We recognize the corporate responsibility that arises from the impact of our activities on people’s lives and society.
Presently, the senior leadership team includes ten associates, two of whom are women. All of our associates are hired on the basis of their qualifications, experience and merit. Our hiring practices are maintained and implemented in accordance with applicable law. ​ We recognize the corporate responsibility that arises from the impact of our activities on people’s lives and society.
Cybersecurity and Data Privacy State and federal banking regulators have issued various policy statements and, in some cases, regulations, emphasizing the importance of technology risk management and supervision.
The agencies continue to apply the CRA rules as they existed before the 2023 modernization, considering the injunction and pending finalization of the recission of the modernization rule. ​ Cybersecurity and Data Privacy State and federal banking regulators have issued various policy statements and, in some cases, regulations, emphasizing the importance of technology risk management and supervision.
Being trustworthy, loyal, and innovative are some of the characteristics exemplified by our associates. Our core values define our culture: Act with Integrity, Be Enthusiastic, Create Positivity, Demonstrate Accountability, and Embrace Change. ​ As of December 31, 2024, we employed 597 full-time and 15 part-time associates, primarily across our three-state footprint of Tennessee, Alabama, and Florida.
Our core values define our culture: Act with Integrity, Be Enthusiastic, Create Positivity, Demonstrate Accountability, and Embrace Change and our Core Purpose creating “WOW” experiences, drives why we do what we do each and every day. ​ As of December 31, 2025, we employed 581 full-time and 8 part-time associates, primarily across our three-state footprint of Tennessee, Alabama, and Florida.
Activity Limitations Bank holding companies are generally restricted to engaging in the business of banking, managing or controlling banks; and certain other activities determined by the Federal Reserve to be closely related to banking.
The terms of any such supervisory action could have a material negative effect on our business, reputation, operating flexibility, financial condition, and the value of our common stock and preferred stock. 10 Table of Contents Activity Limitations Bank holding companies are generally restricted to engaging in the business of banking, managing or controlling banks, and certain other activities determined by the Federal Reserve to be closely related to banking.
We endeavor to compete successfully with our competitors, regardless of their size, through the selection of banking products and services offered, the level of service provided, the convenience and availability of services, and the degree of expertise and the personal manner in which services are offered. Supervision and Regulation We are extensively regulated under federal and state law.
The larger national and super-regional banks may have significantly greater lending limits and may offer additional products than we are capable of providing. 9 Table of Contents We endeavor to compete successfully with our competitors, regardless of their size, through the selection of banking products and services offered, the level of service provided, the convenience and availability of services, and the degree of expertise and the personal manner in which services are offered.
Member banks do not have any control over the Federal Reserve System as a result of owning the stock and the stock cannot be sold or traded. 15 Table of Contents The deposits of SmartBank are insured by the FDIC up to applicable limits, and, accordingly, SmartBank is also subject to certain FDIC regulations and the FDIC has backup examination authority and some enforcement powers over SmartBank.
The deposits of SmartBank are insured by the FDIC up to applicable limits, and, accordingly, SmartBank is also subject to certain FDIC regulations, and the FDIC has backup examination authority and some enforcement powers over SmartBank.
On October 18, 2022, the FDIC adopted an amended restoration plan to increase the likelihood that the reserve ratio would be restored to at least 1.35 percent by September 30, 2028. The FDIC’s amended restoration plan increases the initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning in the first quarterly assessment period of 2023.
On October 18, 2022, the FDIC adopted a final plan and increased the initial base deposit insurance assessment rate schedules uniformly by 2 basis points, beginning in the first quarterly assessment period of 2023.
Our board of directors recognizes the importance of succession planning for our chief executive officer and other key executives.
The board of directors understands how crucial it is to plan for the succession of the chief executive officer and other key leaders.
We invest in a healthy work-life balance, competitive compensation and benefit packages, and a vibrant, team-oriented environment centered on professional service and open communication among associates. We hold ourselves accountable by taking part in annual engagement surveys to ask for feedback from our associates.
Our leadership team empowers associates to make decisions and find opportunities to add value. 8 Table of Contents We invest in a healthy work-life balance, competitive compensation and benefit packages, and a vibrant, team-oriented environment centered on professional service and open communication among associates empowering them to be decision makers.
Additionally, other banks offer different products or services from those that we provide. The larger national and super-regional banks may have significantly greater lending limits and may offer additional products than we are capable of providing.
Additionally, other banks offer different products or services from those that we provide.
For more information regarding our capital, leverage and total capital ratios, see “Part II - Item 8.
Based on current estimates, we believe that we and SmartBank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2026. For more information regarding our capital, leverage and total capital ratios, see “Part II - Item 8.
Removed
The board of directors annually reviews our succession plans for senior leadership roles, with the goal of ensuring we will continue to have the right leadership talent in place to execute the organization’s long-term strategic plans. ​ We invest in the growth and development of our associates by providing a multi-dimensional approach to learning that empowers, intellectually grows, and professionally develops our colleagues.
Added
Being trustworthy, loyal, and innovative are some of the characteristics exemplified by our associates.
Removed
We provide our associates with opportunities to take part in ongoing learning through educational courses relevant to the banking industry and their job functions and tuition reimbursement to support continuing education. We have learning paths designed to encourage an associate’s advancement and growth, including peer mentoring and leadership programs to empower our leaders.
Added
We achieved certification as a Great Place to Work® in 2025, as a direct result of our associates feedback and were named as the Top 28 th best Financial and Insurance Services Company to work for. From 2017 to 2024, we were nominated as Top Workplace USA by USA Today and by the Knoxville News Sentinel.
Removed
The terms of any such supervisory action could have a material negative effect on our business, reputation, operating flexibility, financial condition, and the value of our common stock and preferred stock.
Added
Each year, the board reviews succession plans for senior positions to make sure the organization always has strong leadership to carry out long-term strategies and foster the development of future talent. ​ We support our associates’ growth by offering a well-rounded learning environment that encourages intellectual and professional development.
Removed
Various federal and state statutory provisions and regulations limit the amount of dividends that SmartBank may pay.
Added
Our team members have access to ongoing education through courses tailored to the banking sector and their specific roles, as well as tuition reimbursement for further studies. Specialized learning paths are available to help associates progress in their careers, including peer mentoring and leadership initiatives to cultivate future leaders.
Removed
Reserves Federal Reserve rules require depository institutions, such as SmartBank, to maintain reserves against their transaction accounts, primarily NOW and regular checking accounts. Effective March 26, 2020, the Federal Reserve eliminated reserve requirements for all depository institutions. These reserve requirements are subject to annual adjustment by the Federal Reserve.
Added
As of December 31, 2025, these rules have not been implemented by the banking agencies, but the SEC adopted final clawback rules under Section 954 of the Dodd-Frank Act in 2022, and the NYSE and Nasdaq implemented related listing standards effective October 2, 2023. We adopted an updated clawback policy in October 2023.
Removed
The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits. As of June 30, 2020, the DIF reserve ratio fell to 1.30%, below the statutory minimum of 1.35%.
Added
Member banks do not have any control over the Federal Reserve System as a result of owning the stock and the stock cannot be sold or traded.
Removed
The FDIC could further increase the deposit insurance assessments for certain insured depository institutions, including the Bank, if the DIF reserve ratio is not restored as projected.
Added
In 2024, US federal regulators proposed amendments to modernize Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) program requirements. Aligned with the Anti-Money Laundering Act of 2020, the rules mandate a risk-based approach requiring institutions to identify, evaluate, and document risks based on business activities and national priorities.
Removed
In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the Deposit Insurance Fund ("DIF") incurred as a result of bank failures that occurred during the first half of 2023 and the FDIC's use of the systemic risk exception to cover certain deposits that were otherwise uninsured.
Added
The revised rules would substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026, and revised data reporting requirements taking effect January 1, 2027. The revised CRA regulations have been subject to an injunction since March 29, 2024.
Removed
The special assessment was based on estimated uninsured deposits as of December 31, 2022, (excluding the first $5.0 billion) and will be assessed at a quarterly rate of 3.36 basis points, over eight quarterly assessment periods, beginning in the first quarter of 2024.

… 9 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+2 added−6 removed167 unchanged
Biggest changeOur securities are not FDIC insured . Securities that we issue, including our common stock, are not savings or deposit accounts or other obligations of any bank, insured by the FDIC, any other governmental agency or instrumentality, or any private insurer, and are subject to investment risk, including the possible loss of our shareholders’ investments.
Biggest changeSecurities that we issue, including our common stock, are not savings or deposit accounts or other obligations of any bank, insured by the FDIC, any other governmental agency or instrumentality, or any private insurer, and are subject to investment risk, including the possible loss of our shareholders’ investments. 33 Table of Contents Anti-takeover laws and certain agreements and charter provisions may adversely affect the price of our common stock. ​ Certain provisions of state and federal law and our articles of incorporation may make it more difficult for someone to acquire control of the Company.
U.S. financial institutions have experienced significant distributed denial-of-service attacks, some of which involved sophisticated and targeted attacks intended to disable or degrade service, or sabotage systems. Other attacks have attempted to obtain unauthorized access to confidential information or destroy data, often through the introduction of computer viruses or malware, cyber-attacks and other means.
U.S. financial institutions have experienced significant distributed denial-of-service attacks, some of which involved sophisticated and targeted attacks intended to disable or degrade service or sabotage systems. Other types of attacks have attempted to obtain unauthorized access to confidential information or destroy data, often through the introduction of computer viruses or malware, cyber-attacks and other means.
To the extent that our activities or the activities of our customers involve the storage and transmission of confidential information, security incidents (including compromises of security of customer systems and networks) could expose us to claims, litigation and other possible liabilities.
To the extent that our activities or the activities of our customers involve the storage and transmission of confidential or sensitive information, security incidents (including compromises of security of customer systems and networks) could expose us to claims, litigation and other possible liabilities.
An interception, misuse or mishandling of personal, confidential or proprietary information being sent to or received from a customer or third party could result in legal liability, remediation costs, regulatory action and reputational harm to us. In addition, we provide our customers the ability to bank remotely, including over the internet or through their mobile device.
An interception, misuse or mishandling of personal, confidential or proprietary information being sent to or received from a customer or third party could result in legal liability, remediation costs, regulatory action and reputational harm to us. In addition, we provide our customers the ability to bank remotely, including over the internet or through their mobile devices.
While the Treasury, the Federal Reserve, and the FDIC have historically taken action to ensure that depositors of failed banks had access to their deposits, including uninsured deposit accounts, there is no guarantee that regional bank failures or bank runs will not occur in the future and, if they were to occur, they may have a material adverse impact on client and investor confidence in regional banks, negatively impacting our liquidity, capital, results of operations, and stock price. 24 Table of Contents Our success depends significantly on economic conditions in our market areas.
While the Treasury, the Federal Reserve, and the FDIC have historically taken action to ensure that depositors of failed banks had access to their deposits, including uninsured deposit accounts, there is no guarantee that regional bank failures or bank runs will not occur in the future and, if they were to occur, they may have a material adverse impact on client and investor confidence in regional banks, negatively impacting our liquidity, capital, results of operations, and stock price. ​ Our success depends significantly on economic conditions in our market areas.
A substantial focus of our marketing and business strategy is to serve small to medium-sized businesses in our market areas. As a result, a relatively high percentage of our loan and lease portfolio consists of commercial loans to such businesses. We further anticipate an increase in the amount of loans to small to medium-sized businesses during 2025.
A substantial focus of our marketing and business strategy is to serve small to medium-sized businesses in our market areas. As a result, a relatively high percentage of our loan and lease portfolio consists of commercial loans to such businesses. We further anticipate an increase in the amount of loans to small to medium-sized businesses during 2026.
To date, none of these types of attacks have had a material effect on our business or operations. However, no assurances can be provided that we may not suffer from such an attack in the future that may cause us material harm.
To date, none of these types of attacks have had, or reasonably likely to have, a material effect on our business or operations. However, no assurances can be provided that we may not suffer from such an attack in the future that may cause us material harm.
Although we take protective measures and endeavor to modify these systems as circumstances warrant, the security of our computer systems, software and networks may be vulnerable to cyber-attacks, unauthorized access, misuse, computer viruses or other malicious code, phishing attempts, brute force attacks, exploiting software vulnerabilities (including “zero-day attacks”), ransomware or other malware, supply chain attacks, and other events that could have a security impact.
Although we take protective measures and endeavor to modify these systems as circumstances warrant, the security of our computer systems, software and networks may be vulnerable to cyber-attacks, unauthorized access, misuse, computer viruses or other malicious code, phishing attempts, brute force attacks, exploiting software vulnerabilities (including “zero-day attacks”), ransomware or other malware, supply chain attacks, and other events that could have an adverse security impact.
If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
If our internal controls fail to prevent or detect an incident, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
There are substantial risks associated with such efforts, including risks that (a) revenues from such activities might not be sufficient to offset the development, compliance, and other implementation costs, (b) competing products and services and shifting market preferences might affect the profitability of such activities, (c) regulatory compliance obligations prevent the success of a new line of business, and (d) our internal controls might be inadequate to manage the risks associated with new activities.
There are substantial risks associated with such 30 Table of Contents efforts, including risks that (a) revenues from such activities might not be sufficient to offset the development, compliance, and other implementation costs, (b) competing products and services and shifting market preferences might affect the profitability of such activities, (c) regulatory compliance obligations prevent the success of a new line of business, and (d) our internal controls might be inadequate to manage the risks associated with new activities.
If, as a result of an examination, a banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity, interest rate sensitivity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate.
If, as a result of an examination, a banking agency were to determine that our financial condition, capital resources, asset 23 Table of Contents quality, earnings prospects, management, liquidity, interest rate sensitivity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate.
Thus, any borrowing that must be incurred by us to make a required capital injection to the Bank becomes more difficult and expensive and could have an adverse effect on our business, financial condition and results of operations. 23 Table of Contents Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings.
Thus, any borrowing that must be incurred by us to make a required capital injection to the Bank becomes more difficult and expensive and could have an adverse effect on our business, financial condition and results of operations. Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings.
In addition, our access to deposits may be affected by the liquidity and/or cash flow needs of depositors, which may be exacerbated in an inflationary, recessionary, or elevated rate environment. This may cause our deposit accounts to decrease in the future, and any such decrease could have a material adverse impact on our sources of funding.
In addition, our access to deposits may be affected by the liquidity and/or cash flow needs of depositors, which may be exacerbated in an inflationary, recessionary, or elevated rate environment. This may cause our deposit accounts to decrease in the future, and any such 29 Table of Contents decrease could have a material adverse impact on our sources of funding.
Thus, in addition to our dependence on the interest rate environment, we are dependent upon (a) the 30 Table of Contents existence of an active secondary market and (b) our ability to profitably sell loans into that market. Profitability of our mortgage operations will depend upon our ability to increase production and thus income while holding or reducing costs.
Thus, in addition to our dependence on the interest rate environment, we are dependent upon (a) the existence of an active secondary market and (b) our ability to profitably sell loans into that market. Profitability of our mortgage operations will depend upon our ability to increase production and thus income while holding or reducing costs.
The secure transmission of confidential information is a critical element of remote and mobile banking.
The secure transmission of confidential and sensitive information is a critical element of remote and mobile banking.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual 32 Table of Contents decisions of investors and general economic and market conditions over which we have no control.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control.
Many of our loans are secured by real estate (both residential and commercial) in our market areas. Consequently, declines in economic conditions in these market areas may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse.
Many of our loans are secured by real estate (both residential and commercial) in our market areas. Consequently, declines in economic conditions in these market areas may have a greater 27 Table of Contents effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse.
If the communities in which we operate do not grow or if prevailing economic conditions, locally or nationally, deteriorate, this may have a significant impact on the amount of loans that we originate, the ability of our borrowers to repay these loans and the value of the collateral securing these loans.
If the communities in which we operate do not grow or if prevailing economic conditions, locally or nationally, deteriorate, this may have a significant impact on the amount of 24 Table of Contents loans that we originate, the ability of our borrowers to repay these loans and the value of the collateral securing these loans.
In addition, the success of a small and medium-sized business often depends on the management skills, talents and efforts of one or two people or a small group of people, and the death, disability or resignation of one or more of these people could have an adverse impact on the business and its ability to repay its loan or lease.
In addition, the success 28 Table of Contents of a small and medium-sized business often depends on the management skills, talents and efforts of one or two people or a small group of people, and the death, disability or resignation of one or more of these people could have an adverse impact on the business and its ability to repay its loan or lease.
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, which infringes on the intellectual property rights of others, or that is otherwise harmful.
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or 25 Table of Contents proprietary information, which infringes on the intellectual property rights of others, or that is otherwise harmful.
Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest income and our net interest margin, asset quality, loan and lease origination volume, liquidity or overall profitability. ​ We are dependent on our information technology and telecommunications systems and third-party servicers, and systems failures, interruptions or breaches of security could have an adverse effect on our financial condition and results of operations.
Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest income and our net interest margin, asset quality, loan and lease origination volume, liquidity or overall profitability. ​ We are dependent on our information technology and telecommunications systems and third-party servicers, and systems failures, interruptions or compromises of security in the Company’s information technology and telecommunications systems could have an adverse effect on our financial condition and results of operations.
The development and use of artificial intelligence (“AI”) presents risks and challenges that may adversely impact our business. ​ We or our third-party (or fourth-party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products.
The development and use of artificial intelligence (“AI”) presents risks and challenges that may adversely impact our business. ​ We or our third-party (or fourth-party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to our business.
In addition, to attract and retain personnel with appropriate skills and knowledge to support our business, we may offer a variety of benefits, which could reduce our earnings. 31 Table of Contents Employee misconduct could expose us to significant legal liability and reputational harm.
In addition, to attract and retain personnel with appropriate skills and knowledge to support our business, we may offer a variety of benefits, which could reduce our earnings. Employee misconduct could expose us to significant legal liability and reputational harm.
Failure to realize the expected revenue increases, cost savings, increases in product presence and/or other 27 Table of Contents projected benefits from an acquisition could have a material adverse effect on our financial condition and results of operations.
Failure to realize the expected revenue increases, cost savings, increases in product presence and/or other projected benefits from an acquisition could have a material adverse effect on our financial condition and results of operations.
Based on the results of this simulation model, which assumed a static environment with no contemplated asset growth or changes in our balance sheet management strategies, if interest rates immediately increased by 200 basis points, we could expect net interest income to 21 Table of Contents decrease by approximately $3.4 million over a 12-month period.
Based on the results of this simulation model, which assumed a static environment with no contemplated asset growth or changes in our balance sheet management strategies, if interest rates immediately increased by 200 basis points, we could expect net interest income to increase by approximately $3.4 million over a 12 month period.
Such security attacks can originate from a wide variety of sources, including persons who are involved with organized crime or who may be linked to terrorist organizations or hostile foreign governments.
Such security attacks can originate from a wide variety of sources, including persons who are involved with criminal organizations or who may be linked to terrorist organizations or hostile foreign governments.
Subject to NYSE rules, our board of directors generally has the authority to issue all or part of any authorized but unissued shares of common stock or preferred stock for any corporate purpose.
Subject to NYSE rules, our board of directors 32 Table of Contents generally has the authority to issue all or part of any authorized but unissued shares of common stock or preferred stock for any corporate purpose.
As of December 31, 2024, SmartFinancial is considered to be in a neutral to slightly liability-sensitive position, meaning income is generally expected to decrease with an increase in short-term interest rates and, conversely, to increase with a decrease in short-term interest rates.
As of December 31, 2025, SmartFinancial is considered to be in a neutral to slightly asset-sensitive position, meaning income is generally expected to decrease with a decrease in short-term interest rates and, conversely, to increase with an increase in short-term interest rates.
Those same parties may also attempt to fraudulently induce employees, customers or other users of our systems to disclose sensitive information in order to gain access to our data or that of our customers or clients. We are also subject to the risk that our employees may intercept and transmit unauthorized confidential or proprietary information.
These actors may also attempt to fraudulently induce employees, or other users of our systems to disclose sensitive information in order to gain access to our data or that of our customers or clients. We are also subject to the risk that our employees may intercept and transmit unauthorized confidential or proprietary information.
The small to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, including the continued elevated inflationary and interest rate environment, which may impair a borrower’s 28 Table of Contents ability to repay a loan or lease, and such impairment could have an adverse effect on our business, financial condition and results of operations.
The small to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, including the continued elevated inflationary and interest rate environment and the imposition of tariffs and retaliatory responses, which may impair a borrower’s ability to repay a loan or lease, and such impairment could have an adverse effect on our business, financial condition and results of operations.
If we are unable to replace our purchased credit impaired loans and leases and the related accretion with a significantly higher level of new performing loans and leases and other earning assets due to our inability to identify attractive acquisition opportunities, a decline in loan demand, competition from other financial institutions in our markets, stagnation or continued deterioration of economic conditions, or other conditions, our financial condition and earnings may be adversely affected.
If we are unable to replace our purchased credit impaired loans and leases and the related accretion with a significantly higher level of new performing loans and leases and other earning assets due to our inability to identify attractive acquisition opportunities, a decline in loan demand, competition from other financial institutions in our markets, stagnation or continued deterioration of economic conditions, or other conditions, our financial condition and earnings may be adversely affected. 26 Table of Contents Our acquisition activity and future expansion may result in additional risks.
The integration could result in higher than expected deposit attrition (run-off), loss of key employees, disruption of the Company’s business or the business of the acquired company, or otherwise adversely affect the Company’s ability to maintain relationships with customers and employees or achieve the anticipated benefits of the acquisition.
The integration could result in higher than expected deposit attrition (run-off), loss of key employees, disruption of the Company’s business or the business of the acquired company, exposure to potential asset quality issues with acquired institutions, or otherwise adversely affect the Company’s ability to maintain relationships with customers and employees or achieve the anticipated benefits of the acquisition.
Our acquisition activity and future expansion may result in additional risks. We expect to continue to expand in our current markets and in other select markets through additional branches or through acquisitions of all or part of other financial institutions. These types of expansions involve various risks, including the risks detailed below.
We expect to continue to expand in our current markets and in other select markets through additional branches or through acquisitions of all or part of other financial institutions. These types of expansions involve various risks, including the risks detailed below.
Any inability to prevent security incidents could also cause existing customers to lose confidence in our systems and could adversely affect our reputation, results of operations and ability to attract and maintain customers and businesses.
An inability to prevent security incidents could also cause existing customers to lose confidence in our systems and could adversely affect our reputation, results of 22 Table of Contents operations and ability to attract and maintain customers and businesses.
We may incur meaningful costs with respect to our corporate responsibility 33 Table of Contents efforts, and if such efforts are negatively perceived, our reputation and stock price may suffer. In addition, ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs.
We may incur meaningful costs with respect to our corporate responsibility efforts, and if such efforts are negatively perceived, our reputation and stock price may suffer. In addition, ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Our securities are not FDIC insured .
Any such event or failure to manage our liquidity effectively could affect our competitive position, increase our borrowing costs and the interest rates we pay on deposits, limit our access to the capital markets, cause our regulators to criticize our operations and have a material adverse effect on our results of operations or financial condition. 29 Table of Contents Our most important source of funds consists of our customer deposits.
Any such event or failure to manage our liquidity effectively could affect our competitive position, increase our borrowing costs and the interest rates we pay on deposits, limit our access to the capital markets, cause our regulators to criticize our operations and have a material adverse effect on our results of operations or financial condition.
At December 31, 2024, approximately 78% of our loans and leases had real estate as a primary or secondary component of collateral, which includes 9% of our loans secured by construction and development collateral.
At December 31, 2025, approximately 80% of our loans and leases had real estate as a primary or secondary component of collateral, which includes 10% of our loans secured by construction and development collateral.
In addition, a security incident could also subject us to additional regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our insurance policies), negative publicity, release of sensitive and/or confidential information, diversion of the attention of management away from the operation of our business and increased cybersecurity protection and remediation costs, increases in operating expenses, lost revenues, expose us to civil litigation and possible financial liability and cause reputational damage.
In addition, a security incident could also subject us to additional regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our insurance policies), negative publicity, release of sensitive and/or confidential information, diversion of the attention of management away from the operation of our business, increased cybersecurity protection and remediation costs, increased operating expenses, lost revenues, civil litigation, possible financial liability and reputational damage, any of which could have a material adverse effect on the Company’s results of operations, financial condition and cash flows.
Our network could be vulnerable to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security incidents. We may be required to spend 22 Table of Contents significant capital and other resources to protect against the threat of security incidents, or to alleviate problems caused by security incidents.
Our network could be vulnerable to unauthorized access, computer viruses or other malicious code, phishing attempts, spam attacks, human error, natural disasters, power loss and other security incidents described above. We may be required to spend significant capital and other resources to protect against the threat of security incidents, or to remediate problems caused by security incidents.
As of December 31, 2024, our 10 largest borrowing relationships totaled approximately $314 million in outstanding balances, or approximately 9% of our total loan portfolio.
As of December 31, 2025, our 10 largest borrowing relationships totaled approximately $303 million in outstanding balances, or approximately 7% of our total loan portfolio.
As of December 31, 2024, we had 16,925,672 shares of common stock and no shares of preferred stock outstanding and had reserved or otherwise set aside for issuance 10,148 shares underlying outstanding options and 1,595,020 shares that are available for future grants of stock options, restricted stock or other equity-based awards pursuant to our equity incentive plans.
As of December 31, 2025, we had 17,029,317 shares of common stock and no shares of preferred stock outstanding and had reserved or otherwise set aside for issuance, 1,679,333 shares that are available for future grants of stock options, restricted stock or other equity-based awards pursuant to our equity incentive plans.
We also face significant competition from numerous other financial services institutions, many of which will have greater financial resources than we do, when considering acquisition opportunities. Accordingly, attractive acquisition opportunities may not be available to us. There can be no assurance that we will be successful in identifying or completing any future acquisitions.
We also face significant competition from numerous other financial services institutions, many of which will have greater financial resources than we do, when considering acquisition opportunities. Accordingly, attractive acquisition opportunities may not be available to us.
During higher and rising interest rate environments, the demand for mortgage loans and the level of refinancing activity tends to decline, which can lead to reduced volumes of business and lower revenues, which could negatively impact our earnings.
During higher and rising interest rate environments, the demand for mortgage loans and the level of refinancing activity tends to decline, which can lead to reduced volumes of business and lower revenues, which could negatively impact our earnings. Federal Reserve decisions to change interest rates are not predictable and can have a material impact on our mortgage banking operations.
Such deposit balances can decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff.
Our most important source of funds consists of our customer deposits. Such deposit balances can decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff.
Although we regularly add additional security measures to our computer systems and network infrastructure to mitigate the possibility of cyber security incidents, including firewalls and penetration testing, it is difficult or impossible to defend against every risk being posed by changing technologies, including artificial intelligence, as well as criminal intent on committing cyber-crime.
Although we regularly enhance our security measures to protect our computer systems and network infrastructure to mitigate the possibility of cyber security incidents, including adding firewalls and conducting penetration testing, it is difficult to defend against every risk posed by changing technologies, including artificial intelligence.
Additionally, any future acquisitions may not produce the revenue, earnings or synergies that we anticipated. As our purchased credit impaired loan portfolio, which produces substantially higher yields than our organic and purchased non-credit impaired loan and lease portfolios, is paid down, we expect downward pressure on our income.
As our purchased credit impaired loan portfolio, which produces substantially higher yields than our organic and purchased non-credit impaired loan and lease portfolios, is paid down, we expect downward pressure on our income.
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
The precautions we take to detect and prevent such misconduct may not always be effective. 31 Table of Contents We may be adversely affected by the soundness of other financial institutions. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
In addition, improper use or disclosure of confidential information by our employees, even if inadvertent, could result in serious harm to our reputation, financial condition and current and future business relationships. The precautions we take to detect and prevent such misconduct may not always be effective. We may be adversely affected by the soundness of other financial institutions.
In addition, improper use or disclosure of confidential information by our employees, even if inadvertent, could result in serious harm to our reputation, financial condition and current and future business relationships.
If interest rates immediately decreased by 200 basis points, we could expect net interest income to increase by approximately $1.5 million over the next 12-month period. The Federal Reserve reduced rates five times during 2019 through 2021. However, i nterest rates increased significantly in 2022-2023 to slow economic growth and counteract rising inflation.
If interest rates immediately decreased by 200 basis points, we could expect net interest income to decrease by approximately $4.06 million over the next 12 month period. 21 Table of Contents Rate changes reportedly are dependent on the Federal Reserve’s assessment of economic data as it becomes available.
Removed
In September, November, and December of 2024, the Federal Reserve lowered the federal funds rate and indicated that the rate is likely to be held steady in 2025, or decreased, contingent upon improving inflationary conditions. Further rate changes reportedly are dependent on the Federal Reserve’s assessment of economic data as it becomes available.
Added
As of December 31, 2025, the Company’s CLD and CRE ratios were 71.45% and 277.30%, respectively, both below the guidelines above. Our ability to grow those loan types could be constrained by the amount we are able to grow capital.
Removed
The development and use of AI presents a number of risks and challenges 25 Table of Contents to our business.
Added
There can be no assurance that we will be successful in identifying or completing any future acquisitions Additionally, any future acquisitions may not produce the revenue, earnings or synergies that we anticipated.
Removed
As of December 31, 2024, the Company’s percentage with respect to the above CLD guideline was 75.64%, within the recommended 100% limit, and with respect to the above CRE guideline, its percentage was 303.46%, exceeding the 300% level.
Removed
If we are able to identify attractive acquisition opportunities, we must generally satisfy a number of conditions prior to completing any such transaction, including certain bank regulatory approvals, which have become substantially more difficult, time-consuming and 26 Table of Contents unpredictable as a result of the 2007-2008 financial crisis.
Removed
In 2022 and 2023, in response to growing signs of inflation, the Federal Reserve increased interest rates rapidly, but subsequently lowered the federal funds rate in September, November, and December of 2024 and indicated that the rate is likely to be held steady in 2025, or decreased, contingent upon improving inflationary conditions .
Removed
Anti-takeover laws and certain agreements and charter provisions may adversely affect the price of our common stock. ​ Certain provisions of state and federal law and our articles of incorporation may make it more difficult for someone to acquire control of the Company.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

17 edited+4 added−4 removed0 unchanged
Biggest changeIn addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness. Our Information Security Officer and our Chief Technology Officer, along with key members of their teams, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
Biggest changeOur information security program is based on the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, regulatory guidance, and the Federal Financial Institutions Examination Council (“FFIEC”) guidelines. In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
Our board of directors has approved management committees including the Information Technology Steering Committee, which focuses on technology impact, and the Risk Management Committee, which focuses on business impact and cyber security awareness. These committees provide oversight and governance of the technology program and the information security program.
Our board of directors has approved management committees including the Information Technology Steering Committee, which focuses on technology impact, and the Risk Management Committee, which focuses on business impact and cyber security awareness. These management committees provide oversight and governance of the technology program and the information security program.
We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers and our supply chain. We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections as a significant portion of our workforce has the option to work remotely.
We maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers. We actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections because a significant portion of our workforce has the option to work remotely.
Additionally, the Risk Management Committee and Audit Committee of our board of directors reviews our cyber security risk profile on a quarterly basis. The Information Technology Steering Committee and Risk Management Committee each provide a report of their activities to the full board of directors at least quarterly.
Additionally, the Risk Management Committee and Audit Committee of our board of directors review our cyber security risk profile on a quarterly basis. The Information Technology Steering Committee and Risk Management Committee each provide a report of their activities to the full board of directors at least quarterly. 35 Table of Contents
The Information Technology Steering and Audit Committees are responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
The Information Technology Steering Committee and Audit Committee of the board of directors are responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
These committees are chaired by department managers and include the Information Security Officer and Chief Technology Officer as well as their direct reports and other key departmental managers from throughout the entire company. These committees generally meet quarterly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks.
These management committees are chaired by department managers and include the ISO and CTO and other key departmental managers from throughout the organization. These management committees generally meet quarterly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks.
We have established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests. We engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity experts and third-party specialists.
We leverage people, processes, and technology as part of our efforts to manage and maintain cybersecurity controls. We have established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests. We engage in regular assessments of our infrastructure, software systems, and network architecture.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Our risk management program is designed to identify, assess, and mitigate risks across various aspects of our company, including financial, operational, regulatory, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Our risk management program is designed to identify, assess, and mitigate risks across all aspects of our organization. Given the increasing reliance on technology and increasing risk of cyber threats, cybersecurity is a critical component of our overall risk management program.
Our internal systems, processes, and controls are designed to mitigate loss from cyber-attacks and, while we have experienced cybersecurity incidents in the past, to date, risks from cybersecurity threats have not materially affected our company.
Our internal systems, processes, and controls are designed to prevent and mitigate loss from cyber-attacks and, while we have experienced cybersecurity incidents in the past, to date, risks from cybersecurity threats have not materially affected, or are not reasonably likely to materially affect, our business strategy, results of operations, or financial condition.
Our Information Security Officer and our Chief Technology Officer provide quarterly reports to the Information Technology Steering Committee regarding the information security program and the technology program, key enterprise 35 Table of Contents cybersecurity initiatives, and other matters relating to cybersecurity processes. The Information Technology Steering Committee reviews and approves our information security and technology budgets and strategies annually.
Our ISO and CTO provide quarterly reports to the Information Technology Steering Committee regarding the information security and technology programs, including key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes and systems. The Information Technology Steering Committee reviews and approves our information security and technology budgets and strategies annually.
The Information Security Officer reports summaries of key issues, including significant cybersecurity and/or privacy incidents discussed at committee meetings and the actions taken to the Information Technology Steering Committee on a quarterly basis (or more frequently as may be required by the Incident Response Plan).
More frequent meetings occur, as needed, if and when the Incident Response Plan is activated. The ISO reports summaries of key issues, including significant cybersecurity and/or privacy incidents discussed at management committee meetings and the actions taken in the quarterly Information Technology Steering Committee meetings (or more frequently as may be required by the Incident Response Plan).
The Incident Response Plan is coordinated through the Information Security Officer and key members of management are embedded into the Plan by its design. The Incident Response Plan facilitates coordination across multiple parts of our organization and is evaluated at least annually. Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe.
The Incident Response Plan facilitates coordination across multiple parts of our organization and is evaluated and tested at least annually. Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is potentially severe.
Please see Part I, Item 1A Risk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. Governance Our Information Security Officer has 24 years of experience working for financial institutions and has served in the role of Chief Information Officer and Chief Information Security Officer.
Please see Part I, Item 1A Risk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. ​ Governance Our ISO has 18 years of experience in the financial services industry with a strong emphasis on technology-driven environments.
Our Information Security Officer is primarily responsible for this cybersecurity component and is a key member of the risk management organization, reporting directly to the Chief Risk Officer and as discussed below, periodically to our Information Technology Steering Committee, Audit Committee and to our board of directors.
The ISO is a key member of the risk management team, reporting directly to the Chief Risk Officer and provides reporting on the information security program to the Information Technology Steering Committee, Audit Committee and our board of directors.
He is a certified and active Certified Information Security Manager (“CISM”) professional. Our Information Security Officer is accountable for managing our enterprise information security department and delivering our information security program. The responsibilities of this department include cybersecurity risk assessment, defense operations, incident response, vulnerability assessment, threat intelligence, identity access governance, third-party risk management, and business resilience.
In his role, the ISO is responsible for leading our enterprise information security function and overseeing the execution of our information security program. His responsibilities include cybersecurity risk assessment, security operations and monitoring, incident response, vulnerability management, threat intelligence, identity and access governance, third-party risk management, and business resilience.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management program. ​ We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board-approved management committees, as discussed further below, and to the Information Technology Steering Committee.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and to make recommendations to strengthen our risk management program.
The department, as a whole, consists of information security professionals with varying degrees of education and experience. Individuals within the department are generally subject to professional education and certification requirements. In particular, our Information Security Officer has substantial relevant expertise and formal training in the areas of information security and cybersecurity risk management.
The information security department consists of professionals with diverse technical expertise, educational backgrounds, and experience levels. Team members are generally required to maintain relevant professional education and certification consistent with industry expectations. Our ISO’s extensive experience, formal education, and cybersecurity credentials provide substantial relevant expertise to effectively oversee our information security program and support sound governance of cybersecurity risks.
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Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information. ​ The structure of our information security program is designed around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, regulatory guidance, the Federal Financial Institutions Examination Council (“FFIEC”) guidelines.
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Our Information Security Officer (“ISO”) is primarily responsible for the development, management, and monitoring of our information security program, which includes a cybersecurity component.
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The Information Security Program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We employ an in-depth, layered, defensive strategy that embraces a “trust by design” philosophy when designing new products, services, and technology.
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Our ISO and Chief Technology Officer (“CTO”) and other key members of their teams, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues to ensure the program’s effectiveness. We employ an in-depth, layered, defensive strategy focused on prevention, identification, response and rapid remediation.
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We leverage people, processes, and technology as part of our efforts to manage and 34 Table of Contents maintain cybersecurity controls. We also employ a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats.
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We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board-approved management 34 Table of Contents committees. The Incident Response Plan is coordinated through the ISO and key members of management are embedded into the plan by its design.
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More frequent meetings occur from time to time in accordance with the Incident Response Plan in order to facilitate timely informing and monitoring efforts.
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His background spans all major areas of the banking sector, giving him broad operational and strategic insight into cybersecurity risks unique to financial institutions. He holds an MBA in Financial Services and is a Certified Information Security Manager (“CISM”) professional.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES The Company’s executive offices are located at 5401 Kingston Pike, #600, Knoxville, Tennessee 37919. This property is owned by SmartBank and also serves as a branch location for the Bank’s customers. At December 31, 2024, we conducted branch banking operations in 42 offices in 3 states.
Biggest changeITEM 2. PROPERTIES The Company’s executive offices are located at 5401 Kingston Pike, #600, Knoxville, Tennessee 37919. This property is owned by SmartBank and also serves as a branch location for the Bank’s customers.
These offices include both owned and leased facilities as follows: ​ ​ ​ ​ ​ ​ ​ State ​ Owned ​ Leased ​ Total ​ ​ ​ ​ ​ ​ ​ Tennessee ​ ​ ​ ​ ​ ​ Branch operations ​ 18 ​ 6 ​ 24 ​ ​ ​ ​ ​ ​ ​ Alabama ​ ​ ​ ​ ​ ​ Branch operations ​ 9 ​ 5 ​ 14 ​ ​ ​ ​ ​ ​ ​ Florida ​ ​ ​ ​ ​ ​ Branch operations ​ 2 ​ 2 ​ 4 ​ ​ 29 ​ 13 ​ 42 ​ ​
These offices include both owned and leased facilities as follows: ​ ​ ​ ​ ​ ​ ​ State ​ Owned ​ Leased ​ Total ​ ​ ​ ​ ​ ​ ​ Tennessee ​ ​ ​ ​ ​ ​ Branch operations ​ 18 ​ 6 ​ 24 Loan production office ​ - ​ 1 ​ 1 ​ ​ ​ ​ ​ ​ ​ Alabama ​ ​ ​ ​ ​ ​ Branch operations ​ 9 ​ 5 ​ 14 ​ ​ ​ ​ ​ ​ ​ Florida ​ ​ ​ ​ ​ ​ Branch operations ​ 2 ​ 2 ​ 4 ​ ​ 29 ​ 14 ​ 43 ​ ​
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At December 31, 2025, we conducted full service banking operations in 42 branch offices in 3 states and one loan production office in Tennessee for a total 43 locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS At December 31, 2024, neither SmartFinancial, nor SmartBank, was involved in any material litigation. SmartBank is periodically involved as a plaintiff or defendant in various legal actions in the ordinary course of its business.
Biggest changeITEM 3. LEGAL PROCEEDINGS At December 31, 2025, neither SmartFinancial, nor SmartBank, was involved in any material litigation. SmartBank is periodically involved as a plaintiff or defendant in various legal actions in the ordinary course of its business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities On November 20, 2018, the Company announced that its board of directors had authorized a stock repurchase plan pursuant to which the Company may purchase up to $10.0 million in shares of the Company’s outstanding common stock.
Biggest changeBusiness – Supervision and Regulation – Payment of Dividends”. ​ Equity Compensation Plan Information For information relating to compensation plans under which our equity securities are authorized for issuance, see Part III Items 11 and 12. 36 Table of Contents Issuer Purchases of Equity Securities On November 20, 2018, the Company announced that its board of directors had authorized a stock repurchase plan pursuant to which the Company may purchase up to $10.0 million in shares of the Company’s outstanding common stock.
The following table summarizes the Company’s repurchase activity during the quarter ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum ​ ​ ​ ​ ​ ​ ​ ​ ​ Number (or ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Value) of ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares That May ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Yet Be Purchased ​ ​ Total Number of ​ Weighted ​ Purchased as Part of ​ Under the Plans ​ ​ Shares ​ Average Price Paid ​ Publicly Announced ​ or Programs (in Period Repurchased Per Share Plans or Programs thousands) October 1, 2024 to October 31, 2024 ​ — ​ $ — ​ — ​ $ 1,546 November 1, 2024 to November 30, 2024 — ​ ​ — ​ — ​ ​ 1,546 December 1, 2024 to December 31, 2024 — ​ ​ — ​ — ​ ​ 1,546 Total ​ — ​ $ — ​ — ​ $ 1,546 ​ ​ 37 Table of Contents Stock Performance Graph The following performance graph and related information are neither “soliciting material” nor “filed’ with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent the Company specifically incorporates it by reference to such filing.
The following table summarizes the Company’s repurchase activity during the quarter ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum ​ ​ ​ ​ ​ ​ ​ ​ ​ Number (or ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Value) of ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares That May ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Yet Be Purchased ​ ​ Total Number of ​ ​ ​ Purchased as Part of ​ Under the Plans ​ ​ Shares ​ Average Price Paid ​ Publicly Announced ​ or Programs (in Period ​ ​ ​ Repurchased ​ ​ ​ Per Share ​ ​ ​ Plans or Programs ​ ​ ​ thousands) October 1, 2025 to October 31, 2025 ​ — ​ $ — ​ — ​ $ 1,546 November 1, 2025 to November 30, 2025 — ​ ​ — ​ — ​ ​ 1,546 December 1, 2025 to December 31, 2025 — ​ ​ — ​ — ​ ​ 1,546 Total ​ — ​ $ — ​ — ​ $ 1,546 ​ ​ 37 Table of Contents Stock Performance Graph The following performance graph and related information are neither “soliciting material” nor “filed’ with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent the Company specifically incorporates it by reference to such filing.
Notes: 1) The lines represent monthly index levels derived from compounded daily returns that include all dividends. 2) The indexes are reweighted daily, using the market capitalization on the previous day. 3) If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. 4) The index level for all series was set to $100.00 on 12/31/2019. ​ ​ 38 Table of Contents ​ ITEM 6.
Notes: 1) The lines represent monthly index levels derived from compounded daily returns that include all dividends. 2) The indexes are reweighted daily, using the market capitalization on the previous day. 3) If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. 4) The index level for all series was set to $100.00 on 12/31/2020. 38 Table of Contents ​ ​ ​ ITEM 6.
The performance graph compares the cumulative five-year shareholder return on the Company’s common stock, assuming an investment of $100 on December 31, 2019, and reinvestment of dividends thereafter, to that of the common stocks of United States companies reported in the Russell 3000 Index and the common stocks of the S&P SmallCap Bank Index.
The performance graph compares the cumulative five-year shareholder return on the Company’s common stock, assuming an investment of $100 on December 31, 2020, and reinvestment of dividends thereafter, to that of the common stocks of United States companies reported in the Russell 3000 Index and the common stocks of the S&P SmallCap Bank Index.
As of December 31, 2024, we have purchased $8.5 million of the authorized $10.0 million and may purchase up to an additional $1.5 million in the Company’s outstanding common stock pursuant to the plan.
As of December 31, 2025, we have purchased $8.5 million of the authorized $10.0 million and may purchase up to an additional $1.5 million in the Company’s outstanding common stock pursuant to the plan.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information SmartFinancial’s common stock is listed on the New York Stock Exchange under the symbol “SMBK”. As of March 10, 2025, there were approximately 7,142 holders of record of SmartFinancial’s common stock and 17,018,018 shares outstanding.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information SmartFinancial’s common stock is listed on the New York Stock Exchange under the symbol “SMBK”. As of March 12, 2026, there were approximately 10,561 holders of record of SmartFinancial’s common stock and 17,096,969 shares outstanding.
The index primarily includes banks and, to a lesser extent, insurance underwriters and specialty lenders providing a broad range of financial services, including retail banking, loans, and money transmissions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Symbol Total Returns Index For: 2019 2020 2021 2022 2023 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Smart Financial ​ $ 100.00 ​ ​ 77.69 ​ $ 118.35 ​ $ 120.40 ​ $ 108.57 ​ $ 139.02 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Russell 3000 ​ $ 100.00 ​ $ 120.89 ​ $ 151.91 ​ $ 122.73 ​ $ 154.59 ​ $ 191.39 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ S&P SmallCap Bank ​ $ 100.00 ​ $ 90.82 ​ $ 126.43 ​ $ 111.47 ​ $ 112.03 ​ $ 132.44 ​ Definitions: 1) The Russell 3000 Index is a market-capitalization-weighted equity index which tracks the performance of the 3,000 largest U.S.-traded stocks. 2) The S&P SmallCap Bank Index is a market-capitalization-weighted index which tracks the performance of NYSE and NASDAQ-listed banks, insurance underwriters and specialty lenders in S&P's coverage universe with $250M to $1B market capitalization as of most recent pricing data.
The index primarily includes banks and, to a lesser extent, insurance underwriters and specialty lenders providing a broad range of financial services, including retail banking, loans, and money transmissions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Symbol ​ ​ ​ Total Returns Index For: ​ ​ ​ 2020 ​ ​ ​ 2021 ​ ​ ​ 2022 ​ ​ ​ 2023 ​ ​ ​ 2024 ​ ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Smart Financial ​ $ 100.00 ​ ​ 152.35 ​ $ 154.75 ​ $ 139.75 ​ $ 178.96 ​ $ 215.73 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Russell 3000 ​ $ 100.00 ​ $ 125.66 ​ $ 101.53 ​ $ 127.88 ​ $ 158.32 ​ $ 185.47 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ S&P SmallCap Bank ​ $ 100.00 ​ $ 139.21 ​ $ 122.74 ​ $ 123.35 ​ $ 145.82 ​ $ 160.37 ​ Definitions: 1) The Russell 3000 Index is a market-capitalization-weighted equity index which tracks the performance of the 3,000 largest U.S.-traded stocks. 2) The S&P SmallCap Bank Index is a market-capitalization-weighted index which tracks the performance of NYSE and NASDAQ-listed banks, insurance underwriters and specialty lenders in S&P's coverage universe with $250M to $1B market capitalization as of most recent pricing data.
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Business – Supervision and Regulation – Payment of Dividends”. 36 Table of Contents Equity Compensation Plan Information For information relating to compensation plans under which our equity securities are authorized for issuance, see Part III Items 11 and 12.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe cost of average interest-bearing deposits increased from 0.60% for 2022, to 2.59% for 2023, primarily due to the impact of rising Federal Reserve rates, and such increases significantly contributing to the increase in interest expense in 2023. 41 Table of Contents 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ Yield/ ​ Average ​ ​ ​ Yield/ ​ Average ​ ​ ​ Yield/ ​ ​ Balance Interest Cost Balance Interest Cost Balance Interest Cost ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans and leases, including fees 1,2 ​ $ 3,607,558 ​ $ 214,310 ​ 5.94 % $ 3,334,523 ​ $ 186,479 ​ 5.59 % $ 2,948,511 ​ $ 136,381 4.63 % Taxable Securities ​ ​ 580,001 ​ 20,151 3.47 % ​ 713,637 ​ 16,665 2.34 % 688,428 ​ 11,799 1.71 % Tax-exempt securities 3 ​ 63,679 ​ 1,780 2.80 % 64,816 ​ 1,795 2.77 % 100,566 ​ 2,831 2.82 % Federal funds and other earning assets ​ 300,081 ​ 16,000 5.33 % 272,864 ​ 13,481 4.94 % 577,593 ​ 8,488 1.47 % Total interest-earning assets ​ 4,551,319 ​ 252,241 5.54 % 4,385,840 ​ 218,420 4.98 % 4,315,098 ​ 159,499 3.70 % Noninterest-earning assets ​ 388,267 ​ ​ 370,436 ​ ​ 373,026 ​ ​ Total assets ​ $ 4,939,586 ​ ​ ​ ​ ​ ​ $ 4,756,276 ​ ​ ​ ​ ​ ​ $ 4,688,124 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Shareholders' Equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing demand deposits ​ $ 932,598 ​ 21,074 2.26 % $ 959,639 ​ 20,214 2.11 % $ 945,414 ​ 6,278 0.66 % Money market and savings deposits ​ 1,913,673 ​ 64,116 3.35 % 1,768,869 ​ 50,468 2.85 % 1,576,170 ​ 9,137 0.58 % Time deposits ​ 623,652 ​ 24,070 3.86 % 520,799 ​ 13,578 2.61 % 513,416 ​ 2,813 0.55 % Total interest-bearing deposits ​ 3,469,923 ​ 109,260 3.15 % 3,249,307 ​ 84,260 2.59 % 3,035,000 ​ 18,228 0.60 % Borrowings ​ 21,719 ​ 1,075 4.95 % 17,824 ​ 936 5.25 % 32,986 ​ 602 1.83 % Subordinated debt ​ 41,184 ​ 3,434 8.34 % 42,055 ​ 2,767 6.58 % 41,970 ​ 2,503 5.96 % Total interest-bearing liabilities ​ 3,532,826 ​ 113,769 3.22 % 3,309,186 ​ 87,963 2.66 % 3,109,956 ​ 21,333 0.69 % Noninterest-bearing deposits ​ 883,923 ​ ​ 958,078 ​ ​ 1,120,555 ​ ​ Other liabilities ​ 48,949 ​ ​ 46,052 ​ ​ 34,361 ​ ​ Total liabilities ​ 4,465,698 ​ ​ 4,313,316 ​ ​ 4,264,872 ​ ​ Shareholders' equity ​ 473,888 ​ ​ 442,960 ​ ​ 423,252 ​ ​ Total liabilities and shareholders’ equity ​ $ 4,939,586 ​ ​ $ 4,756,276 ​ ​ $ 4,688,124 ​ ​ Net interest income, taxable equivalent ​ ​ $ 138,472 ​ ​ $ 130,457 ​ ​ $ 138,166 ​ Interest rate spread ​ ​ 2.32 % ​ 2.32 % ​ 3.01 % Tax equivalent net interest margin ​ ​ 3.04 % ​ 2.97 % ​ 3.20 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of average interest-earning assets to average interest-bearing liabilities ​ ​ ​ 128.83 % ​ 132.54 % ​ 138.75 % Percentage of average equity to average assets ​ ​ 9.59 % ​ 9.31 % ​ 9.03 % ​ ​ 1 Yields 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%.
Biggest changeSummary 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 fees 1 ​ $ 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 securities 2 ​ 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 % ​ ​ 1 Yields 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 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, (4) individual allowances on collateral-dependent loans where the bank may be inadequately protected by current paying capacity of the borrower.
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.
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, 2024 (dollars in thousands) .
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) .
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, 2024 and 2023.
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.
At December 31, 2024, and 2023, 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.
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.
The Company performs its annual goodwill impairment test as of December 31, of each year, and for 2024 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.
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.
The Company and Bank exceeded all regulatory capital requirements and was considered to be “well-capitalized” as of December 31, 2024 and 2023. As of December 31, 2024, the FDIC categorized the Bank as well-capitalized under the prompt corrective action framework.
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.
The taxable-equivalent adjustment was $374 thousand, $377 thousand and $665 thousand for the years ended December 31, 2024, 2023 and 2022, respectively. ​ ​ 42 Table of Contents ​ 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.
The taxable-equivalent adjustment was $459 thousand, $374 thousand and $377 thousand for the years ended December 31, 2025, 2024 and 2023, respectively. ​ ​ 42 Table of Contents ​ 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.
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. 2024 compared to 2023 Net interest income, taxable equivalent, increased to $138.5 million in 2024 from $130.5 million in 2023.
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.
Receipts in excess of that amount are recorded as recoveries to the allowance for loan and lease losses until prior charge-offs have been fully recovered. 46 Table of Contents Assets acquired as a result of foreclosure are recorded at estimated fair value in other real estate owned.
Receipts in excess of that amount are recorded as recoveries to the allowance for credit losses until prior charge-offs have been fully recovered. 46 Table of Contents Assets acquired as a result of foreclosure are recorded at estimated fair value in other real estate owned.
The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off. ​ 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, 2024.
The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off. ​ 48 Table of Contents 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.
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 40 Table of Contents assets increased to 2.45% in 2024, up from 2.38% 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.
Financial Statements and Supplementary Data – Note 9 – Borrowings and Line of Credit.” Based on the values of loans pledged as collateral, we had $306.6 million of additional borrowing availability with the FHLB as of December 31, 2024. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts.
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.
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, 2024, there was approximately $96.1 million in 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.
At December 31, 2024, 45% of the allowance is attributable to the collective qualitative factors, a slight decline from 46% at December 31, 2023. Management considers forward-looking information in estimating expected credit losses.
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.
While our policies and procedures used to estimate the allowance for credit losses as well as the resultant provision for credit losses 48 Table of Contents charged to operations are considered adequate by management, they are necessarily approximate and imprecise.
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.
Nonperforming loans and leases as a percentage of gross loans and leases, net of deferred fees, was 0.20% as of December 31, 2024, and 0.24% as of December 31, 2023, respectively. Total nonperforming assets as a percentage of total assets as of December 31, 2024, totaled 0.19% compared to 0.20% as of December 31, 2023.
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.
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 decreased from $689.6 million at December 31, 2023, to $609.0 million at December 31, 2024.
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.
Our investment to asset ratio has decreased from 14.3% at December 31, 2023, to 11.5% at December 31, 2024 primarily due to deploying principal cash flow away from the investment portfolio. 50 Table of Contents Net unrealized losses in our AFS securities portfolio were $30.4 million as of December 31, 2024, compared to $33.0 million at December 31, 2023.
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. 50 Table of Contents 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.
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, 2024, brokered deposits represented approximately 4.52% of total deposits.
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.
Income tax expense was $7.6 million in 2023 with an effective tax rate of 21.1%, compared to $11.9 million in 2022 with an effective tax rate of 21.7%. Net Interest Income and Yield Analysis The management of interest income and expense is fundamental to our financial performance.
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.
As of December 31, 2024 the Bank provides a comprehensive suite of commercial and consumer banking services to clients through 42 full-service bank branches in select markets in East and Middle Tennessee, Alabama and Florida.
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.
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 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. 44 Table of Contents 2023 compared to 2022 Noninterest expense increased $6.9 million to $113.2 million in 2023, compared to $106.3 million in 2022.
The primary components of the changes in noninterest expense were as follows: 44 Table of Contents ● 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.
This increase is related to organic deposit growth. As of December 31, 2024, the Company had outstanding time deposits under $250,000 of $541.8 million, time deposits over $250,000 of $302.8 million, and a time deposit fair value adjustment of $39 thousand.
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 Company believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of deposits was 2.51% in 2024 compared to 2.00% in 2023. 51 Table of Contents Total deposits as of December 31, 2024, were $4.7 billion, which was an increase of $418.6 million from December 31, 2023.
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. 51 Table of Contents Total deposits as of December 31, 2025, were $5.2 billion, which was an increase of $466.3 million from December 31, 2024.
As of December 31, 2024, and 2023, our allowance for credit losses was $37.4 million and $35.1 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 0.96% and 1.02% at December 31, 2024, and 2023, respectively.
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.
Net interest income, taxable equivalent, increased by $8.0 million between the years ended December 31, 2024 and 2023 and decreased by $7.7 million between the years ended December 31, 2023 and 2022.
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.
Income Taxes 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. 2023 compared to 2022 In 2023, income tax expense totaled $7.6 million compared to $11.9 million in 2022.
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.
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 2024, 2023 and 2022: (dollars in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ 2022 ​ Balance Sheet: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 5,275,904 ​ ​ $ 4,829,387 ​ ​ $ 4,637,498 ​ Loans and leases ​ ​ 3,906,340 ​ ​ ​ 3,444,462 ​ ​ ​ 3,253,627 ​ Allowance for credit losses ​ ​ (37,423) ​ ​ ​ (35,066) ​ ​ ​ (23,334) ​ Total securities ​ ​ 608,987 ​ ​ ​ 689,646 ​ ​ ​ 769,842 ​ Goodwill and other intangibles, net ​ ​ 104,723 ​ ​ ​ 107,148 ​ ​ ​ 109,772 ​ Total deposits ​ ​ 4,686,483 ​ ​ ​ 4,267,854 ​ ​ ​ 4,077,100 ​ Borrowings ​ ​ 8,135 ​ ​ ​ 13,078 ​ ​ ​ 41,860 ​ Subordinated debt ​ ​ 39,684 ​ ​ ​ 42,099 ​ ​ ​ 42,015 ​ Shareholders' equity ​ ​ 491,461 ​ ​ ​ 459,886 ​ ​ ​ 432,452 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income Statement: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ $ 251,119 ​ ​ $ 218,043 ​ ​ $ 158,834 ​ Interest expense ​ ​ 113,769 ​ ​ ​ 87,963 ​ ​ ​ 21,333 ​ Net interest income ​ ​ 137,350 ​ ​ ​ 130,080 ​ ​ ​ 137,501 ​ Provision for loan and lease losses ​ ​ 5,153 ​ ​ ​ 3,029 ​ ​ ​ 4,018 ​ Net interest income after provision for loan and lease losses ​ ​ 132,197 ​ ​ ​ 127,051 ​ ​ ​ 133,483 ​ Noninterest income ​ ​ 34,152 ​ ​ ​ 22,325 ​ ​ ​ 27,715 ​ Noninterest expense ​ ​ 120,890 ​ ​ ​ 113,150 ​ ​ ​ 106,290 ​ Income before income taxes ​ ​ 45,459 ​ ​ ​ 36,226 ​ ​ ​ 54,908 ​ Income tax expense ​ ​ 9,318 ​ ​ ​ 7,633 ​ ​ ​ 11,886 ​ Net income ​ $ 36,141 ​ ​ $ 28,593 ​ ​ $ 43,022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Share Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per common share - basic ​ $ 2.16 ​ ​ $ 1.70 ​ ​ $ 2.57 ​ Weighted average common shares outstanding - basic ​ ​ 16,768,956 ​ ​ ​ 16,805,068 ​ ​ ​ 16,740,450 ​ Earnings per common share - diluted ​ $ 2.14 ​ ​ $ 1.69 ​ ​ $ 2.55 ​ Weighted average common shares outstanding - diluted ​ ​ 16,875,456 ​ ​ ​ 16,911,185 ​ ​ ​ 16,871,369 ​ Common dividends per share ​ $ 0.32 ​ ​ $ 0.32 ​ ​ $ 0.28 ​ Book value per share ​ $ 29.04 ​ ​ $ 27.07 ​ ​ $ 25.59 ​ Common shares outstanding at end of period ​ ​ 16,925,672 ​ ​ ​ 16,988,879 ​ ​ ​ 16,900,805 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance Ratios: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average assets ​ ​ 0.73 % ​ ​ 0.60 % ​ ​ 0.92 % Return on average shareholders' equity ​ ​ 7.63 % ​ ​ 6.45 % ​ ​ 10.16 % Tax equivalent net interest margin ​ ​ 3.04 % ​ ​ 2.97 % ​ ​ 3.20 % Interest rate spread ​ ​ 2.32 % ​ ​ 2.32 % ​ ​ 3.01 % Noninterest income to average assets ​ ​ 0.69 % ​ ​ 0.47 % ​ ​ 0.59 % Noninterest expense to average assets ​ ​ 2.45 % ​ ​ 2.38 % ​ ​ 2.27 % Efficiency ratio ​ ​ 70.49 % ​ ​ 74.24 % ​ ​ 64.33 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Credit Quality Ratios: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (charge-offs) to average loans and leases ​ ​ (0.08) % ​ ​ (0.02) % ​ ​ - % Allowance for loan and leases to total loans and leases ​ ​ 0.96 % ​ ​ 1.02 % ​ ​ 0.72 % Nonperforming loans and leases to total loans and leases, gross ​ ​ 0.20 % ​ ​ 0.24 % ​ ​ 0.09 % Nonperforming assets to total assets ​ ​ 0.19 % ​ ​ 0.20 % ​ ​ 0.10 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios 1 : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ​ ​ 8.29 % ​ ​ 8.27 % ​ ​ 7.95 % Common equity Tier 1 ​ ​ 9.76 % ​ ​ 10.16 % ​ ​ 9.65 % Tier 1 capital ​ ​ 9.76 % ​ ​ 10.16 % ​ ​ 9.65 % Total capital ​ ​ 11.10 % ​ ​ 11.80 % ​ ​ 11.40 % 1 Capital 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, 2024, 2023 and 2022.
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 Ratios 1 : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 % 1 Capital 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.
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%. 2023 compared to 2022 Net income was $28.6 million, or $1.69 per diluted common share in 2023, compared to $43.0 million, or $2.55 per diluted common share in 2022.
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 Company had total net loans and leases outstanding of approximately $3.87 billion at December 31, 2024, and $3.41 billion at December 31, 2023. The year-over-year increase of $459.5 million, or 13.5%, was related to organic loan growth throughout all markets.
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.
The cost of average interest-bearing deposits increased from 2.59% for 2023, to 3.15% for 2024, primarily due to the impact of rising Federal Reserve rates, and such increases significantly contributing to the increase in interest expense in 2024. 2023 compared to 2022 Net interest income, taxable equivalent, decreased to $130.5 million in 2023 from $138.2 million in 2022.
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.
The following table provides a summary of noninterest income for the periods presented (in thousands) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2023 - 2022 ​ 2024 2023 ​ Change 2022 ​ ​ Change Service charges on deposit accounts ​ $ 6,862 ​ $ 6,511 ​ $ 351 ​ $ 5,853 ​ $ 658 Gain (loss) on sale of securities ​ 64 ​ (6,801) ​ ​ 6,865 ​ 144 ​ ​ (6,945) Mortgage banking ​ 1,579 ​ 1,040 ​ ​ 539 ​ 1,552 ​ ​ (512) Investment services ​ ​ 5,945 ​ ​ 5,105 ​ ​ 840 ​ ​ 4,144 ​ ​ 961 Insurance commissions ​ ​ 5,696 ​ ​ 4,684 ​ ​ 1,012 ​ ​ 3,595 ​ ​ 1,089 Interchange and debit card transaction fees, net ​ 5,277 ​ 5,457 ​ ​ (180) ​ 5,435 ​ ​ 22 Other ​ 8,729 ​ 6,329 ​ ​ 2,400 ​ 6,992 ​ ​ (663) Total noninterest income ​ $ 34,152 ​ $ 22,325 ​ $ 11,827 ​ $ 27,715 ​ $ (5,390) ​ 43 Table of Contents 2024 compared to 2023 Noninterest income increased $11.8 million to $34.2 million in 2024, compared to $22.3 million in 2023.
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 ​ 43 Table of Contents 2025 compared to 2024 Noninterest income increased $200 thousand to $34.4 million in 2025, compared to $34.2 million in 2024.
The following table summarizes the average balances outstanding and average interest rates for each major category of deposits for 2024, 2023 and 2022 (dollars in thousands) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ Average % of Average Average % of Average Average % of Average ​ ​ Balance ​ Total ​ Rate ​ Balance ​ Total ​ Rate ​ Balance ​ Total ​ Rate Noninterest-bearing demand ​ $ 883,923 20.3 % — ​ $ 958,078 22.8 % — ​ $ 1,120,555 27.0 % — ​ Interest-bearing demand ​ 932,598 21.4 % 2.26 % 959,639 22.8 % 2.11 % 945,414 22.8 % 0.66 % Money market and savings ​ 1,913,673 44.0 % 3.35 % 1,768,869 42.0 % 2.85 % 1,576,170 37.9 % 0.58 % Time deposits ​ 623,652 14.3 % 3.86 % 520,799 12.4 % 2.61 % 513,416 12.4 % 0.55 % Total average deposits ​ $ 4,353,846 100.0 % 2.51 % $ 4,207,385 100.0 % 2.00 % $ 4,155,555 100.0 % 0.44 % ​ During 2024, average deposits increased in money market and savings and time deposits, with decreases in noninterest-bearing demand and interest-bearing demand 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.
Loan fee income for the years ended December 31, 2024, 2023 and 2022, respectively, includes $43 thousand, $38 thousand and $1.9 million accretion of loan fees on PPP loans. 2 Yields 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 2024, 2023 and 2022.
The taxable-equivalent adjustment was $970 thousand, $748 thousand and $0 for the years ended December 31, 2025, 2024 and 2023, respectively. 2 Yields 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 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, 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 6,887 ​ ​ 27.2 % ​ $ 940,789 ​ ​ 0.73 % Owner occupied ​ ​ 8,377 ​ ​ 23.2 ​ ​ ​ 798,416 ​ ​ 1.05 ​ Consumer real estate ​ ​ 7,249 ​ ​ 18.9 ​ ​ ​ 649,867 ​ ​ 1.12 ​ Construction and land development ​ ​ 4,874 ​ ​ 9.5 ​ ​ ​ 327,185 ​ ​ 1.49 ​ Commercial and industrial ​ ​ 6,924 ​ ​ 18.8 ​ ​ ​ 645,918 ​ ​ 1.07 ​ Leases ​ ​ 640 ​ ​ 2.0 ​ ​ ​ 68,752 ​ ​ 0.93 ​ Consumer and other ​ ​ 115 ​ ​ 0.4 ​ ​ ​ 13,535 ​ ​ 0.85 ​ Total ​ $ 35,066 ​ ​ 100.0 % ​ $ 3,444,462 ​ ​ 1.02 ​ ​ The allowance associated with the individually evaluated loans and leases were approximately $3.9 million at December 31, 2024, compared to $3.5 million at December 31, 2023. 49 Table of Contents 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, 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) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 83 ​ $ - ​ $ 824,555 ​ ​ - % Owner occupied ​ ​ 951 ​ ​ 6 ​ ​ 673,680 ​ ​ - ​ Consumer real estate ​ ​ 43 ​ ​ 531 ​ ​ 520,447 ​ ​ 0.10 ​ Construction and land development ​ ​ 1,177 ​ ​ - ​ ​ 360,660 ​ ​ - ​ Commercial and industrial ​ ​ 339 ​ ​ (123) ​ ​ 493,236 ​ ​ (0.02) ​ Leases ​ ​ 879 ​ ​ 84 ​ ​ 61,960 ​ ​ 0.14 ​ Consumer and other ​ ​ 546 ​ ​ (534) ​ ​ 13,973 ​ ​ (3.82) ​ Total ​ $ 4,018 ​ $ (36) ​ $ 2,948,511 ​ ​ - ​ ​ Investment Portfolio Our investment portfolio is the second largest component of our interest earning assets.
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. 49 Table of Contents 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 primary components of the changes in noninterest income were as follows: ● Increase in service charges on deposit accounts, related to deposit growth and transaction volume; ● Increase in 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 the acquisition of Sunbelt Group, LLC (“Sunbelt”) and organic growth; and ● Decrease in other, primarily related to decreased 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, ​ ​ 2023 - 2022 ​ 2024 2023 ​ Change ​ 2022 Change Salaries and employee benefits ​ $ 72,100 ​ $ 65,749 ​ $ 6,351 ​ $ 63,420 ​ $ 2,329 Occupancy and equipment ​ 13,617 ​ 13,451 ​ 166 ​ 12,034 ​ 1,417 FDIC insurance ​ 3,390 ​ 3,156 ​ 234 ​ 2,672 ​ 484 Other real estate and loan-related expense ​ 2,823 ​ 2,397 ​ 426 ​ 2,446 ​ (49) Advertising and marketing ​ 1,321 ​ 1,342 ​ (21) ​ 1,293 ​ 49 Data processing and technology ​ 9,930 ​ 9,235 ​ 695 ​ 7,283 ​ 1,952 Professional services ​ 4,207 ​ 3,443 ​ 764 ​ 3,790 ​ (347) Amortization of intangibles ​ 2,425 ​ 2,624 ​ (199) ​ 2,607 ​ 17 Merger-related and restructuring expenses ​ — ​ 110 ​ (110) ​ 562 ​ (452) Other ​ 11,077 ​ 11,643 ​ (566) ​ 10,183 ​ 1,460 Total noninterest expense ​ $ 120,890 ​ $ 113,150 ​ $ 7,740 ​ $ 106,290 ​ $ 6,860 ​ 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 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.
At December 31, 2024, $4.0 million was outstanding under the line of credit, and $31.0 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.
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.
Average earning assets increased from $4.3 billion in 2022 to $4.4 billion in 2023, primarily from organic loan and lease growth. Over this period, average loan and lease balances increased by $386.0 million, offset by a decrease in interest-earning cash and federal funds sold of $304.7 million and average securities decreased by $10.5 million.
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.
There have been no conditions or events since December 31, 2024, that management believes would change this classification. ​ 53 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum to be ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ well ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ capitalized under ​ ​ ​ ​ ​ ​ ​ ​ Minimum for ​ prompt ​ ​ ​ ​ ​ ​ ​ ​ capital ​ corrective action ​ ​ ​ ​ Actual ​ adequacy purposes ​ provisions 1 ​ ​ Amount Ratio Amount Ratio Amount Ratio ​ 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) 2 ​ 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) 2 ​ 445,159 8.94 % 199,214 4.00 % 249,017 5.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SmartFinancial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Capital (to Risk Weighted Assets) ​ $ 448,050 11.80 % $ 303,658 8.00 % N/A N/A ​ Tier 1 Capital (to Risk Weighted Assets) ​ 385,795 10.16 % 227,744 6.00 % N/A N/A ​ Common Equity Tier 1 Capital (to Risk Weighted Assets) ​ 385,795 10.16 % 170,808 4.50 % N/A N/A ​ Tier 1 Capital (to Average Assets) ​ 385,795 8.27 % 186,672 4.00 % N/A N/A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SmartBank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Capital (to Risk Weighted Assets) ​ $ 456,134 12.02 % $ 303,680 8.00 % $ 379,600 10.00 % Tier 1 Capital (to Risk Weighted Assets) ​ 427,559 11.26 % 227,760 6.00 % 303,680 8.00 % Common Equity Tier 1 Capital (to Risk Weighted Assets) ​ 427,559 11.26 % 170,820 4.50 % 246,740 6.50 % Tier 1 Capital (to Average Assets) ​ 427,559 9.18 % 186,363 4.00 % 232,954 5.00 % ​ 1 The prompt corrective action provisions are applicable at the Bank level only. 2 Average assets for the above calculations were based on the most recent quarter. ​ Contractual Obligations ​ The following tables present, as of December 31, 2024, our significant fixed and determinable contractual obligations (in thousands) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024, payments due in ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ More ​ ​ ​ ​ Less than 1 to 3 3 to 5 than 5 ​ ​ ​ ​ 1 year ​ years ​ years ​ years ​ Total Operating leases ​ $ 1,725 ​ $ 3,144 ​ $ 2,862 ​ $ 7,650 ​ $ 15,381 Time deposits ​ 772,344 ​ 61,190 ​ 11,106 ​ — ​ 844,640 Securities sold under agreement to repurchase ​ 4,135 ​ — ​ — ​ — ​ 4,135 FHLB advances and other borrowings ​ 4,000 ​ — ​ — ​ — ​ 4,000 Subordinated debt ​ — ​ — ​ 40,000 ​ — ​ 40,000 Total ​ $ 782,204 ​ $ 64,334 ​ $ 53,968 ​ $ 7,650 ​ $ 908,156 ​ 54 Table of Contents Off-Balance Sheet Arrangements At December 31, 2024, we had $828.8 million of pre-approved but unused lines of credit and $23.2 million of standby letters of credit.
There have been no conditions or events since December 31, 2025, that management believes would change this classification. ​ 53 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum to be ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ well ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ capitalized under ​ ​ ​ ​ ​ ​ ​ ​ Minimum for ​ prompt ​ ​ ​ ​ ​ ​ ​ ​ capital ​ corrective action ​ ​ ​ ​ Actual ​ adequacy purposes ​ provisions 1 ​ ​ ​ ​ ​ 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 % ​ 1 The prompt corrective action provisions are applicable at the Bank level only. 2 Average 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 ​ 54 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.
The Company has a revolving line of credit for an aggregate amount of $35.0 million, with a maturity date of February 1, 2025. On January 21,2025, the maturity date was extended to May 1, 2025.
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.
As part of our liquidity management strategy, we open federal funds lines with our correspondent banks. As of December 31, 2024, we had $96.0 million of unsecured federal funds lines with no funds advanced.
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 following is an analysis of the changes in net interest income comparing the changes attributable to rates and those attributable to volumes (in thousands) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 Compared to 2023 ​ 2023 Compared to 2022 ​ ​ Increase (decrease) due to ​ Increase (decrease) due to ​ ​ Rate ​ Volume ​ Net ​ Rate ​ Volume ​ Net Interest-earning assets: ​ ​ ​ ​ ​ ​ Loans and leases ​ $ 12,563 ​ $ 15,268 ​ $ 27,831 ​ $ 32,246 ​ $ 17,852 ​ $ 50,098 Taxable Securities ​ 5,707 ​ (2,221) ​ 3,486 ​ 4,471 ​ 395 ​ 4,866 Tax-exempt securities ​ 15 ​ (30) ​ (15) ​ 58 ​ (1,094) ​ (1,036) Federal funds and other earning assets ​ 1,184 ​ 1,335 ​ 2,519 ​ 9,232 ​ (4,239) ​ 4,993 Total interest-earning assets ​ 19,469 ​ 14,352 ​ 33,821 ​ 46,007 ​ 12,914 ​ 58,921 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing demand deposits ​ 1,430 ​ (570) ​ 860 ​ 13,842 ​ 94 ​ 13,936 Money market and savings deposits ​ 9,516 ​ 4,132 ​ 13,648 ​ 40,214 ​ 1,117 ​ 41,331 Time deposits ​ 7,812 ​ 2,680 ​ 10,492 ​ 10,724 ​ 41 ​ 10,765 Total interest-bearing deposits ​ 18,758 ​ 6,242 ​ 25,000 ​ 64,780 ​ 1,252 ​ 66,032 Borrowings ​ (172) ​ 311 ​ 139 ​ 656 ​ (322) ​ 334 Subordinated debt ​ 724 ​ (57) ​ 667 ​ 259 ​ 5 ​ 264 Total interest-bearing liabilities ​ 19,310 ​ 6,496 ​ 25,806 ​ 65,695 ​ 935 ​ 66,630 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 159 ​ $ 7,856 ​ $ 8,015 ​ $ (19,688) ​ $ 11,979 ​ $ (7,709) ​ 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.
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.
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, 2024, and 2023 (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, 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied $ 940,789 ​ $ - ​ - % ​ $ ​ ​ - % ​ $ - ​ - % Owner occupied ​ 798,416 ​ ​ 322 ​ 0.04 ​ ​ ​ ​ ​ - ​ ​ ​ 322 ​ 0.04 ​ Consumer real estate ​ 649,867 ​ ​ 2,229 ​ 0.34 ​ ​ ​ - ​ - ​ ​ ​ 2,229 ​ 0.34 ​ Construction and land development ​ 327,185 ​ ​ 631 ​ 0.19 ​ ​ ​ - ​ - ​ ​ ​ 631 ​ 0.19 ​ Commercial and industrial ​ 645,918 ​ ​ 1,286 ​ 0.20 ​ ​ ​ - ​ - ​ ​ ​ 1,286 ​ 0.20 ​ Leases ​ 68,752 ​ ​ 1,340 ​ 1.95 ​ ​ ​ 72 ​ 0.10 ​ ​ ​ 1,412 ​ 2.05 ​ Consumer and other ​ 13,535 ​ ​ 89 ​ 0.66 ​ ​ ​ 98 ​ 0.72 ​ ​ ​ 187 ​ 1.38 ​ Total $ 3,444,462 ​ $ 5,897 ​ 0.17 ​ ​ $ 170 ​ - ​ ​ $ 6,067 ​ 0.18 ​ ​ The following table is a summary of our nonaccrual loans and leases as of December 31, 2024, and 2023 (dollars in thousands) : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ December 31, 2023 ​ ​ ​ ​ 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 $ 1,080,404 ​ $ 514 ​ 0.05 % ​ $ 940,789 ​ $ 571 ​ 0.06 % Owner occupied ​ 867,678 ​ ​ 906 ​ 0.10 ​ ​ ​ 798,416 ​ ​ 1,473 ​ 0.18 ​ Consumer real estate ​ 741,836 ​ ​ 1,995 ​ 0.27 ​ ​ ​ 649,867 ​ ​ 2,647 ​ 0.41 ​ Construction and land development ​ 361,735 ​ ​ 39 ​ 0.01 ​ ​ ​ 327,185 ​ ​ 620 ​ 0.19 ​ Commercial and industrial ​ 775,620 ​ ​ 1,820 ​ 0.23 ​ ​ ​ 645,918 ​ ​ 2,480 ​ 0.38 ​ Leases ​ 64,878 ​ ​ 2,433 ​ 3.75 ​ ​ ​ 68,752 ​ ​ 140 ​ 0.20 ​ Consumer and other ​ 14,189 ​ ​ 2 ​ 0.01 ​ ​ ​ 13,535 ​ ​ - ​ - ​ Total $ 3,906,340 ​ $ 7,709 ​ 0.20 ​ ​ $ 3,444,462 ​ $ 7,931 ​ 0.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to nonaccrual loans ​ ​ ​ ​ 485.45% ​ ​ ​ ​ ​ ​ ​ ​ 424.75% ​ ​ ​ 47 Table of Contents Potential Problem Loans and Leases At December 31, 2024, substandard or problem loans and leases amounted to approximately $11.7 million or 0.30% of total loans and leases outstanding.
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% ​ ​ ​ 47 Table of Contents Potential Problem Loans and Leases At December 31, 2025, substandard or problem loans and leases, which are defined in “Part II – Item 8.
Executive Summary The following is a summary of the Company’s financial highlights and significant events during 2024: ● Net income totaled $36.1 million, or $2.14 per diluted common share, during the year ended of 2024 compared to $28.6 million, or $1.69 per diluted common share, for the same period in 2023. ● Net loans and leases growth of $459.5 million from December 31, 2023, with a record high net loans and leases of $3.9 billion at December 31, 2024. ● Total deposits growth of $418.6 million from December 31, 2023, with a record high total deposits of $4.7 billion at December 31, 2024. ● Return on average assets was 0.73% for the year ended December 31, 2024, compared to 0.60% for the year ended December 31, 2023. ● During the fourth quarter of 2024, the Company established a Real Estate Investment Trust (“REIT”) subsidiary as a tax savings strategy. ​ Analysis of Results of Operations 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.
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.
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.
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 tax equivalent net interest margin for 2023 was 2.97% compared to 3.20% for 2022. Noninterest income to average assets was 0.47% for 2023, decreasing from 0.59% for 2022. Noninterest expense to average assets increased to 2.38% in 2023, up from 2.27% in 2022.
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.
The yield on earning assets increased from 3.70% for 2022, to 4.98% for 2023, primarily due to the Company’s deployment of excess cash and cash equivalents into loans and leases and securities during 2023 and higher yields on cash deposits in the Federal Reserve System.
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.
Treasury ​ $ — ​ - % ​ $ 83,330 ​ 1.27 % ​ $ — ​ - % ​ $ — ​ - % ​ $ 83,330 ​ 1.27 % ​ U.S.
Treasury ​ $ — ​ - % ​ $ 31,688 ​ 1.27 % ​ $ — ​ - % ​ $ — ​ - % ​ $ 31,688 ​ 1.27 % ​ U.S.
The $5.0 million reduction in borrowings was primarily the repayment of $4.0 million on a line of credit. Short-term borrowings, included in borrowings, totaled $4.1 million at December 31, 2024 and $5.1 million at December 31, 2023 and consisted entirely of securities sold under repurchase agreements.
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.
In addition, we have access to the Federal Reserve’s discount window in the amount of $427.8 million with no borrowings outstanding as of 52 Table of Contents December 31, 2024. The Federal Reserve discount window line is collateralized by a pool of commercial real estate loans and commercial and industrial loans totaling $537.4 million as of December 31, 2024.
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. 52 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.
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, 2024 and 2023, were $8.1 million and $13.1 million, respectively.
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.
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. ​ 2023 compared to 2022 Noninterest income decreased $5.4 million to $22.3 million in 2023, compared to $27.7 million in 2022.
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.
Average interest-bearing deposits increased by $214.3 million, average noninterest-bearing deposits decreased $162.5 million and average borrowings decreased $15.2 million. The tax equivalent net interest margin decreased to 2.97% for 2023, compared to 3.20% for 2022.
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.
Long-term debt totaled $39.7 million at December 31, 2024 and $42.1 million at December 31, 2023 and consisted entirely of subordinated debt. The $2.4 million reduction in long-term debt is related to the redemption of $2.5 million of sub-debt during 2024. For more information regarding our borrowings and subordinated debt, see “Part II – Item 8.
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.
Loans secured by real estate, consisting of commercial or residential property, are the principal component of our loan and lease portfolio. ​ 45 Table of Contents 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 ​ ​ ​ 2024 ​ Total ​ ​ 2023 ​ Total Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 1,080,404 ​ 27.5 % $ ​ 940,789 ​ 27.2 % Owner occupied ​ ​ 867,678 ​ 22.2 % ​ ​ 798,416 ​ 23.2 % Consumer real estate ​ 741,836 ​ 19.0 % ​ 649,867 ​ 18.9 % Construction and land development ​ 361,735 ​ 9.3 % ​ 327,185 ​ 9.5 % Commercial and industrial ​ 775,620 ​ 19.9 % ​ 645,918 ​ 18.8 % Leases ​ ​ 64,878 ​ 1.7 % ​ ​ 68,752 ​ 2.0 % Consumer and other ​ 14,189 ​ 0.4 % ​ 13,535 ​ 0.4 % Total loans and leases ​ 3,906,340 ​ 100.0 % ​ 3,444,462 ​ 100.0 % Less: Allowance for credit losses ​ (37,423) ​ ​ ​ ​ (35,066) ​ ​ ​ Loans and leases, net ​ $ 3,868,917 ​ ​ ​ ​ $ 3,409,396 ​ ​ ​ ​ 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 ​ $ 72,684 ​ $ 745,248 ​ $ 231,178 ​ $ 31,294 ​ $ 1,080,404 ​ $ 555,845 ​ $ 451,875 Owner occupied ​ ​ 24,565 ​ ​ 445,600 ​ ​ 373,646 ​ ​ 23,867 ​ ​ 867,678 ​ ​ 453,957 ​ ​ 389,156 Consumer real estate-mortgage ​ 44,261 ​ 238,674 ​ ​ 94,051 ​ 364,850 ​ 741,836 ​ 273,809 ​ 423,766 Construction and land development ​ 77,534 ​ 189,195 ​ ​ 47,811 ​ 47,195 ​ 361,735 ​ 105,139 ​ 179,062 Commercial and industrial ​ 292,381 ​ 386,606 ​ ​ 73,857 ​ 22,776 ​ 775,620 ​ 345,696 ​ 137,543 Leases ​ ​ 2,132 ​ ​ 62,597 ​ ​ 149 ​ ​ — ​ ​ 64,878 ​ ​ 62,746 ​ ​ — Consumer and other ​ 8,703 ​ 4,932 ​ ​ 513 ​ 41 ​ 14,189 ​ 5,069 ​ 417 Total loans and leases ​ $ 522,260 ​ $ 2,072,852 ​ $ 821,205 ​ $ 490,023 ​ $ 3,906,340 ​ $ 1,802,261 ​ $ 1,581,819 ​ 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 secured by real estate, consisting of commercial or residential property, are the principal component of our loan and lease portfolio. ​ 45 Table of Contents 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.
New purchases were focused on higher yielding mortgage-backed securities to provide cash flow, liquidity and to support interest rate risk objectives.
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.
Removed
In addition to our banking services, we offer insurance products through SBK Insurance, Inc., formally known as Rains Insurance Agency, Inc. and loans and leases for heavy equipment through Fountain Equipment Finance, LLC, both are subsidiaries of the Bank.
Added
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.
Removed
The taxable-equivalent adjustment was $748, $0 and $0 for the years ended December 31, 2024, 2023 and 2022, respectively. 2 Loans include Paycheck Protection Program (“PPP”) loans with an average balance of $1.6 million, $2.8 million and $14.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Added
The cost of average interest-bearing deposits increased from 2.59% for 2023, to 3.15% for 2024, primarily due to 41 Table of Contents the impact of rising Federal Reserve rates, and such increases significantly contributing to the increase in interest expense in 2024.
Removed
Loan fees included in loan income were $3.0 million, $5.3 million, and $4.1 million for 2024, 2023, and 2022, respectively.
Added
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.
Removed
The primary components of the changes in noninterest expense were as follows: ● Increase in salary and employee benefits, related to the Sunbelt acquisition completed September 1, 2022 and overall franchise growth; ● Increase in occupancy and equipment, due to ongoing infrastructure and facilities added to accommodate growth in operations; ● Increase in FDIC insurance, related to continued asset growth; ● Increase in data processing and technology, primarily from continued infrastructure build and overall growth; and ● Increases in other, primarily related to a Community Reinvestment Act donation of a former branch location and accruals in respect of pending litigation.
Added
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.
Removed
The effective tax rate was approximately 21.1% for 2023 compared to 21.7% in 2022. The primary reason for the 0.06% decline in the effective tax rate was due to lower earnings, largely from the $6.8 million pre-tax loss on the sale of available-for-sale securities during the year.
Added
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.
Removed
The $80.7 million decrease is primarily related to the strategic decision not to reinvest the full proceeds of scheduled maturities back into the investment portfolio. The Company purchased $131.4 million of securities during the year ended December 31, 2024, which was offset by $210.5 million of sales, maturities, and prepayments received during the same period.
Added
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.
Removed
Government agencies ​ ​ — ​ - ​ ​ ​ 119 ​ 6.20 ​ ​ ​ 38,798 ​ 6.29 ​ ​ ​ — ​ - ​ ​ ​ 38,917 ​ 6.29 ​ ​ State and political subdivisions ​ 480 ​ 2.00 ​ ​ 3,707 ​ 2.95 ​ ​ 5,379 ​ 3.30 ​ ​ 8,711 ​ 3.96 ​ ​ 18,277 ​ 3.50 ​ ​ Other debt securities ​ 999 ​ 4.18 ​ ​ 6,921 ​ 6.78 ​ ​ 32,901 ​ 5.05 ​ ​ 500 ​ 4.50 ​ ​ 41,321 ​ 5.31 ​ ​ Mortgage-backed securities ​ — ​ - ​ ​ 15,718 ​ 3.51 ​ ​ 114,646 ​ 3..60 ​ ​ 200,475 ​ 3.49 ​ ​ 330,839 ​ 3.53 ​ ​ Total securities ​ $ 1,479 ​ 3.65 ​ ​ $ 109,795 ​ 2.00 ​ ​ $ 191,724 ​ 4.39 ​ ​ $ 209,686 ​ 3.51 ​ ​ $ 512,684 ​ 3.52 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Held-to-maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Added
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.
Removed
Government agencies ​ ​ — ​ - ​ ​ ​ — ​ - ​ ​ ​ 41,871 ​ 1.84 ​ ​ ​ 6,241 ​ 2.01 ​ ​ ​ 48,112 ​ 1.86 ​ ​ State and political subdivisions ​ — ​ - ​ ​ 731 ​ 1.32 ​ ​ 8,724 ​ 1.97 ​ ​ 42,197 ​ 2.18 ​ ​ 51,652 ​ 2.14 ​ ​ Other debt securities ​ — ​ - ​ ​ — ​ - ​ ​ — ​ - ​ ​ — ​ - ​ ​ — ​ - ​ ​ Mortgage-backed securities ​ — ​ - ​ ​ — ​ - ​ ​ 4,764 ​ 2.14 ​ ​ 22,131 ​ 2.12 ​ ​ 26,895 ​ 2.12 ​ ​ Total securities ​ $ — ​ - ​ ​ $ 731 ​ 1.32 ​ ​ $ 55,359 ​ 1.89 ​ ​ $ 70,569 ​ 2.15 ​ ​ $ 126,659 ​ 2.03 ​ ​ ​ 1 Based on amortized cost, taxable equivalent basis.
Added
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.
Removed
The following table summarizes the maturities of time deposits of $250,000 or more as of December 31, 2024 (in thousands) : ​ ​ ​ ​ ​ December 31, ​ ​ 2024 Three months or less ​ $ 78,805 Three to six months ​ 67,145 Six to twelve months ​ 118,809 More than twelve months ​ 38,076 Total ​ $ 302,835 ​ As of December 31, 2024 and 2023, $2.08 billion and $1.76 billion, respectively, of our deposit portfolio was uninsured.
Added
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 ​ ​ ​ 1 Based on amortized cost, taxable equivalent basis.
Removed
The uninsured amounts are estimated based on the methodologies and assumptions used for the SmartBank’s regulatory reporting requirements.
Added
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.
Removed
At December 31, 2024, we had no FHLB advances outstanding. For more information regarding the FHLB advances, see “Part II – Item 8.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed18 unchanged
Biggest changeFor changes up or down in rates from our static interest rate forecast over the next 12 months, limits in the decline in net interest income are as follows: ​ ​ ​ ​ ​ Estimated % Change in Net Interest Income Over 12 Months December 31, 2024: ​ Instantaneous, Parallel Change in Prevailing Interest Rates Equal to: ​ ​ 100 basis points increase (1.01)% 200 basis points increase (2.01)% 100 basis points decrease 0.49% 200 basis points decrease ​ 0.90% ​ ​ ​ ​ ​ ​ Estimated % Change in Net Interest Income Over 12 Months December 31, 2024: ​ 12-month RAMP, Parallel Change in Prevailing Interest Rates Equal to: ​ ​ 100 basis points increase (0.62)% 200 basis points increase (1.33)% 100 basis points decrease 0.39% 200 basis points decrease ​ 0.81% ​ ​ 56 Table of Contents Economic Value of Equity.
Biggest changeRates are increased/decreased from our static/level rate forecast over the next 12 months, with limits in the decline in net interest income as follows: ​ ​ ​ ​ ​ Estimated % Change in Net Interest Income Over 12 Months December 31, 2025: ​ ​ ​ ​ Instantaneous, Parallel Change in Prevailing Interest Rates Equal to: ​ ​ 100 basis points increase 1.22% 200 basis points increase 1.78% 100 basis points decrease (1.35)% 200 basis points decrease ​ (2.13)% ​ ​ ​ ​ ​ ​ Estimated % Change in Net Interest Income Over 12 Months December 31, 2025: ​ ​ ​ ​ 12-month ramp, Parallel Change in Prevailing Interest Rates Equal to: ​ ​ 100 basis points increase 0.77% 200 basis points increase 1.35% 100 basis points decrease (0.75)% 200 basis points decrease ​ (1.34)% ​ ​ 56 Table of Contents Economic Value of Equity.
Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with simulated forecasts of interest rates for the next 12 months. To limit interest rate risk, we have guidelines for our earnings at risk which seek to limit the variance of net interest income in instantaneous changes to interest rates.
Interest earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with simulated forecasts of interest rates for the next 12 months. To limit interest rate risk, we have guidelines for our earnings at risk which seek to limit the variance of net interest income in instantaneous changes to interest rates.
Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their debts also may decrease during periods of rising interest rates.
Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their debts may also decrease during periods of rising interest rates.
Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as interest rate caps and floors) which limit changes in interest rates.
Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as interest rate caps and floors) which limit changes in interest rates.
The impact of interest rate, caps and floors, is also included in the model. Other interest rate-related risks such as prepayment, basis and option risk are also considered. In addition, third parties will join the meetings of ALCO to provide feedback regarding future balance sheet structure, earnings and liquidity strategies.
The impact of interest rate, caps and floors is also included in the model. Other interest rate-related risks such as beta, prepayment, basis and option risk are also considered. In addition, third parties will occasionally join ALCO meetings to provide feedback regarding future balance sheet structure, earnings and liquidity strategies.
ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities. The objective is to manage the impact of fluctuating market rates on net interest income within acceptable levels. In order to meet this objective, management may lengthen or shorten the duration of assets or liabilities.
ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities, with the objective of managing the impact of fluctuating market rates on net interest income within acceptable levels. To meet this objective, management may lengthen or shorten the duration of assets or liabilities.
We also periodically monitor simulations based on various rate scenarios such as non-parallel shifts or 12-month RAMP in market interest rates over time.
We also periodically monitor simulations based on various rate scenarios such as non-parallel shifts or ramped shifts in market interest rates over time.
To help monitor our related risk, we have established the following policy limits regarding simulated changes in our economic value of equity: ​ ​ ​ ​ ​ Current Estimated Instantaneous Rate Change December 31, 2024: ​ ​ Instantaneous, Parallel Change in Prevailing Interest Rates Equal to: 100 basis points increase (3.13)% 200 basis points increase (1.52)% 100 basis points decrease ​ 3.13% 200 basis points decrease ​ 4.77% ​ At December 31, 2024, our model results indicated that we were within these policy limits.
To help monitor our related risk, we have established the following policy limits regarding simulated changes in our economic value of equity: ​ ​ ​ ​ ​ Current Estimated Instantaneous Rate Change December 31, 2025: ​ ​ Instantaneous, Parallel Change in Prevailing Interest Rates Equal to: ​ ​ ​ ​ ​ ​ 100 basis points increase (0.43)% 200 basis points increase (1.47)% 100 basis points decrease ​ 1.07% 200 basis points decrease ​ 0.48% ​ At December 31, 2025, our model results indicated that we were within these policy limits.
The model measures the impact on net interest income relative to a flat-rate case scenario of hypothetical fluctuations in interest rates 55 Table of Contents over the next 12-24 months. These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the repricing and maturity characteristics of the existing and projected balance sheet.
The model evaluates the effect of hypothetical changes in interest rates on net interest income compared to a baseline scenario with 55 Table of Contents constant rates over the next 12 to 24 months. These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the repricing and maturity characteristics of the existing and projected balance sheet.

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