FB Financial (US:FBK)2025-07-15 14:00Financial Data and Key Metrics Changes - The company reported EPS of $0.06 and adjusted EPS of $0.88 for the quarter, with tangible book value per share growing at a compound annual growth rate of 12.2% since the IPO [5] - Net income on a reported basis was $2.9 million, while adjusted net income was $40.8 million, significantly impacted by a $60 million pre-tax loss from a securities transaction [14][15] - Net interest income increased by 3.5% from the prior quarter and 8.6% year-over-year, reaching $111.4 million [15] - The net interest margin expanded by 13 basis points to 3.68% due to loan growth and cost management [16] Business Line Data and Key Metrics Changes - Loan growth was at an annualized rate of 4.2%, while deposits grew at an annualized rate of 7.2% [10] - Core non-interest income, excluding the securities loss, was $25.8 million, representing a 9% increase over the previous quarter [16] - The company experienced a loss in non-interest income of $34.6 million due to the securities trade [16] Market Data and Key Metrics Changes - The company noted increased market volatility due to trade policy announcements and geopolitical events, which impacted customer behavior and loan activity [7][8] - The loan growth was concentrated in residential mortgages and commercial real estate, with significant increases in specific categories [23] Company Strategy and Development Direction - The merger with Southern States is expected to add immediate scale and accretive earnings, with integration efforts on track for completion by the end of Q3 [11][12] - The company is optimistic about both organic and inorganic growth opportunities, with a focus on capitalizing on market disruptions [12][13] - The company aims to maintain a strong capital position while pursuing additional M&A opportunities in the future [56][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainties and highlighted the potential for growth in the coming quarters [9][11] - The outlook for loan growth remains mid to high single digits, with a strong pipeline of opportunities despite some delays in funding [10][37] - The company anticipates a net interest margin in the range of $3.70 to $3.80 for the second half of the year [25] Other Important Information - The company migrated to a new allowance model to enhance forecasting precision, which had a net impact of approximately $395,000 on reserves [19] - The company plans to redeem subordinated debt and trust preferred securities using proceeds from the securities sale [17] Q&A Session Summary Question: Can you elaborate on the margin guidance and the impact of the bond restructuring? - Management confirmed that virtually no securities from Southern States will be brought over, focusing on paying down brokered deposits and optimizing capital [34][35] Question: What is the outlook for loan growth and the current pipeline? - Management reiterated a mid to high single-digit growth outlook, noting that some expected fundings were delayed but overall customer activity remains strong [37][40] Question: Can you provide details on the higher provision for mortgage banking? - The increase in provision was driven by higher LTV loans and changes in economic forecasts, with a focus on maintaining a profitable operating business [49][50] Question: What is the company's stance on future M&A activity? - Management expressed optimism about M&A opportunities, particularly in the $3 billion to $7 billion range, and emphasized readiness to capitalize on market disruptions [56][82] Question: How is the company managing hiring and recruitment? - The company continues to recruit talent, hiring four new revenue producers in the second quarter to prepare for potential market disruptions [60]