FB Financial Corporation ((FBK)) has held its Q1 earnings call. Read on for the main highlights of the call.
FB Financial Corporation’s recent earnings call conveyed a generally positive sentiment, highlighting strategic expansion plans and robust financial performance. Despite facing challenges in non-interest expenses and charge-offs, the bank emphasized its strong capital position and effective management of loan growth and margins.
Planned Combination with Southern States Banc
FB Financial announced a strategic combination with Southern States Banc, focusing on cultural alignment, market opportunities, and financial synergies. The integration is progressing well, with an expected close by the third quarter.
Loan Growth and Focus Areas
The bank reported a $169 million increase in loan balances, growing at an annualized rate of 7.14%. This growth was primarily driven by commercial and industrial (C&I) and owner-occupied commercial real estate (CRE) loans, while reducing exposure to construction loans. Loans held for investment reached approximately $9.8 billion by the end of the quarter.
Strong Capital Ratios
FB Financial ended the quarter with robust capital ratios, including a tangible common equity to tangible assets ratio of 10.5%, a preliminary CET1 ratio of 12.8%, and a total risk-based capital ratio of 15.2%.
Net Interest Margin Improvement
The bank’s net interest margin improved by 5 basis points to 3.55%, supported by a reduction in the cost of total interest-bearing deposits by 24 basis points.
Positive Non-Interest Income Performance
Non-interest income remained stable at $23 million, with notable improvements in mortgage banking income due to lower market interest rates and enhanced mortgage servicing economics.
Higher Non-Interest Expenses
Core non-interest expenses rose to $79.2 million from $72.7 million in the previous quarter, leading to a core efficiency ratio of 59.9%, up from 54.6%.
Elevated Charge-Offs in C&I Portfolio
The bank experienced an annualized net charge-off rate of 0.14%, primarily due to a specific credit in the C&I portfolio that was largely reserved for but charged-off during the quarter.
Forward-Looking Guidance
FB Financial Corporation reported an EPS of $0.84 and an adjusted EPS of $0.85 for the first quarter of 2025. The company achieved a pre-tax pre-provision net revenue of $51.1 million, or $52.2 million on an adjusted basis. Loan balances increased by $169 million, with a focus on C&I and owner-occupied CRE loans. The bank maintained strong capital ratios and reported a net interest margin increase to 3.55%.
In summary, FB Financial Corporation’s earnings call reflected a positive outlook with strategic growth initiatives and solid financial metrics. Despite some challenges, the bank’s strong capital position and effective management strategies were emphasized, setting a promising tone for future performance.