Release Date: October 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FB Financial Corp (FBK, Financial) reported adjusted earnings per share of $0.86, up 21% year over year.
- The company achieved a compound annual growth rate of 12.9% in tangible book value per share since its IPO.
- FB Financial Corp (FBK) maintained strong capital ratios, including a CET1 ratio of 12.7% and a total risk-based capital ratio of 15.1%.
- The company experienced 7.2% annualized loan growth and 5.4% annualized non-broker deposit growth in the quarter.
- FB Financial Corp (FBK) expanded its team by adding 20 senior revenue producers in 2024, enhancing its growth potential.
Negative Points
- Net interest margin decreased slightly to 3.55%, indicating pressure on profitability.
- Non-performing loans to loans held for investment increased to 0.96%, driven by two commercial credits and softness in consumer loans.
- The company reported a $40 million pre-tax loss on securities trade, impacting non-interest income.
- Cost of interest-bearing deposits increased, with non-brokered interest-bearing deposits rising to 3.53%.
- FB Financial Corp (FBK) anticipates challenges in deposit growth, particularly on the custom deposit side.
Q & A Highlights
Q: How do lower rates act as an earnings growth catalyst for FB Financial Corp?
A: Christopher Holmes, President and CEO, explained that FB Financial is well-matched between its asset and liability sides. With a significant portion of deposits indexed and a relatively low percentage in CDs, the bank can maintain or even expand its margin as rates move gradually. The strength of local economies and a stable team further support optimism for future growth.
Q: What are the expectations for deposit betas with future rate cuts?
A: Michael Mettee, CFO, stated that the goal is to mirror the 60% beta experienced on the way up. The team responded well to the first 50 basis points rate cut, and the bank has prepared for optionality in the balance sheet by increasing broker deposits, allowing for management of higher-cost deposits.
Q: What is the outlook for loan yields and new loan production following recent rate cuts?
A: Michael Mettee noted that loan yields remained relatively flat due to a decrease in higher-yielding construction balances. New originations were around 7.80% in the third quarter, with the market responding well to higher rates. Travis Edmondson, Chief Banking Officer, added that fixed-rate pricing remains in the 7.5% to 8% range.
Q: How does FB Financial view its commercial real estate and construction loan concentrations?
A: Christopher Holmes expressed comfort with current concentration levels, citing strong geographies and credit history. The bank feels confident in its risk profile and has room to grow these concentrations slightly, though they prefer to maintain them within the current range.
Q: Have discussions around mergers and acquisitions (M&A) increased recently?
A: Christopher Holmes indicated that while conversations are a regular part of business in a consolidating industry, there has been a slight increase in the intensity and directness of discussions, suggesting more intent from potential partners. The bank is also more intentional in reaching out geographically.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
