FB Financial Q2 Earnings Call Highlights

Key Points

• FB Financial posted solid Q2 results with EPS of $1.13 and adjusted EPS of $1.14, while net income reached $58.6 million. Pre-tax, pre-provision net revenue rose about 8% sequentially, and management said the bank remains well-positioned with strong balance sheet growth and stable margins.
• Loan growth was strong, but deposit competition remains intense. Loans grew at an 11.6% annualized pace and deposits at 7.7%, though management said deposit pricing is still competitive and full-year deposit growth expectations are now toward the lower end of the mid- to high-single-digit range.
• Credit pressure was limited to a few specific relationships, even as non-performing loans and assets rose in the quarter. Management said the increase was driven mostly by three borrower-specific credits, while net charge-offs stayed low at six basis points annualized and capital ratios remained comfortably above regulatory requirements.

FB Financial NYSE: FBK reported higher second-quarter 2026 earnings and balance sheet growth, with management pointing to broad-based loan demand across its Southeast footprint while acknowledging continued pressure from competition for deposits and lending relationships.

President and Chief Executive Officer Chris Holmes said the company reported earnings per share of $1.13 and adjusted earnings per share of $1.14. Net income totaled $58.6 million, or $58.9 million on an adjusted basis. Pre-tax, pre-provision net revenue rose to $83.3 million, an increase of approximately 8% from the prior quarter, which Holmes said lifted the company’s pre-provision net revenue return on average assets above 2%.

Holmes said tangible book value per share, excluding the impact of accumulated other comprehensive income, has grown at an 11.3% compound annual growth rate since the company’s 2016 initial public offering.

“As I reflect on the second quarter, our company is well-positioned and our outlook is bullish,” Holmes said. He cited “sustainable momentum” across the franchise, strong balance sheet growth, stable net interest margin, solid returns and improved financial positioning through capital deployment.

Loan and Deposit Growth Remain Central to Outlook

Chief Financial and Operating Officer Michael Mettee said loans grew at an annualized rate of 11.6% during the quarter, while deposits grew 7.7% annualized. He said loan growth was broad-based, including metro markets such as Birmingham, Memphis and Huntsville, as well as community markets including Lexington, Tennessee; Auburn, Tuscaloosa and Florence in Alabama; and Columbus and Newnan in Georgia.

Mettee said FB Financial remains comfortable with its expectation for full-year loan growth in the mid- to high-single-digit range. For deposits, he said the company still expects full-year growth in the mid- to high-single-digit range, though current expectations are toward the lower end of that range.

Deposit competition was a major topic during the question-and-answer session. Holmes said deposits remain challenging, telling analysts that “today’s going to be the easiest day of your career to get deposits because tomorrow it’s going to be a little harder.” He said the company continues to focus on non-interest-bearing accounts and operating relationships, while also using brokered deposits selectively when pricing is attractive.

Mettee said deposit costs declined modestly during the quarter to 2.26%, but new deposit production around quarter-end was coming in at blended rates of roughly 2.60% to 2.70%. He said the lower overall deposit cost was driven more by mix than by reduced competition, and noted that money market rates remain competitive while CD pricing has been steadier.

Margin Stable as Pricing Competition Persists

FB Financial’s net interest margin was 3.95% for the quarter. Mettee said the margin was supported by stable contractual loan rates and all-in loan yields of 6.48%. New loan production near quarter-end was in the 6.35% to 6.40% range.

Mettee said the company’s outlook assumes one rate hike in the third quarter of 2026, though he said the timing and magnitude of rate actions remain uncertain. He said the company remains comfortable with its full-year net interest margin forecast, excluding loan accretion, of 3.70% to 3.80%.

In response to an analyst question, Mettee said loan pricing is “almost just as competitive as deposits,” adding that the company expects some margin pressure over the remainder of the year. He said about 52% of the loan book is floating-rate, and roughly $1 billion of loans from older vintages is expected to reprice in the back half of the year.

Mortgage Mix Weighs on Fee Income but Supports Relationships

Non-interest income declined modestly to $25.8 million, or $26.2 million on an adjusted basis. Mettee said recurring fee categories including service charges, interchange income and assets under management revenue benefited from customer growth and the additional day in the quarter.

Mortgage banking revenue declined by $1.1 million, which Mettee attributed to a higher proportion of new lock production being retained in the portfolio rather than sold into the secondary market. He said that mix shift reduces upfront gain-on-sale income but supports balance sheet growth, attractive loan yields and broader customer relationships.

Holmes said FB Financial generally originates mortgages to sell, though it may retain some production from time to time. Mettee said the company has become “a little bit more aggressive” on portfolio mortgage rates in order to convert mortgage clients into broader banking customers.

Expenses Decline, Credit Metrics Show Isolated Pressure

Non-interest expense totaled $91.5 million, down approximately 4% from the first quarter, or approximately 2% on an adjusted basis. Mettee said expense trends benefited from seasonal compensation patterns, disciplined expense management and the absence of merger-related costs.

The company’s efficiency ratio improved to 52.3%, while its banking segment efficiency ratio was 49.5%. Mettee said FB Financial continues to expect banking segment non-interest expense of $325 million to $335 million for the year and expects the consolidated efficiency ratio to finish the year at or around 50%.

Provision expense rose to $10.1 million, an increase of approximately $7 million from the prior quarter. Mettee said most of the reserve build was associated with loan growth, with the remainder tied to specific reserves on two individually evaluated credits and softer economic forecasts used in the allowance process. The allowance coverage ratio ended the quarter at 1.51%.

Non-performing loan and non-performing asset ratios increased during the quarter, driven almost entirely by three relationships. Mettee said two were the individually evaluated credits that carried specific reserves, while the third was a well-collateralized credit with a near-term workout plan. He said management believes the situations are borrower-specific and do not reflect broader portfolio weakness. Net charge-offs remained low at six basis points annualized.

Share Repurchases and Capital Position

FB Financial repurchased approximately 3% of its outstanding shares during the quarter. Holmes said about two-thirds of the repurchase activity came through a single transaction with a charity that received shares as part of the administration of the estate of Jim Ayers. He said the transaction reflected the company’s capital strength and confidence in its long-term prospects.

Mettee said the company’s capital ratios remain well above 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 response to an analyst question, management said it is comfortable with capital levels and continues to monitor tangible common equity and CET1 ratios closely.

Asked about strategic opportunities, Holmes said the company continues to evaluate potential acquisitions but remains focused on organic growth. He said many available opportunities are smaller institutions, generally less than $2 billion in assets, and that acquisitions must offer both strategic and financial value to justify disruption to the company’s organic momentum.

“Our focus continues to be maximizing the significant organic opportunities already in front of us,” Holmes said.

About FB Financial NYSE: FBK

FB Financial Corporation, through its banking subsidiary FirstBank, is a Tennessee-based bank holding company that provides a broad range of financial services to individuals, small and medium-sized businesses, and commercial clients. Established to serve the banking needs of communities across the southeastern United States, the company's core offerings include consumer and commercial deposit products, commercial lending, and mortgage services.

In addition to traditional checking and savings accounts, FB Financial's service portfolio encompasses treasury and cash management, equipment financing, and letters of credit to support the working capital and expansion needs of business customers.

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