SmartFinancial Inc (SMBK) 2025 Q3 法說會逐字稿

Hello, everyone, and welcome to the SmartFinancial third-quarter 2025 earnings release and conference call. My name is Ezra, and I will be your coordinator today. (Operator Instructions)

We will be taking questions at the end of the presentation. I will now hand you over to Nate Strall, Director of Investor Relations, to begin. Please go ahead.

Thanks, Ezra. Good morning, everyone, and thank you for joining us for SmartFinancial'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, smartbank.com. Billy Carroll, our President and Chief Executive Officer, will begin our call; followed by Ron 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, and 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 developments 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 October 21, 2025, with the SEC.

And now I'll turn it over to Billy Carroll to open our call. Billy?

Thanks, Nate, and good morning, everyone. Great to be with you, and thank you for joining us today and for your interest in SMBK. I'll open our call today with some commentary, then hand it over to Ron to walk through the numbers in some greater detail.

After our prepared comments, we'll open it up with Ron, Nate, Rhett, Miller, 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 we 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 with 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. And our operating noninterest expenses also came in on target at $32.6 million.

Looking at the charts on page 4 and 5, 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 teams. I've enjoyed watching this company transforming 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, including fees and accretion was up to 6.14%, and our new loan production continues to come onto the books accretive through 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 my 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 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-focused initiatives looking into 2026.

So all in all, a very nice third quarter for our company. And I'm going to stop there and hand it over to Ron to let him dive into some greater detail. Ron?

Thanks, Billy, and good morning, everyone. I'll start by highlighting some key deposit results. For the quarter, we had strong non-brokered 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 broker deposits, which had a weighted average cost of 4.27%. Our overall interest-bearing costs rose by 3 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 Billy had mentioned, we utilized the gain generated from sale of our insurance operations to offset losses associated with selling $85 million of securities with a weighted average rate of 1.40%. The proceeds of the security sales 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 3.70%.

During the quarter, our net interest margin experienced some temporary compression, declining 4 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 paydowns 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 downstreaming 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 nonperforming 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 noninterest 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 noninterest 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, noninterest income is projected to be approximately $7 million and noninterest 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 and consolidated Tier 2 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 Billy.

Thanks, Ron. I want to reiterate again, the value proposition with our company, drawing your attention back to page 7 of our deck. We are successfully executing on the leveraging phase of growth for our company. We hit our 1% and 12% 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 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.

We 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 we'll 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. This 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 are positioned well for our clients, our associates and 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 resets 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's SmartBank team and the efforts of all of our associates. I'm very proud of what we have going on here at SMBK. And I'll stop there and open it up for questions.

(Operator Instructions) Brett Rabatin, Hovde Group.

I wanted to start, maybe, Billy, 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 specifically. 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?

Yes, Brett, thanks. It has. As far as just geography, it's really been fairly evenly spread. I think last quarter, I think we talked about we had 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 Montgomerys.

Those offices really are starting to generate some great momentum. Mobile too. I know Miller and I have been -- we've been on the road a lot in 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 as did have -- we had a new add in Panama City, did have a new add 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. Like I said, Florida as well, we're seeing some nice panhandle opportunity there.

And don't see that slowing down.

Yes, 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 is good. We're attracting some great bankers. And our existing legacy teams are performing extremely well.

So we're kind of hitting on most all cylinders. We've 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. I wanted to make sure I understood kind 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 and how that might impact NII?

Yes. Ron, do you want to talk a little more on the margin detail?

Yes. A lot of our cash on the balance sheet today will be more deployed. 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 is going to move anything materially.

We're just going to use really the cash on hand to fund most of the production for Q4.

Okay. That's helpful. And then if I could sneak in one last one. You mentioned, Billy, tech-focused initiatives 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?

It really -- what we've done, Brett, over the last a little bit, as I said, we've really worked and had some very favorable outcomes with some new contract renegotiations on several different fronts across the company. But some of the stuff that we're doing in tech, I think, is allowing us to get some expense reductions, so we can reinvest. Obviously, Ron will continue to quarterly kind of give our quarterly noninterest 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 into kind of where we think run rates are today.

But we've got some great platform enhancements. We're looking at AI. We 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 -- it absolutely increases efficiency. I don't know that necessarily -- I don't think it necessarily impacts you from a spot where we're going to look to reduce staff. 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 evaluating risk, evaluating fraud [ near ] company. So a lot of those technologies, I think, will allow us to continue at current staffing levels or maybe add just a few or instead of adding a lot over the coming years.

So it's kind of a mix -- it's a mixed bag. There's a lot of different moving parts to it, but I really -- I'm 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 growth.

It's as much a reallocation and reinvestment --

Yes.

Well, additionally, the first lever of this will be, we want to 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.

Russell Gunther, Stephens.

I wanted to begin with just a follow-up on the expense conversation. So 6 consecutive quarters of positive operating leverage. You 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?

Yes. I'll start, and then, Ron, maybe you can add some additional color as well. Yes, Russell, I think so. I mean when you look at where the company is 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 going to get -- we're going to continue to get that revenue lift.

And it's definitely going to outweigh our expense run rates. Now we're going to want to continue to invest and add people. But we're going to 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 our '26 models and feel very good about where our company can be. Again, we've got to execute. We've got to 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 Ron, I don't know any additional comments that you've got.

Yes. No, exactly right, Billy. We're probably -- 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 4 or 5 quarters. And we're probably looking around the $34 million, if you want numbers, $34 million to max $35 million range for the full year next year. So yes, we will be focused on containing in with our growth.

That's great color, guys. I appreciate it. And then just switching gears to the margin. I appreciate the sort of level set for 4Q '25, given the moving pieces in 3Q. You gave 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 2 to 3 basis points of margin expansion quarterly. Is that still sort of the range you're thinking about as we move beyond 4Q? Or have some of the actions taken this quarter changed that in any way?

No. Actually, the prior quarter was 2 to 3 basis points. We're pretty bullish on our margin expansion going into 2026. Overall, I think we're probably looking at 5 to 7 basis points expansion quarter over quarter for '26.

Catherine Mealor, KBW.

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 in the past 100 basis points of cuts, just given I think we'll see better growth rates come in, in the next -- over the next course of the year?

Yes. I think for the variable, we intend to -- as best we can is to really follow dollar or basis point for basis point. So we're still targeting 45%. I know we're probably in the 30s right now, but we want to target that 40% range beta.

Okay. And from the past 25 bps cut, I know it's early, but have you already seen the ability to do that?

Yes. Yes, we have.

Yes. We've been trying to step down, Catherine, a little bit as we work. We've got -- 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.

That gives us the ability to move a little bit faster than some others too. So yes, we've been able to move those down and still pick up the growth that we've needed. So teams have done a nice job to be able to do that. And then I think we're still staying right there in market. We're staying on top 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 we've done a nice job being able to pull that down.

Okay. Great. And then just one question on fees. Any outlook for fees as we go into next year, just things to be aware of that could drive better fee growth? I know we've got the insurance fees that will be a little bit of a moving piece.

But just kind of curious on how we should think about fee growth into '26.

Yes. I'll start and, Ron, I'd love to get your -- some color for Catherine as well on that. We've got several things. Again, we'll kind of reset now without that insurance component line item going forward. But yes, we've got -- I think we've still got some really good plans.

When you look at fees for us on the whole, we continue to think that, that's going to have the ability to trend up. I 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 interchange income. I think there's some opportunities there. And I did -- in my comments, I did mention 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 and grown our platform, we've continued to add some great new sales team numbers on the mortgage side, and our legacy team continues to perform well. So that's -- I think that will be a plus. Our investments arm continues to really execute -- continue to grow our AUM there. We've added a really nice producer in one of our Alabama markets, new FA down there this year.

And Ron, I know we always talk about TM. While TM is a piece of it is we continue to grow that TM platform, I know that those dollars continue to just kind of build and become a really nice annuity. So Catherine, I think there are several pieces. I don't know, Ron, 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 don't know, Ron, any comments on that from you?

Other than more looking at the customer fees and making sure more market, but no, you hit all the highlights, Billy, yes.

Steve Moss, Raymond James.

Maybe just starting here on loans. Just on the pipeline here, Billy, 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 here?

Yes. Again, I keep guiding to kind of the high singles. We've been able to beat that a little bit. And I think we'll be right there. I think we'll be right there at that plus/minus 10 number.

And that's a big boat as we get larger. I'll tell you, one of the things that we talk about a lot internally, the production levels that we've had have really just been outstanding. Again, the teams are doing a nice job. We're still seeing the payoffs and pay downs that a lot of our -- as we read and look at other releases and see a lot of other things go on the market, we're not immune to that. We're getting a lot of payoffs and pay downs.

It's just our production is so strong. It's still allowing us to get up here and kind of hit this 10%-ish number. So 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 or around that pace. Again, pipelines are solid.

When you're out -- we're out in these markets and we're with the reps in a lot of them, Miller and I are in a lot of them, I mean, we're out and there's just -- there's an energy and a really good calling effort going on throughout the company. So yes, I think we can continue that. There might be a quarter that we're a little lighter, a little heavier. But I still think we'd be right around that plus/minus 10.

Yes. 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 it.

Great. And maybe just in terms of feeding the beast, I hear you guys in terms of hiring as well. Just curious, as you think about -- I know you guys are always opportunistic, but you obviously have merger disruption in your markets. Kind of do you think there's a possibility of a step-up in hiring over the next 12 months? Just kind of curious, I know you guys are talking about positive operating leverage, but just curious on that aspect.

Yes. I'll tell you. Steve, we're very selective as we go through this hiring process. I don't necessarily think it's going to pick up dramatically. And I think a couple of reasons.

I think the disruption that we see in the market, I mean, these are good banks, and they're going to be fighting to hold on to good talent. And I just -- I think over a period of time, you may see some dislocation in some different bankers and some of those different markets throughout the Southeast. But I don't think there's a lot. I think we're just going to continue to be diligent in trying to find just incrementally good bankers that fit our culture, that fit our teams. And I think we're probably going to be -- I would imagine, looking into '26, kind of keeping the same type pace that we saw in '25, which will just be just add great talent when we find it.

Like I said, I think we probably are in the process. I think we've added -- Nate, I think we talked about we're probably maybe 12 to 15 net for kind of what we've done in the pipeline or that we've added this year. I think we'll continue to do that. And I think, Steve, for us, it's just going to be just continuing to be diligent, again, find the right types of bankers that fit the types of deals that we want to look at.

Billy talks often about ABR, always be recruiting, always be recruiting, that's talent and clients. And -- but I think it takes a special -- we're recruiting the quality, not the quantity. And I think that's important for us, the culture fit and who they are.

Yes.

Great. I appreciate that color there. Maybe just one more for me here on the loan loss reserve release. Did I understand that correctly that because you -- did I hear it correctly that you downstreamed some capital and, therefore, with a lower reserve ratio -- lower CRE concentration ratio, that was kind of one of the qualitative factors that drove the reserve lower?

Yes. Our CRE concentration ratio, one of our qualitative factors was our -- because we're over to $300 million. Now that we downstreamed $45 million from the parent to the bank, it lowered it to $271 million. That was one of the main factors.

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

Yes, sir, correct.

(Operator Instructions) Stephen Scouten, Piper Sandler.

I just wanted to clarify a couple of things real quick. Ron, 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 an internal index that will move with the rate moves. So yes, 45% all in, no.

Okay. Great. Perfect. And then on the NIM trajectory, I think you said 5 to 7 basis points a quarter in '26. Is that your expectation each quarter in 2026?

Or I just want to make sure I'm hearing that right.

Yes, each quarter in 2026.

Great. Fantastic. Okay. And then last thing, I think I know Catherine maybe had asked this 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. It sounds like, I think you said maybe another $111 million next quarter.

So I'm doing math remotely correct. Looks like maybe $120 million or so left in that ballpark. What's the plan for the remaining brokered deposits? Would the objective still to get those down from here? Or is that kind of an acceptable level moving forward?

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

Okay. Great. And then I guess last thing for me. The stock's been trading fantastically. The results have been great, kind of ahead of schedule in that operating revenue line.

It sounds like hiring has continued well. Do you think about M&A as a piece of that puzzle at all? I think there was some -- a note maybe in the slide deck that said, 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.

Yes. Yes, Stephen, for us, it really -- in my comments, I said we -- our strategy really hasn't changed a ton. A lot of it is just, again, doubling down on this organic strategy, getting deeper into the market. So that's Strategy 1A. Yes, I think we're really not shifting that to really look at M&A.

But we've said and continue to say, we will evaluate needle-moving opportunities that make sense. I've said before, we don't necessarily -- we don't want to do M&A just to be bigger. We want -- if we did it, we'd want it to make us better. And sometimes that's just tough to find. If we find that unicorn, we find the right piece that fits us, yes, we would evaluate.

But really, I mean, it's -- I say that because you never know what could come down the road. But man, our strategy is really focused on continuing just to lever this balance sheet and grow as we've done in the last couple of years, the way we've done it. That's the primary focus.

Yes. You can't ever say you're not going to look. I think we are open to look. But Billy talks often about now organic is 1A and M&A would be 1B. M&A might be 1C, but we're continuing to look.

Yes, 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.

It is. But I do think -- and as we've talked to you and a lot of your colleagues, I mean, it's just -- it's really important for us to message what we've messaged. It's -- we've built this company by design. We were, again, a little bit kind of mile wide, inch deep by design for a reason. And we -- it's been very important for us to gain this operating leverage and do that.

And that's -- we've done that. We've executed well. We're executing well. We still got room to grow. And we've got -- we want to continue to see this move forward.

So not really changing anything on our outlook moving forward. It's just -- we're going to just keep doubling down on what we're doing.

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

Thanks, Ezra, 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.

Thank you very much, Miller, and thank you to all the speakers for joining today's line. That concludes today's conference call. Thank you, everyone, for joining. You may now disconnect your lines.