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FB Financial Corp (FBK)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered steady profitability: diluted EPS $0.84 and adjusted diluted EPS $0.85, with ROAA 1.21% (adjusted 1.23%) and NIM rising 5 bps to 3.55% .
  • Revenue was resilient despite two fewer business days; margin expansion was driven by lower deposit costs (-24 bps QoQ) outpacing a 10 bps decline in earning asset yields .
  • Consensus vs actual: EPS modest beat (0.85 vs 0.835*), revenue a slight miss ($130.7mm company vs $131.9mm estimate*), reflecting timing effects and day-count; costs rose seasonally (HR/comp) .
  • Strategic catalysts: mortgage pre-tax contribution improved ($1.5mm) and Southern States Bancshares (SSBK) merger progressing toward a Q3 close; dividend maintained at $0.19/share declared April 30, 2025 .

What Went Well and What Went Wrong

  • What Went Well
    • NIM expanded to 3.55% on lower deposit costs; “net interest margin was up five basis points… cost of total interest-bearing deposits decreased 24 basis points” .
    • Core deposit stability with improved cost of funds; noninterest-bearing rose QoQ and cost of total deposits fell to 2.54% .
    • Mortgage segment posted positive pre-tax net contribution ($1.5mm) with higher lock volumes; five straight profitable quarters and pipelines ready if rates ease .
  • What Went Wrong
    • Noninterest expense increased (~$6mm QoQ) on performance-based compensation and seasonal HR expenses; core efficiency ratio rose to 59.9% .
    • Revenue vs Street modestly light (two fewer days and lower earning asset yields); securities yields improved but day-count and asset yield compression weighed on NII .
    • Credit: annualized NCOs 0.14% (vs 0.47% in Q4) included a notable C&I charge-off; ACL coverage edged down to 1.54% with mix shift away from higher-reserve construction .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Thousands)$89,520 $130,378 $130,673
Diluted EPS ($)$0.22 $0.81 $0.84
Adjusted Diluted EPS ($)$0.86 $0.85 $0.85
NIM (tax-equivalent) (%)3.55% 3.50% 3.55%
ROAA (%)0.32% 1.14% 1.21%
Core Efficiency Ratio (%)58.4% 54.6% 59.9%
PPNR ($USD Thousands)$13,308 $57,204 $51,124
Adjusted PPNR ($USD Thousands)$53,762 $59,829 $52,134

Segment performance

SegmentQ3 2024Q4 2024Q1 2025
Banking Pre-tax Net Contribution ($000)$10,819 $49,858 $47,321
Mortgage Pre-tax Net Contribution ($000)$575 $262 $1,511
Mortgage Total Revenue ($000)$13,555 $12,274 $14,254
Mortgage Sale Margin (%)2.84% 2.71% 2.51%

KPIs and balance sheet

KPIQ3 2024Q4 2024Q1 2025
Loans HFI ($000)$9,478,129 $9,602,384 $9,771,536
Deposits ($000)$10,976,211 $11,210,434 $11,201,998
Cost of Total Deposits (%)2.83% 2.70% 2.54%
Noninterest-bearing % of Deposits20.3% 18.9% 19.3%
ACL / Loans HFI (%)1.65% 1.58% 1.54%
Annualized NCOs (%)0.03% 0.47% 0.14%
NPLs / Loans HFI (%)0.96% 0.87% 0.79%
NPAs / Assets (%)0.99% 0.93% 0.84%
TCE / Tangible Assets (%)10.4% 10.2% 10.5%
CET1 (%)12.7% 12.8% 12.8%
Total RBC (%)15.1% 15.2% 15.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NIM (standalone)FY 20253.54%–3.61% (communicated entering Q1) 3.55%–3.60% (upper end with SSBK) Maintained/slightly narrowed
Banking Noninterest ExpenseQ2 2025$63–$65mm (Q3 guide for Q4) $66–$68mm Raised
Operating Expense Growth (Banking)FY 2025~4%–5% ~5%–6% Raised
CD Repricing VolumesQ2 & H2 2025N/A~$600mm in Q2 at ~4.2%; ~$775mm H2 at ~3.8% New detail
Mortgage Efficiency RatioFY 2025N/ATarget low-to-mid 80s as pipelines allow New detail
NCO OutlookFY 2025N/AExpect lower than Q1 run-rate New detail
Merger Timeline (SSBK)2025N/AEnvision Q3 close; integration office established New detail
DividendQ2 2025$0.19 prior$0.19 declared Apr 30, payable May 27 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Margin managementNIM ~3.50–3.60% guide; securities repositioning lifted securities yield NIM +5 bps QoQ to 3.55%; deposit costs -24 bps; guide 3.55–3.60% Improving/stable
Deposit cost & mixIndexed deposits moving lower post cuts; brokered used tactically Active runoff of higher-cost deposits; noninterest-bearing up; CDs set to reprice Favorable tailwind
Loan growth outlookTarget high-single/low-double digits; broader pipelines Pipelines robust; new hires in Nashville/Tuscaloosa; new production ~7% yield Positive
Expense trajectoryQ4 core efficiency improved on franchise tax benefit Q1 seasonal comp lifted NIE; Q2 banking NIE guided $66–$68mm Near-term higher, normalizing later
Mortgage performanceProfitable, efficient ops focus Pre-tax contribution $1.5mm; 5+ quarters profitability; mid-80s efficiency target Improving if rates ease
Credit & reservesQ4 elevated NCOs due to single C&I; ACL ~1.58% Q1 NCOs 0.14% (notable C&I); ACL 1.54%; expect lower NCOs ahead Stable-to-improving
Macro/policy watch (tariffs, rates)Expect measured rate cuts; asset sensitive Uncertainty acknowledged; baseline two cuts modeled; tariffs monitored Cautious monitoring
M&A postureMore constructive regulatory environment SSBK merger announced; Q3 close envisioned Executing

Management Commentary

  • “The Company had good results to start the year… our high levels of capital and liquidity provide good buffers… operating momentum has us prepared to capitalize on opportunities” — Christopher T. Holmes, CEO .
  • “Net interest margin was up five basis points… cost of total interest-bearing deposits decreased 24 basis points… we’ll continue to reprice these portfolios along with about $600 million in CD deposit balances… and an additional $775 million… in lower market rates” — Michael Mettee, CFO .
  • “Pipelines… remain fairly robust… outlook remains in that high single, low double digits area” — Travis Edmondson, Chief Banking Officer .
  • “We bought back about $10 million in stock… [authorization] about $73 million remaining… if we think the stock is undervalued, then we’re going to be in the market” — Management .
  • “We still envision the Q3 close [for Southern States]… integration office has been established” — Management .

Q&A Highlights

  • Loan growth: Pipelines robust across geographies; cautious on new large projects amid uncertainty, but near-term falloff limited .
  • Deposit costs: Continued management of brokered/higher-cost balances; expecting CD repricing at lower rates; goal to grow core relationships .
  • Construction/CRE: Concentration within targets (~64%); hospitality watched carefully, discipline on CRE opportunities .
  • Margin outlook: Baseline assumes two cuts; pro forma NIM at upper end with SSBK; hedging not favored currently given cost/benefit .
  • Mortgage: Pipelines responsive to rates; aim for mid-80s efficiency; profitability expected to continue, rate-dependent .
  • Expenses: Seasonal HR/comp elevated Q1; banking NIE guided $66–$68mm in Q2; full-year growth 5–6% vs prior 4–5% .
  • Credit: Q1 NCOs driven by specific C&I; expect lower NCOs for rest of year; lines utilization stable but monitored .

Estimates Context

MetricConsensus (Q1 2025)Company Reported Actual
Primary EPS Consensus Mean ($)0.835*Adjusted Diluted EPS: 0.85
Revenue Consensus Mean ($000)131,864.6*Total Revenue: 130,673

Values retrieved from S&P Global.*

Implications: Slight EPS beat and modest revenue miss likely reflect day-count headwinds and timing of loan growth (back half of quarter), offset by deposit cost relief and stronger mortgage income .

Key Takeaways for Investors

  • Margin expansion with deposit cost tailwinds underpin near-term EPS stability; watch NIM trajectory as CDs reprice lower in Q2/H2 .
  • Expense normalization expected after seasonal Q1 spike; Q2 banking NIE guided higher but management targets operating leverage thereafter .
  • Credit remains contained; after Q4/Q1 idiosyncratic C&I charge-offs, NCOs are expected to drift lower with ACL at 1.54% and NPAs trending down .
  • Mortgage contributes positively; pipelines sensitive to rates—potential upside if 10-year declines sustainably below 4% .
  • SSBK merger is a medium-term catalyst: footprint expansion, margin support, and cost synergies—Q3 close targeted .
  • Capital returns intact: $10mm buyback in Q1 with ~$73mm remaining authorization and a $0.19 dividend declared for May 27 .
  • Trading lens: modest EPS beat vs consensus with improving NIM and credit optics; near-term stock drivers include expense cadence in Q2, CD repricing benefits, and merger milestones .