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FB Financial Corp (FBK)·Q2 2025 Earnings Summary

Executive Summary

  • GAAP results were noisy due to a deliberate securities repositioning: FBK sold $266.5M of AFS securities (1.63% yield), recording a $60.5M loss that depressed GAAP revenue and EPS to $76.9M and $0.06, respectively; on an adjusted basis, EPS was $0.88, in line with Street and up vs Q1/Q2’24, with adjusted PPNR up 12-13% YoY/QoQ .
  • Core banking momentum improved: NIM expanded 13 bps QoQ to 3.68% on higher asset yields and lower deposit costs; loans and deposits both grew (4.2% and 7.2% annualized), while cost of total deposits fell to 2.48% from 2.54% .
  • Forward setup strengthened: management guided H2’25 NIM to 3.70–3.80% (combined with Southern States), expects banking noninterest expense of $285–295M for FY25, tax rate 21–23%, core banking efficiency ratio in the low-50s by Q4’25 and ~50% in 2026; deal cost saves modeled at 25% in 2025, 75% in 2026, 100% thereafter, with ~12% 2026 EPS accretion per deck .
  • Potential stock catalysts: evidence of NIM follow-through post securities redeployment and debt redemption, realization of SSBK cost saves, stable credit metrics (NCOs 2 bps), and core operating leverage; GAAP noise should fade after Q2’s restructuring loss .

What Went Well and What Went Wrong

  • What Went Well

    • NIM expansion and funding mix: NIM rose to 3.68% (up 13 bps QoQ) on 8 bps higher earning asset yields and 3 bps lower rates on interest-bearing liabilities; cost of total deposits fell to 2.48% from 2.54% .
    • Core earnings strength: Adjusted EPS $0.88 (vs $0.85 in Q1’25 and $0.84 in Q2’24); adjusted PPNR $58.6M (+12–13% YoY/QoQ). CEO: “we repositioned our balance sheet…which will further enhance both our liquidity and margin moving forward” .
    • Credit stability: NCOs were 0.02% (annualized); ACL on loans HFI 1.51% (down 3 bps QoQ); three larger credits moved to nonperforming but are well-secured with limited expected losses, per CFO .

  • What Went Wrong

    • Securities loss drove GAAP miss optics: $60.5M loss on the sale of $266.5M AFS securities pushed noninterest income negative and GAAP EPS to $0.06; efficiency ratio spiked on a reported basis (105.7%) .
    • Nonperformers uptick: NPLs/loans rose to 0.97% (from 0.79% QoQ), NPAs/assets to 0.92% (from 0.84%) .
    • Merger expenses and modeling changes: $2.7M merger/integration costs and higher provision for unfunded commitments (linked to new ACL model and macro inputs) pressured reported results .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income ($M)$102.6 $107.6 $111.4
Noninterest (Loss) Income ($M)$25.6 $23.0 $(34.6)
Total Revenue ($M)$128.2 $130.7 $76.9
Diluted EPS (GAAP)$0.85 $0.84 $0.06
Adjusted Diluted EPS$0.84 $0.85 $0.88
NIM (tax-equivalent)3.57% 3.55% 3.68%
Efficiency Ratio58.6% 60.9% 105.7%
Core Efficiency Ratio58.3% 59.9% 56.9%

Segment performance and selected KPIs:

  • Segment breakdown (pre-tax contribution)
    • Banking: $(6.7)M in Q2’25, $47.3M in Q1’25, $50.1M in Q2’24; noninterest (loss) $(47.7)M in Q2’25 given securities loss .
    • Mortgage: $(3.0)M in Q2’25 (PPNR $1.7M), $1.5M in Q1’25, $0.8M in Q2’24; gain on sale margin 2.86% .
KPIQ2 2024Q1 2025Q2 2025
Loans HFI ($B)$9.31 $9.77 $9.87
Total Deposits ($B)$10.47 $11.20 $11.40
Noninterest-bearing/Total Deposits20.9% 19.3% 19.2%
Loan HFI/Deposits88.9% 87.2% 86.6%
Yield on Earning Assets6.16% 5.91% 5.99%
Cost of Int.-Bearing Liabilities3.56% 3.16% 3.13%
Cost of Total Deposits2.77% 2.54% 2.48%
ACL/Loans HFI1.67% 1.54% 1.51%
NCOs (annualized)0.02% 0.14% 0.02%
NPLs/Loans HFI0.79% 0.79% 0.97%
NPAs/Assets0.81% 0.84% 0.92%
CET112.7% 12.8% 12.3%
Total RBC15.1% 15.2% 14.7%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginH2 2025 (combined)3.55–3.60% (standalone, reiterated in Q1) 3.70–3.80% (combined with Southern States) Raised (pro forma)
Banking Noninterest ExpenseFY 2025n/a (Q1 framed run-rate; $66–68M Q2 banking NIE guide) $285–295M (banking) Set full-year range
Core Banking Efficiency RatioQ4 2025; FY 2026n/aLow-50s by Q4’25; ~50% in 2026 New targets
Effective Tax RateRemainder of 2025n/a21–23% New range
Deal Cost Saves (SSBK)2025–2026n/a25% in 2025; 75% in 2026; 100% thereafter New detail
2026 EPS Accretion (deal)2026n/a~12% accretion; TBV dilution ~$1.04 (3.4%) New detail
Capital ActionsQ3 2025n/aRedeem sub debt and trust preferreds with proceeds from securities sale New action
DividendQ3 2025$0.19 prior?Declared $0.19 per share (paid 8/26/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
NIM & fundingQ4: NIM 3.50%, building deposits for 2025 loan growth . Q1: standalone NIM 3.55–3.60% outlook; deposit repricing underway .NIM 3.68% (+13 bps QoQ); H2’25 NIM guide 3.70–3.80% combined .Improving; pro forma uplift from actions & SSBK
Balance sheet restructuringQ4: Prepared for growth; higher liquidity . Q1: managing higher cost deposits down .Sold $266.5M AFS (1.63% yield), redeploy to redeem debt and fund loans at >7% yields; payback <4 years .Proactive to boost yield and liquidity
Loan growth & pipelineQ1: Mid-to-high single-digit growth target; pipelines healthy .Loans +4.2% ann.; some payoffs delayed closings; still mid-high single-digit outlook .Solid but timing noise
Deposit costs/mixQ1: Cost of total deposits down 24 bps QoQ; managing non-core balances .Cost of total deposits 2.48% (down 6 bps QoQ); NIB stable ~19% .Incremental progress
Credit & ACLQ1: Charge-offs elevated vs history (14 bps); stable ACL; monitoring tariffs .New ACL model; reserves essentially steady; NCOs 2 bps; NPLs up on 3 credits with negligible loss content .Stable losses; watch list uptick
MortgageQ1: Profitability continued; GOS margin support .Strong locks and margins; segment PPNR $1.7M; provision for high LTV cohort under new model .Resilient, with targeted reserving
M&A strategyQ1: SSBK announced; integration office formed .Closed 7/1; cost saves timetable; sees more opportunities at $3–7B targets .Integration on track; pipeline open
Office/CREQ4/Q1: Concentrations managed; monitoring hospitality .Office = 4% of loans; 99% pass/current; 23% maturing by YE26; strong LTV/occupancy metrics .Controlled exposure

Management Commentary

  • Strategic actions: “we repositioned our balance sheet by selling low-yielding securities which will further enhance both our liquidity and margin moving forward” — CEO Christopher Holmes .
  • Capital redeployment plan: proceeds will “redeem our sub debt and our trust preferreds in the third quarter” and fund new loans “north of 7%” yields; modeled ~6% yield pickup, <4-year payback — CFO Michael Mettee .
  • Integration and growth: SSBK closed July 1; conversion in Q3; cost saves cadence 25%/75%/100%; 2026 EPS accretion ~12%; efficiency ~50% — Company deck .
  • Credit tone: three NPL migrations “well secured” with limited loss content; NCOs normalized at 2 bps — CFO .

Q&A Highlights

  • NIM outlook and levers: Management affirmed H2’25 NIM 3.70–3.80% (combined), with proceeds from securities sale used to redeem debt and fund loans; guide sensitivity reflects deposit repricing and balance sheet mix across FBK/SSBK .
  • Loan growth and payoffs: Pipelines strong but some large payoffs and timing shifted fundings into H2; still targeting mid-to-high single-digit growth; new production yields low-7% range and “slightly higher in July” .
  • Mortgage reserve: Provision tied to high-LTV cohort under new ACL model amid flat HPA and higher unemployment forecasts; emphasized older vintages and modeling granularity .
  • M&A appetite: Post-SSBK, sees more opportunities in $3–7B asset range; comfortable at $20B+ platform size; upstream disruption may drive organic lift-outs as well .
  • Hedging stance: No balance sheet hedges planned currently given cost/benefit; focus on disciplined loan/deposit pricing .

Estimates Context

MetricQ4 2024Q1 2025Q2 2025
EPS – Consensus Mean ($)0.835*0.835*0.882*
EPS – Actual ($)0.85*0.85*0.88*
EPS Surprise (pp)+0.015*+0.015*−0.002*
Revenue – Consensus Mean ($M)131.14*131.86*136.51*
Revenue – Actual ($M)123.29*128.38*71.53*
Revenue Surprise (%)−6.0%*−2.6%*−47.6%*
# of EPS / Revenue Estimates6 / 5*6 / 5*6 / 5*

Interpretation:

  • EPS tracked “adjusted” performance and was effectively in line in Q2 ($0.88 vs $0.882 cons.).
  • Revenue fell well below consensus due to the $60.5M securities loss embedded in noninterest income, which depressed GAAP revenue in the S&P framework. Expect models to shift focus toward NIM, PPNR, and pro forma H2’25–2026 trajectory .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core profitability intact; GAAP noise transitory: The $60.5M securities loss masks underlying strength (NIM expansion, adjusted EPS/PPNR growth). Focus on redeployment benefits and debt redemption in Q3 onward .
  • Pro forma catalysts ahead: H2’25 NIM 3.70–3.80%, cost saves ramp, and efficiency heading to low-50s by Q4’25 support operating leverage; deck points to ~12% 2026 EPS accretion from SSBK .
  • Funding and margin discipline continue: Cost of deposits trended lower and NIB stable; room remains in CDs and non-core portfolios to optimize funding as loan growth accelerates .
  • Credit watch manageable: NCOs at 2 bps; NPL uptick isolated and secured; ACL steady under new model; office exposure modest (4% of loans) and predominantly pass-rated .
  • Mortgage is additive with prudent reserving: Improved locks/margins drive segment PPNR; targeted reserves on high-LTV cohort reflect modeling discipline .
  • Capital deployment optionality: CET1 12.3% and TCE/TA 10.4% provide flexibility for buybacks (executed in Q2), organic growth, and selective M&A .
  • Dividend support intact: 30th consecutive quarterly dividend declared at $0.19 per share (payable Aug 26) .

Supporting Details and Additional Materials

  • Q2’25 Press Release and Financials: GAAP and adjusted results, balance sheet and margin drivers, credit quality, capital .
  • 8-K and Earnings Presentation: Non-GAAP reconciliations, NIM/NII roll, deal metrics, liquidity, segment detail .
  • Q2’25 Call Transcript: Guidance, strategic commentary, Q&A on NIM, loan growth, ACL/credit, M&A .
  • Prior Quarters for Trend: Q1’25 press release/call; Q4’24 press release .
  • Other Q2 Press Releases: SSBK merger closing (7/1); dividend (7/25) .