Hey there,
I quickly checked through your settings and they look just fine, but I noticed your graphics card might be a bit underpowered. Smite will probably already use the gpu up to 100% so OBS will have a hard time copying each frame to start using it for streaming.
You could test, if you set Smite to Low Quality in your video settings (world/texture/shadow detail) and maybe even lower your resolution quite a bit. Then test with OBS again.
Of course you can also check the load your GPU has to take, for example with "GPU-Z" (
http://www.techpowerup.com/gpuz/) on its Sensors tab, it will show you the GPU Load. If this reaches 100% while smite is running or with OBS together, this would explain the "taking too long to encode".
Your current graphics card has a benchmark score of 814, if you can upgrade your System (assuming you are not on a laptop), you could for example get a GTX 650 for around 100€ which would get you a benchmark score of 1828 or a Radeon HD 7770 with a score of 2157. You could of course invest more money but these 2 should already be able to run smite and obs at the same time.
To give you one more information about your GPU, in a top notch system you at the moment would use a GeForce GTX 780 Ti with a passmark score of 8517, so just about 10x the power of your current gpu. This graphics card would of course cost alot more and would also need a new PSU and maybe more upgrades, so this is just an Info to help understand the indefferences in the current graphics card market.
Overall, if lowering the graphics settings in Smite does not help and neither lowering its resolution, there is unfortunately not you can do except for upgrading :/