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FB Financial Corp (FBK)·Q3 2025 Earnings Summary

Executive Summary

  • Adjusted diluted EPS was $1.07, a clear beat versus S&P Global consensus of $0.96; GAAP diluted EPS was $0.43 due to day-one acquisition reserves and integration costs, masking core strength. Management highlighted NIM expansion to 3.95% and efficiency gains as catalysts into Q4 and 2026 .
  • Net interest margin guidance was raised to 3.80–3.90% for the back half of 2025 (including accretion effects), supported by Southern States synergies, prior securities repositioning, and subordinated debt redemptions; full benefits expected in Q4 .
  • Balance sheet scale-up from the Southern States merger drove loans HFI to $12.30B and deposits to $13.81B, while core deposit mix improved (promo-driven $320M inflows, targeted runoff of high-cost/non-relationship deposits), supporting margin durability .
  • Credit remained stable: ACL coverage at 1.50%, NPLs/loans down to 0.94%, and net charge-offs of 0.05% annualized, positioning the bank to play offense on growth and capital deployment .
  • Dividend declared at $0.19 per share (payable Nov 25, 2025; record Nov 11), with management emphasizing scale, synergy realization ahead of schedule, and a constructive outlook for loan and deposit growth as potential stock catalysts .

What Went Well and What Went Wrong

What Went Well

  • Strong core profitability: adjusted net income of $57.6M and adjusted ROAA of 1.43%, with adjusted ROATCE of 14.7% reflecting synergy and margin lift from the merger .
  • NIM expansion to 3.95% on tax-equivalent basis, driven by higher earning asset yields, purchase accounting accretion (19 bps), and debt redemption; CFO guided continued margin strength into 2026 with two rate cuts assumed .
  • Integration execution ahead of schedule: deal closed July 1 and systems conversion completed by Sept 2, enabling 50% of cost saves in 2H25 and 100% in 2026; “Our team…proved how truly outstanding you are,” said CEO Holmes .

What Went Wrong

  • GAAP EPS ($0.43) was depressed by acquisition-related provisioning ($25.1M non‑PCD day-one) and $16.1M merger/integration costs, obscuring underlying strength despite the adjusted beat .
  • Deposit costs ticked up to 2.53% (from 2.48%) owing to higher-rate deposits from the merger; competitive pricing pressure in markets may challenge continuous margin expansion despite rate cuts .
  • Organic deposit balances (ex-acquisition) declined by ~$59M as management purposely ran off brokered/high-cost non-relationship deposits; loan growth remains governed by sustaining core deposit growth .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$89.5 $130.7 $76.9 $173.9
Net Interest Income ($USD Millions)$106.0 $107.6 $111.4 $147.2
Diluted EPS ($USD)$0.22 $0.84 $0.06 $0.43
Adjusted Diluted EPS ($USD)$0.86 $0.85 $0.88 $1.07
Net Interest Margin (%)3.55% 3.55% 3.68% 3.95%
Core Efficiency Ratio (%)58.4% 59.9% 56.9% 53.3%

Segment and KPIs

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Loans HFI ($USD Billions)$9.48 $9.77 $9.87 $12.30
Total Deposits ($USD Billions)$10.98 $11.20 $11.40 $13.81
Cost of Total Deposits (%)2.83% 2.54% 2.48% 2.53%
Nonperforming Loans / Loans (%)0.96% 0.79% 0.97% 0.94%
Nonperforming Assets / Assets (%)0.99% 0.84% 0.92% 0.89%
ACL Coverage (Loans HFI, %)1.65% 1.54% 1.51% 1.50%
Net Charge-Off Ratio (ann.) (%)0.03% 0.14% 0.02% 0.05%
TCE / TA (%)10.4% 10.5% 10.4% 10.1%
CET1 (%)12.7% 12.8% 12.3% 11.7%

Segment Contribution

Segment MetricQ3 2024Q2 2025Q3 2025
Banking Pre-tax Net Contribution ($USD Millions)$11.0 $(6.7) $26.9
Mortgage Pre-tax Net Contribution ($USD Millions)$0.4 $(3.0) $2.7
Mortgage Banking Income ($USD Millions)$11.6 $13.0 $13.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (tax-equivalent)2H 20253.70–3.80% (ex-accretion) 3.80–3.90% (incl. accretion) Raised
Banking Expenses ($USD Millions)FY 2025~$290–$300 ~$290–$300 Maintained
Banking Expenses ($USD Millions)FY 2026~50% efficiency by YE 2026 (prior slide) $325–$335; low-50s FY efficiency; ~50% by YE 2026 Clarified/Maintained target
Loans & Deposits GrowthQ4 2025Not specifiedMid to high single digits New
Organic GrowthFY 2026High single to low double digits (historical target)High single to low double digits Maintained
Dividend per ShareQ4 2025Not specified$0.19 (pay Nov 25; record Nov 11) Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
M&A Integration (Southern States)Q1: Proposed merger announced; strong capital to pursue opportunities . Q2: Merger closed July 1; integration underway; securities repositioning to enhance margin .Full quarter combined; conversion completed Sept 2; 50% of synergies in 2H25, 100% in 2026 .Ahead of schedule, positive operating leverage
NIM and Balance Sheet OptimizationQ1: Lower deposit costs; NIM 3.55% . Q2: Securities sale $266.5M loss to reposition for margin; NIM 3.68% .NIM 3.95% with 19 bps accretion; debt redemptions; raised guide to 3.80–3.90% .Upward trajectory
Deposits Mix & PricingQ1: Reduced brokered deposits; cost of deposits 2.54% . Q2: Cost down to 2.48% .Cost up to 2.53% due to acquired high-rate deposits; $320M promo inflows; strategic runoff of ~$132M high-cost non-relationship deposits .Quality mix improving; competitive pricing pressure
Credit QualityQ1: ACL 1.54%; NPLs/loans 0.79%; NCO 0.14% . Q2: NPLs/loans 0.97%; NCO 0.02% .ACL 1.50%; NPLs/loans 0.94%; NCO 0.05%; day-one provision for acquired loans/commitments .Stable
Mortgage SegmentQ1: $12.4M income; muted but profitable retail model . Q2: $13.0M; 2Q provision spike on estimate change .$13.5M income; pre-tax $2.7M; GOS margin ~2.69% .Recovering contribution
Capital DeploymentQ1: Strong capital; buybacks . Q2: ~812K shares repurchased .~$24M repurchases; sub debt/trust preferred redemptions .Active, opportunistic

Management Commentary

  • “Our results this quarter signal we're not willing to accept a return profile that doesn't advantage our shareholders… I’m pleased with where we ended the quarter and how we've set ourselves up heading into 2026.” — CEO Chris Holmes .
  • “We expect to land between 3.80% to 3.90% [NIM] in the back half of the year and continue that into 2026, which includes two assumed rate cuts.” — CFO Michael Mettee .
  • “We’re on pace to achieve 50% of our deal synergies in the second half of 2025, and we expect to achieve 100% in 2026.” — CFO Michael Mettee .
  • “Credit quality remained stable… We’ve maintained appropriate reserves ensuring we’re well-positioned should economic conditions begin to shift.” — CEO Chris Holmes .
  • “Our banking expense guide is run rate and is not inclusive of any large investments in revenue producers or market expansion, and we are likely to get these opportunities in 2026.” — CFO Michael Mettee .

Q&A Highlights

  • Margin sustainability and deposit beta: Management expects deposit pricing competition to persist; NIM guide includes accretion (3.80–3.90%); deposit promo accounts in low-4% range tied to Fed funds with repricing ahead .
  • Loan pipeline strength and growth: Pipeline “as full as we’ve seen in a while”; growth balanced by core deposit gathering; aiming high single-digit to low double-digit organic in 2026 .
  • Organic vs inorganic growth: Leaning toward organic growth daily, but industry consolidation presents attractive acquisition opportunities; footprint expansion prioritized over in-market consolidation .
  • Mortgage upside with rate cuts: Retail-focused, 90% purchase; refinance optionality if rates fall meaningfully; gain-on-sale margins expected ~270–300 bps .
  • Capital strategy and asset sensitivity: Comfortable running CET1 north of 10% to act quickly on opportunities; variable-rate loan book ~45%, securities ~30–35% — slightly asset sensitive into rate cuts .

Estimates Context

MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus Mean ($)0.835*0.882*0.960*
EPS Actual (Normalized) ($)0.85*0.88*1.07*
Revenue Consensus Mean ($USD Millions)131.9*136.5*167.8*
Revenue Actual (S&P definition) ($USD Millions)128.4*71.5*139.5*
# EPS Estimates6*6*7*
# Revenue Estimates5*5*6*

Values retrieved from S&P Global*.
Interpretation: Adjusted/normalized EPS beat in Q3 ($1.07 vs $0.96), while revenue comparisons use S&P’s bank revenue definition, which may differ from company “Total revenue” in press releases; nonetheless, the EPS beat is significant and should drive upward revisions to out-quarter profitability assumptions.*

Key Takeaways for Investors

  • The quarter delivered a meaningful core EPS beat and raised NIM guidance; expect estimate revisions upward on margin and synergy realization into 2026, supporting multiple expansion .
  • Deposit mix strategy (targeted runoff of high-cost balances; $320M new promo deposits) and debt redemption should sustain spread and NII momentum despite competitive pricing pressure .
  • Credit is stable with low loss content; ACL coverage at 1.50% and NPLs trending down support offensive capital deployment (buybacks, organic growth, selective M&A) .
  • Synergy timeline ahead of schedule (50% in 2H25; 100% in 2026) and expense discipline (FY25 $290–$300M; FY26 $325–$335M) point to improving efficiency into low-50s and ~50% by year-end 2026 .
  • Short-term: Trade the EPS beat and margin guide; watch Q4 deposit pricing actions and accretion trajectory for confirmation of NIM resilience .
  • Medium-term: Thesis centers on scaled regional platform with continued organic growth, opportunistic M&A, and capital returns, underpinned by robust CET1 (11.7%) and TCE/TA (10.1%) .
  • Dividend continuity ($0.19) adds carry; further buybacks are plausible given capital generation and improving ROA/ROTCE trajectory .