FB Financial Corp Q4 FY2025 earnings call

• Growth themes: Focus on talent acquisition, organizational optimization to drive growth in financial assets and capabilities, with a focus on customer experience and company culture.
• Financial results: Quarter saw EPS of $1.07 and adjusted EPS of $1.16; full-year EPS of $2.45 and adjusted EPS of $3.99. Net interest income was $150.6 million, net interest margin 3.98%. Return on average assets 1.4% (adjusted 1.51%), return on average tangible common equity 14.4% (adjusted 15.9%).
• Quarter details: Pretax pre-provision net revenue $71.1M ($77.1M adjusted); non-interest expense $107.6M ($100.4M adjusted); provision expense $1.2M; loan growth $86M, deposit growth $97M for the quarter. Stock repurchase of over 1.7 million shares, representing ~3% of the company.

For the quarter, FB Financial reported EPS of $1.07 and adjusted EPS of $1.16. Pretax, pre-provision net revenue was $71.1 million, or $77.1 million on an adjusted basis. Earnings were led by net interest income of $150.6 million, a net interest margin of 3.98%. Adjusted returns were solid with a return on average assets of 1.4% or 1.51% on an adjusted basis, and a return on average tangible common equity of 14.4% or 15.9% on an adjusted basis. For the year, EPS was $2.45 and adjusted EPS was $3.99. Loans held for investment grew 29% and deposits were up 25% year over year. The balance sheet grew through the acquisition of Southern States Bank and organic growth in key businesses and geographies. The allowance for loan losses settled at $186 million or 1.5% of loans held for investment.

• Net interest margin exclusive of loan accretion to land between 3.78% and 3.83% in Q1 2026, full-year consistent with current levels, with loan accretion expected to add ~15 basis points.
• Fee income to grow in upper single-digit range.
• Banking expense to land between $325 million and $335 million in 2026, efficiency ratio in low 50s. Mid to high single-digit loan and core customer deposit growth expected in 2026.

Factors affecting forward-looking statements, including risks beyond FB Financial's control that may cause actual results to differ materially from expectations, as detailed in FB Financial's periodic and current reports filed with the SEC, such as in the most recent Form 10-K.

Q: Does management anticipate additional share repurchases from the Ayers estate?

A: We do not anticipate additional share repurchases from the Ayers estate.

Q: Do you guys think mortgage banking is on the right path?

A: Mortgage had a good year, went from negative to positive contribution, and is on the right track with potential for overperformance in 2026.

Q: What does management think about the current M&A climate and optimism on additional deals?

A: There are many M&A conversations, we'll continue to evaluate opportunities, and will act on the right one if it comes along, weighing the distraction of transactions.

Q: On loan growth front, where do paydowns compare to last quarter and asset class/geographic loan leaders?

A: Payoffs were elevated in the fourth quarter, especially at the end of the quarter; growth forecast is based on current players, with broad-based growth expected across asset classes and geographies, including Nashville being a significant part of the loan and deposit base.

Q: On the expense front, how does the 4Q run rate shape up and changes to comp structure?

A: There were non-run-rate expenses like performance-based, franchise tax, and share repurchase related fees; the expense guide for 2026 is reiterated, and we're willing to invest in the right talent while maintaining discipline and operating leverage.

Q: Thoughts on M&A opportunity, size, geography?

A: Geographically looking at the Southeast, Carolinas, Virginia, Georgia, Alabama; prefer contiguous or nearby geographies; target banks with good performance, size from couple billion to 6-7 billion in assets.

Q: Loan pipeline and client sentiment; core deposit growth outlook for 2026?

A: Loan pipeline is strong, client sentiment is positive; core deposit growth focuses on customer experience, treasury management, and activating relationships, with brokered deposits at a small percentage.