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FB Financial (FBK) - 2025 Q1 - Earnings Call Transcript
FBKFB Financial (FBK)2025-04-15 12:00
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Financial Data and Key Metrics Changes - FB Financial reported EPS of 84 cents and adjusted EPS of 85 cents for Q1 2025, with a tangible book value per share growth at a compound annual growth rate of 12.8% since its IPO in 2016 [14][15] - Pre-tax pre-provision net revenue was 51.1million,or51.1 million, or 52.2 million on an adjusted basis, with net interest income of 107.6millionandnon−interestincomeof107.6 million and non-interest income of 23 million for the quarter [23][24] - The net interest margin increased by five basis points to 3.55%, while the cost of total interest-bearing deposits decreased by 24 basis points [25][26] Business Line Data and Key Metrics Changes - Loan balances grew by 169millionatanannualizedrateof7.14169 million at an annualized rate of 7.14%, primarily in commercial and industrial (CNI) and owner-occupied commercial real estate (CRE) [15][16] - Non-interest income remained relatively flat at 23 million, with mortgage banking income up by approximately 1.8millionduetolowermarketinterestrates[28]MarketDataandKeyMetricsChanges−ThecompanyoperatesasaregionalbankacrossfivestatesintheSoutheast,focusingoncustomerserviceandcommunityengagementduringeconomicuncertainty[20]−Economicuncertaintyhasincreased,butthecompanybelievesitpresentsopportunitiesfordisciplinedandpreparedorganizations[21]CompanyStrategyandDevelopmentDirection−TheplannedcombinationwithSouthernStatesBankisexpectedtocloseinQ32025,withastrongconvictionintheculturalfitandmarketopportunityofthemerger[13][14]−ThecompanyaimstobalancegrowththroughorganicmeanswhileintegratingtheSouthernStatestransaction,emphasizingthestrengthofitsoperatingfoundation[17]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthateconomicuncertaintyisrising,butthecompany′smissionremainsunchanged,focusingonservingcustomersandcommunities[19][20]−Thecompanyispreparedforvariouseconomicenvironments,withastrongcapitalpositionandafocusonunderstandingcustomerneedsduringuncertaintimes[21][22]OtherImportantInformation−Theallowanceforcreditlossbalancedecreasedto1.8 million due to lower market interest rates [28] Market Data and Key Metrics Changes - The company operates as a regional bank across five states in the Southeast, focusing on customer service and community engagement during economic uncertainty [20] - Economic uncertainty has increased, but the company believes it presents opportunities for disciplined and prepared organizations [21] Company Strategy and Development Direction - The planned combination with Southern States Bank is expected to close in Q3 2025, with a strong conviction in the cultural fit and market opportunity of the merger [13][14] - The company aims to balance growth through organic means while integrating the Southern States transaction, emphasizing the strength of its operating foundation [17] Management's Comments on Operating Environment and Future Outlook - Management noted that economic uncertainty is rising, but the company's mission remains unchanged, focusing on serving customers and communities [19][20] - The company is prepared for various economic environments, with a strong capital position and a focus on understanding customer needs during uncertain times [21][22] Other Important Information - The allowance for credit loss balance decreased to 151 million, with an annualized net charge-off rate of 0.14% driven by credit in the C&I portfolio [31] - The company maintains strong capital ratios, including a tangible common equity to total assets ratio of 10.5% and a preliminary common equity tier one ratio of 12.8% [32] Q&A Session Summary Question: Loan growth trends and customer sentiment - Management noted some reticence about major projects at a macro level, but pipelines remain robust with an outlook for high single to low double-digit growth [40][41] Question: Performance in new markets like Asheville and Tuscaloosa - Both markets are showing positive momentum, with strong starts in Tuscaloosa and improving conditions in Asheville [43][44] Question: Stock buyback strategy - The company has $73 million remaining on its stock buyback authorization and will consider buying back shares if they believe the stock is undervalued [51] Question: Balance sheet growth expectations - The company anticipates stronger balance sheet growth in Q2, driven by core customer deposits and managing higher-cost deposits [64][65] Question: Construction commitments and risks - The company is monitoring its construction commitments closely, particularly in Nashville, but maintains a healthy concentration ratio [70] Question: Charge-off expectations and credit quality - Management expects charge-offs to be lower than historical levels, with concerns primarily in the C&I portfolio rather than real estate [92][94] Question: Expense growth and efficiency - The company anticipates a slight increase in expenses due to higher compensation-related costs but expects to stabilize in the latter half of the year [109][111]