EPS: $0.84 reported, $0.85 adjusted. Tangible Book Value Growth: 12.8% CAGR since IPO in 2016. Pretax Pre-Provision Net Revenue: $51.1 million, $52.2 million adjusted. Loan Growth: $169 million increase, 7.14% annualized rate. Loans Held for Investment: Approximately $9.8 million at quarter end. Adjusted Return on Average Assets: 1.23%. Adjusted Return on Average Tangible Common Equity: 12.3%. Tangible Common Equity to Tangible Assets Ratio: 10.5%. Net Interest Income: $107.6 million. Noninterest Income: $23 million. Noninterest Expense: $79.5 million reported, $79.1 million adjusted. Provision Expense: $2.3 million. Net Income: $39.4 million reported, $40.1 million adjusted. Net Interest Margin: 3.55% on a tax equivalent basis. Cost of Total Interest-Bearing Deposits: Decreased 24 basis points. Core Efficiency Ratio: 59.9%. Annualized Net Charge-Off Rate: 0.14%. Allowance for Credit Loss Balance: $151 million. Common Equity Tier 1 Ratio: 12.8% preliminary.

Warning! GuruFocus has detected 1 Warning Sign with FBK.

Release Date: April 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

FB Financial Corp (NYSE:FBK) reported a solid first quarter with an EPS of $0.84 and adjusted EPS of $0.85. The company achieved a compound annual growth rate of 12.8% in tangible book value per share since its IPO in 2016. Loan balances grew by $169 million at an annualized rate of 7.14%, primarily in C&I and owner-occupied CRE. FB Financial Corp (NYSE:FBK) maintained a strong capital position with a tangible common equity to tangible assets ratio of 10.5% and a CET1 ratio of 12.8%. The planned combination with Southern States Bank is progressing well, with integration efforts underway and a Q3 close anticipated.

Negative Points

The adjusted return on average tangible common equity of 12.3% is below internal targets due to holding excess capital. Net interest income was slightly down by $740,000, impacted by two fewer days in the quarter. Noninterest expense increased to $79.2 million, resulting in a higher core efficiency ratio of 59.9% compared to the previous quarter. Charge-offs were higher than historical levels, with an annualized net charge-off rate of 0.14%, driven by a specific C&I credit. Economic uncertainty and market volatility pose challenges, with potential impacts on clients and communities being closely monitored.

Q & A Highlights

Q: Can you provide insights on loan growth trends and how you feel about continued growth in C&I given market uncertainties? A: Christopher Holmes, President and CEO, noted that while there is some reticence about major projects, business continues as usual on a smaller scale. Travis Edmondson, Chief Banking Officer, added that pipelines remain robust, and they expect high single to low double-digit growth for the year.

Story Continues

Q: How are the new markets, Nashville and Tuscaloosa, performing? A: Travis Edmondson stated that both markets are performing well, with Tuscaloosa off to a strong start and Nashville gaining momentum. Michael Mettee, CFO, mentioned that new revenue producers have been hired in these areas, indicating continued growth.

Q: With the share repurchase program, how aggressive do you plan to be given the current stock price and pending deal? A: Christopher Holmes confirmed that with $73 million remaining in the authorization, they will be in the market if they believe the stock is undervalued.

Q: What is your outlook on the balance sheet growth, especially with the pending deal? A: Michael Mettee explained that they will continue to manage liquidity and deposit costs, with a focus on growing core relationships. Christopher Holmes added that they expect more asset growth in the second quarter, driven by strong core customer deposits.

Q: Can you discuss the increase in construction commitments and any concerns about the hospitality sector? A: Christopher Holmes stated that their construction concentration is within acceptable limits and spread across various markets. They are cautious about the hospitality sector, especially in Nashville, but continue to support projects with strong customer relationships.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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