FB Financial Corporation ((FBK)) has held its Q3 earnings call. Read on for the main highlights of the call.
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FB Financial Corporation’s recent earnings call conveyed a generally positive sentiment, highlighting strong financial performance and successful merger integration. The company expressed optimism about future growth, particularly in market expansion and improving efficiency ratios. However, concerns were noted regarding increased provision expenses and challenges in deposit growth and merger-related costs.
Merger with Southern States Bankshares
FB Financial Corporation successfully completed its merger with Southern States Bankshares, closing the transaction on July 1 and completing systems conversion over Labor Day weekend. The merger was executed efficiently, from announcement to conversion in about 150 days, showcasing strong operational execution.
Strong Financial Performance
The company reported an EPS of $0.43 and an adjusted EPS of $1.07, with a net interest margin of 3.95% and an efficiency ratio of 63.2% or 53.3% on an adjusted basis. Net income was $23.4 million or $57.6 million on an adjusted basis, reflecting robust financial health.
Improved Net Interest Income
Net interest income saw a significant increase of 32.2% from the prior quarter and 38.9% from the same quarter last year. This growth was driven by the merger and strategic balance sheet maneuvers, including debt paydown.
Positive Market Expansion Outlook
FB Financial is optimistic about its growth prospects in Tennessee, Alabama, Georgia, Northern Kentucky, and North Carolina. The company plans to pursue growth through market expansion and acquisition opportunities.
Efficiency Improvements
The adjusted core efficiency ratio improved to 53.3% from last quarter’s 56.9% and from 58.4% the same quarter last year, indicating enhanced operational efficiency.
Provision Expense Increase
The company reported a provision expense of $34.4 million, which includes $28.4 million in day one provision expense for the acquired non-purchase credit deteriorated loan portfolio and unfunded commitments.
Challenges in Deposit Growth
Excluding the acquired Southern States deposits, deposit balances were down approximately $59 million on a period-end basis as the company executed a remixing strategy.
Non-Interest Expense and Merger Costs
Total non-interest expense was $109.9 million or $93.5 million on an adjusted basis, including $16.1 million of merger and integration costs, which peaked this quarter.
Forward-Looking Guidance
Looking ahead, FB Financial projects a net interest margin of 3.80% to 3.90% into 2026, with banking expenses expected to reach $325 million to $335 million next year, targeting an efficiency ratio in the low 50s. The company also anticipates mid to high single-digit growth in loans and deposits for Q4 2025, with a return to high single-digit to low double-digit growth in 2026.
In conclusion, FB Financial Corporation’s earnings call reflected a positive outlook with strong financial performance and successful merger integration. While challenges in deposit growth and increased provision expenses were noted, the company remains optimistic about its growth prospects and efficiency improvements.