FB Financial Corp Q2 2024 Earnings Call Transcript

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

Question: Brett Rabatin - Hovde Group LLC - Analyst : Hey, guys, good morning. I wanted to just start on deposits, and you referenced in the press release the three depositor relationships. Can we talk about the net versus the gross and how much those -- how much might have moved out relative to those larger deposit relationships? And then maybe any mix shift change? It was interesting that your interest-bearing checking was up quite a bit your Money Market was down. Was there any reclassification or maybe talk about the net versus the gross trends in the quarter? Thanks.

Question: Brett Rabatin - Hovde Group LLC - Analyst : Okay. That's helpful. And then what's your strategy from here? I mean, your cost of funds is still a little bit lower than some peers and I know some banks have said that they've been able to maybe tweak down their highest rate offerings. But I still see locally here in Nashville, around 5% CD money et cetera. What's your strategy? And is the margin guidance for it to be a little bit lower, slightly lower in the back half of the year? Is that due to you expecting continued increases or increases and the cost of funds relative to your stability in the second quarter?

Question: Brett Rabatin - Hovde Group LLC - Analyst : Okay. That's great. If I could sneak in one last one. Just, Chris, you sound, I would say, overall more optimistic thematically, maybe economically about your prospects on capital. When you guys continue to buy back stock. I mean, obviously you've got excess capital, or maybe do you hold it with some watching the political landscape potentially giving you opportunities with M&A if there might be regime change later this year?

Question: Brett Rabatin - Hovde Group LLC - Analyst : Okay. That's great color. Thanks so much, guys. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 16, 2024 / 1:00PM, FBK.N - Q2 2024 FB Financial Corp Earnings Call

Question: Christopher Marinac - Janney Montgomery Scott - Analyst : Hey, thanks. Good morning. Chris, I want to go back to the public funds and the comments that you and Michael made, if you think about them being sources of payroll, the other payroll clients that you have, they're not public funds, do you pay them a similar rate or do you pay them less? Because I'm curious if you can replace those public funds down the road with either new customers or certainly merger partners that you find next several years?

Question: Christopher Marinac - Janney Montgomery Scott - Analyst : Great. Thank you both for that. I appreciate. And then just a quick reserve question. What do you see from the external factors that kind of help you build reserves? Do you see anything even in the month of July that would support more reserve build this quarter?

Question: Christopher Marinac - Janney Montgomery Scott - Analyst : Great, Chris. Thank you, Michael, very much. Appreciate it.

Question: Steve Moss - Raymond James Ltd - Analyst : Good morning. Maybe just starting here with going back to the margin for a moment. Does your guidance here for the second half of the year, assume any rate cuts?

Question: Steve Moss - Raymond James Ltd - Analyst : Okay. And just judging by the balance sheet remixing and especially on the deposit side, are you guys more asset-sensitive today than maybe a year ago?

Question: Steve Moss - Raymond James Ltd - Analyst : Okay, great. Appreciate that. And then in terms of on the lending side, I noticed in on the loans by market, your specialty lending, our bucket continues to build. And just kind of curious, you know, maybe some color on the underlying drivers there? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 16, 2024 / 1:00PM, FBK.N - Q2 2024 FB Financial Corp Earnings Call

Question: Steve Moss - Raymond James Ltd - Analyst : Okay, great. I appreciate that color there. And then, Chris, you mentioned earlier you hired 14 producers. Still looking for additional talent maybe Just curious like what does that pipeline account look to you today is a bigger just kind of thinking about on managing or thinking about expenses beyond your guidance for this year?

Question: Steve Moss - Raymond James Ltd - Analyst : Okay. Great. Appreciate all that color there. And maybe just one last one here for me. Going back to the loan portfolio, construction balances have come off quite a bit. I'm just kind of curious maybe how much lower could they go in the color on that would be great?

Question: Steve Moss - Raymond James Ltd - Analyst : Great. I appreciate all the color and everything. Thank you very much.

Question: Catherine Mealor - Keefe, Bruyette & Woods Inc - Analyst : Good morning. Back to the margin just done, Michael can you talk just about the securities yield. I know you had the boundary structure late last quarter into that. I'm a big piece of the security of going higher. But if you just talk about your outlook for where that yields going cash flows towards the back half of the year and maybe anything else you did to the bond book this quarter to push yields up so much?

Question: Catherine Mealor - Keefe, Bruyette & Woods Inc - Analyst : Great. And then back to the C&I credit that you added the specific reserve for. Can you talk a little bit about I know you mentioned that it was a C&I credit, and we saw your C&I reserve go up. So that makes sense that because maybe the size of the credit, maybe the type of industry has been then outside of that one credit? Or have you seen any other migration within criticized clubs, classifieds, or any other migration within your portfolio?

Question: Catherine Mealor - Keefe, Bruyette & Woods Inc - Analyst : Okay. And what in versus that's the current size of that credit? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 16, 2024 / 1:00PM, FBK.N - Q2 2024 FB Financial Corp Earnings Call

Question: Catherine Mealor - Keefe, Bruyette & Woods Inc - Analyst : Great. Okay, very, very helpful. Thank you.

Question: Alex Lau - JP Morgan Securities LLC - Analyst : Hi, good morning. Chris, can you confirm if the low to mid-single digit outlook for the second half of the year was for loan growth specifically? And where do you expect net loan growth to come from for the back half of the year?

Question: Alex Lau - JP Morgan Securities LLC - Analyst : That's great color. And how much runoff in construction loans are you assuming in that outlook?

Question: Alex Lau - JP Morgan Securities LLC - Analyst : Thank you. And then just on the commitment side of it, does the construction loan commitments were down about $70 million. How do you expect the pace of decline in commitments in the quarters ahead or is that similar to your balanced outlook?

Question: Alex Lau - JP Morgan Securities LLC - Analyst : Thank you. And then just a follow up on the public funds. Last quarter, you're expecting it to peak at $1.7 billion, $1.8 billion. Given the recent customer actions this quarter. How has this changed your expectations for peak deposits this year? And do you expect any seasonal increase in the third quarter?

Question: Alex Lau - JP Morgan Securities LLC - Analyst : Great. And just one follow-up on the revenue producers being added this year, how does this pace of investing in revenue producers compare to say last year? And what type of contribution are you expecting to this year's outlook? Thanks. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 16, 2024 / 1:00PM, FBK.N - Q2 2024 FB Financial Corp Earnings Call

Question: Alex Lau - JP Morgan Securities LLC - Analyst : Great. Thanks for taking my questions.

Question: Russell Gunther - Stephens Inc - Analyst : Hey, good morning, guys. I just had a good morning and a couple of follow-up questions at this point. First, on the glide path to that 10% loan growth number in '25, you guys just parse that a little bit in terms of how much that would be driven by the new revenue producers versus, no longer declines in some of the construction balances versus a willingness to just grow legacy with the producers you currently have? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 16, 2024 / 1:00PM, FBK.N - Q2 2024 FB Financial Corp Earnings Call

Question: Russell Gunther - Stephens Inc - Analyst : Understood. Thank you, guys. And then just switching to the excess capital deployment. When we saw the benefit of a prior securities repositioning in the numbers this quarter, you guys were active with the buyback. I understand you evaluate both on a quarterly basis just as we looked at 3Q and what does the opportunity set look like and where would you expect to be more active?

Question: Russell Gunther - Stephens Inc - Analyst : Got you. Okay. Great. And then last one on the M&A front, you're reminded us of the interest in a handful of names. Could you just also remind in terms of your targeted asset size desired geographies?

Question: Russell Gunther - Stephens Inc - Analyst : Got you. Okay. Great, guys. Thank you very much for taking my question.