FB Financial (FBK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported EPS of $1.07 and adjusted EPS of $1.16 for Q4 2025, with a full-year EPS of $2.45 and adjusted EPS of $3.99 [5][6] - Pre-tax pre-provision net revenue was $71.1 million, or $77.1 million on an adjusted basis, with net interest income of $150.6 million and a net interest margin of 3.98% [5][12] - The company achieved a return on average assets of 1.4% and a return on average tangible common equity of 14.4% [5] Business Line Data and Key Metrics Changes - Loans held for investment grew by 29% year-over-year, while deposits increased by 25% [6][15] - Non-interest income improved due to stronger swap fees and investment services revenue [12] - The banking core non-interest expense totaled $88 million for the quarter and $298 million for the full year [13] Market Data and Key Metrics Changes - The company experienced a slight increase in non-performing assets, but loss content remained low with annualized net charge-offs totaling only five basis points [14] - The company reported loan growth of $86 million for the quarter and total deposit growth of $97 million, both approximately 3% on an annualized basis [14] Company Strategy and Development Direction - The company aims to focus on customer relationships to enhance service and product offerings, which is seen as a winning formula for growth in 2026 [10][16] - The company is optimistic about growth opportunities in 2026, both organically and through potential acquisitions, while maintaining a focus on customer experience [9][11] - The company plans to continue evaluating M&A opportunities, particularly in the southeastern U.S. and Carolinas, targeting banks with assets between a couple of billion to six or seven billion [67][69] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of credit outlook and the potential for strong growth opportunities in 2026 [14][15] - The management highlighted the importance of maintaining a focus on customer experience and adapting to market disruptions [25][56] - The company anticipates a return to high single-digit growth rates in loans and deposits for 2026 [15][17] Other Important Information - The company executed a significant stock repurchase transaction, repurchasing over 1.7 million shares, representing about 3% of the company [16] - The company expects net interest margin to land between 3.78% and 3.83% in Q1 2026, assuming a rate cut is factored into the forecast [16] Q&A Session Summary Question: Anticipation of additional share repurchases from the Ayers estate - Management does not anticipate any additional share repurchases from the Ayers estate based on current conversations [21] Question: Is mortgage banking on the right path? - Management indicated that mortgage banking had a good year, with positive contributions and ongoing tweaks to improve the platform [23][24] Question: Current M&A climate and optimism for additional deals - Management noted a lot of conversations in the industry regarding M&A, and they will continue to evaluate opportunities as they arise [25][26] Question: Loan growth and elevated paydowns - Management acknowledged elevated paydowns in Q4 but expects to achieve high single-digit growth without adding new personnel [34][35] Question: Expense run rate and changes to compensation structure - Management clarified that some expenses in Q4 were non-run rate and reiterated their expense guidance for 2026 [41][42] Question: Loan pipeline and client sentiment - Management reported a strong loan pipeline and positive client sentiment, with clients starting new projects and deals [72][73]