SmartFinancial (NYSE:SMBK) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
SmartFinancial reported a strong third quarter with operating earnings of $18.6 million and record operating revenue of $57.5 million, marking significant growth driven by a 15% annualized organic loan growth and 12% annualized core deposit growth.
The company opened a new financial center in Columbus, Georgia, and emphasized continued investment in talent acquisition and strategic facilities to support growth, with a focus on maintaining a manageable loan-to-deposit ratio.
Looking ahead, SmartFinancial expects net interest margin to remain stable at 3.45% and projects fourth-quarter operating noninterest income of approximately $7.5 million with operating noninterest expenses between $35.0 to $35.5 million, despite potential pressure from higher deposit costs.
Full Transcript
OPERATOR
Hello everyone. Thank you for joining us and welcome to the SmartFinancial third quarter 2026 earnings release and conference call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star-one to raise your hand. To withdraw your question, press star-one again. I will now hand over to Nate Strahl, Director of Investor Relations, to begin. Please go ahead.
Nate Strahl (Director of Investor Relations)
Thanks, Erica. Good morning everyone and thank you for joining us for SmartFinancial’s third quarter 2026 earnings webcast and conference call. During today’s call, we will reference the slides and earnings release available in the Investor Relations section of our website at smartbank.com. Billy Carroll, our President and Chief Executive Officer, will begin the call, followed by Ron Gorczynski, our Chief Financial Officer, who will provide additional commentary.
We will be available to answer your questions at the conclusion of our call. Our comments today include forward-looking statements. These statements are subject to risks and uncertainties and actual results may differ materially. Factors that could cause actual results to differ materially are described in our earnings release and SEC filings, which are available on our website. We undertake no obligation to update any of the forward-looking statements as a result of new information, future developments, or otherwise, except as required by law.
During today’s call, we may reference non-GAAP financial measures related to the company’s performance. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendices to the earnings release and investor presentation filed with the SEC on October 19, 2026. And now I’ll turn the call over to Billy Carroll.
Billy Carroll (President & CEO)
Thanks, Nate, and good morning everyone. Great to be with you and thank you for joining us today and for your interest in SMBK. As usual, I’ll open our call with some commentary and then hand it over to Ron to walk through the numbers in greater detail. After our prepared comments, we’ll open it up with Ron, Nate, Rhett Miller, and myself available for Q&A. The third quarter was another outstanding one for our company. We continue to build strong organic momentum, generated record operating revenue, and expanded our return metrics. The foundation we have built over the past several years is producing the results we expected, and our team remains highly focused on disciplined growth and long-term shareholder value. So let me jump right into some of the highlights.
First, and as I always say, one of the most important metrics to me, we continue to increase the tangible book value of our company. Tangible book value per share was up, ending the quarter at $28.50. The tangible book value excluding AOCI increased to $30.03. That represents 15% annualized quarter-over-quarter growth, excluding AOCI. For the quarter, we posted operating earnings of $18.6 million, or $1.10 per diluted share, and record operating revenue of $57.5 million.
We did have a few moving parts that netted out positive to operating earnings this quarter, including a nice tax credit transaction that Ron will discuss in a moment. We again delivered excellent growth on both sides of the balance sheet with 15% annualized organic loan growth and 12% annualized core deposit growth. Our return metrics, though slightly aided this quarter, continued to strengthen. Operating return on average assets increased to 1.20% and operating return on average tangible common equity increased to 15.1%.
Credit quality remains very sound. Nonperforming assets were only 25 basis points of total assets and annualized net charge-offs were 6 basis points. We did have a slight uptick in delinquencies in our equipment finance subsidiary as higher diesel prices have strained some transportation business, but overall very manageable as that continues to be a relatively small piece of our overall loan book. We were thrilled to open our full-service Columbus, Georgia Financial Center during the quarter. This is our first branch in this great state and an important step in building density in that market and supporting the strong start our Columbus team has made.
Looking at the first few pages in our deck, you can see the continued progress in revenue, EPS, return metrics, and tangible book value. The consistency of those trends demonstrates the strength of our organic strategy and the operating leverage we are building. A couple of additional high-level comments from me on growth: we added $174 million in loans this quarter, representing 15% annualized. The growth remains broad-based with strong production across all regions and continued momentum in C&I lending. Our average loan portfolio yield, including fees and accretion, ticked up to 6.08%.
Regarding deposits, core deposits increased $163 million, or 12% annualized, during the quarter. Our focus on both sides of the balance sheet continues to pay off, and loan-to-deposit ratios remained very manageable at 87%. Deposit pricing remains competitive and higher funding costs pressured the margin modestly, but net interest income still increased nicely to $49.4 million as balance sheet growth more than offset that pressure. On expenses, operating noninterest expense was $36.4 million. The quarter included some slightly higher one-time items along with continued investment in our people and franchise. Even with that increase, year-over-year operating revenue growth outpaced operating expense growth. We will maintain discipline around expenses, but we’ll also continue making investments that support growth, including revenue-producing talent, technology, and strategic facilities.
So all in all, another excellent quarter of continued execution. I’m going to stop there and hand it over to Ron to dive into the details.
Ron Gorczynski (EVP Chief Financial Officer)
Thanks, Billy, and good morning everyone. I’ll start with deposits. During the quarter, our non-broker deposits grew $163 million, driven by continued new account growth and strong relationship expansion. The weighted average cost of new deposit production increased 43 basis points to 3.33% for the quarter and was 3.36% for September. Noninterest-bearing deposits were essentially unchanged at $920 million, representing approximately 70% of total deposits.
Interest-bearing deposit costs increased 9 basis points to 2.71%, while total deposit costs increased 11 basis points to 2.26%. Loan balances increased $174 million with growth diversified across all loan categories and geographies. New loan production carried a weighted average yield of 6.37% for the quarter and was 6.78% for September. Our growth on both sides of the balance sheet reflects the consistent execution of our relationship-based strategy. Our bankers remain focused on pairing quality loan growth with broader client relationships, operating accounts, and core deposits.
Turning to margin, net interest income increased $1.3 million to $49.4 million, and net interest margin was 3.45%, in line with our stated guidance. Looking ahead, we expect continued improvement in asset yields to support modest margin expansion over time. However, near-term deposit cost pressure is expected to continue to offset some of that benefit. As such, for the fourth quarter, we currently expect net interest margin to remain around current levels in the 3.45% range.
Our provision for credit losses declined to $687,000 from $1.5 million in the prior quarter. This included approximately $1.1 million of provisions, partially offset by a $371,000 release from our unfunded commitments liability. The provision also benefited from a $1.7 million net release of a loan-specific reserve driven by a loan payoff. Overall, the allowance for credit losses increased slightly to $45.6 million and our allowance-to-loans ratio declined to 94 basis points.
We believe the allowance is appropriate for the portfolio and current environment. Operating noninterest income was $8.1 million, up $245,000 from the prior quarter, led by service charges and mortgage banking income. Together with higher net interest income, this drove operating revenue to $57.5 million, reflecting continued momentum across the company. Operating noninterest expense totaled $36.4 million, up $2.4 million from the prior quarter. Approximately $1 million of this increase was attributable to sale losses and valuation write-downs on repossessed equipment in our equipment finance subsidiary. Salary and benefit expenses also increased primarily due to higher production-related variable compensation. Professional service expense included approximately $300,000 of consulting and placement costs associated with our tax credit purchase.
Adjusting for the equipment finance and tax credit expenses, our noninterest expenses were in line with our stated guidance. Our operating efficiency ratio increased to approximately 63% from 60% in the prior quarter. Although the ratio was elevated this quarter due to the aforementioned items, we expect to generate positive operating leverage over time as our recent investments contribute more meaningfully to revenue. We will continue making targeted investments in our expanding markets while maintaining discipline across the broader expense base.
For the fourth quarter, we expect operating noninterest income of approximately $7.5 million and operating noninterest expense of $35.0 to $35.5 million. Salary and benefit expenses are expected to range from $21.0 to $21.5 million, reflecting production-related incentive compensation and additional hiring. Incentive compensation accruals will vary with performance. Turning to taxes, income tax expense was $1.9 million, compared with $4.2 million in the prior quarter. During the quarter, we purchased $36 million of transferable energy tax credits at a discount to face, resulting in a $2.6 million income tax benefit. Looking ahead, we may consider similar transactions from time to time as part of our tax planning. Our effective tax rate going forward will be in the range of 19.5% to 20.5%.
I’ll wrap up with capital. Our tangible common equity ratio was 7.8%, compared with 8.0% in the second quarter. The decline in the tangible common equity ratio was primarily attributable to changes in AOCI as rising interest rates reduced the fair value of our bond portfolio during the quarter. In contrast, our estimated common equity tier 1 ratio increased to 9.8% and our estimated total risk-based capital ratio was 12.6% at quarter end. Our capital position remains solid and provides flexibility to support organic growth, maintain balance sheet strength, and continue building long-term shareholder value.
With that said, I’ll turn it back over to Billy.
Billy Carroll (President & CEO)
Thanks, Ron. As you can tell from Ron’s comments, we continue to execute successfully in the leveraging phase of our company’s growth. Our outlook remains centered on the strategy that has brought us here: getting deeper in our markets, growing share, expanding high-value relationships, recruiting great bankers, and leveraging the infrastructure and capabilities we have built. Our pipelines remain solid and we continue to see opportunities across our footprint.
The higher rate forecast does present some added challenges as we look ahead, but I’m going to continue to stick to our high single digits plus growth guidance, even though we bettered that in recent quarters. Talent acquisition remains a high priority. Market disruption across the Southeast continues to create opportunities for us to add experienced revenue producers who fit our culture. We have added some strong bankers in several markets this year and our ability to recruit maintains one of our company’s key competitive advantages. We had several very nice recruiting wins this quarter and have several other great talent members in the pipeline currently.
Again, Columbus, Georgia is a good example of our strategy in action as we opened our full-service financial center during the quarter right in the heart of Columbus’s main business district. We’re very bullish about the opportunity to build meaningful relationships and market share there. To summarize, we’re positioned very well. We are executing, posting record operating revenue this quarter. We are producing double-digit organic growth on both sides of the balance sheet. We are managing risk as credit remains very sound, and we are winning on talent as we continue to add outstanding new team members. Also want to close with a huge shout-out to our associates as our company was recently named to Great Place to Work’s list of top 50 mid-sized companies in the country and we also ranked number 11 nationally in the financial institutions category.
This is another great statement on the culture that this team is creating. Our future is bright and I appreciate the work of our SmartFinancial and SmartBank team and the efforts of all of our associates. I’m extremely proud of what we’re building here at SmartFinancial. I’ll stop there and we’ll open it up for questions.
OPERATOR
We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one. Again, we ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Will Jones with KBW.
Your line is open. Please go ahead.
Will Jones (Analyst at KBW)
Yeah. Hey. Great. Good morning, guys.
Billy Carroll (President & CEO)
Hey, Will.
Will Jones (Analyst at KBW)
Hey. Another really strong quarter of growth, both sides of the balance sheet, loans and deposits. I know last quarter we spoke about some deposit seasonality that we would see in the back half of the quarter that may be supporting some of the growth we saw. Could you speak to maybe any seasonality in this quarter’s results and what you would expect to maybe flow through into the balance of this year. Ron, you want to jump in on that one?
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, we did get a pickup really for Q3 throughout the board. Not only new relationships but building of the existing client base. So I think we’re, you know, I think we’re still looking for a good growth quarter for fourth and, you know, we’re out of our seasonality trend, our historical trending for that.
Will Jones (Analyst at KBW)
Yeah, got it. Okay. And then I think, I think, Ron, I heard you say the new deposits in the quarter were 3.30. Is that… Did I hear that right?
Ron Gorczynski (EVP Chief Financial Officer)
3.33 for the quarter. Yes.
Will Jones (Analyst at KBW)
Okay. And as we just kind of model out and think about deposit betas moving forward, could you just maybe walk us through, you know, level set expectations there, you know, and hear you that that margin may be more stable over the near term as, you know, some of your repricing on the asset side is offset by deposit costs. Is that how we should, you know, kind of think about, you know, additional incremental hikes from here? I know the forward curve would imply maybe a few more hikes coming into 2027.
You know, is kind of a stable margin where you would, you know, peg margin performance as we think about additional hikes in the future?
Ron Gorczynski (EVP Chief Financial Officer)
Yeah. First, since the rates hiked again, we’re probably running around 70% beta at this point of time. You know, we’re really so neutral. We’re really not going to be affected by rate hikes or rate decreases at this point. A lot of our expansion that’s, you know, our modest expansion throughout 2027, is really due to our repricing book. We will see incremental lift going through 2027. So as far as rate hikes, we should be fairly neutral throughout each rate hike.
Which, by the way, our guidance does include a rate hike in December.
Will Jones (Analyst at KBW)
Yeah. Okay. And then just fair to say, I know we talked about a $1 EPS target by the end of this year. Feels like things are still kind of trending in that direction if we normalize some of the expenses from this quarter. Is that the way that you guys are kind of viewing the business?
Billy Carroll (President & CEO)
Yeah. Well, I think you’re spot on. Yeah, you really, you shake out kind of the ebbs and flows this quarter. Really a solid quarter. And we still feel very good about our ability to kind of hit that four by four challenge that we’ve stated publicly, hitting that dollar run rate. We’re still on that trajectory and feel really good about our ability not just to hit that but our ability to continue to move EPS higher as we look into next year. Again, we’ve talked about it a lot. I mean, our focus on just continuing to grow EPS and revenue and book value, that’s kind of where we’re sitting, and the team’s doing a great job on that. So yeah, I think we’re moving in that direction and feel pretty good about the chances of getting that here pretty soon.
Will Jones (Analyst at KBW)
Yeah, certainly. Well, the momentum is certainly still very much evident. So that’s there, guys, and then thanks for the questions.
Billy Carroll (President & CEO)
Thanks, Will.
OPERATOR
The next question comes from the line of Russell Gunther with Stephens. Your line is open. Please go ahead.
Russell Gunther (Analyst at Stephens)
Hey, good morning, guys. I wanted to start on the loan growth side of things. Morning, Billy. Another enviable organic growth quarter and guide. Maybe a more intermediate question on my end as you guys think about, you know, potential Fed rate hikes and the absolute level of interest rates. Is there a threshold where you would expect to see some pipeline fallout that would put that kind of high single, low double-digit growth profile at risk?
Billy Carroll (President & CEO)
Yes, that’s a really good question, Russell. Yeah, obviously as rates edge up, and quite frankly we’re talking about that a lot with our division and regional leadership. We’re talking about, you know, pipelines and thinking about 27 and starting to lay out our forecasts, and, you know, right now even with kind of the current rate environment, we’ve not—pipelines still feel pretty good. Now, I do agree, I think if you’re going to see another two to three hikes, could that have some impact as we look into 27?
Absolutely. I think the macro is the macro and so we’ve got to deal with that just like everybody else. What I will say is that I call it the hustle factor that our guys and gals have across our board of just getting out, bringing in new relationships. I don’t think that will slow down. So it might slow a little bit of just what I call just maybe some of the new projects that are going on that we see. But I still think we have got a great shot at continuing to bring in new relationships, new deposit accounts, and new funded debt as we hopefully move things from other entities.
Russell Gunther (Analyst at Stephens)
Got it. That’s very helpful. Thank you, Billy. And then, you know, always have that great slide in the deck that flushes out your back book repricing opportunity. Ron, you mentioned the reinvesting rates on the loan side. Could you just share where you’re reinvesting on the investment securities front? And then on the other side it would be helpful to get a sense for just kind of where spot and the period deposit rates ended the quarter.
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, at this point, we’re buying bonds SOFR plus 85, so in the 5.5 plus range. Again, we’re just kind of keeping our balance of our investments pretty stable over time. And the spot deposit pricing: our CDs are today around 4.10 for 7-month CDs. Our 13-month CDs are 4.15, and our money markets are in the 3.60 to 3.70 range. At this point we try to target 95% of Fed funds.
Russell Gunther (Analyst at Stephens)
Okay, fantastic. Thank you. And then just last one for me if you don’t mind. You know, I appreciate the near-term expense outlook, but how are you guys thinking about a core expense growth rate on a more intermediate-term basis as you guys balance, you know, franchise investment and talent and tech with the goal of delivering positive operating leverage?
Billy Carroll (President & CEO)
Yeah, great question. And again we’re having these exact same conversations, Russell, as we’re kind of going through our 27 forecasting. You know, we—you know, again, you used the word—it is balanced. We’re continuing to grow, continuing to add team members. When we look at, we kind of look at it almost in a little bit of, I call it same-store sales. When you kind of factor out some of the new ads, I think if you factor out some of that and you just look at where we are moving forward, I think we can stay pretty reasonable on the expense growth.
Now, Ron, I know we’re talking about—you’ve got—we’re probably not prepared to really lay—I know we’re working through forecast right now, probably not ready to give 27 guidance. But, I mean, percentage-wise, you got a range that you could maybe share.
Ron Gorczynski (EVP Chief Financial Officer)
You know, for both of these I think we’re going to be around 5 to 6 growth range going off of a fourth quarter’s run rate. But again, we will be providing continuous leverage and sustainability in our workforce, in our franchise. You know, we benefited from keeping our expenses to a tight band, but, you know, our franchise is growing, so we will have incremental growth in our noninterest expenses.
Russell Gunther (Analyst at Stephens)
Yep. Nope. Understood. I appreciate your thoughts, guys. Thanks for taking my question.
Billy Carroll (President & CEO)
Thank you, Russell.
OPERATOR
The next question comes from the line of Stephen Scouten with Piper Sandler. Your line is open. Please go ahead.
Stephen Scouten (Analyst at Piper Sandler)
Hey, good morning, everyone. Ron, I appreciate the information you gave there on CD and money market costs. Can you talk a little bit about maybe what you’re seeing all-in kind of blended rates come in at on the deposit side and kind of how you’re seeing spreads overall, and any sort of directional trends there, whether you’re seeing spread compression given competition or what have you?
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, we’ve always—you know, the last couple of quarters we were probably, on our side of the house, kind of quiet getting the phone calls of pricing. The pricing competition is real. You know, we’re coming into the 3.35 range all-in. That’s kind of what we expect. I don’t know how much incrementally higher we’re going to go at this point, but, you know, that’s to be determined. The market is real and we’re getting more calls every day for exception pricing.
So that’s about as best I could tell you at this point.
Billy Carroll (President & CEO)
But I’ll add to Stephen, you know, I think the team’s also doing a really nice job on the asset side. You know, we’re, you know, we’re sitting down and really looking at, you know, watching that and kind of fighting for every basis point on the asset side. You know, loan growth is competitive too, but, you know, we’ve been able to continue to eke out pretty nice, you know, pretty nice incremental, incremental rates on our loan growth as well. So while we’re, while, yeah, a little more deposit funding than we’d like to see, we’re doing a nice job balancing it with the growth that we’re getting.
Yeah, yeah. I mean the growth is a huge tailwind there and I think that the average yield is what, 6.08 currently. And I’m not sure if you noted this or if it’s in the slide deck. Apologies I missed it. But new loan yields are coming on around where all in.
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, 6. September was 6.78, so for the quarter was 6.37. So we are getting some nice lift from the rate increase.
Stephen Scouten (Analyst at Piper Sandler)
Yeah, that’s fantastic. Okay, great. Appreciate that. And I think, you know, Billy, you mentioned the $1 run rate and your progression there. Do you guys have or do you think you’ll maybe be putting out some longer-term profitability targets from here? You guys have made just obviously tremendous strides over the last couple years. Just kind of curious where you think you can continue to head from here. What’s possible for the franchise?
Billy Carroll (President & CEO)
Yeah, yeah, Stephen, we will. I think you know, we’re spending a lot of time. We’ve worked through our kind of our executive teams planning meetings over the last few weeks and got board strategy coming up here in a couple of weeks. And so we’re laying out the forecast. You know, we. As y’all know, we. We’re pretty transparent. We’ve demonstrated our ability to kind of challenge ourselves internally and execute on that. That’s worked pretty well.
So we’re. We’re kind of working through what that next challenge is going to be for our group. But we will be. We’ll be sharing that at the appropriate time. But again, I remain so excited about what we’re seeing in this company. The energy. Again, I mentioned recruitment. I mean, we’re adding some great bankers to this platform. Just strategically and in some key markets. So I love our ability to continue executing. And so, yeah, we’ll be laying out.
We’ve got Nate’s kind of our marketing guy when it comes to crafting these, the mantras for the challenges. So we’re trying to figure out exactly what we want to lay out for ’27, but stay tuned. And I do think the whole team’s up for the challenge. I mean, they push us.
Stephen Scouten (Analyst at Piper Sandler)
Absolutely.
Tim (Analyst)
It’s a good, good mix of driving for higher. Yeah. It seems like you have a group that likes a challenge, so that’s fantastic. I guess last thing for me, and I think I kind of asked you this last quarter as well, but M&A possibilities. I mean, does any of this change? You continue to have a strength from a pricing power perspective. You’re now in Columbus. I mean, do you think about, you know, maybe changing direction at all or putting that back on the table in any way, shape or form, given maybe a desire to get more scale and density in newer markets?
Billy Carroll (President & CEO)
You know, I think, you know, our focus continues to be 1A on what we’ve done. You know, this organic strategy and just adding great regional bankers is really where we want to focus. We are. We’re watching what’s going on in the world. I mean, there are opportunities out there. Again, I’ve said it before and I’ll reiterate it. You know, I think it would have to be something that was really unique, that made us better and not just bigger if we were ever to look at something, because again, we’ve kind of got this thing built to where we can punch up and, you know, we’ve got.
When you look at our products and our services and our ability to compete against the larger regional banks, we can do that now at 6 billion. And so I think for us, it would have to be really unique for us to consider it. But we’re always keeping our eye open on what’s happening. But organic continues to be 1A.
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, I think it’s intriguing to look at. Obviously always fun to run the numbers, but man, we are pretty darn focused on what we’re doing now. And I echo what Billy said. It would have to be super, super attractive for us to deviate from the current strategy.
Tim (Analyst)
Yep, makes sense. Continues to be a great answer there. Keep it up, guys. Appreciate the time.
Billy Carroll (President & CEO)
Thank you. Thanks, Tim.
OPERATOR
The next question comes from the line of Brett Rabaton with StoneX Group. Your line is open. Please go ahead.
Brett Rabaton (Analyst at StoneX Group)
Hey guys. Good morning. If I heard the guidance correct, the guidance for 4Q fee income was 7.5 million. One, is that the right number? And then two, it’s a little softer than 3Q. If so, just any thoughts on the fourth quarter level of fee income?
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, Brett. Yeah, fourth quarter, we’re projecting 7.5 million and it is softer. It’s really the mortgage, our mortgage unit, the seasonality of it. You know, could we do better maybe from what’s in the pipeline. But right now we’re, you know, usually we do start slowing down and that’s been a pretty decent lift for us quarter over quarter. So that’s really the only item that’s really causing that.
Brett Rabaton (Analyst at StoneX Group)
Okay, and any thoughts on the third quarter strength, you know, versus what I’ve seen from some other banks, you know, when mortgage’s been tough, given rates. Was that—I’m sorry, Brett, was that—quote—was that mortgage? Is that what you were—mortgage specific? Yeah, just the mortgage banking line item was stronger in 3Q than 2Q and 1Q. And, you know, it just seems like others have had some pretty tough comps in 3Q just given rates. So I was just curious what the strength was related to 3Q.
Billy Carroll (President & CEO)
Yeah, I’ll do that. And then Ron or Rhett, y’all, I mean, any chime in. But yeah, overall I think a lot of it has just been, you know, our mortgage group has really had just an overall really good year. We’ve continued to add some really good mortgage bankers over the course, especially early in the year. Those folks have kind of ramped up and have kind of gained momentum, even in an environment. We were actually talking with one of our mortgage team members yesterday about kind of prospects, and Ron said you do get a little bit of seasonality.
You don’t have as many closings usually in Q4, but, you know, our pipelines feel pretty good. You know, we’re still getting, you know, while some one-to-four pockets may be a little bit softer in some different spots, we’ve been able to continue to eke out really good growth and been real pleased with what we’ve been able to accomplish this year on mortgage. So I think a lot of it is just, number one, team’s very focused and sales side’s doing a great job there.
And then probably number two, just we’ve been able to do it with some really good new mortgage banker additions this year. I don’t know, Rhett, Ron, any additional color on that from you guys?
Rhett Miller
No, you’re spot on. I mean our volume—you know, we have been putting more originators out on the field. So our volume has increased. So we just, you know, it’s been working for us.
Billy Carroll (President & CEO)
Great team, great hustle.
Ron Gorczynski (EVP Chief Financial Officer)
Yeah. The production side has—to your point, Billy—the new hires has been a key driver, and then I think that team’s ability to just continue to process activity very efficiently also helps. With the new producers, we’re able to get deals turned around quickly, get responses back and in business.
Brett Rabaton (Analyst at StoneX Group)
Okay, that’s super helpful. And then the other question I had was just around slide 14 and if you could just refresh my memory on—you’ve got nearly half a billion of fixed-rate loans yielding slightly under 5% that mature by the end of next year and a little over 100 million of adjustable-rate loans at a similar rate. Those loans—I mean, I assume those are all kind of more, you know, fixed-rate commercial real estate type properties. Do those loans, do you think, reprice to a higher level or do you think that those loans end up repricing someplace else with another institution?
Or just any thoughts that—slide 14—those loans that are repricing, you know, over the next year.
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, I’ll start. You know, what we have seen for our renewals and repricing: we are getting, one, we’re getting about 100, 110 basis points over the original rate. Two, for the renewal side, we are keeping around 80, 85% of those in-house. So we’re very successful in keeping those—nice retention—and at a lot better rates than what we’ve had. So, you know, it’s been something we’ve been working at for a while and quarter over quarter. So we don’t see why that would defer or change going forward either.
Brett Rabaton (Analyst at StoneX Group)
Okay, if I could ask one last quick one just around demand, you know, and I’ve had folks asking about maybe demand being quelled by higher rates. And you guys obviously have an origination rate September, close to 7%. Have you guys seen any of that where higher rates might be starting to slow demand a little bit, or is it just not a factor at this point?
Billy Carroll (President & CEO)
You know, we’re watching it. We’re watching it, Brett. I know, Rhett. I know we talk about pipelines a lot, you know, just trying to project, you know, growth over the near term as good as you can project off your pipeline. But we’ve usually been pretty accurate around that. We’re not seeing it slow yet. You know, I think, you know, if you do get a couple of more rate increases in there, could you see some slowdown as we look into ’27? You know, absolutely.
Again, I’ll kind of go back to my comment that I made earlier. You know, it is not slowing our team’s calling efforts down and our prospecting efforts. And so even though you might get a little bit of softness maybe in some new projects, I think our ability to move clients over and to move deals over remains pretty good.
Ron Gorczynski (EVP Chief Financial Officer)
I think that’s spot on, Billy. I would say what we’re seeing in opportunities I don’t think is really slowing. When you combine our calling efforts and our new team members’ additions we’ve had across the footprint, we’re still seeing a very steady pipeline.
Brett Rabaton (Analyst at StoneX Group)
Okay, great. Appreciate the call, guys.
Billy Carroll (President & CEO)
Thanks, Brett.
OPERATOR
The next question comes from the line of Steve Moss with Raymond James. Your line is open. Please go ahead.
Steve Moss (Analyst)
Good morning, guys. Maybe just start on the equipment finance, Billy, on the equipment finance here, just with Fountain. I think I heard you, Billy, talk about some challenges within that portfolio regarding higher diesel. Just kind of curious, how large is that portfolio and any color you can give there.
Billy Carroll (President & CEO)
Yeah, I’ll give a little high level, and Rhett, maybe you could walk through specifics on portfolio balances. Overall, we saw a little bit of delinquency creep in that book. A lot of that’s some of these smaller mom-and-pop transports, just a little bit of strain there. We’ve been able to navigate that pretty well internally. So, with diesel prices up, you might say we might have a little bit more delinquency, but overall we think it continues to be very manageable as it’s a small piece of the book. Any portfolio specifics?
Rhett Miller
Yeah, I’ll just say it’s about $145 million or so.
Steve Moss (Analyst)
Yeah. Is the entire bookstation okay? Great. Appreciate that color there. And then, thinking about NII growth going forward, given the 70% deposit beta, sounds like you’ll have another good quarter of loan growth. So, for NII in the upcoming quarter, if the margin is only 3.45%, is that like a 2% type NII number?
Billy Carroll (President & CEO)
NII growth? We were probably a little better than that this quarter. I haven’t looked at it from a percentage standpoint—they could probably calculate it pretty quick—but I think we were a little better than that this last quarter, but that’s probably in the right range. Ron, you got a quick math on that?
Ron Gorczynski (EVP Chief Financial Officer)
We’re probably looking at the NII change closer to 3% growth for Q4.
Steve Moss (Analyst)
Okay, so maybe loan growth similar to the current quarter for the fourth quarter here?
Billy Carroll (President & CEO)
Yeah, probably a little—maybe a touch higher—but yes. Yes, sir.
Steve Moss (Analyst)
Awesome. Thanks, Ron. Okay, and in terms of you guys having managed down your securities and liquidity a bit, it kind of seems like we’re hitting the floor here. Are you willing to run it a bit lower to fund loan growth, or have we hit the floor? That’s what I’m trying to ask.
Ron Gorczynski (EVP Chief Financial Officer)
Yeah, I still think we could probably go $80 million less, but we’re getting near our floor at this point. We’ve got a little bit more ammo, but we just keep reinvesting in the portfolio.
Steve Moss (Analyst)
Okay, great. Well, nice quarter. And that’s all my questions. Appreciate the call here, guys.
Billy Carroll (President & CEO)
Thank you very much. Thank you. Thanks, Steve.
OPERATOR
The next question comes from the line of Christopher Adamo with Breen Capital. Your line is open. Please go ahead.
Christopher Adamo (Analyst at Breen Capital)
Hey guys, this is Chris Adamo on for Chris Marinac. I got a quick one for you on the credit front. Could you provide any color into the CRA loss rate for the quarter and how you see that going forward and impacting future provision and overall reserve levels as well? Thanks.
Billy Carroll (President & CEO)
I just want to make sure I clarify the right question, Chris. You’re saying loss levels—how do we view loss levels going forward? Is that correct?
Christopher Adamo (Analyst at Breen Capital)
Yeah, that’s correct.
Billy Carroll (President & CEO)
I’ll make a high-level comment and then let Rhett jump in. Overall, we still feel really good about the credit book. When you look at what little we had in the way of losses so far this year, most of that has been our equipment finance sub-related, which is usually typical—we’ll have a little bit more there because we get the yield for it. But I don’t anticipate anything unusual going forward. Rhett, anything on your side as far as expected thoughts around credit in the next couple of quarters?
Rhett Miller
Billy, I would say for purposes of the outlook, to your point, our strain is in that equipment portfolio and I wouldn’t anticipate seeing any significant changes there as far as larger additional losses. We’ll work through that book as we go through this cycle in the transportation space, but I don’t anticipate it having any significant impact. We feel like our allowance is positioned very well with where we are today, so I don’t see it being significant.
Billy Carroll (President & CEO)
Yeah, so I think Rhett answered. Chris, loss rates stable moving forward.
Christopher Adamo (Analyst at Breen Capital)
Perfect. I appreciate the time.
Billy Carroll (President & CEO)
Appreciate it. Thank you.
OPERATOR
There are no further questions at this time. I will now turn the call back to Miller Welburn, Chairman of the Board, for closing remarks.
Miller Welburn (Chairman of the Board)
We really appreciate y’all joining us today. Thank you for your interest in what we’re building here at the bank and for our team. I hope you each have a great day. Talk to you soon. Thanks.
OPERATOR
This concludes today’s call. Thank you for attending. You may now disconnect.
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