FB Financial Corporation (NYSE: FBK) Q3 2025 Earnings Call | 10/14/2025

FB Financial Corporation Q3 2025 Earnings Call Summary

Date: October 14, 2025 Participants:

• Chris Holmes, President and CEO
• Michael Mati, COO and CFO
• Operator and Analysts

Key Financial Highlights:

• Earnings: Reported EPS of $0.43, adjusted EPS of $1.07.
• Tangible Book Value Growth: Achieved an 11.8% compounded annual growth rate since IPO.
• Pre-Tax, Pre-Provision Net Revenue (PPNR): $64 million reported, $81 million adjusted.
• Net Interest Margin (NIM): 3.95%, up 27 basis points from Q2, aided by Southern States Bank (SSBK) merger and purchase accounting accretion (~$6 million).
• Efficiency Ratio: 63.2% reported, 53.3% adjusted, improved from 56.9% in Q2.
• Return Metrics: Adjusted ROA of 1.43% and adjusted ROTCE of 14.7%.
• Merger with Southern States Bank: Closed July 1, 2025, with systems conversion completed by September 2. Achieved 50% of deal synergies in H2 2025, with 100% expected in 2026.
• Net Interest Income: $147.2 million, up 32.2% from Q2 and 38.9% year-over-year.
• Non-Interest Income: $27.3 million adjusted, up from $25.8 million in Q2.
• Non-Interest Expense: $109.9 million reported, $93.5 million adjusted, including $16.1 million in merger costs.
• Credit Quality: Provision expense of $34.4 million, including $28.4 million for SSBK’s non-PCD loans and unfunded commitments. Net charge-offs at 0.05% annualized. Allowance for loan losses at 1.5% of loans.
• Loan and Deposit Growth: Organic loan growth of $156 million (5% annualized). Deposits down $59 million due to strategic runoff of high-cost deposits, offset by $320 million in new deposit balances from campaigns.
• Capital Actions: Repurchased $24 million in shares, paid down $100 million in subordinated debt, and called $30 million in trust preferred securities.

Strategic and Operational Updates:

• Merger Execution: Successfully integrated SSBK, with a focus on scalability and client-first community banking.
• Market Outlook: Bullish on Tennessee, Alabama, Georgia, Northern Kentucky, and North Carolina markets, expecting industry consolidation to drive opportunities for talent and business acquisition.
• Growth Strategy: Targeting high single-digit to low double-digit organic growth in 2026, with a focus on both organic and acquisitive growth. Acquisitions will prioritize contiguous geographies, talented teams, compatible cultures, and strong financial performance.
• Balance Sheet Strength: Strong capital (TCE 10.1%, CET1 11.7%) and liquidity position, enabling pursuit of growth opportunities.
• Focus Areas for 2026:
  • Growth in existing markets and potential market expansion.
  • Maintaining a strong earnings profile to deliver shareholder value.
  • Capital deployment through organic growth, share repurchases, or strategic acquisitions.

Forward-Looking Guidance:

• NIM: Expected to range between 3.80%–3.90% in Q4 2025 and into 2026, including accretion, with two assumed rate cuts by year-end.
• Expenses: Full-year 2025 banking expenses projected at $290–$300 million; 2026 expected at $325–$335 million, with an efficiency ratio in the low 50s, reaching ~50% by year-end 2026.
• Growth: Mid to high single-digit loan and deposit growth in Q4 2025, returning to high single-digit to low double-digit organic growth in 2026.
• Capital Management: Comfortable with current capital levels, open to deploying capital for growth or acquisitions without needing to raise additional capital unless organic growth significantly accelerates.

Q&A Highlights:

• NIM Dynamics: SSBK added 6–8 basis points to core NIM. New deposits from campaigns came at low-4% rates. Loan yields remain in the high 6% to low 7% range, with minimal repricing pressure.
• Growth Outlook: Strong loan pipelines and market disruption (e.g., large MOEs) provide upside potential, though competition remains fierce.
• Acquisitions: Targeting banks with $3–$7 billion in assets for future deals, with a focus on footprint expansion over in-market consolidation.
• Wealth Management: Identified as an area for enhanced focus to improve customer offerings.
• Mortgage Business: Positioned to avoid losses, with upside potential if rates drop significantly (e.g., to 5.99%), though current origination is 90% purchase-driven.
• Capital Strategy: High capital levels support flexibility for organic growth or acquisitions, with a preference to avoid raising capital unless driven by exceptional organic growth.