FB Financial (US:FBK)2021-01-26 21:37Financial Data and Key Metrics Changes - FB Financial's adjusted net income for 2020 was $142 million, representing an adjusted EPS of $3.73, a 31.8% increase from $2.83 per share last year [9] - The adjusted return on average assets was 1.68%, and the adjusted return on tangible common equity was 19.1% [9] - Tangible book value increased to $21.64 per share, growing nearly 17% year-over-year [9] - Assets grew from $6 billion to $11 billion during the year, with a tangible common equity to tangible asset ratio of 9.3% and a total risk-based capital ratio increasing from 12.2% to 15.2% [9] Business Line Data and Key Metrics Changes - The mortgage division produced $23 million of adjusted pre-tax contribution in Q4, typically the slowest quarter for mortgage activity [17] - The company expects mid to high single-digit loan growth in 2021, with the first half expected to be slower than the second half [16] Market Data and Key Metrics Changes - The company has built top 10 market shares in Nashville, Chattanooga, Knoxville, and Bowling Green, with projected household income growth of over 8% and population growth of 4% in these markets [10] - The residential housing market in Nashville and across the footprint is performing well, aided by corporate relocations [37] Company Strategy and Development Direction - The company focuses on organic growth and aims to outwork competitors to gain market share, particularly in strong growth markets [14] - There is a commitment to aggressive recruitment of relationship managers to enhance business development [15] - The company plans to continue improving operational efficiencies and reducing expenses following the Franklin merger [22][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2021, citing strong capital and liquidity positions to take advantage of business opportunities [24] - The company remains cautiously optimistic about economic trends, with expectations for further reserve releases as the economy improves [45][60] - Management noted that while the pandemic continues to impact certain sectors, overall credit metrics are stable and reserves are strong [37] Other Important Information - The company received regulatory relief regarding the Durbin Amendment despite being over $10 billion in assets due to COVID-related asset inflation [52] - The interim CFO title was removed from Michael Mettee, who has been recognized for his contributions to the company [48] Q&A Session Summary Question: Can you discuss the waiver on the Durbin Amendment? - Management explained that regulatory guidance provided relief due to COVID-related asset inflation, allowing them to maintain a path under $10 billion in assets [52][53] Question: What is the outlook for the loan loss reserve normalization? - Management indicated that while the current reserve levels appear high relative to peers, they are following a defined process and expect to see opportunities for reserve releases as the economy improves [58][60] Question: How does the company view share repurchases? - Management considers share repurchases as an option for managing capital, especially as they are accumulating capital at a rapid pace [61] Question: Will the company consider more M&A activity? - Management stated that while they are monitoring the environment, they are not compelled to pursue additional acquisitions at this time, focusing instead on internal improvements [63][64] Question: Can you elaborate on operating expenses and cost savings from the Franklin deal? - Management confirmed that they received cost savings earlier than expected due to the pandemic and are optimistic about further efficiencies in the future [67][70]