管理層發言
Good morning, everyone, and welcome to FB Financial Corporation's Second Quarter 2026 Earnings Conference Call. At this time, participants are in a listen-only mode. Following the prepared remarks, we will open the call to questions. Please note that today's conference call is being recorded. At this time, I would like to turn the call over to Rachel Dereski, Financial Management Associate for FB Financial. Please go ahead.
Thank you, and good morning, everyone. We appreciate you joining us today for FB Financial's second quarter 2026 earnings conference call. Joining me on the call this morning are Christopher T. Holmes, President and Chief Executive Officer, and Michael Mettee, Chief Financial and Operating Officer. Before we begin, I would like to remind listeners that during today's call, management may make forward-looking statements regarding the company's plans, expectations and outlook. These statements are subject to risks and uncertainties; actual results may differ materially from those discussed. Additional information regarding these risks and uncertainties, including risk factors that could cause actual results to differ, can be found in our earnings release, our most recent annual report on Form 10-K, and our subsequent filings with the Securities and Exchange Commission. FB Financial undertakes no obligation to update any forward-looking statements except as required by law. In addition, today's discussion may include references to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are available on our second quarter 2026 financial supplement posted to the Investor Relations section of our website at www.firstbankonline.com and on the SEC's website at www.sec.gov. With that, I will turn the call over to Mr. Christopher T. Holmes.
Thank you, Rachel, and thanks to everybody for joining us on the call this morning and for your interest in FB. We reported EPS of $1.13 and adjusted EPS of $1.14 and have grown our tangible book value per share, excluding the impact of AOCI, at a compound annual growth rate of 11.2% since our IPO in 2016. Our net income was $58.6 million and $58.9 million on an adjusted basis. Our pretax pre-provision net revenue increased to $83.3 million, which represents an increase of approximately 8% in the quarter. This improves our PPNR return on average assets to over 2%, which we consider to be our benchmark for returns. We grew loans at an annualized rate of 11.6% and deposits at 7.7% annualized. Growth this quarter was strong and reflects the hard work, discipline and execution of our teams across the company. As I reflect on the second quarter, our company is well positioned and our outlook is bullish. What I am most excited about is the sustainable momentum that we are seeing across the franchise. This quarter was marked by strong balance sheet growth, a stable net interest margin, solid returns, and an improved financial position through thoughtful capital deployment, including meaningful share repurchases during the quarter. Just as importantly, the activity across our footprint gives us confidence in the road ahead. Our pipelines are healthy, our markets continue to perform well, and we are seeing continued momentum in attracting talent and winning new client relationships. What continues to differentiate FirstBank is that our success is not dependent on a single factor. It is the combination of award-winning customer service, strong and growing markets, disciplined execution, talented associates, and a strong financial position that allows us to invest in growth while maintaining a conservative risk profile. We remain focused on getting better every day by improving our execution, raising our level of client service and deepening our presence in the markets across the Southeast. As we look ahead, we see sustainable opportunity in front of us. Before turning the call over to Michael, I would like to briefly cover our share repurchase activity during the quarter. Approximately two-thirds of our repurchase activity this quarter was completed through a single transaction with a charity that received shares as part of the administration of the estate of Jim Ayers. We remain a constructive partner with those responsible for the administration of the estate and its beneficiaries. This transaction, along with the other repurchases during the quarter, reiterates our commitment to investing in our business and deploying capital in a disciplined manner. That transaction reflects both the strength of our capital position and our continued confidence in the long-term value and prospects of our company. To conclude my remarks, our capital reserve and liquidity positions remain strong and we believe the franchise is well positioned to continue to deliver profitable growth and long-term shareholder value. We remain confident in our ability to grow organically through disciplined execution. While we evaluate strategic opportunities as they arise, our focus continues to be maximizing the significant organic opportunities already in front of us. So with that, I am going to turn the call over to our Chief Financial and Chief Operating Officer, Michael Mettee, for more color on the quarter.
Thank you. Michael?
Thank you, Christopher, and good morning everyone. I will begin my comments this quarter with the balance sheet. This quarter's results reflect the growth and momentum that we highlighted last quarter with annualized loan growth of 11.6% and annualized deposit growth of 7.7%. Our teams continue executing at the highest level in an increasingly competitive environment and our results demonstrate that our value proposition continues to resonate across our markets. We saw this most clearly in our loan portfolio, where growth was broad based across our footprint in metro markets including Birmingham, Memphis, Huntsville, throughout our community markets like Lexington, Tennessee; Auburn; Tuscaloosa and Florence in Alabama; and Columbus and Newnan in Georgia. This balanced growth reflects the strength of our teams and demonstrates our ability to execute consistently across our geography. We believe our ability to consistently deliver strong financial advice, trusted service and a differentiated customer experience sets us apart. As the Southeast remains the most attractive part of the country to live and work, we are seeing increased competition in pricing, recruiting and customer acquisition. Even so, our focus remains consistent: growing the franchise organically by delivering competitive products, responsive service, and making FirstBank the easiest institution to do business with. We strike a balance between growth and profitability and this quarter reflects that discipline. We produced strong balance sheet growth while maintaining a stable margin and generating strong returns with an adjusted return on average tangible common equity of 15% and a pretax pre-provision net revenue return on average assets above 2%. Ultimately, these results reinforce what we have long believed: building deep, long-term customer relationships remains the best path to creating sustainable value for our shareholders. Looking ahead, we continue to see a healthy pipeline and remain encouraged by the level of business activity across our footprint. We remain comfortable with our expectations for full-year loan growth in the mid- to high-single-digit range. Deposits remain highly competitive and our funding strategy continues to prioritize organically generated core deposits. We expect full-year deposit growth to remain within our previously communicated range of mid- to high-single digits. We currently anticipate those results trending towards the lower end of that range. Turning to earnings, we grew in both net income and pretax pre-provision revenue during the quarter, totaling $58.6 million and $83.3 million respectively. Our results were driven by stable margin performance on a growing balance sheet, disciplined expense management and a lower effective tax rate, partially offset by a higher level of provision expense. Our net interest margin was 3.95% for the quarter, supported by stable contractual interest rates on loans and all-in loan yields of 6.48%. New loan production near quarter end was coming in the 6.35% to 6.4% range. Deposit costs declined modestly to 2.26% while blended rates on new production around quarter end were in the 2.6% to 2.7% range. Like the rest of the industry, we continue to monitor the outlook for benchmark interest rates closely. While the timing and magnitude of future rate actions remain uncertain, our current outlook assumes one rate hike in the third quarter of 2026. As we move through the second half of the year, we expect elevated competitive dynamics on pricing as institutions compete for both loans and deposits. Between those two factors, we remain comfortable with our full-year net interest margin forecast, excluding loan accretion, of 3.7% to 3.8%. We know that the environment can change quickly but we believe that our balance sheet remains well positioned to perform across a variety of interest rate scenarios. Noninterest income declined to $25.8 million during the quarter but increased to $26.2 million on an adjusted basis. Recurring fee categories such as service charges, interchange income and assets under management revenue all benefited from continued customer growth and the additional day in the quarter. Within mortgage banking, revenue declined $1.1 million as a greater proportion of new lock production was retained in the portfolio rather than sold into the secondary market. While this mix shift reduces upfront gain-on-sale income, it has enhanced balance sheet growth, generated attractive loan yields and strengthened broader customer relationships by creating additional opportunities for deposits and other banking services. Noninterest expense totaled $91.5 million during the quarter, down approximately 4% from the first quarter or approximately 2% on an adjusted basis. Expense trends benefited from normal seasonal compensation patterns, disciplined expense management and the absence of merger-related costs. As revenues expanded and expenses declined, we generated strong positive operating leverage during the quarter highlighting the earnings power of the franchise when the balance sheet and fee businesses are performing well. As a result, our efficiency ratio improved to 52.3% while our banking segment had a sub-50 efficiency ratio of 49.5%. Looking ahead, we continue to expect expenses to normalize during the second half of the year as we invest in talent and growth across the franchise. While we remain disciplined on expenses, we continue to see opportunities to create positive operating leverage as revenue growth outpaces expense growth. Accordingly, we are maintaining our banking segment noninterest expense outlook of $325 million to $335 million, and we continue to expect the consolidated efficiency ratio to finish the year at or around 50%. Turning to credit, provision expense was $10.1 million for the quarter, an increase of approximately $7 million, and our allowance coverage ratio ended the period at 1.51%. The majority of the reserve build was associated with loan growth with the remainder driven by specific reserves on two individually evaluated credits, and a modest portion of the increase resulted from somewhat softer economic forecasts incorporated into our allowance for credit loss estimation process. Nonperforming loan and nonperforming asset ratios both increased during the quarter and were driven almost entirely by three relationships. Two of those relationships are the individually evaluated credits that I just referenced, which led to specific reserves, while the third is a well-collateralized credit with a near-term workout plan in place. Our teams remain actively engaged with these relationships and based on our analysis we believe these situations are borrower specific and do not reflect broader weakness within the portfolio. Importantly, net charge-offs remain low at 6 basis points annualized, which is generally consistent with our long-term performance and reflects both the strength of our underwriting discipline and our ability to effectively manage credit relationships when challenges arise. Our outlook for both our markets and our franchise remains positive. At the same time, we recognize that factors such as geopolitical developments, monetary policy decisions and housing market conditions remain largely outside of our control and can influence our customers' environment and behavior. One of the advantages of our community banking model is the depth of our customer relationships, which allows us to identify emerging risks early and respond quickly. We will continue to take a proactive approach as the macroeconomic environment evolves. With respect to capital, we remain in a position of considerable strength supported by robust capital ratios and a strong liquidity profile. As Chris mentioned, we completed another meaningful share repurchase transaction during the quarter from a charity that received shares from the heirs' ownership. In total, we repurchased approximately 3% of our outstanding shares during the quarter. Our capital deployment strategy remains centered on supporting organic growth while maintaining the flexibility to pursue opportunities that enhance shareholder value, like the repurchase this quarter. We continually evaluate a range of capital allocation alternatives and move on opportunities that are strategically compelling and economically attractive. As a result, our capital ratios remain well above the regulatory requirements with a common equity Tier 1 ratio of 11%, a Tier 1 leverage ratio of 10.1%, and total risk-based capital of 12.9%. In closing, I would like to thank our associates for their hard work, dedication and continued commitment to our customers. We entered the second half of the year with strong momentum, healthy pipelines and confidence in the opportunities ahead. With that, I will turn the call back over to Christopher.
All right. Thank you, Michael, and thanks to everybody for tuning into the call this morning and for your interest in FB Financial. Operator, at this time, I would like to open the line for questions.
分析師問答
And at this time, we will open the line for questions. If you would like to ask a question, you may press *1. If you are using a speakerphone, we ask that you pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is * and then 1 to join the question queue. Our first question today comes from Catherine Mealor from KBW. Please go ahead with your question.
Thanks. Good morning. I wanted to start on deposit cost. It was great to see deposit cost decline this quarter. I know you mentioned that new production was coming on around 2.60 to 2.70, but could you give a little more color around deposit flows, confidence in still being able to grow deposits at a mid-single-digit pace, and from a big-picture perspective where you think overall deposit cost trends for the rest of the year? Is this kind of a couple of basis points increase per quarter, or how should we think of the trajectory of overall deposit cost for the next couple of quarters?
Hey Catherine and good morning. I will take the first part. Deposits have been a challenge, and I think that environment is going to continue to be competitive. There are many different payment streams and many different ways to hold money now. We continue to adjust our strategy to meet that. This quarter we saw success in noninterest-bearing deposits, which remains a focus for us. We did use a little more brokered funding than usual because it was cheaper; that is not something we would prefer to use long term, but we will use it while it is an economical option. We think we can do similar to what we did in the second quarter throughout the rest of the year. Michael will add more specific color on flows.
Good morning, Catherine. The modest decrease in deposit costs was driven more by mix than by competitive pricing. As noted, new deposit production has been blending in the 2.62% to 2.70% range. Money market rates have continued to move higher from a competitive perspective, while certificate (CD) rates in our book have modestly declined and held fairly steady. Customers are moving between noninterest-bearing accounts, money markets and CDs based on liquidity needs and their desire to lock in rates. We are seeing new money markets in the 4%+ range from many competitors. So new deposits are coming on at higher costs and customer acquisition is becoming more expensive. The best way to keep deposit costs modest is by deepening relationships, growing wallet share and creating value for customers, and the team did a good job with that this quarter. But we understand customer acquisitions can be more expensive.
When we say deepening relationships, we mean getting the operating account, not trying to lock customers into a low rate. Our emphasis is on acquiring the full banking relationship, which makes our deposit base more stable and valuable.
Just to be clear, the 2.60 to 2.70 blended figure includes the growth in noninterest-bearing deposits, the money market accounts that can be near 4%, and the more stable CDs? Is that the right way to think about that blended range?
Yes, that's correct. The blended number includes all those components. Our overall deposit cost was 2.26% this quarter, so new deposits are coming in higher than that on a blended basis.
Maybe on the other side of the margin, can you talk about what competition looks like on the lending side? Is there still enough back-book repricing opportunity to offset higher deposit cost with higher loan yields?
Loans are almost as competitive as deposits. On the relationship side, it is important to have first shot with clients to help them with refinancing or new projects, and we are getting our fair share of that business. Spot loan yields in June were around 6.40% but we are starting to see some pressure there as well. We've had significant repricing from the 2021 vintage and there is probably about $1 billion or so left to reprice in the back half of the year. The yield curve steepening is generally positive for us, and 52% of our loan portfolio is floating, which should reprice higher, but some of those loans are on tighter spreads than we would have expected, so there is some squeeze. That is why we expect margin compression of a couple of basis points per quarter through year end on a blended basis.
Got it. That makes sense. Thanks. Great quarter, guys, appreciate it.
Our next question comes from Stephen Scouten from Piper Sandler. Please go ahead with your question.
I wanted to dig into the loan growth a bit. It was very strong and helped by retaining more of the residential mortgages. Is retaining production likely to be a continued strategy? Also, with growth being led by residential and seemingly non-owner occupied CRE, is that the composition we should expect or would you want growth weighted more toward C&I in the future?
We would expect more weighting toward C&I over time. We don't mind residential or non-owner occupied CRE, but we expect to have some nice C&I growth between now and year end. Our general strategy is still to originate to sell in mortgage—selling mortgage production remains our normal approach—but from time to time we will retain loans that make sense, and when we keep them we are increasingly good at converting those relationships into full bank clients.
To add some detail, the secondary market economics affect whether servicing is sold and that can complicate converting mortgage customers into full bank clients. From the first quarter into the second quarter we were a bit more aggressive on portfolio rates, which created customer relationship opportunities and was effective in turning mortgage clients into full bank clients. On the recent growth, residential real estate contribution of about $145 million included approximately $60 million of 1-to-4 family, about $50 million of multifamily, and some line-of-credit activity as well. So it's not all coming from the mortgage division; it's across the footprint.
On your guide, you said you currently expect deposit growth to trend toward the lower end of the mid- to high-single-digit range. What is constraining deposit growth—funding mix, paydowns, or pipeline—and why might results trend to the lower end?
To clarify, our loan growth outlook remains mid- to high-single digits and we feel good about loan growth. It is the deposit side where we are thinking more conservatively and trending toward the mid-single-digit range due to competitive dynamics. Funding is cheaper from a brokered perspective right now, which can flip dynamics; we remain focused on building core relationships. We have a lot of optionality because brokered funding is a small percentage of our funding mix, so we can fund the bank various ways while building core deposits.
To add, when people look at our growth, they often think Nashville is driving everything; in fact, Nashville was flat this quarter due to payoffs, while growth came from many other markets—Birmingham, Auburn, Columbus, and smaller communities—which is why we remain bullish about the franchise and the pipeline. We could exceed our guidance, but we are comfortable with the high-single-digit loan growth assumption.
Thanks. On the repurchase, you mentioned about two-thirds was tied to the charity transaction. Excluding that, would buybacks have been around ~500,000 shares? Should we think about continuing repurchases from the remaining authorization or will activity slow down?
Your approximation is correct. Excluding that charity transaction, repurchases would have been plus or minus roughly 500,000 shares. We remain price sensitive and view repurchases as one tool in our capital allocation toolbox. We anticipate repurchases can continue as an option—open-market purchases or occasional bulk repurchases—when they are strategically and economically attractive.
Got it. Thanks so much for the color and congrats on a nice quarter.
Our next question comes from Russell Gunther from Stephens. Please go ahead with your question.
Good morning. On the organic opportunity going forward, are incremental LPOs something you would consider? If so, directionally and geographically where might that take you?
When we open an LPO, it's with the intent to enter a market with a full banking offering over time. We typically grow commercial first and then add more retail. Our geographic targets are generally adjacent to our current footprint, often east and south of our existing markets. We evaluate opportunities in advance and pursue them when the right bankers or institutions become available. Bankers and small banks become available periodically and that's when we tend to act.
On rate sensitivity, with a potential rate hike, what does that mean to margin in isolation? And where do index deposits stand today?
We are slightly asset sensitive, so an incremental rate hike could help because 52% of our loan book is floating and our investment portfolio has meaningful floating exposure as well—roughly 55% to 60%—so higher rates help that side by a couple million dollars. However, competitive pressures on deposit pricing can offset that benefit. On total deposits, approximately 40% are indexed and if you think specifically about money market exposure, it's a higher proportion—around two-thirds of those categories—give or take.
Great. Thanks both.
Our next question comes from David Rochester from Cantor Fitzgerald. Please go ahead with your question.
Good morning. On your loan outlook, you wrapped up a solid quarter of growth across a number of buckets. Can you give an update on any other known paydown activity coming up and what is stopping you from hitting the top end of that mid- to high-single-digit growth range given the momentum?
Great question. There can be significant payoff activity in certain markets even as we produce strong originations. For example, Nashville had one of our largest production quarters, but the net was flat due to hundreds of millions of dollars of payoff activity and related movements. That payoff activity in some competitive markets can constrain net growth even as pipeline and originations remain strong across the footprint. The overall pipeline is healthy and teams are converting business, but payoffs can mute net growth in certain markets.
You mentioned success in attracting talent. Can you update us on recent hires and the opportunity to pick up more talent given competitive pressures?
On talent, we've had some wins and continue to add bankers who fit our culture and strategy. Our key metric is revenue growth and we focus on hiring the right people for the long term rather than just short-term fixes. Recruiting is an ongoing effort; sometimes hires close near quarter end, which can make it seem like bursts of activity. We expect to continue attracting talent who want to be part of FirstBank, and we remain confident in our ability to compete for quality hires over the short and long term.
Sounds good. Appreciate the color, thanks.
Our next question comes from Brett Rabatin from StoneX Group. Please go ahead with your question.
Good morning. Wanted to talk about components of loan growth from here. Construction continued to be a little softer sequentially; are you looking to add construction lending or avoiding it given credit risk? Also, on specialized lending, you talked about manufactured housing and SBA last quarter—anything else you are targeting and do you expect specialized lines to help grow loans?
We are not avoiding construction lending. We manage construction concentration prudently, but we are confident in the markets where we operate and have owner-occupied construction projects in the pipeline that span multiple quarters and even years. Those projects are typically owner-occupied rather than speculative. On specialized lending, our manufactured housing portfolio remains a growth area and we continue to monitor concentration limits—currently we are under our internal thresholds and have room to grow that business.
Can you provide additional color on the two credits that drove the reserve build? How much was the specific reserve on those two, and were they in the non-owner occupied CRE bucket?
Those two credits were real estate-related but in different geographies. One came to us through acquisition and the other originated with an officer we subsequently terminated; we are actively working through that. Both were completed projects rather than construction loans and are relatively small.
To add, the specific reserves related to those two credits totaled about $3.5 million in aggregate. One situation has strong guarantors but the project's cash flows have not yet penciled out; the other is an isolated matter in a different geography and we are working through it. They are borrower-specific and unrelated to broader portfolio credit quality.
Okay, that makes them pretty isolated. Appreciate the color.
Our next question comes from David Bishop from Hovde Group. Please go ahead with your question.
Curious, Christopher or Mike, if you could remind us of your near-term and intermediate-term capital targets and how those compare to where you exited the quarter.
We are comfortable with our capital levels exiting the quarter. On tangible common equity (TCE), we closely track that metric and our target is around 9%. We build capital back quickly and expect to rebuild from repurchases over the next couple of quarters if needed. For CET1, we want to remain above 10% and our ratios remain well above regulatory requirements at quarter end.
On operating expense outlook, you had strong expense control this quarter but you mentioned hires coming. Is there an expected mid-single-digit inflationary pressure for the second half of the year? What sort of run rate are you penciling in?
It's a tough question. Employee costs, particularly on the revenue side, are running above single-digit increases. We are being thoughtful and conservative—protecting the team while recruiting the right people. Our expense guidance is based on a combination of math and judgment about hiring timing and compensation levels. The team has executed well across both front-office and back-office, and our guidance reflects expected investments in talent and growth for the back half of the year.
One housekeeping item: what is a good effective tax rate to use going forward?
Use a low-20% effective tax rate, around 20% or so, slightly higher than recent periods but not materially higher.
Our next question comes from Steve Moss from Raymond James. Please go ahead with your question.
Most of my questions have been answered. One cleanup: on purchase accounting accretion, is the current level a good run rate at the lower level or should we expect something like $6 million plus a quarter?
This quarter's purchase accounting accretion is a good run rate. Think of it as roughly 14 to 15 basis points on margin to get to that core margin range in the low- to mid-3% range. It may decline a basis point or so over time on a longer horizon, but the current level is a reasonable run rate.
Great. Appreciate the color and congrats on the quarter.
Our next question comes from Christopher Marinac from Green Capital. Please go ahead with your question.
Thanks for taking the questions. On deposits, are you seeing changing behaviors—more rate shopping or exception requests? Any changes in customer behavior that you have observed?
We have not seen any material change in customer behavior. Relationships still matter and the experience of being easy to do business with continues to drive retention and acquisition. If there is any change, it's more driven by new competitors and technology making customers aware of different ways to hold money, but that has not materially changed our day-to-day relationship dynamics.
We do empower frontline staff with rate authority to retain and attract business, and we track pricing exceptions daily. We have not seen a material increase in exceptions—activity ebbs and flows—but overall it has been consistent. Teams are empowered to take care of clients.
One additional point: our deposit cost is a bit higher than some peers, and because we have long empowered our front line to be competitive at the point of contact, that helps us respond effectively when customers are offered special rates elsewhere. That approach has been intentional and it continues to serve us well.
One follow-up on strategic opportunities and pricing—have you seen any shift that would require a change in how you assess external opportunities or valuations?
We are seeing ample opportunities in the market, generally among smaller institutions under $2 billion. For us, acquisitions must deliver both strategic and financial value to justify the disruption. Because we have significant organic opportunity, the opportunity cost of disruptive transactions is high, so unless an acquisition offers clear strategic and financial advantages, we may pass. That view influences valuations and is why we haven't executed many transactions recently. We continue to evaluate opportunities but remain disciplined on price and strategic fit.
At this time, we will be concluding the question-and-answer session. I will now turn the floor back over to Christopher T. Holmes for closing remarks.
Thank you. We really appreciate everyone joining us to cover the quarter. I appreciate your interest in the company. If any of you need to speak to us directly, we are available after the call. Thanks.
With that, ladies and gentlemen, we will conclude today's call. We do thank you for joining. You may now disconnect your lines.