FB Financial Corp Q2 FY2025 earnings call

• Merger with Southern States: Announced March 31, completed July 1, with integration efforts including system conversion and rebranding to be completed by end of Q3.
• Securities transaction: Sold ~$266 million of investment securities at a pretax loss of $60 million; proceeds to be used for redeeming sub debt and trust preferreds and funding loan growth.
• Earnings: Reported EPS of $0.06 and adjusted EPS of $0.88; tangible book value per share grew at 12.2% CAGR since IPO.
• Balance sheet growth: Loans grew at 4.2% annualized, deposits at 7.2% annualized; targets mid- to high single-digit growth for second half of 2025 and 2026.
• Credit and allowance model: Migrated to a new allowance model during the quarter, with a net impact of ~$395,000 on reserves; provision expense was $5.3 million.

No detailed breakdown of product segments provided in the transcript.

• Net interest margin: Expected to be in 3.70% to 3.80% range in back half of 2025, including proceeds from security sale and Southern States' balance sheet.
• Noninterest income: Expected to grow modestly across various lines.
• Noninterest expense: Projected to be $285 million to $295 million for full year 2025; core efficiency ratio targeted to be in low 50s by Q4 2025 and 50% in 2026.
• Effective tax rate: Forecasted in 21% to 23% range for remainder of 2025.

• Market volatility: Due to trade policy and geopolitical events, potentially impacting customers and financial markets.
• Loan growth uncertainty: Customer wait-and-see approach during volatile market conditions affecting loan growth timing.
• Macroeconomic impact: Potential effect on credit quality and provisioning.

Q: Circle back on margin guide, SSBK bond book, loan growth pipeline A: Michael Mettee and Chris Holmes discuss SSBK bond book, loan growth pipeline timing, and new loan yields over 7% Q: Mortgage banking provision, ACL change A: Michael Mettee elaborates on mortgage banking provision due to higher LTVs and new allowance model Q: M&A, organic hiring A: Chris Holmes and Travis Edmondson discuss M&A opportunities, organic hiring, and hiring of 4 new revenue producers in Q2 Q: Margin guide, rate cuts, deposit costs A: Michael Mettee and Chris Holmes talk about margin guide range, potential rate cuts, and deposit cost management Q: M&A preference, loan growth, multifamily lending A: Chris Holmes and Travis Edmondson discuss M&A preference, loan growth trends, and multifamily lending demand Q: Unfunded commitments, systems conversion logistics A: Chris Holmes and Michael Mettee discuss unfunded commitments potential and systems conversion logistics for transactions