Reports Q3 Diluted EPS of $0.22, Adjusted
Diluted EPS* of $0.86
FB Financial Corporation (the “Company”) (NYSE: FBK), parent
company of FirstBank, reported net income of $10.2 million, or
$0.22 per diluted common share, for the third quarter of 2024,
compared to $0.85 in the previous quarter and $0.41 in the third
quarter of last year. Adjusted net income* was $40.1 million, or
$0.86 per diluted common share, compared to $0.84 in the previous
quarter and $0.71 in the third quarter of last year.
The Company ended the third quarter with loans held for
investment (“HFI”) of $9.48 billion compared to $9.31 billion at
the end of the previous quarter, a 7.20% annualized increase, and
$9.29 billion at the end of the third quarter of last year, a 2.06%
increase. Deposits were $10.98 billion as of September 30, 2024,
compared to $10.47 billion as of June 30, 2024, and $10.64 billion
as of September 30, 2023. Net interest margin (“NIM”) was 3.55% for
the third quarter of 2024, compared to 3.57% in the prior quarter
and 3.42% in the third quarter of 2023. The Company ended the
quarter with book value per common share of $33.48 and tangible
book value per common share* of $28.15, which represents a 19.7%
annualized increase from the previous quarter.
President and Chief Executive Officer, Christopher T. Holmes
stated, “The Company continues enhancing an already strong balance
sheet to provide security and the platform for further growth. Our
loan and deposit growth was encouraging during the quarter, and we
are optimistic about 2025 with some momentum and expected future
interest rate decreases.”
Annualized
(dollars in thousands, except share
data)
Sep 2024
Jun 2024
Sep 2023
Sep 24 / Jun 24 %
Change
Sep 24 / Sep 23 %
Change
Balance Sheet
Highlights
Investment securities, at fair value
$
1,567,922
$
1,482,379
$
1,351,153
23.0
%
16.0
%
Loans held for sale
103,145
106,875
103,858
(13.9
)%
(0.69
)%
Loans HFI
9,478,129
9,309,553
9,287,225
7.20
%
2.06
%
Allowance for credit losses on loans
HFI
(156,260
)
(155,055
)
(146,134
)
3.09
%
6.93
%
Total assets
12,920,222
12,535,169
12,489,631
12.2
%
3.45
%
Interest-bearing deposits
(non-brokered)
8,230,867
8,130,704
8,105,713
4.90
%
1.54
%
Brokered deposits
519,200
150,113
174,920
978.1
%
196.8
%
Noninterest-bearing deposits
2,226,144
2,187,185
2,358,435
7.09
%
(5.61
)%
Total deposits
10,976,211
10,468,002
10,639,068
19.3
%
3.17
%
Borrowings
182,107
360,944
226,689
(197.1
)%
(19.7
)%
Allowance for credit losses on unfunded
commitments
(6,042
)
(5,984
)
(11,600
)
3.86
%
(47.9
)%
Total common shareholders’ equity
1,562,329
1,500,502
1,372,901
16.4
%
13.8
%
Book value per common share
$
33.48
$
32.17
$
29.31
16.2
%
14.2
%
Tangible book value per common share*
$
28.15
$
26.82
$
23.93
19.7
%
17.6
%
Total common shareholders’ equity to total
assets
12.1
%
12.0
%
11.0
%
Tangible common equity to tangible
assets*
10.4
%
10.2
%
9.16
%
*Non-GAAP financial measure; A
reconciliation of non-GAAP measures to the most directly comparable
GAAP measure is included in the Company’s Third Quarter 2024
Financial Supplement.
Three Months Ended
(dollars in thousands, except share
data)
Sep 2024
Jun 2024
Sep 2023
Statement of
Income Highlights
Net interest income
$
106,017
$
102,615
$
100,926
NIM
3.55
%
3.57
%
3.42
%
Noninterest (loss) income
$
(16,497
)
$
25,608
$
8,042
Loss from securities, net
$
(40,165
)
$
—
$
(14,197
)
Cash life insurance benefit
$
—
$
2,057
$
—
Total revenue
$
89,520
$
128,223
$
108,968
Noninterest expense
$
76,212
$
75,093
$
82,997
Early retirement and severance costs
$
—
$
1,015
$
4,809
Efficiency ratio
85.1
%
58.6
%
76.2
%
Core efficiency ratio*
58.4
%
58.3
%
63.1
%
Pre-tax, pre-provision net revenue
$
13,308
$
53,130
$
25,971
Adjusted pre-tax, pre-provision net
revenue*
$
53,762
$
52,369
$
44,869
Provisions for credit losses
$
1,914
$
2,224
$
2,821
Net charge-offs ratio
0.03
%
0.02
%
0.02
%
Net income applicable to FB Financial
Corporation
$
10,220
$
39,979
$
19,175
Diluted earnings per common share
$
0.22
$
0.85
$
0.41
Effective tax rate
10.3
%
21.4
%
17.2
%
Adjusted net income*
$
40,132
$
39,424
$
33,148
Adjusted diluted earnings per common
share*
$
0.86
$
0.84
$
0.71
Weighted average number of shares
outstanding - fully diluted
46,803,330
46,845,143
46,856,422
Returns on
average:
Return on average total assets
(“ROAA”)
0.32
%
1.30
%
0.61
%
Adjusted*
1.25
%
1.28
%
1.05
%
Return on average shareholders’ equity
2.67
%
10.9
%
5.46
%
Return on average tangible common equity
(“ROATCE”)*
3.19
%
13.1
%
6.67
%
Adjusted*
12.7
%
13.1
%
11.8
%
*Non-GAAP financial measure; A
reconciliation of non-GAAP measures to the most directly comparable
GAAP measure is included in the Company’s Third Quarter 2024
Financial Supplement.
Balance Sheet and Net Interest
Margin
The Company reported loans HFI of $9.48 billion at the end of
the third quarter of 2024, compared to $9.31 billion at the end of
the prior quarter. Net growth in loans HFI was driven by increases
of $74.5 million in commercial and industrial loans, $57.1 million
in multifamily loans and $49.5 million in owner occupied loans,
offset by a decline in construction loans of $120.4 million.
Additionally, net growth in the Company’s consumer loan portfolio
was driven by increases of $59.7 million in residential real estate
and $35.2 million of consumer and other loans.
The Company reported total deposits of $10.98 billion at the end
of the third quarter compared to $10.47 billion at the end of the
second quarter. Total cost of deposits was 2.83% during the third
quarter compared to 2.77% in the second quarter of 2024. The
increase was driven by an issuance of brokered deposits of $369.1
million at an average cost of 4.15% as the Company took advantage
of favorable relative terms available early in the quarter.
Noninterest-bearing deposits grew to $2.23 billion at the end of
the quarter compared to $2.19 billion at the end of the second
quarter of 2024, a 7.09% annualized increase.
During the third quarter of 2024, the Company elected to sell
$318.6 million in available-for-sale securities with a weighted
average yield of 2.25% and reinvested the proceeds of the sale into
available-for-sale securities with a weighted average yield of
5.25%. With the securities sale and reinvestment, total securities
yield increased to 3.68% for the third quarter compared to 3.29% in
the second quarter of 2024. The securities sale resulted in a loss
on securities of $40.2 million, which has been adjusted from
earnings in the Company’s computations of adjusted performance
measures for the third quarter.
The Company’s net interest income on a tax equivalent basis
increased in the third quarter of 2024 to $106.6 million from
$103.3 million in the prior quarter. NIM decreased to 3.55% for the
third quarter of 2024 from 3.57% for the previous quarter. NIM was
impacted by the recent investment portfolio restructuring, the
addition of brokered deposits noted above and the effect of the
decrease in the federal funds rate during the quarter. The cost of
interest-bearing deposits increased to 3.58% from 3.52% in the
previous quarter and the contractual yield on loans HFI increased
to 6.62% from 6.60% in the second quarter of 2024.
Holmes continued, “The Company delivered on relationship growth
during the quarter with core deposit growth of 5.36% annualized and
loan growth of 7.20% annualized. Early in the third quarter, we
were able to acquire brokered deposits, which were significantly
less costly than new customer funding at the time, to provide us
with some balance sheet flexibility. The team continues to focus on
building relationships and growing revenue, which creates long-term
franchise value.”
Noninterest Income
Core noninterest income* was $24.0 million for the third quarter
of 2024, compared to $23.8 million and $22.1 million for the prior
quarter and third quarter of 2023, respectively.
Mortgage banking income declined slightly to $11.6 million in
the third quarter of 2024, compared to $11.9 million in the prior
quarter and $12.0 million in the third quarter of 2023.
Noninterest Expense
Core noninterest expense* during the third quarter of 2024 was
$76.2 million compared to $74.1 million for the prior quarter and
$78.2 million for the third quarter of 2023. During the third
quarter of 2024, the Company’s core efficiency ratio* was 58.4%,
compared to 58.3% in the previous quarter and 63.1% in the third
quarter of 2023. Core banking noninterest expense* was $63.3
million for the quarter, compared to $61.3 million in the prior
quarter and $63.9 million in the third quarter of 2023.
Chief Financial Officer Michael Mettee commented, “Banking
noninterest expenses aligned with our projections for the quarter,
moving modestly higher from our recent success in hiring revenue
producers and from increases to our short-term incentive
compensation accrual. The Company remains steadfast in its
commitment to growing revenue and enhancing operating
leverage.”
Credit Quality
In the third quarter, the Company recorded provision expenses of
$1.9 million related to loans HFI and $58 thousand related to
unfunded loan commitments. The Company had an allowance for credit
losses on loans HFI as of the end of the third quarter of 2024 of
$156.3 million, representing 1.65% of loans HFI compared to $155.1
million, or 1.67% of loans HFI as of June 30, 2024.
The Company experienced net charge-offs of $0.7 million in the
third quarter of 2024, representing annualized net charge-offs of
0.03% of average loans HFI, which compares to annualized net
charge-offs of 0.02% in both the prior quarter and third quarter of
2023.
The Company’s nonperforming loans HFI as a percentage of total
loans HFI increased to 0.96% as of the end of the third quarter of
2024, compared to 0.79% at the previous quarter-end and 0.59% at
the end of the third quarter of 2023. Nonperforming assets as a
percentage of total assets increased to 0.99% as of the end of the
third quarter of 2024, compared to 0.81% at the end of the prior
quarter and 0.71% as of the end of the third quarter of 2023.
Holmes commented, “Annualized net charge-offs were 3 basis
points for the quarter which is in line with our recent
performance, and our allowance for credit losses increased modestly
as we continue to evaluate the impact of multiple economic
scenarios on the balance sheet. Nonperforming assets moved higher
during the quarter related to downgrades on a couple of individual
credits and some softness in consumer loans. We continue to closely
monitor our loan portfolio for potential negative credit trends or
elevated loss content, but have not seen these materialize.”
Capital
The Company continued its capital build in the third quarter,
resulting in a total risk-based capital ratio of 15.1%, common
equity tier 1 ratio of 12.7% and tangible common equity to tangible
assets ratio* of 10.4%.
Holmes continued, “The Company is steadily increasing its
capital, enabling strategic deployment through market expansion,
relationship manager additions and balance sheet enhancements. In
addition to our securities restructuring transaction this quarter,
we expanded into the Tuscaloosa, Alabama market with the hiring of
a market president, and a new location coming soon.”
________________________
*Non-GAAP financial measure; A
reconciliation of non-GAAP measures to the most directly comparable
GAAP measure is included in the Company’s Third Quarter 2024
Financial Supplement.
Summary
Holmes finalized, “The Company is moving into the end of the
year in a position of strength. We maintain a long-term focus,
consistently compounding shareholder value through our commitment
to serving our customers and our communities.”
WEBCAST AND CONFERENCE CALL INFORMATION
FB Financial Corporation will host a conference call to discuss
the Company’s financial results on October 15, 2024, at 10:00 a.m.
(Central Time). To listen to the call, participants should dial
1-877-883-0383 (confirmation code 8581921) approximately 10 minutes
prior to the call. A telephonic replay will be available
approximately two hours after the call through October 22, 2024, by
dialing 1-877-344-7529 and entering confirmation code 5751189.
A live online broadcast of the Company’s quarterly conference
call will be available online at
https://event.choruscall.com/mediaframe/webcast.html?webcastid=Vt6q2sIw.
An online replay will be available on the Company’s website
approximately two hours after the conclusion of the call and will
remain available for 12 months.
ABOUT FB FINANCIAL CORPORATION
FB Financial Corporation (NYSE: FBK) is a financial holding
company headquartered in Nashville, Tennessee. FB Financial
Corporation operates through its wholly owned banking subsidiary,
FirstBank with 77 full-service bank branches across Tennessee,
Kentucky, Alabama and North Georgia, and mortgage offices across
the Southeast. FB Financial Corporation has approximately $12.92
billion in total assets.
SUPPLEMENTAL FINANCIAL INFORMATION AND EARNINGS
PRESENTATION
Investors are encouraged to review this Earnings Release in
conjunction with the Third Quarter 2024 Financial Supplement and
Earnings Presentation posted on the Company’s website, which can be
found at https://investors.firstbankonline.com. This Earnings
Release, the Third Quarter 2024 Financial Supplement and the
Earnings Presentation are also included with a Current Report on
Form 8-K that the Company furnished to the U.S. Securities and
Exchange Commission (“SEC”) on October 15, 2024.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Earnings Release that are
not historical in nature may be considered forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include,
without limitation, statements regarding the Company’s future
plans, results, strategies, and expectations, including
expectations around changing economic markets. These statements can
generally be identified by the use of the words and phrases “may,”
“will,” “should,” “could,” “would,” “goal,” “plan,” “potential,”
“estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,”
“target,” “aim,” “predict,” “continue,” “seek,” and other
variations of such words and phrases and similar expressions. These
forward-looking statements are not historical facts, and are based
upon management’s current expectations, estimates, and projections,
many of which, by their nature, are inherently uncertain and beyond
the Company’s control. The inclusion of these forward-looking
statements should not be regarded as a representation by the
Company or any other person that such expectations, estimates, and
projections will be achieved. Accordingly, the Company cautions
shareholders and investors that any such forward-looking statements
are not guarantees of future performance and are subject to risks,
assumptions, and uncertainties that are difficult to predict.
Actual results may prove to be materially different from the
results expressed or implied by the forward-looking statements. A
number of factors could cause actual results to differ materially
from those contemplated by the forward-looking statements
including, without limitation, (1) current and future economic
conditions, including the effects of inflation, interest rate
fluctuations, changes in the economy or global supply chain,
supply-demand imbalances affecting local real estate prices, and
high unemployment rates in the local or regional economies in which
the Company operates and/or the US economy generally, (2) changes
in government interest rate policies and its impact on the
Company’s business, net interest margin, and mortgage operations,
(3) any continuation of the recent turmoil in the banking industry,
including the associated impact to the Company and other financial
institutions of any regulatory changes or other mitigation efforts
taken by government agencies in response, (4) increased competition
for deposits, (5) the Company’s ability to effectively manage
problem credits, (6) any deterioration in commercial real estate
market fundamentals, (7) the Company’s ability to identify
potential candidates for, consummate, and achieve synergies from,
potential future acquisitions, (8) the Company’s ability to
successfully execute its various business strategies, (9) changes
in state and federal legislation, regulations or policies
applicable to banks and other financial service providers,
including legislative developments, (10) the effectiveness of the
Company’s cybersecurity controls and procedures to prevent and
mitigate attempted intrusions, (11) the Company’s dependence on
information technology systems of third party service providers and
the risk of systems failures, interruptions, or breaches of
security, and (12) the impact of natural disasters, pandemics,
and/or acts of war or terrorism, (13) events giving rise to
international or regional political instability, including the
broader impacts of such events on financial markets and/or global
macroeconomic environments, and (14) general competitive, economic,
political, and market conditions. Further information regarding the
Company and factors which could affect the forward-looking
statements contained herein can be found in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2023,
and in any of the Company’s subsequent filings with the SEC. Many
of these factors are beyond the Company’s ability to control or
predict. If one or more events related to these or other risks or
uncertainties materialize, or if the underlying assumptions prove
to be incorrect, actual results may differ materially from the
forward-looking statements. Accordingly, shareholders and investors
should not place undue reliance on any such forward-looking
statements. Any forward-looking statement speaks only as of the
date of this Earnings Release, and the Company undertakes no
obligation to publicly update or review any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as required by law. New risks and
uncertainties may emerge from time to time, and it is not possible
for the Company to predict their occurrence or how they will affect
the Company.
The Company qualifies all forward-looking statements by these
cautionary statements.
GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL
MEASURES
This Earnings Release contains certain financial measures that
are not measures recognized under U.S. generally accepted
accounting principles (“GAAP”) and therefore are considered
non-GAAP financial measures. These non-GAAP financial measures may
include, without limitation, adjusted net income, adjusted diluted
earnings per common share, adjusted pre-tax pre-provision net
revenue, consolidated core revenue, consolidated core and segment
noninterest expense and consolidated core noninterest income,
consolidated core efficiency ratio (tax-equivalent basis), and
adjusted return on average assets and equity. Each of these
non-GAAP metrics excludes certain income and expense items that the
Company’s management considers to be non-core/adjusted in nature.
The Company refers to these non-GAAP measures as adjusted (or core)
measures. Also, the Company presents tangible assets, tangible
common equity, tangible book value per common share, tangible
common equity to tangible assets, return on average tangible common
equity, and adjusted return on average tangible common equity. Each
of these non-GAAP metrics excludes the impact of goodwill and other
intangibles.
The Company’s management uses these non-GAAP financial measures
in their analysis of the Company’s performance, financial condition
and the efficiency of its operations as management believes such
measures facilitate period-to-period comparisons and provide
meaningful indications of its operating performance as they
eliminate both gains and charges that management views as
non-recurring or not indicative of operating performance.
Management believes that these non-GAAP financial measures provide
a greater understanding of ongoing operations and enhance
comparability of results with prior periods as well as demonstrate
the effects of significant non-core gains and charges in the
current and prior periods. The Company’s management also believes
that investors find these non-GAAP financial measures useful as
they assist investors in understanding the Company’s underlying
operating performance and in the analysis of ongoing operating
trends. In addition, because intangible assets such as goodwill and
the other items excluded each vary extensively from company to
company, the Company believes that the presentation of this
information allows investors to more easily compare the Company’s
results to the results of other companies. However, the non-GAAP
financial measures discussed herein should not be considered in
isolation or as a substitute for the most directly comparable or
other financial measures calculated in accordance with GAAP.
Moreover, the manner in which the Company calculates the non-GAAP
financial measures discussed herein may differ from that of other
companies reporting measures with similar names. Investors should
understand how such other banking organizations calculate their
financial measures with names similar to the non-GAAP financial
measures the Company has discussed herein when comparing such
non-GAAP financial measures.
A reconciliation of these measures to the most directly
comparable GAAP financial measures is included in the Company’s
Third Quarter 2024 Financial Supplement, which is available at
https://investors.firstbankonline.com.
Financial Summary and Key
Metrics
(Unaudited)
(dollars in thousands, except
share data)
As of or for the Three Months
Ended
Sep 2024
Jun 2024
Sep 2023
Selected Balance Sheet Data
Cash and cash equivalents
$
951,750
$
800,902
$
848,318
Investment securities, at fair value
1,567,922
1,482,379
1,351,153
Loans held for sale
103,145
106,875
103,858
Loans HFI
9,478,129
9,309,553
9,287,225
Allowance for credit losses on loans
HFI
(156,260
)
(155,055
)
(146,134
)
Total assets
12,920,222
12,535,169
12,489,631
Interest-bearing deposits
(non-brokered)
8,230,867
8,130,704
8,105,713
Brokered deposits
519,200
150,113
174,920
Noninterest-bearing deposits
2,226,144
2,187,185
2,358,435
Total deposits
10,976,211
10,468,002
10,639,068
Borrowings
182,107
360,944
226,689
Allowance for credit losses on unfunded
commitments
(6,042
)
(5,984
)
(11,600
)
Total common shareholders’ equity
1,562,329
1,500,502
1,372,901
Selected Statement of Income
Data
Total interest income
$
185,628
$
177,413
$
173,912
Total interest expense
79,611
74,798
72,986
Net interest income
106,017
102,615
100,926
Total noninterest (loss) income
(16,497
)
25,608
8,042
Total noninterest expense
76,212
75,093
82,997
Earnings before income taxes and
provisions for credit losses
13,308
53,130
25,971
Provisions for credit losses
1,914
2,224
2,821
Income tax expense
1,174
10,919
3,975
Net income applicable to noncontrolling
interest
—
8
—
Net income applicable to FB Financial
Corporation
$
10,220
$
39,979
$
19,175
Net interest income (tax-equivalent
basis)
$
106,634
$
103,254
$
101,762
Adjusted net income*
$
40,132
$
39,424
$
33,148
Adjusted pre-tax, pre-provision net
revenue*
$
53,762
$
52,369
$
44,869
Per Common Share
Diluted net income
$
0.22
$
0.85
$
0.41
Adjusted diluted net income*
0.86
0.84
0.71
Book value
33.48
32.17
29.31
Tangible book value*
28.15
26.82
23.93
Weighted average number of shares
outstanding - fully diluted
46,803,330
46,845,143
46,856,422
Period-end number of shares
46,658,019
46,642,958
46,839,159
Selected Ratios
Return on average:
Assets
0.32
%
1.30
%
0.61
%
Shareholders’ equity
2.67
%
10.9
%
5.46
%
Tangible common equity*
3.19
%
13.1
%
6.67
%
Efficiency ratio
85.1
%
58.6
%
76.2
%
Core efficiency ratio (tax-equivalent
basis)*
58.4
%
58.3
%
63.1
%
Loans HFI to deposit ratio
86.4
%
88.9
%
87.3
%
Noninterest-bearing deposits to total
deposits
20.3
%
20.9
%
22.2
%
Net interest margin (tax-equivalent
basis)
3.55
%
3.57
%
3.42
%
Yield on interest-earning assets
6.20
%
6.16
%
5.87
%
Cost of interest-bearing liabilities
3.63
%
3.56
%
3.41
%
Cost of total deposits
2.83
%
2.77
%
2.58
%
Credit Quality Ratios
Allowance for credit losses on loans HFI
as a percentage of loans HFI
1.65
%
1.67
%
1.57
%
Annualized net charge-offs as a percentage
of average loans HFI
0.03
%
0.02
%
0.02
%
Nonperforming loans HFI as a percentage of
loans HFI
0.96
%
0.79
%
0.59
%
Nonperforming assets as a percentage of
total assets
0.99
%
0.81
%
0.71
%
Preliminary Capital Ratios
(consolidated)
Total common shareholders’ equity to
assets
12.1
%
12.0
%
11.0
%
Tangible common equity to tangible
assets*
10.4
%
10.2
%
9.16
%
Tier 1 leverage
11.5
%
11.7
%
11.0
%
Tier 1 risk-based capital
13.0
%
13.0
%
12.1
%
Total risk-based capital
15.1
%
15.1
%
14.1
%
Common equity Tier 1
12.7
%
12.7
%
11.8
%
*Non-GAAP financial measure; A
reconciliation of non-GAAP measures to the most directly comparable
GAAP measure is included in the Company’s Third Quarter 2024
Financial Supplement.
(FBK - ER)
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