FB Financial Corp Q1 FY2026 earnings call

• Received J.D. Power's Retail Banking Award in the South Central Region for customer satisfaction, ranking number one in overall satisfaction, client trust, and quality of people. - EPS and adjusted EPS grew, with tangible book value per share having a 11.6% compounded annual growth rate since IPO in 2016. - PPNR return on average assets near benchmark range of 2%. - Loan growth started slower than anticipated but momentum building, with deposit growth around 5%. - Focus on building deep long-term customer relationships, disciplined in acquiring new and protecting existing relationships. - March was strongest month of quarter with upper single-digit loan growth and expanded loan pipeline. - Expect second quarter balances to improve with pipeline conversion extending into third quarter and larger volumes in back half of year. - Full year loan and deposit growth expected in mid to high single digits, weighted towards second half. - Non-interest expense managed with banking segment non-interest expense expected to range between $325 million and $335 million for the year, efficiency ratio in low 50% range. - Capital position strong with flexibility for organic growth, strategic opportunities, and returning capital to shareholders.

EPS was $1.10, adjusted EPS was $1.12. Net income was $57.5 million, adjusted net income was $58.3 million. Pre-tax pre-provision net revenue (PPNR) was $77.2 million, adjusted PPNR was $78.2 million. Net interest margin for the quarter was 3.94%, driven primarily by balance sheet mix and rate cuts. Total loan yields were 6.51%, deposit costs were 2.27%. Non-interest income declined $2.4 million due to lower secondary mortgage volume and non-recurring items. Non-interest expense was $95.2 million, 11% lower than prior quarter. Provision expense was approximately $3 million, allowance coverage ratio was 1.49% of loans held for investment. Capital ratios were strong: common equity tier one ratio 11.5%, tier one leverage ratio 10.4%, total risk-based capital 13.4%.

• Full year net interest margin, excluding loan accretion, expected to be in range of 3.76% to 3.8%, a modest decline from prior guidance. - Second quarter margin expected to trend towards lower end of 3.76% to 3.8% range before stabilizing. - Banking segment non-interest expense expected to range between $325 million and $335 million for the year. - Total company efficiency ratio anticipated to remain in low 50% range. - Full year loan and deposit growth expected in mid to high single digits, weighted towards second half.

• Interest rate environment uncertain, timing and magnitude of future benchmark rate movements can impact margin. - Competitive pressure around pricing, both on loan and deposit side, from large and small institutions. - Potential macroeconomic events from Middle East conflict, though exposure to sensitive sectors minimal but need to monitor. - Talent pipeline disruption with movement of people between institutions, requiring offense and defense in talent acquisition and retention. - Distraction from integrating acquisitions, which can impact growth cadence.

Q: Michael, comments on March loan growth momentum and competitive pressures, variance by market and paydown activity.

A: Pipeline continues to build, competitive pressure from large institutions across markets, deposit pressure from both large and small, expect some paydowns to continue.

Q: Russell, on expense side, banking segment expense guide and deal synergies.

A: Banking segment non-interest expense expected between $325 - $335M, deal synergies landed close to expectations.

Q: Steven, on loan growth cadence, demand pullback, payoffs.

A: Cadence fairly steady with some big balance payoffs, minor bumps related to economic uncertainty.

Q: Brett, on strategy, specialized lines of business, M&A.

A: Continue community bank orientation, consider adding specialized lines, M&A still an option but selective and strategic.

Q: Steve, on loan pipeline demand by type, margin purchase account accretion, capital buybacks.

A: Demand across board, more in operating businesses, margin guide includes rate cut, continue opportunistic buybacks.

Q: Catherine, on deposit costs, new deposit cost, growth by product type.

A: Deposit costs modestly higher with competitive pressure, see growth in CDs and savings accounts.

Q: Christopher, on securities growth for NII, net new account growth.

A: Investment portfolio used as liquidity vehicle, net new account growth positive with focus on relationships