Earnings call transcript: FB Financial Q1 2026 earnings beat EPS, stock falls

FB Financial Corporation reported its first-quarter 2026 earnings, posting an adjusted earnings per share (EPS) of $1.12, slightly surpassing the forecast of $1.10. However, the company fell short on revenue expectations, reporting $172.34 million against a forecast of $175.42 million. Despite the EPS beat, the revenue miss has led to a premarket stock decline of 4.45%, with shares trading at $53.50.

Key Takeaways

• FB Financial beat EPS estimates but missed revenue forecasts.
• Premarket stock price dropped by 4.45% following the earnings release.
• The company received the J.D. Power Retail Banking Award for customer satisfaction.
• Competitive pressures are impacting loan and deposit pricing.

Company Performance

FB Financial demonstrated solid financial performance in Q1 2026, with a slight EPS beat indicating effective cost management. However, a revenue shortfall suggests challenges in sales or market conditions. The company’s customer-centric model continues to earn accolades, with a J.D. Power award highlighting its strong customer satisfaction.

Financial Highlights

• Revenue: $172.34 million, below forecast
• Earnings per share: $1.12, above forecast
• Net income: $57.5 million ($58.3 million adjusted)
• Net Interest Margin: 3.94%, reflecting a slight decline

Earnings vs. Forecast

FB Financial’s Q1 2026 EPS of $1.12 surpassed the forecast of $1.10, resulting in a 1.82% surprise. However, revenue came in at $172.34 million, missing the anticipated $175.42 million by 1.76%.

Market Reaction

Following the earnings release, FB Financial’s stock experienced a 4.45% decline in premarket trading. This reaction is largely attributed to the revenue miss, which overshadowed the EPS beat. The stock is currently trading at $53.50, approximately 12% below its 52-week high of $62.37. Despite the near-term volatility, the stock has delivered a strong 38% return over the past year, and InvestingPro analysis suggests the stock remains undervalued at current levels, placing it among compelling opportunities on the Most Undervalued stocks list.

Outlook & Guidance

FB Financial expects mid to high single-digit loan and deposit growth for the full year 2026, with momentum building in the second half. The company projects a Net Interest Margin range of 3.76% to 3.80% for the year, adjusting for competitive pressures and potential rate cuts. The growth outlook aligns with the company’s recent performance, having posted 20% revenue growth over the last twelve months and a forecast of 41% revenue growth for fiscal 2026. An InvestingPro tip highlights that net income is expected to grow this year, supporting the optimistic guidance.

Executive Commentary

CEO Christopher Holmes emphasized the company’s strong capital position, stating, "Our robust capital ratios provide us with the flexibility to support organic growth and pursue strategic opportunities." He also highlighted the successful integration of recent acquisitions, which has strengthened FB Financial’s market position.

Risks and Challenges

• Competitive pricing pressure in loans and deposits could impact margins.
• Revenue miss suggests potential challenges in market conditions or sales execution.
• Macroeconomic uncertainties, including geopolitical tensions, may affect future performance.

Q&A

Analysts questioned the company’s ability to maintain margin stability amidst competitive pressures. Executives responded by highlighting strategic initiatives to enhance loan yields and deposit growth, while continuing to focus on customer satisfaction and operational efficiencies. The company’s commitment to shareholder returns remains evident, with management aggressively buying back shares and raising dividends for eight consecutive years—the latest increase of 24% brings the current yield to 1.5%. For investors seeking deeper insights, InvestingPro offers a comprehensive Pro Research Report on FB Financial, one of 1,400+ US equities covered, transforming complex Wall Street data into clear, actionable intelligence. The platform provides access to additional ProTips beyond the two mentioned here, along with Fair Value analysis and advanced financial health scores.

Full transcript - FB Financial Corp (FBK) Q1 2026:

Operator: Good morning everyone, and welcome to the FB Financial first quarter 2026 earnings call. Please note this event is being recorded. At this time, I’d like to turn the conference call over to Rachel Dereski with FB Financial. Please go ahead.

Rachel Dereski, Investor Relations, FB Financial Corporation: Good morning and welcome to FB Financial Corporation’s first quarter 2026 earnings conference call. Hosting the call today from FB Financial are Chris Holmes, President and Chief Executive Officer, and Michael Mettee, Chief Operating and Financial Officer. Please note FB Financial’s Earnings Release, supplemental financial information, and this morning’s presentation are available on the investor relations page of the company’s website at www.firstbankonline.com and on the Securities and Exchange Commission’s website at www.sec.gov. Today’s call is being recorded and will be available for replay on FB Financial’s website approximately an hour after the conclusion of the call. At this time, all participants have been placed in a listen-only mode. The call will open for questions after the presentation. During the presentation, FB Financial may make comments which constitute forward-looking statements under the federal securities laws.

Forward-looking statements are based on management’s current expectations and assumptions and are subject to risks, uncertainties, and other factors that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond FB Financial’s ability to control or predict, and listeners are cautioned not to put undue reliance on such forward-looking statements. A more detailed description of these and other risks that may cause actual results to materially differ from expectations is contained in FB Financial’s periodic and current reports filed with the SEC, including FB Financial’s most recent Form 10-K. Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise.

In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to comparable GAAP measures is available in FB Financial’s earnings release, supplemental financial information in this morning’s presentation, which are all available on the investor relations page of the company’s website at www.firstbankonline.com and on the SEC’s website at www.sec.gov. I would now like to turn the presentation over to Mr. Chris Holmes, FB Financial’s President and CEO.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: All right. Good morning. Thank you, Rachel. Thanks to everybody for joining the call this morning. Always thank you for your interest in FB Financial. I want to start today’s call by calling attention to a distinguished award the company received recently and what it means to FirstBank. The bank received J.D. Power’s Retail Banking Award in the South Central region for placing number one among the banks in the region for customer satisfaction. J.D. Power surveyed over 100,000 banking customers across our region, surveying them about their satisfaction with their primary bank. When the results were tabulated, FirstBank ranked number one on the list for overall customer satisfaction. FirstBank also ranked number one in the subcategories of client trust and quality of our people. What made this award even more gratifying was that we weren’t even aware that our customers were being surveyed.

The ranking is a result of our natural service behavior and not something that resulted from any special preparation. As bank investors, we watch every basis point of margin, efficiency, return, et cetera, and every penny of EPS, where we can struggle to find effective relative measures of the actual driver of superior sustainable bank performance, which is our ability to attract, satisfy, and retain bank clients. This award is independent, tangible verification of what I’ve known about our team. That’s when stacked against the competition, we win. I want to thank our clients who participated in the process and our associates who are the FirstBank story and who take such outstanding care of our clients. You are literally the best at what you do, and I’m proud to be on the team with you. With that, now let me get into the quarter.

We reported EPS of $1.10 and adjusted EPS of $1.12 and have grown our tangible book value per share, excluding the impact of AOCI, at a compounded annual growth rate of 11.6% since our IPO back in 2016. Our net income was $57.5 million, or $58.3 million on an adjusted basis, and our pre-tax, pre-provision net revenue, or we may refer to as PPNR during the call, was $77.2 million, or $78.2 million on an adjusted basis. Even with two fewer days in the quarter, we were able to grow our pre-tax pre-provision net revenue versus the prior quarter. Revenue declined slightly during the quarter, but expenses had an even greater decrease to keep our net income and profitability metrics in line with our expectations. We kept our PPNR return on average assets near our benchmark range of 2%, coming in at 1.93% or 1.95% adjusted.

We’re pleased with our returns, and as Michael will cover in his comments, our growth gained momentum during the quarter, giving us optimism about the remainder of the year. We’re now a quarter of the way through 2026. We continue to believe it’s a great time to be at FirstBank. Our strategic pillars of award-winning client experience, high associate engagement, operational efficiency, and elite financial performance are all working together to grow our franchise and position us for continued success. When you add that our geography is one of the best in the country and our size is optimal to allow for both capacity and agility, we’re optimistic about our path to creating shareholder value, both short-term and long-term. Before I turn the call over to Michael, I do want to acknowledge that, like all of you, we’re following the macro events of our times closely.

Most of these things, like geopolitical conflicts, technology disruptions, economic shocks, and interest rate volatility, are things that we have to react to versus exercise control over. What we do control is our position in preparation for a range of circumstances and risk scenarios with active and prudent management of our robust capital, robust liquidity, and our high reserve levels. We remain in a position of strength and believe that we have the ability to perform through the various economic cycles as they come. With that, I’ll now turn the call over to our Chief Financial and Operating Officer, Michael Mettee, for some more color on the quarter.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Thank you, Chris, and good morning, everyone. I’ll begin my comments this quarter with the balance sheet. While we started the year at a slower pace than we originally anticipated, with annualized loan growth of approximately 4%, deposit growth around 5%, we are seeing momentum build across the business in the right areas. Although these growth levels fell at the lower end of our internal expectations, the underlying activity and pipeline trends give us confidence that we are positioned to execute on the core fundamentals Chris outlined and drive improved results as the year progresses. During the first quarter, we began to see a more intense wave of competitive pressure, particularly around pricing. While profitability will always remain central to our decision-making, we’re focused on striking the appropriate balance between disciplined returns and sustainable growth.

Our strategy remains centered on building deep, long-term customer relationships that create enduring value for our shareholders. We will continue to be disciplined in acquiring new relationships and remain committed to protecting and strengthening our existing ones, always with a focus on delivering value to both our clients and shareholders. The company has the size and scale to compete effectively and win attractive deals when it makes sense to do so, and do not hesitate to act aggressively in competitive situations when warranted. Ultimately, our value proposition is not about being the low-price provider. It’s about delivering peer-leading customer satisfaction through strong financial advice and trusted services. By keeping the client at the center of everything we do, we believe we will continue to drive improved profitability over time and create sustained long-term value for our shareholders.

On that front, March was our strongest month of the quarter, with upper single-digit loan growth and meaningful expansion in our loan pipeline. As we move through the second quarter, we’re seeing the momentum continue with a portion of that activity beginning to translate into on-balance sheet growth. We expect second quarter balances to reflect continued improvement, with additional pipeline conversion extending into the third quarter and larger volumes building into the back half of the year. On a full year basis, we continue to expect both loan and deposit growth in the mid to high single-digit range, with growth increasingly weighted towards the second half as momentum builds. Turning to earnings for the quarter, pre-provision net revenue totaled $77.2 million, or $78.2 million on an adjusted basis, compared to $71.1 million in the prior quarter and $77.1 million on an adjusted basis.

Net income also improved quarter-over-quarter, despite the shorter reporting period, coming in at $57.5 million or $58.3 million on an adjusted basis. Our net interest margin for the quarter was 3.94%, representing a modest decline, driven primarily by balance sheet mix and the full quarter impact of rate cuts implemented late in the fourth quarter. Total loan yields for the quarter were 6.51%, with yields on new production toward the end of the quarter running a bit closer to 6.6%. On the deposit side, total costs declined to 2.27%, while rates on new production were approximately 2.7% around quarter end. Both loan and deposit yields were modestly lower than the prior quarter, reflecting benchmark rate cuts across the variable rate portions of our balance sheet.

As we move deeper into 2026, we expect some additional pressure on margin as competitive dynamics remain elevated and we continue to pursue targeted growth opportunities in our market. Based on current conditions, we would expect full year net interest margin, excluding loan accretion, to be in the range of 3.76%-3.8%, representing a modest decline from our prior guidance. We would expect second quarter margin to trend towards the lower end of that range before stabilizing as the year progresses. Finally, we would note that the interest rate environment remains uncertain, particularly around the timing and magnitude of future benchmark rate movements. As a slightly asset-sensitive balance sheet, changes in rates can be both favorable and unfavorable, depending on the direction and speed of those moves.

While our margin outlook assumes a continuation of current conditions, modest rate actions, either higher or lower than current levels, will impact some of the competitive and growth-related margin pressure we’ve outlined. We’ll continue to actively manage the balance sheet and pricing strategy to position the company as effectively as possible across a range of potential scenarios. Non-interest income declined $2.4 million during the quarter, primarily driven by lower secondary mortgage volume, as well as absence of several non-recurring items recognized in the prior quarter, including a higher BOLI benefit payout. In addition, the quarter reflected fewer calendar days relative to the prior period, which modestly impacted overall fee generation, particularly within mortgage-related activity. With mortgage, we saw a really strong start to the quarter, and that slowed as the quarter progressed due to the increased interest rate volatility and heightened uncertainty in the housing market and really the world economy.

Shifting rate expectations and broader market dynamics impacted borrower sentiment and transaction activity, which weighed on production as rates moved throughout the quarter. Mortgage revenue also tends to exhibit some seasonality, with activity typically building as we move further into the year. On the expense side, first quarter non-interest expense totaled $95.2 million, representing an approximate 11% decline from the prior quarter, or roughly 7% on an adjusted basis. Personnel costs moderated as compensation-related accruals returned to a more normalized run rate, and merger and integration expenses declined as we completed the majority of costs associated with the Southern States acquisition. We also saw quarter-over-quarter reductions across several other expense categories as the year reset and teams maintained strong expense discipline.

As a result, our efficiency ratio for the quarter was 55.2%, or 54.3% on an adjusted basis, driven in part by our Banking segment, which delivered an adjusted efficiency ratio of 50.9%. Looking ahead, we remain focused on disciplined expense management, with Banking segment non-interest expense expected to range between $325 million and $335 million for the year, and a total company efficiency ratio anticipated to remain in the low 50% range. Turning to credit, our provision expense for the quarter totaled approximately $3 million, with our allowance coverage ratio ending the period at 1.49% of loans held for investment. Net charge-offs were modest at an annualized rate of 11 basis points, which was a slight uptick for us, but were driven by a small number of isolated borrower-specific situations rather than any deterioration tied to broader economic stress.

In evaluating the allowance for the quarter, we gave additional consideration to potential macroeconomic events stemming from the conflict in the Middle East. We reviewed the most relevant economic forecast, assessed our portfolio for direct exposure to the recent increase in energy prices. While it remains early to fully understand the broader downstream impact of operating companies, our analysis focused on a limited set of industries most sensitive to near-term energy price shocks. Our exposure to those sectors remains minimal, and we believe our reserve levels are appropriate given the current risk profile of the portfolio. With respect to capital, we continue to be in a very strong position, supported by solid capital ratios and a robust liquidity profile that provide meaningful flexibility. During the quarter, we were opportunistic in repurchasing shares amid periods of market volatility, and we remain well positioned to deploy capital thoughtfully as opportunities present themselves.

Our capital ratios continue to reflect that strength with a common equity Tier 1 ratio of 11.5%, a Tier 1 leverage ratio of 10.4%, and total risk-based capital of 13.4%. This strong capital foundation allows us to remain flexible in supporting organic growth, pursuing strategic opportunities, and returning capital to shareholders where appropriate. In closing, I want to echo Chris’ congratulations to our team on earning the J.D. Power recognition. This award is a direct reflection of our associates’ commitment to our core values and the strength of our franchise, and it reinforces our focus on delivering consistent value to our customers, shareholders, and communities. With that, I’ll turn the call back over to Chris.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: All right. Thanks for the call, Michael. Thanks again to everyone joining the call this morning and for your interest in FB Financial. Operator, at this time, we’d like to open the line for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Dave Rochester with Cantor. Please go ahead.

Dave Rochester, Analyst, Cantor: Hey, good morning, guys, and congrats on the award. That sounded very impressive.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Good morning, Dave. Thanks very much.

Dave Rochester, Analyst, Cantor: Hey, Michael, your comments on the March momentum on loan growth and the guide for the year sounded positive, but it sounds like you’re also expecting those competitive pressures to continue. I was wondering where you’re seeing the bulk of those pressures coming from. Is it larger banks, smaller banks? Is there any variance by market that’s noticeable? Are you assuming more elevated paydown activity to continue as well? I guess you’ll just originate more to offset that to get to that mid- to high-single-digit range. Just any thoughts there would be great.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. Good morning, Dave.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Some of the optimism, right, is the pipeline continues to build. You can see the closing dates in sight for a lot of those deals. I would say on the loan side, competitive pressure is generally larger institutions. We’re seeing it really across the board. Nashville is obviously pretty competitive, but we’re seeing it in a lot of our large metro markets, whether that’s Birmingham, Huntsville, Knoxville, Memphis. We saw some large payoffs in Memphis where competition took us out on some deals this quarter. It really is across the board. On the deposit side, I would actually say it’s both large and smaller. We see community banks that have gotten really aggressive, specifically in the 12-month CD space, even interest checking rates that will make you blush a little bit.

For the larger institutions, we’re seeing money market rates well above 4% from regional banks that actually we haven’t seen advertise and market in quite a while. I’d say it’s coming from both sides. The optimism is the team has put in the work, has been working with our clients, both our existing clients and new prospects. There’s a lot of kind of economic excitement. Even with everything going on in the world, people are pretty positive about the economic environment. Deal flow is happening, and I would say that’s across the company, whether that’s in our communities of 7,000 people or our metros of 4 million people.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. Dave, you mentioned paydowns, and we’ve seen some of those both second half of last year and into this year, and do we think that’ll continue? We do. There will be some of that. Michael mentioned a couple of payoffs. We’ll continue to see some of those. It’s okay when we know about them. It’s the unexpected ones that get you. We do expect to continue to see those. As you’ve heard kind of where the pipeline is and what things look like, we’re considering that as we’re talking about net growth.

Dave Rochester, Analyst, Cantor: Okay, great. That’s great color, guys. Appreciate that. Maybe just one more, just on the talent pipeline. Obviously, a lot of disruption in the market, you guys have talked about this before. Seems like a good opportunity, but of course, everybody’s trying to retain their people. Can you just give us an update on what you’re seeing there, the dynamics with conversations that are going on right now, and how confident are you guys that you might be able to pick up some value add there over the rest of the year? Thanks.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. It’s a daily topic here, Dave, right, is kind of offense and defense with regard to talent. I’d say conversations have heated up. We added, let’s say, 15 revenue producers in the first quarter. Yet we also lost a couple, and some of that is people going to other institutions, and some of it’s retirement, things like that. These are really waterfall events. It’s not necessarily who you think is acquiring your talent, but when one person moves, it opens up a door for someone else. You’re constantly trying to keep your key players in your key markets, and that’s both large and small, too. I think a lot of it people equate to, I’ll call it Nashville or like a Huntsville, but it’s happening across the board, in places like Jackson, Tennessee, Birmingham, Atlanta. Feel good about the conversations.

We’re hot and heavy on a lot of recruiting. It’s more important to me that we have the right people that fit our culture and our business opportunities versus putting numbers on a page. Even though I just quoted 15, it’s much more important that those were the right people. That’s where we continue to be focused, and we think we’ll get more than our fair share of those right people as we move forward.

Dave Rochester, Analyst, Cantor: On a net basis, that sounds really positive in terms of the adds that you just brought in in the first quarter. Just curious, what areas are they in? Are they primarily loan producers, deposit guys? Is it commercial? Where are you seeing those adds?

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. One point of clarity when I’m recruiting is I expect all our bankers to be bankers, loans and deposits. Generally not bringing in just loan people. Sometimes bring in just deposit people. Even those are equipped to take care of their clients. It’s eight or so relationship managers, couple mortgage people, and a couple people that are focused really on consumer and small business relationship development. We do have a couple, I guess, loan-heavy businesses, right? Yeah, it’s positive. We think we can continue the momentum.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. David, I think it’s always, I think, a topic, and it’s a little like the customer service topic I talked about. It’s important. One thing I would say about this one, it’s kind of hard to get relative measures on talent because folks look at it differently. For us, it’s become something that we know that folks want to try to get their arms around, but it’s not really a key performance metric for us. We don’t have a goal where we say we’re going to hire this many this quarter, or this many the next quarter. We’re looking for the right people at the right time, and there is a lot of movement.

The one thing I would say is probably more movement and more recruiting going on, particularly in our metropolitan markets, but Michael said even in some of our smaller markets than we’ve seen across the board. Typically, you see people going from smaller banks to larger banks, but we’re seeing some larger banks, some much larger than we are, that are coming in and recruiting talent from banks even smaller than we are. I think it’s an interesting time. Again, Michael said it. You have to play offense and defense all the time, and defense is best played by making sure you’ve got a great place to work, making sure you’ve got engaged folks, and making sure that you’re taking good care of them. That’s as important as anything. That’s how we view it.

Dave Rochester, Analyst, Cantor: All right. Great. Thank you, guys. I appreciate all the color.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Sure.

Thanks, Dave.

Operator: The next question comes from Russell Gunther with Stephens. Please go ahead.

Russell Gunther, Analyst, Stephens: Hey, good morning, guys.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Good morning, Russell.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Morning, Russell.

Russell Gunther, Analyst, Stephens: Morning, Chris. Morning, Michael. I wanted to ask on the expense side of things. Really strong first quarter results. You guys have reiterated the Banking segment expense guide for the year. It would just be helpful to get some color in terms of what’s driving that sort of pickup over the course of the year.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. There’s a dose of expectation around performance picking up. We’re a performance-based company when it comes to compensation. We want to expect peer-leading returns, and so that drives that number a little bit higher as we look out over the year. Some of that’ll come with growth there, Russell. There’s not any expectations of huge technology investments or anything like that. It’s more just maintaining our run-rate expectations and performance-based comp-type stuff moving higher throughout the year.

Russell Gunther, Analyst, Stephens: Okay. Thanks, Michael. Just an adjacent follow-up. I’m curious, deal synergies were fully realized this quarter. In aggregate, did they come in in line with what you were expecting or maybe better than modeled? Bigger picture, what’s a good kind of core expense growth rate or range to think about for FBK?

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. Actually, I would say from a combination perspective, we landed pretty much right on top of our deal expense number. Maybe ±$100,000 or $200,000 or so.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: It was really close, except on just a shade. As Michael said, the difference is really immaterial because it’s like on a fairly large number, it’s down less than a million bucks. I actually think it may be just a hair under, but it’s right on the number.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. I’d say we haven’t done a real merger in five years.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: That’s right.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: It’s good to kind of dust that off and resharpen the knife a little bit. Yeah, we’re around expectations. I think the proof, right, Russell, is getting to that kind of 50% range by year-end, as we continue to efficiency ratio to year-end as we get to the combined company, make sure the revenue engine’s still going, which is really important. When you say synergy, I think about revenue as well, and maintaining our ability to grow in our legacy Southern States markets. Yeah, I think we’re in a good spot there. I’d say, 4%-5% kind of core expense growth as you look forward, if I think about 2027, which is a long way away. That would not include back to Dave’s question, talent acquisition and opportunities to really add teams and scale.

We’ll maintain our expense discipline as we kind of look forward.

Russell Gunther, Analyst, Stephens: Got it. Okay. Thank you. Just last question for me would be circling back to the loan growth side of things, the mid versus high single digits. What are the largest drivers that would get you to the high end versus the low end?

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. Some of it’s just the time of the quarter, I guess. If you think about the year, it is a competitive environment. People step in, other companies step in, and sometimes, we’ll get really aggressive and some customers are more price sensitive than others. You can see large deals move one way or the other. Our pipeline, when I look at it on confidence interval, we’re pretty confident about where we are. You could see some payoffs come in, like Chris said, the unexpected ones, which you hope doesn’t happen. If you’re really servicing your clients, you should know, but sometimes we’re all surprised.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. The other thing I would say, Russell, it goes a little bit like we talked about on the people side, in that, as bankers move, that also makes customers more vulnerable to changing banks. Generally, as we’re rolling forward, we’re looking at what we have, customers that we have, and things that we know are in a pipeline. Part of the optimism is we also are having more and more conversations with really, really solid customers that have big balances, both in loans and deposits, that are in play. You certainly don’t bat 1,000 on those, by a long shot. The more at bats you get, the more hits you get. We’re getting more and more at bats.

There’s some optimism around that because we’re having a lot of those conversations now. You think some of those are going to hit as you get later into the year and as you get into next year. That seems to be picking up momentum.

Russell Gunther, Analyst, Stephens: Okay. That’s great, guys. Thank you very much for taking my question.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Sure.

Operator: The next question comes from Stephen Scouten with Piper Sandler. Please go ahead.

Stephen Scouten, Analyst, Piper Sandler: Hey, good morning, guys. Appreciate the time. I guess one other kind of maybe point of clarification on loan growth. Could you give us a feel for kind of maybe the cadence of growth? Obviously, you said the pipelines and growth picked up in the back of the quarter, but still a little bit below your expectations. Was the cadence just that things started off a little slower? Did you see any sort of demand pullback with all the macro and the geopolitical events? Talked about payoffs, but do you have any sort of numbers there in terms of quarter-over-quarter payoffs or year-over-year that, if that was part of the driver for the slightly slower than expected growth, maybe?

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. From a loan cadence, I think I’d describe things as fairly steady and normal, with the exception of a few big balance things. We did have at least a couple of payoffs that were just big balance things. We’ve talked about that before, and we anticipated some of that. Other things, you do see a little bit of push down the calendar, if you will, or push forward some. Maybe that’s related to just some uncertainty. I wouldn’t say that’s a material event. I would just say that, as we have continued to do what we do, make changes here and make changes there. Remember, we had the disruption, second half of last year, of integrating FirstBank and Southern States, and that does create a little bit of distraction.

As you really get back on a good cadence, to use your word there, you just begin to see the momentum pick up. I wouldn’t say there’s anything unusual about it, other than you can see things bump a little bit, maybe related to, I call it economic uncertainty. Again, I wouldn’t read too much into that. Those tend to be small bumps, not big bumps, like I said. It could bump 30 days, but that could move it between quarters. We do see that, but we see that every quarter.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. I’d say for Russell Gunther, timing-wise, I’d say if you’re sitting here in January, as you’re saying, "Wow, it’s a really tough start to the year here.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. At the end of January, you’d look at it and go, wow, it’s starting to feel weird.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah, especially coming off what I’d say were elevated payoffs in December. We’re running $600 million or so in payoffs and amortization a quarter, Stephen. You also have people paying down lines, and then you have new lines being extended and paying up. It’s a little bit of a moving target. That kind of $500 million-$600 million range is where I expect payoffs and pay downs to occur kind of on a quarterly basis, which means you got to be growing $600 million-$700 million to get to that mid-to-high single-digit % plus increases in lines and things of that nature. The first quarter was a bit elevated, but not so much over the fourth quarter, because the fourth quarter was also elevated.

Stephen Scouten, Analyst, Piper Sandler: Okay. Really helpful, Cole. Appreciate that. On the updated NIM guidance, only a couple basis points below kind of where you were previously, just kind of wondering, what, if any, rate cuts do you have built into that guidance? I know you said maybe not an overly material change one way or the other, but would expect if we didn’t get cuts, maybe that could lead you to the higher end of the range. The reason for the decline, would that be just increase in deposit pricing pressure? Is that the biggest delta, maybe quarter-over-quarter?

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah, you nailed it. We have a rate cut in our NIM guidance. That’s what we had when we talked about the full year in January. Yeah, and like you said, it’s basically a basis point or two lower. I would call that pretty stable. Reality is, if you look at the forward curve, market would say it’s probably rates up at this point, right? We’re slightly asset sensitive. It’s probably worth kind of three to four basis points in margin. If I think about what you just said, deposit pressure and thinner loans, you kind of get back to the same place. There’s probably a little bit of upside in flat to up rate scenario. I would say any, what I’ll call stairstep rate movement, either direction, I think, yeah, is manageable.

It’s the elevators up and down which really create a lot of volatility in your margin. The team will be able to manage through either way. We certainly prefer that stairstep. Chris says to our team all the time, "It’ll never get easier than today to get deposits." We expect that to continue to be challenging, in the right environment. Now you’ve got Treasuries are attractive again with where rates are, and so that’s a competitive pressure outside of the banking system. As well as, companies need to fund loan growth and economic expansion. It’s a competitive market. It always is, but it’s been a little bit more fierce as we turn the calendar.

Stephen Scouten, Analyst, Piper Sandler: Got it. Makes sense. Maybe just one housekeeping question, just on the tax rate. Anything to note there? It looks maybe slightly elevated relative to the past this quarter.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah.

Stephen Scouten, Analyst, Piper Sandler: Do you have anything about that?

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: I think it’s probably in this kind of 20%-22% range is our normal operating environment. We had some franchise tax, an excess tax that’s kind of local state-related that picked up this quarter. That drove the higher number. There’s community opportunities where we can invest in our communities that can move that number around a bit. We do those when the deals make sense. You can see that move around. That’s what you saw late last year. We’re pretty normal range here, maybe slightly lower on a go-forward basis.

Stephen Scouten, Analyst, Piper Sandler: Got it. Appreciate it. Thanks so much for the time, guys.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Thanks, Stephen.

Operator: The next question comes from Brett Rabatin with StoneX. Please go ahead.

Brett Rabatin, Analyst, StoneX: Hey, guys. Good morning.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Good morning, Brett.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Brett.

Brett Rabatin, Analyst, StoneX: Wanted to start off with just a strategy question. You guys are now $16.5 billion in assets, headed to $20, I would guess, over the next couple of years organically. I know, when you think about FirstBank, it’s very community bank oriented. I wanted just to get an idea, one, from a philosophy perspective, would you guys start to think about specialized lines of business, equipment finance, those kinds of things that might further drive the loan pipeline? Just secondly, you guys didn’t talk about the First Bank Way. Wanted to see where you guys were in your evolution of that, and just if there’s anything left that you guys were trying to do in terms of the franchise and how you do business.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah, Brett. I mean, I’m afraid maybe one of our conference rooms is bugged. You’re hitting on some topics that have been heavy topics over the last two months. Let me see if I can just kind of run down and talk about some of those. You label us as community bank oriented, which I would give a strong indication that that continues, a strong message that that continues. That will continue. You heard us start off by talking about what our customers think about that. That was J.D. Power, but if you look at Greenwich Information, that’s very strong as well. We think we have a formula there and sort of a special sauce in how we run, and our community orientation is really a key ingredient there.

It’s not the only ingredient, but it’s a key ingredient. We’ll continue that as we scale. I’ve spent a lot of time strategizing in the last 60 days. Part of that strategy is how do we maintain that as we scale the company? That’s really important to us, and you’re going to continue to see that. You also mentioned specialized lines of business. Part of what we’re working through is how do we add some specialized lines of business. We have some today, MH, manufactured housing, being one, for instance, that we excel at. How do we continue to add some other lines of business like that and continue that community bank orientation, okay? That’s an important part of the strategy.

What you labeled as First Bank Way, sometimes internally, we’ll talk about our customer-centric business model. Those two overlap and can even be used interchangeably sometimes. Again, heavy focus on that very thing. We’ll continue to do that because that’s just making us better. Again, literally yesterday, we sat around the conference room, we’re talking about where we ranked in customer service. One of our goals for our executive team to hit our objectives for the year, we have to increase that score. Even though we’re number one, we have to increase that score by a certain percentage. That is a continuous process for us on how we basically keep that community bank orientation and continue to scale the company. That’s critical to us.

I’ll give you another line of business that we’ve added in the last 90 days, is the SBA line. Okay? We haven’t had that as a line in the company. We’ve dabbled, we’ve got just a few small SBA things out there that we had before this, but that’s now a line where we have an all-star that heads that, Lane Rhodes, who joined us. That’s another example. You’re going to see exactly what you described, where we continue that orientation, but we do continue to grow certain lines and some certain verticals.

Brett Rabatin, Analyst, StoneX: Okay. That’s helpful. The other question I wanted to ask was just around, there’s an obvious expectation that there’s going to be some market disruption in the Southeast with some of the recent transactions. Chris, would you view M&A as too distracting from here? I’ve had some color from some banks saying that they think focusing organically and looking to take advantage of maybe some of the other acquisitions that have happened here recently is a bigger opportunity. I just wanted to see if your philosophy had changed much, if any, around M&A and potential opportunities, particularly in maybe newer markets like North Carolina, et cetera.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah, again, man, I’m afraid you have us bugged here because it’s a frequent topic of conversation, is exactly that. With the organic opportunity, do we need to, or is it too distracting to do M&A? The answer for us is no, it’s not. We are very conscious of distractions ourselves. That does cause us to look at it strategically a little differently than we traditionally looked at it, and probably causes us to be even more careful and picky, choosy about what we do, because it needs to be both strategically compelling and financially compelling for us. You have to be careful about markets, okay? We can generally keep distractions away from markets that don’t have any involvement through overlap in a transaction. We can limit the distraction. Those are all the things we consider.

We will still keep that arrow in our quiver, and we could exercise that on a transaction at any point.

Brett Rabatin, Analyst, StoneX: Okay. Great. I appreciate the color, guys.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: All right. Thanks, Brett.

Operator: The next question comes from Steve Moss with Raymond James. Please go ahead.

Catherine Mealor, Analyst, KBW0: Good morning, guys.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Good morning, Steve.

Catherine Mealor, Analyst, KBW0: I want to start here, just following up on the loan pipeline here that you guys spoke is stronger. Just kind of curious where you’re seeing the pickup in demand by loan type, if you will?

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. Steve, I would say it’s across the board, but I would say, I’ll caveat that or a little bit more clear, it’s more in operating businesses. That’s really where we’ve been focused, is developing out that strength from a C&I perspective. If you look at where we’ve gotten smaller, a lot of that is kind of non-owner occupied CRE or construction over the last couple of years. Some of the pressure that we faced in payoffs this quarter and late last quarter was, if you think back that 2021 timeframe, a lot of growth out of the company, a lot of it was in that construction and non-owner occupied CRE space. You’re seeing that kind of roll off. We’re replacing it.

We’re still in those businesses and taking care of clients, and we still like those asset classes, but it’s not growing at the same velocity. It’s much more about operating businesses, and some owner-occupied real estate type of transactions.

Catherine Mealor, Analyst, KBW0: Okay, great. Appreciate that color there. Second question for me here, just on the margin. You talked about the core margin, just kind of curious as to where you’re thinking, any updated thoughts, I should say, on purchase accounting accretion here for the upcoming quarters?

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah, I think it’s going to be in that same kind of 15-17, 18 basis point range. I don’t think you’ll see it go up, unless we get even faster payoffs. I think it’s going to be pretty consistent here.

Catherine Mealor, Analyst, KBW0: Okay, excellent. One more question, just on capital here. You guys bought back late in the quarter with the pullback. Should we expect you guys to continue to be opportunistic? Sitting at 9.9% TCE, more favorable regulatory environment, do you guys press the gas on that a little bit more?

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. We’ll continue to be opportunistic, when it comes to buybacks.

We’re watching the volatility there. We usually regard that as opportunistic, and we really haven’t changed that stance.

Catherine Mealor, Analyst, KBW0: Okay. Well, great. I appreciate all the color here, and that’s all my questions. Thank you very much, guys.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Thanks, Steve.

Operator: The next question comes from Catherine Mealor with KBW. Please go ahead.

Catherine Mealor, Analyst, KBW: Thanks. Good morning.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Good morning.

Catherine Mealor, Analyst, KBW: All right, I’ve got one more on the margin, just on deposit cost. Do you have the spot rate of where deposit cost ended the quarter? Let’s just say we are in a position where we don’t have any more rate cuts until maybe the very end of the year, so basically no more for 2026. Do you think that your deposit costs increase from this kind of 2.80% interest-bearing level, or are you just more stable?

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. At 280 level. When we think about total new originations were 270. That’s probably on the low end, honestly. Like you said, of interest-bearing 283. I think you probably see those increase a little bit, given where you have to acquire new customers, Catherine. The market rate is significantly higher to acquire new customers. The goal there is to translate that into relationships over time and full operating business, and then you get back to more of an equilibrium. There’s a bit of a disconnect, reality-wise, of where you can fund the company, either through borrowing or brokered and wholesale, versus kind of where I’ll call the consumer retail commercial market is. It’s actually, I would say, significantly higher to go out and acquire new customers versus funding the bank. It’s a balance.

If rates are up or flat, Fed funds, I think you see competitive pressure pushing deposit costs modestly higher. Our goal is always to get the full relationship.

Catherine Mealor, Analyst, KBW: Got it. That new deposit cost of 270, does that include non-interest-bearing, or that’s just on new interest-bearings?

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: That’s inclusive.

Catherine Mealor, Analyst, KBW: Okay. That’s all in.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: All in, yeah.

Catherine Mealor, Analyst, KBW: That’s relative to your kind of 227. Your cost of new is still higher than, you know, where you are today.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: That’s right.

Catherine Mealor, Analyst, KBW: Which makes sense.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah.

Catherine Mealor, Analyst, KBW: Yeah. Okay.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah.

Catherine Mealor, Analyst, KBW: Okay.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: I will say this too, Catherine, just to clarify. The days, I think, of loading up on non-interest-bearing deposits and not paying your customers a lot of interest, we don’t really see that as a long-term thing. We obviously want all the operating accounts we can, but we also want a fair value proposition. With all these fintechs and competitive market, we don’t expect our customers to be asleep at the wheel, and we’re not going to try to nickel-and-dime them to 0. Yeah. That’s right. As a matter of fact, sometimes we’ll even wake them up intentionally and say, "Hey, we’ll give you a better deal." The days of those really cheap back books, we view that as quickly coming to an end, which changes a lot of competitive dynamics.

Just viewing our window strategically on how we’re thinking about it.

Catherine Mealor, Analyst, KBW: By product type, where do you think you see the biggest growth in deposits? Is that just interest-bearing demand?

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah, you’ve obviously been sitting in our treasury meetings and our pricing committee. We saw money market decrease this quarter because when we’re talking about the aggressive nature of other rate offerings. Yeah, there’s probably some work to do there just to get back to equilibrium on money market. CDs, we continue to see CD renewals, and new production CDs as a growth opportunity. We saw that in the back half of the year and through the quarter. We’ve been more in the short and long, kind of a barbell approach. We’re seeing a lot of competition in that middle ground, which I’ll call 12-15 months. CDs are an opportunity, but getting some of our money market business back is probably the biggest lever.

Catherine Mealor, Analyst, KBW: That makes sense. Great. Thank you.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Thanks, Catherine. Have a great day.

Operator: As a reminder, if you would like to ask a question, please press star then one to join the question queue. The next question comes from Christopher Marinac with Janney Montgomery Scott. Please go ahead.

Christopher Marinac, Analyst, Janney Montgomery Scott: Hey, good morning, Chris and Michael. Can you talk about the growth of securities as another tool to grow NII? I know it’s not the focus of loans and deposits as we are all talking about, but just curious if securities are a component of how you continue to grow revenue.

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. Good morning, Chris. The investment portfolio is about 9% of the balance sheet total assets. We’ve been as high in the past, that kind of 14% range. That really comes down to funding, in a lot of cases. There’s not a whole lot of times where I sit around and say, "Hey, we have excess deposits." To go and invest in investment portfolio, we’d much rather deploy through organic growth opportunities. That certainly is a lever to do that. We’ve been mainly in kind of floating-rate, government-backed stuff from an investment portfolio perspective. It’s been a higher-yielding asset than fixed-rate mortgages and things of that nature. We’ll continue to do that. It’s not top of the list.

We want to be organic in nature. If we stick at 9%-10%, or even if it went down a bit and liquidity levels remained in that 11% on-balance-sheet liquidity range, I’d be a happy person. Mainly we’re deploying through loan growth.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: ` tags. Wait, "Yeah, Chris, I’ll just add this." "When we’re looking at banks, when we’re valuing banks, and we see wholesale funding and sometimes then wholesale assets on the balance sheet, we quickly discount that to 0." "When we’re thinking about our own company, we don’t do that as a matter of practice." "We think, hey, to be successful and to continue to be creating value, we’ve got to be adding what we call customer." "That can take a lot of different forms, but I’ll broadly call it customer assets and customer deposits." "We think that’s what we do, and if we don’t continue to do that well, we won’t continue to be able to sit at this table." "There are times where we might leverage up for some specific reason, or, if we know something’s coming or something’s leaving, we will use that leverage." Wait, "And so" was removed. "And" was removed. Wait, "Yeah, Chris, I’ll just add this." "When we’re looking at banks, when we’re valuing banks, and we see wholesale funding and sometimes then wholesale assets on the balance sheet, we quickly discount that to 0." "When we’re thinking about our own company, we don’t do that as a matter

We keep a lot of dry powder there to use. We just don’t typically use it for revenue growth purposes. When we think about our portfolio, we don’t keep a very large investment portfolio, and basically, it’s simply a liquidity vehicle for us. If you also look at it in there, it’s very vanilla and liquid in terms of its marketability, because, again, that fits that same philosophy of we’re really trying to plow it into the assets that we think really grow our shareholder value.

Christopher Marinac, Analyst, Janney Montgomery Scott: Understood. Thank you both for that. Just a quick follow-up on new accounts that you’re opening, as you look at it internally, do you see net new account growth, and is there sort of a general pace that you’re looking for as the next several quarters and years play out?

Michael Mettee, Chief Operating Officer and Chief Financial Officer, FB Financial Corporation: Yeah. We actually have been quite successful in growing consumer accounts over the past year. It’s interesting, as we’re going through some of this generational shift, I don’t know what the youngest generation is now because I’m getting older, but I’m going to say adding millennials is a different structure, and you got to add a lot of those accounts for one baby boomer that may be passing away or what have you. That evolution of your accounts, you got to add a lot of smaller ones. We like that, actually. We like granular deposits and granular loans, so we’re all for it. It just takes a little bit more time to grow your balances. The number of accounts has been quite good.

The balance growth comes over a significantly longer period of time than adding $400,000-$500,000 deposit accounts, when they’re coming in $2,000-$3,000 chunks. It’s been positive. I’ll also say, back to Catherine’s question, we’ve seen some success in savings, in our savings account product, which is probably an odd thing for people externally to hear, but it helps add that younger generation. You got a savings account, it’s got a companion checking account, and it’s of interest to people that are not quite yet adults. It’s worked well for families as people move into the stages of life.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yeah. Hey, Chris, I want to just add one thing there. We have had good success at growing accounts, and still, about half our deposits are retail. We have a lot of small balance accounts, which Michael said, we love that construction on our balance sheet and the granularity that gives us and all the positive things that go with that. One of the other things we have done, which is not easy to do, and I won’t say we’re perfect at it, but we feel like it gives us a leg up, is traditionally in banking, we’ve counted accounts. Even some banks have gotten in trouble for that in terms of how they did that and how they motivated folks to do that. We’re very aware of that. We actually go through and define a relationship. We actually count relationships.

Because you can add accounts, but frankly, some of them aren’t very valuable, and they’re not really a relationship. We have moved into relationship counting. It’s paying some dividends, but we think it’s going to pay big dividends as we roll forward.

Christopher Marinac, Analyst, Janney Montgomery Scott: No, that’s great stuff. Thank you both for getting into that detail, and we appreciate you hosting us all this morning.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: Yep. Thanks, Chris.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Chris Holmes for any closing remarks.

Chris Holmes, President and Chief Executive Officer, FB Financial Corporation: All right. Thank you all for joining us. We always appreciate your participation and your interest. Any further questions from either anybody in the investment community or analyst community, you can reach out to us directly. Everybody have a great day. Thanks.

Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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