FB Financial Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Stephen Scouten - Piper Sandler - Analyst : Hey, good morning, everyone. I guess I would love to touch on kind of loan growth trends, what you're seeing kind of boots on the ground. Obviously, the markets are telling us one thing about uncertainty people are getting maybe a little bit more spooked about C&I lending just at a high level. So I'm wondering if you could give us some color kind of what you're seeing and hearing from your customers, how you feel about continued growth in C&I and kind of how you're thinking about loan growth for the rest of the year, given all the uncertainty?

Question: Stephen Scouten - Piper Sandler - Analyst : Got it. Okay. That's very helpful. And how about Nashville and Tuscaloosa in particular? I mean, I know it's still really early innings there as you continue to build out kind of in those new markets. But what are you seeing there, maybe even anecdotally and just kind of how you feel about the pace of expansion in those newer markets?

Question: Stephen Scouten - Piper Sandler - Analyst : Got it. Got it. And that new hire activity is helpful. I think -- if I'm looking at my notes correctly, you had nine new revenue producers in the fourth quarter as well and maybe like 32 for the year last year. So is that kind of a ratable pace at this point? Or did that slow with the Southern States merger, you kind of just continue to add personnel given all the excess capital and the desire to kind of continue to build the franchise?

Question: Stephen Scouten - Piper Sandler - Analyst : Okay. Great. And one just point of clarity. With the share repurchase, I mean, it looks like if I'm doing the math right, you bought back stock around $48 in the quarter, obviously, unfortunately, it's trading a bit lower than that today. And if I'm doing the math right, you have maybe $73 million left in that authorization. How should we think about the potential aggressiveness at these levels with the deal pending?

Question: Stephen Scouten - Piper Sandler - Analyst : Great. Appreciate the time as always.

Question: Brett Rabatin - Hovde Group - Analyst : Hey, guys. Good morning. I want to start off with the balance sheet. And last year, you started off the year kind of in the same way where the balance sheet overall is kind of flattish in the first half of the year and then the growth really took off in the back half of the year. And with the deal pending, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 1:00PM, FBK.N - Q1 2025 FB Financial Corp Earnings Call it kind of looks to me like you're managing the deposit costs. Obviously, you'll have some liquidity with the deal. You use some during the quarter with cash balances lower. Should we expect 2Q to be similar and you guys are kind of just managing deposit costs until the deal closes? Or should we expect stronger balance sheet growth irrespective of the transaction?

Question: Brett Rabatin - Hovde Group - Analyst : Okay. That's great color on that. And then the other question I wanted to ask was just around construction. And I think this is the first quarter in at least the last four or five that you've actually had an increase in commitments to construction, and it worries me a little bit that Nashville wants as many hotel rooms as they do to host the Super Bowl, but we'll see how that plays out. Just wanted to hear what you guys thoughts on the the increase in construction commitments and just if you think there's opportunities in that particular bucket from here?

Question: Russell Gunther - Stephens - Analyst : Hey, good morning, guys. On the margin, so the legacy FBK near-term outlook, when could you just let us know what you're contemplating from a Fed cut and shape of the curve perspective in there? And then second part, the kind of pro forma NIM guide around 3.60%, does that consider plan to liquidate the target securities portfolio and either reinvest higher or pay down borrowing?

Question: Russell Gunther - Stephens - Analyst : Yeah, no, I fully understand and appreciate the color and your guys' thoughts there. Maybe then switching gears to fee income and the mortgage banking outlook, you addressed the somewhat stronger performance this quarter. How are you guys thinking about that in 2Q relative to the 1Q results and then the impact that might have on the aggregate noninterest expense guide for 2Q?

Question: Russell Gunther - Stephens - Analyst : Got it. Okay. And then just last one for me, sort of on your charge-off expectations for the year. Last couple of quarters have been really credit specific. So just curious as to line of sight you have going forward? And then if there were to be negative surprises or weakness related to the current macro volatility, where would you be most concerned about that showing up in your book?

Question: Catherine Mealor - KBW - Analyst : Thanks. Good morning. I Just have one follow-up question on expenses. You kind of came into the high end of the range that you gave last quarter, Michael. And then I feel like for the full year, you had been talking about a 4% to 5% kind of growth rate. But if we look at the range of expense guide that you gave for next quarter and just bring that for the full year, it looks like we're now at like around a 9% or so growth range. And so just kind of curious where that or where the higher expenses is coming from? I'm assuming it's just from the hires that you continue to have. And so just curious if that does anything to kind of forward thinking on efficiency or with that higher expense level, I'm assuming we should assume revenue comes pretty quickly with it. But just kind of curious what maybe changed since last quarter.

Question: Catherine Mealor - KBW - Analyst : There were a lot of questions before me, so I was able to do a little work.

Question: Catherine Mealor - KBW - Analyst : Okay. That's helpful. So don't take this $66 million to $68 million run rate into next quarter and then grow that. We might even kind of that come to the low end of the range as we get to the back half of the year.

Question: Catherine Mealor - KBW - Analyst : Okay. That's great. Yes, it definitely does. Okay. That's great. And then I think you touched on this a little bit earlier, too, but just on the growth piece, can you help us just kind of think about the risk of CRE paydowns as we get to the back half of the year and how sensitive do you think that is to the 10-year and kind of any large payoffs do you see kind of a head that may offset some of the new origination growth that you're seeing?

Question: Catherine Mealor - KBW - Analyst : Great. Thank you. And our condolences to Jim Ayer's family and friends. I really enjoyed working with him over the years. And he does leave an incredible legacy. So I appreciated your comments at the start of the call, Chris. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 1:00PM, FBK.N - Q1 2025 FB Financial Corp Earnings Call

Question: Christopher Marinac - Janney Montgomery Scott - Analyst : Hey, thanks. Good morning. Chris, it's been two weeks since our last call with you and all of this external noise. I'm just curious to what extent this may or may not influence kind of how you think of the reserve future quarters. And I appreciate the detail on the slides about how you allocate. I'm just kind of curious if that is going to lead to behavior change for you or even to what you see your customers doing these next several months?

Question: Christopher Marinac - Janney Montgomery Scott - Analyst : Great.

Question: Christopher Marinac - Janney Montgomery Scott - Analyst : Great. Thank you so much for that color. And I guess my only follow-up just is I know it's early, but if you think of a range of outcomes, is it possible that customers want to build more lines of credit with you and/or tap those as we head into the next few months?

Question: Steve Moss - Raymond James - Analyst : Hi, good morning. Just following up on Michael's comments from earlier with regard to the loan pricing. It sounds like in terms of loan yields going forward here, I mean, with the expectation of that rate cut those will be coming down. But just curious where are new loans coming on the books for these days?

Question: Steve Moss - Raymond James - Analyst : Okay. Great. And then I guess just in terms of any -- it sounds like you guys are not willing to -- or not looking to hedge the balance sheet in any way just to maintain kind of fixed and floating rates position that you guys have versus putting on swaps or anything synthetic to maybe make yourselves liability sensitive or anything of that nature? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 1:00PM, FBK.N - Q1 2025 FB Financial Corp Earnings Call

Question: Steve Moss - Raymond James - Analyst : Okay. Great. Well, that's everything for me. I really appreciate all the color there.