FB Financial Q2 Profit Rises on Southeast Loan Growth
FB Financial's second-quarter earnings jumped on double-digit loan growth across the Southeast U.S., though intensifying deposit competition forced management to temper full-year growth expectations.
FB Financial reported net income of $58.6 million for the second quarter, driven by broad-based loan demand across its southeastern markets. Earnings per share landed at $1.13, or $1.14 on an adjusted basis. Pre-tax, pre-provision net revenue climbed roughly 8% sequentially to $83.3 million, pushing the bank's pre-provision net revenue return on average assets above the 2% threshold.
The bank's loan book expanded at an 11.6% annualized rate during the period. Chief Financial and Operating Officer Michael Mettee noted that this demand was spread across major metro areas like Birmingham, Memphis and Huntsville, as well as smaller community markets in Alabama, Tennessee and Georgia. This geographic diversification reduces concentration risk and points to durable regional commercial activity.
Funding that loan growth, however, is becoming increasingly expensive. Deposits grew at a 7.7% annualized clip, but management acknowledged that pricing remains highly competitive. Consequently, the bank now expects full-year deposit growth to land at the lower end of its mid- to high-single-digit target range. This suggests the lender must pay up to retain balance sheet liquidity.
Credit quality metrics remain a bright spot for investors. While non-performing loans and assets increased during the quarter, management attributed the rise almost entirely to three specific borrower relationships rather than broader economic stress. Net charge-offs stayed remarkably low at an annualized six basis points, and capital ratios held comfortably above regulatory requirements.
President and Chief Executive Officer Chris Holmes struck an optimistic tone despite the funding headwinds. "As I reflect on the second quarter, our company is well-positioned and our outlook is bullish," he said. He cited stable net interest margins, solid returns, and tangible book value growth of 11.3% compounded annually since the 2016 IPO. For investors, the central focus will be whether robust loan expansion can continue without margin compression as the industry-wide fight for deposits drags on.
