FB Financial (US:FBK)2023-01-17 17:41Financial Data and Key Metrics Changes - The company reported an EPS of $0.81 and an adjusted EPS of $0.85 for the quarter, with a tangible book value per share growing at a compound annual growth rate of 14.8% since its IPO in 2016 [136] - The adjusted ROAA was 1.11% and the adjusted PTPP ROAA was 1.58%, which was below expectations [18] - The net interest margin for December was approximately 3.75%, with a contraction of 15 basis points from the previous quarter [54][168] Business Line Data and Key Metrics Changes - The mortgage segment experienced a pretax loss of $4.2 million for the quarter, attributed to rising interest rates and seasonality, leading to a 31% quarter-over-quarter reduction in rate lock demand [50][169] - The company managed to grow loans by 22.3% while holding deposits flat, which was considered a disappointing result [133] - The net interest income for the quarter was $111.3 million, with core bank non-interest income at $11.1 million [142] Market Data and Key Metrics Changes - The company saw a decline in non-interest bearing accounts by $225 million during the quarter, while interest-bearing deposits increased by 93 basis points compared to the prior quarter [19] - The company maintained a loan-to-deposit ratio comfortably below 90%, specifically at 85.7% [21] - The company reported a significant deposit growth of $850 million for the quarter, or 33.7% annualized, with true growth excluding mortgage escrow-related deposits at $915 million or 37% annualized [162] Company Strategy and Development Direction - The company is focused on improving efficiency and effectiveness through its community banking model, referred to as the "FirstBank way," which aims to enhance scalability and operational effectiveness [165] - The company plans to maintain a cautious approach to loan growth, limiting it to 8.4% annualized growth, while managing exposure in construction and commercial real estate [163][138] - The company is preparing for potential economic challenges by positioning itself defensively and is ready to capitalize on opportunities when the economic outlook improves [166] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding credit and liquidity, indicating a need to limit loan growth until clarity on economic conditions is achieved [20] - The company anticipates continued pressure on non-interest bearing deposits in 2023, with expectations that balances may stabilize after significant declines [148] - Management noted that while the mortgage segment has been a significant contributor in the past, it is not essential for achieving profitability moving forward [91][183] Other Important Information - The company repurchased $7 million worth of shares following a decline in stock price in December [139] - The allowance for credit losses (ACL) to loans decreased by 4 basis points, with a release of $456,000 recorded [26] - The company has approximately $7 billion in contingent liquidity readily available [139] Q&A Session Summary Question: What is the outlook for deposit growth and competition? - Management indicated that deposit growth is expected to continue in line with loan growth, but competition for deposits is anticipated to intensify [9] Question: How is the company managing its loan growth? - The company is intentionally limiting loan growth to maintain a loan-to-deposit ratio between 85% and 90% and is cautious about credit exposure [20] Question: What are the concerns regarding the loan portfolio? - Management expressed concerns about pockets of commercial real estate and construction loans, but noted confidence in their long-term customers [122][123]