SMBK - NASDAQ

Hello, everyone, and welcome to the SmartFinancial, Inc. Third Quarter 2025 Earnings Release and Conference Call. My name is Edra, and I will be your coordinator today. We will be taking questions at the end of the presentation. I will now hand you over to Nathan Strall, Director of Investor Relations, to begin. Please go ahead. Thanks, Edra.

Good morning, everyone, and thank you for joining us for SmartFinancial, Inc.'s third quarter 2025 earnings conference call. During today's call, we will reference the slides and press release that are available in the Investor Relations section on our website, smartbent.com. William Carroll, our President and Chief Executive Officer, will begin our call followed by Ronald Gorczynski, our Chief Financial Officer, who will provide some comments and some additional commentary. We will be available to answer your questions at the end of the call. Our comments include forward-looking statements. These statements are subject to risks and uncertainties. The actual results could vary materially. We list the factors that might cause these results to differ materially in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements because of new information, early development, or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendices of the earnings release and investor presentation filed on 10/21/2025 with the SEC. And now I'll turn it over to William Carroll to open our call. William?

Thanks, Nathan, and good morning, everyone. Great to be with you. And thank you for joining us today and for your interest in SmartFinancial, Inc. I'll open our call today with some commentary, then hand it over to Ronald Gorczynski to walk through the numbers in some greater detail. After our prepared comments, we'll open it up with Ronald, Nathan, Rhett Jordan, Miller Welborn, and myself available for Q&A. It's been a busy quarter for us, and we've had a number of very positive things happening with our company. The focus on execution that's going on right now is outstanding. Our team continues to have a keen focus on hitting targets we've set for this year in regard to revenue, returns, and prudent expense growth, and I remain very bullish on our outlook. So let me jump right into some of our highlights. First, and in my opinion, one of the most important metrics, we continue to increase the tangible book value of our company. Moving up to $26 per share including the impacts of AOCI, and $26.63 excluding that impact. That's growth of over 26% annualized quarter over quarter. For the quarter, we posted operating earnings of $14.5 million or $0.86 per diluted share. This is our sixth consecutive quarter of positive operating leverage and hit our $50 million quarterly revenue target in Q3, which we had set for our team this year. We actually hit it a few months early, and I look forward to seeing that number continue to grow. We had outstanding growth on both sides of the balance sheet, posting 10% annualized growth in loans and 15% annualized growth in deposits. Our history of strong credit continues. Only 22 basis points in nonperforming assets. I'm pleased to see these numbers continue at exceptionally low levels. Total operating revenue came in at $50.8 million as net interest income continued to expand and noninterest income was solid again. Our operating noninterest expenses also came in on target at $32.6 million. Looking at the charts on page four and five, you'll see very nice trends. We're building our return metrics and most importantly, growing our total revenue, EPS, and as I mentioned earlier, tangible book value. All those charts are great graphics to illustrate our execution. I'm looking forward to and expecting these trends to continue. So just a couple of additional high-level comments from me. On growth, our continued balance sheet expansion is a direct result of the focus of our sales team. I've enjoyed watching this company transform into a very good organic grower. As we have hired well over the last several years, we've also built an outstanding foundational process that includes aggressively going after new client relationships, growing existing ones along with a very diligent prospecting process. As I stated, we grew our loan book at a 10% annualized rate quarter over quarter. As sales momentum stays strong and balanced across all of our regions. Our average portfolio yield, fees, and accretion, was up to 6.14% and our new loan production continues to come onto the books accretive to our total portfolio yield levels. Regarding deposits, again deposits were up 15% annualized or $179 million for the quarter inclusive of reducing some of our brokered CD positions. It's important to recognize how we're building this bank with core relationships as we have an intense focus on both sides of the balance sheet. We've made investments in our treasury management team over the last several quarters and it's nice to see this line of business gain outstanding momentum. Our loan to deposit ratio was at 84% which is actually down quarter over quarter even with 10% loan growth. This strong position gives us continued flexibility to leverage a great balance sheet. Our pipelines continue to look good, and I'll discuss these a little bit more in closing comments. But, also, when you look at the highlight bullets, in our earnings release, we've had a lot going on this quarter. All of it tied back to building the foundation of a bank that is on track to becoming one of the Southeast's strongest regional community banks. Everything accomplished this quarter is part of our focus on efficiency and growth. A well-executed sub-debt issuance, a sale with a subsequent minority reinvestment on our insurance platform, a repositioning trade with our bond portfolio that did not impact our book value as we leverage the gain off the insurance deal. And continued contract evaluations and renegotiations. Including our core data processing vendor interchange payment rails, and some new tech token tech-focused initiatives looking into 2026. So all in all, a very nice third quarter for our company. And I'm gonna stop there, hand it over to Ronald Gorczynski to let him dive into some greater detail. Ronald?

Thanks, William, and good morning, everyone. I'll start by highlighting some key deposit results. For the quarter, we had strong non-broker deposit growth of $283 million representing more than 24% growth on an annualized basis. This increase resulted from both new deposit production and seasonal client liquidity build following the previous quarter outflows. The cost of new non-brokered production was 3.47%. This growth gave us the opportunity to pay down $104 million of brokered deposits which had a weighted average cost of 4.27%. Our overall interest-bearing cost rose by three basis points to 2.98% but were down to 2.93% for the month of September. Despite funding almost $100 million of loan growth, and paying down $104 million of brokered deposits, our overall liquidity position which includes cash and securities, at quarter end was approximately 21%. Included in our liquidity position was $98 million in net proceeds from our sub-debt issuance which closed in August. As we look ahead to Q4, we anticipate our liquidity position normalizing as we already retired $40 million in our existing sub-debt on October 2, and we expect to pay down an additional $111 million in brokered deposits with a weighted average rate of 4.28% during the fourth quarter. As William had mentioned, we utilized the gain generated from the sale of our insurance operations to offset losses associated with selling $85 million of securities with a weighted average rate of 1.4%. The proceeds of the security sale were reinvested in securities yielding 4.95% which will generate $2.6 million of additional annual interest income and increase our overall weighted average securities portfolio yield to 3.7%. During the quarter, our net interest margin experienced some temporary compression declining four basis points to 3.25% primarily as a result of timing differences between issuing new sub-debt prior to paying off our existing sub-debt and higher rates for new deposit production. However, the average rate of new loan production was 7.11% which continues to push the yield on our overall portfolio higher. Furthermore, any future cuts to the Federal Rates Fund will positively impact our deposit portfolio costs as approximately 45% is variable cost adjusting in lockstep with any Fed actions. We believe these factors in conjunction with anticipated broker deposit pay downs and enhanced yields on our overall securities portfolio has our balance sheet well positioned heading into the fourth quarter and into 2026. Looking ahead, we're projecting our fourth quarter margin to be in the 3.3% to 3.35% range. Our quarterly provision expense decreased to $227,000 from $2.4 million reported in the previous quarter. The growth-related provision this quarter was offset by the adjustment to our qualitative factors specifically an improvement in our CRE concentration ratio which decreased to 271% from 301% in the previous quarter. This decrease was due to the downstream of $45 million of proceeds from our sub-debt issuance to the bank as equity capital. Additionally, our asset quality continues to remain robust with non-performing assets comprising 0.22% of total assets and net charge-offs to average loans of 10 basis points on an annualized basis. Our allowance for credit losses is now at 0.93% of total loans. Operating non-interest income after adjusting for the gain in sale of our insurance operations and the loss on the securities restructuring was $8.4 million which is $500,000 lower than the previous quarter. As a result of the sale. All other income items remain consistent with our expectations. Operating non-interest expenses after adjusting for previously noted items totaled $32.6 million aligning with results from the prior quarter. We made progress again in our operating efficiency ratio which improved to 64% compared to 66% from the previous quarter. Our ongoing commitment to expense management has allowed us to maintain a level of expense base over the past four quarters and continue to trend positively towards our long-term efficiency goals. For the fourth quarter, with insurance operations removed, non-interest income is projected to be approximately $7 million and non-interest expense is expected to be in the range of $32.5 million to $33 million. Salary and benefit expenses are anticipated to range from $19 million to $19.5 million comparable to the previous quarter due to higher levels of variable compensation and anticipated costs associated with the new hires. Both our bank consolidated Tier two capital ratios increased during the quarter primarily due to the sub-debt issuance. Our total consolidated risk-based capital ratio rose to 13.3% up from the 11.1% in the previous quarter and the company's TCE ratio also improved to 7.8%. Looking ahead, we are confident that our capital ratios are appropriately balanced and well-positioned to sustain growth while optimizing returns on equity. With that said, I'll turn it back over to William.

Thanks, Ronald. I want to reiterate again the value proposition with our company, drawing your attention back to page seven of our deck. We are successfully executing on the leveraging phase of growth for our company. We hit our 112% ROE and ROE targets this quarter. And have confidence that this will build from here as we gain even more operating leverage. We're building a great franchise. We're in arguably some of the most attractive markets in the country. And have put together a team that is rapidly moving us forward. You've heard me say before, I believe we are one of the Southeast's brightest stories. Outstanding markets, strong experienced bankers, coupled with a great operational and support team, plus very nice complementary business lines. We expect the remainder of 2025 to have a similar look to what we've seen in the last few quarters. And I believe this will continue into 2026. Our focus will be on doubling down on this current strategy. Getting deeper into our markets and our business lines. As I mentioned, pipelines are good and I think we can continue growing at this high single digits plus pace. On talent acquisition, this continues to be a focus as well. Recruiting is a process. We've added a number of great bankers this year, and have several more in our pipelines. Made some outstanding additions in the third quarter. And I believe we are included with a very small handful of banks that have built a culture where outstanding regional bankers want to work. We will continue to look for these organic growth opportunities and will remain very focused on recruiting. One of the reasons for our successful execution on adding great people is our culture. Arguably, one of the biggest highlights for the quarter for us internally was our company being named to Fortune's list of best workplaces. It is an honor we don't take lightly, and a big shout out to our people team led by Becca Boyd as we continue with huge accomplishments with the culture of our company. So to summarize, we're positioned well for our clients, our associates, our shareholders. We are executing, growing revenue, EPS, and book value while staying prudent on expense growth. We remain optimistic around our margin, as new production stays strong and as we see the tailwind coming with rate reset on our loan portfolio, over the next couple of years. Credit continues to be very sound and we're seeing great new client acquisitions coupled with great overall energy around our company. I appreciate the work of our SmartFinancial, Inc., SmartBank team and the efforts of all of our associates. I'm very proud of what we have going on here at SmartFinancial, Inc. And I'll stop there and open it up for questions.

Thank you very much. Our first question comes from Brett Rabatin with Hofde Group. Your line is now open. Please go ahead.

Hey, good morning, guys. Thanks for the question. Wanted to start maybe, William, you mentioned some hires, and I think in the past, you've said the Alabama franchise could double in size over time and you felt pretty optimistic about Alabama. Can you talk maybe about where the hires were in the geographies? And then just, thinking about Alabama, just any update on the growth outlook for that franchise in particular?

Yeah. Brett, thanks. It has. You know, as far as just geography, it's really been fairly evenly spread. You know, I think last quarter, I think we've talked about we had we hired several, and then we had several in the pipeline. We continue to add those. We added a couple in Alabama, added a couple in Tennessee, over the last little bit. And so it's really been throughout all of our zones. I do think we're still extremely bullish on Alabama as we're getting started. We're bullish on all of our markets. But we're seeing a lot of this Alabama growth starting to catch stride, especially with some of these teams that we've got in the Birminghams. In the Auburns, the Dothans, the Montgomery's. Those offices really are starting to generate some great momentum in Mobile too. I know Miller and I have been we've done we've been on we've been on the road a lot the last several weeks. And so we've been in most all of those markets over the last little bit. And it's exciting. A lot of new folks coming on. We had a new ad in Panama City. Did have a new ad in Murfreesboro as well. So it's really been across the board, Brett. But we're continuing to focus not just on Alabama, really all of our zones. That had you know, like I said, Florida as well. We're seeing some nice Panhandle opportunity there. And don't see that slowing down. Yeah. Yeah. It's just really been across the board. So again and I made the comment in here the momentum that we've got really everywhere in the company is just really good right now. Our culture's good. We're attracting some great bankers and you know, and our existing legacy teams are performing extremely well. So we're kinda hitting on most all cylinders. Still got always still got work to do and gaps to close, but it's been really good.

Okay. That's helpful. And then on the margin guidance for the fourth quarter, obviously a lot is going into that. Wanted to make sure I understood of the guidance relative to the liquidity that you added in 3Q. How much of that drains out? How should we think about maybe the average balance sheet size in the fourth quarter, you know, and how that might impact NII. Yeah.

Ronald, do you wanna talk a little more on the margin detail?

Yeah. You know, a lot of our cash on the balance sheet today will be more deployed. You know, we did $40 million for the sub-debt. Another $100 million for brokered, and we expect to shrink some of the cash put into loans. So I don't think our asset size of our balance sheet's gonna move anything materially. We're just gonna use really the cash on hand to fund most of the production for Q4.

Okay. That's helpful. Then if I could sneak in one last one, you mentioned, William, you know, focused initiatives and next in the next year. Does that increase productivity, like AI, so you can have bots doing work that maybe frees up FTEs or any thoughts on how much that might add to an expense base?

You know, it really you know, what we've done, Brett, over the last little bit, as I said, we've really worked and had some very favorable outcomes with some new contract renegotiations on several fronts across the company. But some of the stuff that we're doing in tech I think, is allowing us to get some expense reduction so we can reinvest. I obviously, Ronald will continue to quarterly kind of give our quarterly non-interest expense guidance moving forward. I don't see it having a really meaningful impact from an increase standpoint, even these new initiatives. I think we've got those kind of built in kind of where we think run rates are today. But, we've got some great platform enhancements. We're looking at AI. We've started using bots. I think we will continue to do more of that. We're looking at some new things on the digital front as well from a consumer-facing digital piece. We're leveraging Copilot a lot. In our company today. And I do think it overall, I think it increases efficiency. I don't know yet if it doesn't necessarily don't think it necessarily impacts you in from a spot where we're gonna look to reduce that. But I do think it continues to allow you not to add staff as you scale. And I think that's the biggest thing. We're seeing a lot of tools that we're starting to use. I know we've got great support stuff going on, our risk platform tools. Are very helpful. We're spending a lot of time, you know, evaluating risk, evaluating fraud in your company. So a lot of those technologies, I think, will allow us to continue at current staffing levels. Or maybe add just a few instead of adding a lot over the coming year. So it's kind of a mix it's a mixed bag. There's a lot of different moving parts to it, but I'm really excited. I think our technology team is as good as we've ever had it in our company today. And I feel really good about our ability to advance that while still staying within a very reasonable expense profile. It's as much a reallocation and reinvestment as it is.

Well, additionally, the first sliver of this will be to you know, we wanna provide our clients with better experience, easy to do business easier to do business with. So that's really our first focus when we're going down this path.

That's all really helpful. Thanks so much, guys.

Thanks, Brett.

Our next question comes from Russell Gunther with Stephens. Your line is now open. Please go ahead.

Hey, good morning, guys. I wanted to begin with just a follow-up on the expense. So six consecutive quarters of positive operating leverage. You've talked about continuing to hire bankers as the opportunity arises. We just touched on the expense initiative the tech initiatives. So how are you thinking about that streak of positive operating leverage going forward? Is that something we should expect to see over the course of 2026 alongside this franchise investment?

Yeah. I'll start, and then, Ronald, maybe you can add some additional color as well. Yeah, Russell. I think so. I mean, you know, when you look at where the company's positioned today, we're really bullish on our ability to continue to grow that revenue line. Again, the production that we're seeing happen throughout all of our markets, the repricing that we've got going on, we're gonna get we're gonna continue to get that revenue lift. You know? And it's definitely gonna outweigh our expense run rates. Now we're gonna wanna continue to invest and add people but we're gonna do that balanced as we grow this revenue line. I think it's really important for us right now to continue hitting these operating leverage targets over the next few quarters. We really believe we can do that. We feel good. We're starting to run Air 26 models and feel very good about where our company can be. Again, we've gotta execute. We've gotta do the right things to do that. But, we've demonstrated our ability to do that. In '24 and '25. We think we can continue that in '26. So, yes, I do think we can continue to increase this consecutive streak of gaining operating leverage. But Ronald, I have any additional comments that you've got.

Yeah. No. Exactly right, William. You know, we're probably you know, again, we're not going into '26 guidance, but we're probably keeping our band tight. We've been focused on containment for the prior four or five quarters. And we're probably looking around the 34, if you want numbers, 34 to max $35 million range for the full year next year. So yes, we will be focused on containing it with our growth.

That's great color, guys. I appreciate it. And then just switching gears, to the margin. Appreciate the sort of level set for 04/2025 given the moving pieces in March. You give great detail in the deck, around the average earning asset repricing schedule. And in the past, you've talked about how that would translate to about two to three basis points of margin expansion quarterly. Is that still sort of the range you're thinking about as we move beyond April, or have some of the actions taken this quarter changed that in any way?

No. Actually, you know, the prior quarters was two to three basis points. We're pretty bullish in our margin expansion going into 2026. Overall, I think we're probably looking at five to seven basis points expansion quarter over quarter for '26.

That's very helpful. Scott. Thank you, guys. Okay. Thanks for taking my question. Thanks, Russell.

Our next question comes from Catherine Mealor with KBW. Your line is now open. Please go ahead.

Thanks. Good morning.

Good morning.

Maybe just one follow-up on the margin on the deposit side. With growth improving as much as it has into next year, how do you think the deposit beta could be on the next 100 basis points of cuts versus what we've seen on the past 100 basis points of cuts? Just given I think we'll see better growth rates coming, you know, in the next the next course of the year.

Yeah. I think I think, for the variable intend to, as best we can, is to really follow dollar or basis point per basis point. So we're still targeting 45%. I know we're probably in the thirties right now, but we wanna target that 40% range beta.

Okay. And from the past twenty-five of cut, I know it's early, but have you already seen the ability to do that?

Yes. Yes. We have.

Yeah. We've been trying to step down, Catherine, a little bit as we were. You know, we've got we have we have some of the deposits are tied directly to, the rates or market rates. And so those come down as rates come down. Some are more correlated. Some and that gives us the ability to move a little bit faster in some other too. So, yeah, we've been able to move those down and still pick up the growth that we've needed. Teams have done a nice job to be able to do that. And I think, yeah, we're still staying right there in market and staying on top of of what's going on in all of our different zones, and each of our different zones have different competitive pressures. And different competitors, but, but we've done a nice job being able to pull that down.

Okay. Great. Then just a quick question on fees. Any outlook for fees as we go into next year of just things to be aware of that could drive better fee growth? I know that the insurance fees settled be over the moving piece. I was just kind of curious on how we're seeing that fee growth into twenty-six.

Yeah. I'll start, and then, Ronald, I'd love to get your you know, some color Catherine as well on that. We yeah. We've got several things working. Again, yeah, we'll kinda reset without that insurance component line item going forward. But, yeah, we've got I think we still got some really good plans when you look at fees for us on the whole. Continue to think that that's gonna, have the ability to trend up. I know you know, we've talked a little bit about payment rails and renegotiation. I think we've got some things that we're working on on our, on our interchange income. I did mention I think there's some opportunities there. And I did in my comments our mortgage unit. I'll tell you. Our mortgage unit is having probably as good a year as we've ever had. And really excited about what that mortgage team is bringing to the company. We're seeing, as we've grown our footprint, grown our platform, we continue to add some, great new sales team members on the mortgage side, and our legacy team continues to perform well. So that's a, that's I think that'll be a plus. You know, our investments arm continues to really execute, you know, continue to grow our AU in there. We've added a really nice producer in one of our Alabama markets. New FA down there this year. Yes. And, you know, Ronald, I know we talk we always talk about TM. Well, TM is a piece of it as we continue to grow that TM platform. I know that those dollars continue to just kinda build and become a really nice annuity. So Catherine, I think there are several pieces. I don't know, Ronald, if there's any others that you think of, but I do think we'll continue to get some nice growth. We'd love to see that accelerate. That's going to be a strategic focus for us next year. But I know, Ronald, any comments on that from you?

Other than, you know, more like more looking at the customer fees and making sure more market. But, no, you hit all the highlights, William. Yeah.

Okay. Great. Thank you.

Thanks.

Our next question comes from Steve Moss with Raymond James. Your line is now open. Please go ahead.

Maybe just starting here on loans, just on the pipeline here, Bill, you sound really optimistic on things. So I'm assuming it's going to be likely to be a really good fourth quarter. Just kind of curious as to is that pipeline enough to support double-digit growth into 2026 Again, I keep guiding to kind of the high singles. We've been able to beat that a little bit. You know? And you know, I think we'll be right there I think we'll be right there at that plus minus 10 number. You know, that's and that's a that's a big bogey as we get larger. I'll tell you, one of the things that we talk about a lot internally you know, the production levels that we've had have really been outstanding. Again, the teams are doing a nice job. You know, we're still seeing the payoffs in paydowns that that, you know, that'll you know, a lot of our as we read and look at other releases, and see a lot of other things going on the market, you know, we're not immune to that. We're getting a lot of pass paydowns. It's just our production is so strong It's still allowing us to get up there and kinda hit this 10% ish number. So, you know, that's know, that's that's a lot to continue to ask our team to do. But as we look over the at least the near term, I do think we can continue at at or around that pace. Again, pipelines are solid, you know, when you're out when you know when we're out in these markets and and with the rents at renting a lot of them, the miller and I are in a lot of them. I mean, we're out, and there's just there's a there's an energy and a really good calling effort. Going on throughout, throughout the company. So, yeah, I think we can continue that know, there might be a quarter that we're a little lighter. Little heavier, but I still think we'd be right around that plus minus 10.

Yeah. I like the markets. Okay. And they're just all so positive, and the teams seem to be so positive. It does get harder to feed the beast, but I think we're certainly up for.

Right. And maybe just in terms of being the beast, I hear you guys in terms of hiring as well. Just curious, you know, as you think about I know you guys are always opportunistic, but know, you obviously have merger disruption in your markets. You'll kind of do you think there's a possibility of a step up in hiring over the next twelve months Just kinda curious. I know you guys are talking about positive operating leverage, but just curious on that aspect expense.

Yeah. I'll tell you. See, we're we we're all we're very selective as we go through this hiring process. I you know, I don't necessarily think it's gonna pick up dramatically. I think couple of reasons. I think that it you know, you the disruption that you we see in the market I mean, these are these are good banks, they're gonna be they're gonna be fighting to hold on to good talent. And, you know, and I just and I think over the over a period of time, you may see some you know, dislocation in in in some different bankers and some of those, you know, different markets throughout the Southeast. But I don't think there's a lot. I think we're just gonna continue to be diligent and trying to find just incrementally good bankers that that fit our culture, that fit our teams, And I think we're probably gonna be I would imagine, looking into 26. Kinda keeping the same tight pace that we saw in '25, which will just be just, you know, add great talent. We can find it. Like I said, I think we probably in the process. I think we've added Nate, I think we stopped. We're probably maybe 12 to 15 net for, you know, kind of what we've done, you know, in the pipeline or on we've added this year, I think we'll continue to do that. And, I I think Steve, for us, it's just gonna be just continuing to be diligent. Again, find the right types of bankers that fit the types of of of deals that we wanna look at. William talks off about ADR, always be recruiting. Always be recruiting. That's talent and clients, and I but I think it's it takes a special we're recruiting the quality, not the quantity. And I think that's important for us, culture fit and who they are. Yeah. Alright. Appreciate appreciate that color there.

Maybe just one more for me here on the loan loss reserve release.

Did I understand that correctly because you did I hear correctly that downstream some capital and therefore a lower reserve ratio lower, CRE concentration ratio, that was kinda one of the qualitative factors that drove the reserve lower.

Yeah. Our, our share concentration ratio one of our qualitative factors was there was our because we're over to 300 that we downstream $45 million from, you know, the parent to the bank, it lowered it to $2.71. Yeah. That was a that was one of the main factors. Okay.

Okay. So going forward, you know, relatively stable to maybe a modest build on reserve ratio as as you continue to grow here?

Yes, sir. Correct. Okay. Awesome. Well, I'll step back in the queue. I really appreciate all the color here, and nice quarter, guys.

Thanks, Steve. Thanks, Steve.

Thank you very much. Our next question comes from Stephen Scouten with Piper Sandler. Your line is now open. Please go ahead.

Good morning, guys. Just wanted to clarify a couple of things real quick. Ronald, did you say that 45% of your deposits are variable costs? And is that to say, if I heard that right, that those are directly indexed?

We have the ability to move 45%. We have about 32% that are directly indexed, and we have the remainder that's tied to internal index that will move with the rate moves. So, yeah, 45% all in, though.

Okay. Great. Perfect. And then on the on the NIM trajectory, I think you said five to seven basis points a quarter in 2026. Is that your expectation each quarter in 2026? Or just wanna make sure I'm hearing that right.

Yes. Each quarter in 2026.

Great. Fantastic. Okay. And then last thing, think I know Catherine maybe had asked this on the on the fee revenues and insurance. Did you give a guidance for expected fourth quarter overall fee revenues?

Yes, $7 million.

$7 million. Great. Okay. Perfect. And then, on the broker deposit front, you obviously had some nice reductions here this quarter. Sounds like think you said maybe another 111 next quarter. So I'm doing math remotely correct. Like maybe a $120 million or so left in that ballpark. What's the plan for the remaining broker deposits? Would the objective still to get those down from here? Or is that kind of an acceptable level moving forward?

Yeah. We were at $268 million in June. September at $164 million. Minus the $111 million. Yeah. We intend to as soon as they are due, we're gonna pay those down. So yes, we're looking not to have brokered deposits at someday. That's our goal objective is not have those.

Okay. Great. And then I guess last thing for me, you know, the stock's been trading fantastically. The results have been great, kind of ahead of schedule on our operating revenue line. Sounds like hiring has continued well. Do you think about M&A as a piece of that puzzle at all? I think there were some a note maybe in the slide deck, that said you know, maybe more trying to find the verbiage. Maybe more strategic than it was previously. M&A focus shifted to strategic and or needle moving opportunities. I guess, maybe if you could kind of speak to that comment and what that might look like?

Yeah. Steven, us, it really and I'm in my comments, said we've our strategy really hasn't changed a ton. A lot of it is just, again, doubling down on this organic strategy, deeper into the markets. That's strategy one a. You know? Yeah. Yeah. I think, you know, we're really not shifting that to really look at M&A. But we've said and continue to say, you know, we will evaluate you know, needle moving opportunities that make sense. I've said you know, before, we don't necessarily, you know, we don't wanna do M&A just to be bigger. You know, we want if we did it, we'd want it to make us better. And sometimes that's just tough to find. You know, if we find that unicorn, we find the right piece that fits us and we would evaluate. But, really, I mean, it's I say that because, you know, you never know what could come down the road. But, man, our strategy is really focused on continuing just to lever you know, this balance sheet and grow as we've done the last couple of years the way we've done it. That's the primary focus. You can't ever say you're not gonna look. I think we are open to look. But William talks often about now, you know, organic is one a and M&A would be one b. M&A might be one c, but we're continuing to look. Yeah. That makes a lot of sense. Well, the strategy is working, so I guess if it ain't broke, don't fix it. Right? So great job, guys.

Well, it is. You know, it is. But I but I think I do think you know, and as we've talked to you and a lot of your colleagues, I mean, it's just you know, it's really important for us to message what we've messaged. It's you know, we've built this company by design. We were, again, a little bit kinda mile wide inch deep. By design for a reason. And we it's been very important for us gain this operating leverage and do that. And that's done that. We've executed well. We're executing well. We still got room to grow, and we've got wanna continue to see this move forward. So not really changing anything, on our outlook moving forward. It's just we're gonna just keep doubling down on what we're doing.

Perfect. Thanks a lot.

Thank you very much.

Thanks.

Currently have no further questions. So I will hand back over to Miller Welborn for any closing remarks.

Thanks, Edra, and thanks, everybody, for being part of the call today. We are very excited about where we are and where we're going. Thank you for being part of the SmartBank family, and have a great day.