Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to FB Financial Corporation’s Fourth Quarter 2022 Earnings Conference Call. Hosting the call today from FB Financial is Chris Holmes, President and Chief Executive Officer; and Michael Mettee, Chief Financial Officer. Both will be available for questions and answers.

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. participants placed all mode. a time, this have in been listen-only At call questions for be the The open after will presentation.

federal During make this laws. the comments, may securities which constitute presentation, forward-looking statements FB Financial under

on such statements risk differ actual materially Financial to and results management’s Forward-looking performance to any uncertainties based currents beyond and forward-looking or achievements or results by are statements. are and are ability implied may assumptions such that factors to such or forward-looking from listeners put expectations FB of other and statements. Financial’s and to undue control on subject Many and cause predict, FB are factors not of expressed cautioned reliance

from statements these other in actual obligation description contained may whether disclaims most or current detailed FB future Financial’s recent revise law, FB of new of more otherwise. periodic Form Financial A Financial’s events, forward-looking in filed as including by and FB information, or XX-K. to This update required SEC, a result contained expectations. with and the any is materially risks this differ Except reports cause any as results to presentation

page the on Relations release, at information, and this and website Investor which measures these the at GAAP a A include financial may addition, available Financial’s supplemental measures non-GAAP defined the non-GAAP directly certain of G. GAAP www.sec.gov. is reconciliation In SEC in by on earnings SEC’s FB financial comparable Regulation available presentation morning’s financial presentation, most remarks the and of company’s as comparable the are www.firstbankonline.com of measures to measures website

turn and Holmes, to like presentation the now Chris President over CEO. FB Financial’s would to I

Chris Holmes

this for appreciate Good you everybody morning. interest always. FB [Rocco] morning. in you, joining [ph]. Thank as Financial We Alright. your Thank us

we're some deposits XX.X%, with we're put result. grew with as the we capital the on] bad and others. liquidity systems the from keeping will with and was and We And some people flat [ball by made that while pleased of strategic XXXX holding us and disappointed positions. from results year exit [ph] XXXX, We So, a we strong a processes year future. flat deposits propel the investments and loans into

our adjusted an be, of capital our liquidity PTPP scheduled and restructuring was for management not of disappointing. actions with where X.XX%, it was profitability an of and we economic expect XXXX. ROAA entering for year, X.XX% operational potential feel XXXX, the half adjusted we ROAA a range the which our in segment, second those our With of to of well-positioned The scenarios enhancements mortgage

EPS grown IPO reported EPS of of book and $X.XX $X.XX. AOCI per in loan XX.X% of we XXXX. challenging a quarter, a since environment C&D excluding our and of on rate the [ph] annual We've On impact value customer adjusted liquidity compound last For deposits. I particularly highlighted share, prepared at growth our for the operating in By that in] CRE potentially and growth, [bringing were quarter's we call, XXXX. focusing and tangible

priorities. is those quarter's This near-term reflection performance a of

$XXX customer change annualized, public and in vast funding the Deposit increases the we're some this deposit Our majority true which even of. mortgage growth quarter in by XX.X% time but across is spread products. includes is non-time impressive. growth funds, seasonal our customer in more base both you is or annualized, deposits, exclude XX% increased When million which portfolio million escrow-related $XXX or proud actually the

by of escrow prior XX to the compared and to decline in which negatives mortgage deposit points, accounts, non-interest were were the the cost deposits, of effect you basis quarter quarter bearing million down $XXX growth our our this deposits when quarter. the exclude stellar our The which the that interest were during bearing up

intensify now as in in we've the some the competition to got quarter, of urgency deposit this expect came to growth increase months. expense deposit coming profitability balances our deposit While our we

for non-interest know time Fed funds of the over of While was NIB permanent bearing noninterest in X% out decline that XX sitting funds in in movement being bucket. With accounts, first bearing we're less accounts. the seeing idle we some a years,

tough believe is the we be noninterest focus While an and quarter bearing and company. growth to sliding anomaly, is in expect an area going the we for XXXX, decline always of this fourth

interest-bearing long-term with attracting will deposits to interest-bearing high deposits the to Our [ph] value It is able continue – customers goal] be relationships. all [our our customer rates to be bank.

current deposit balance and loan the we to a maintain go to intend its to have level, ratio we grow Since near sheet. deposits

to producing during than rates. portfolio the of the our So, we balances quarters. We've we in plus market on prior X.X% X% grown after quarter. more incremental the growth $XXX be million near our growth have more annualized three holding each the will by of that participations We limited XX% to cost loan much sold as originated annualized could deposits to in

to and credit loan until gain some the annualized we our the conservative think ratio kept So, XX% We clarity we economic during for balance have on be loan in this economic around limit and environment. in XX% in will credit If calls that quarter. to on XXX would liquidity to asset impacted the on million to continue caution intentionally had participation our deposit growth be which sheet, environment keep loan current growth we'll classes we XX% range the

of has year. heading been XXXX, to commitments new of over down the increased million C&D any the this part on to combined intent occupied As XXXX. the exposure funding balances point, quarter since but due the and balance trends of during these managing CRE much not credit our we've negative decreased $XX portfolios managing construction, second commitments, our quarter, early of into we're we're down existing we last quarter, With but in the signaled seeing non-owner

and The balance decline portfolio trend management of we throughout beginning that balances continue expect the we result of saw of in the fourth quarter is is declining our XXXX in commitments throughout XXXX. to of a that

of for $X.X pretax million, of a paired X.X million to loss mortgage, quarter. seasonality with led For market loss headwinds the

earlier new depths. right taken we've to actions was mortgage year, of the continued that to continues the While the in following as and sized reduce size segment industry this scope the we felt unit

difficult mortgage to causes forecast. environment exceptionally to The be

XXXX So, we're sale The We million relationships had One getting for exposure. our to that. XX.X for to contribution a of a is area primarily X.X three loans right million than portfolio. and touch budgeting a is negative the lot by we're quarter, mark now quarter held that credit. the not down remaining with on market in commercial in positive more last I'll comfortable one precise adjustment driven portfolio for

the less of than payoffs remaining one in remaining with and $XX relationships three We those on of believe January, relationship exposure. will that million see remaining two full should we exit and quarter

X.X reminder, since we this experienced closing. combination with had a Franklin portfolio marked As we have gains conservatively of and net when million a

as So, quarter, XX% and the XX.X%. result below the XXXX taken of we entered loans, with actions comfortably deposits a HFI to during loans

million We capital ratios capital $X shares XX% maintained and in contingent should able over stock price XXX million liquidity cost December. ratio borrowings [decline] to nearly it. billion readily pay risk-based to available following have the also a We in the our while we strong down for our [ph] ever repurchasing in CETX XX.X%, of of of need of us were and short-term X% X at in worth ratio approximately total

offensive the continue We clarity economic have and touching priorities throughout improved of [got] of XXXX. bank similar prepare for the [ph] we couple sheet on execute balance environment. on profitability once an that management would the half for first a our XXXX expect we'll gain positioned longer-term But Our during actions to

through project into through our and effectiveness has us community of improving call a continue local a present we what served on, model well we regional will core future. First, operate model that well way, banking us the and authority, serve had going efficiency we've to that FirstBank

our company, model us quantify to culture grow. we the continue the opportunity and we we This why the of better better model. our and grow our banking to allows community saw as As how banking to perpetuate

will It of as grow that $XX model we in we're look excited associate from our service business experience. base while – we XXXX, of implementation to processes allows us about of and what our like effective labor. to the time place XXXX footprint, banking today. and improving assets cost community to also In the significant efficient committed take seeing ensures the model billion Much deliver fruits of customer wanted we consistency and of resources in that

for we Second, in new and of growth of our both lift-outs bank recently local Central relationship and the recruitment a manager the strong teams teams with to markets, authority strong the results lift and that weapon organic positions had in Alabama model continuous Southeast, bankers and is outstanding geographies. our hold Memphis existing via of as markets. continue as well outs across We in discussions a existing as result regions

with dialogue with the number a these timeline our some of that act partners. handful position clouds to satisfy banks find the able of one sheet a be balance as of attractive uncertainty partner. we'll management current environment The banks to have third, these continue the merchant The for processes internal small of and operating around teams. to to procedures and a We we

scarcity, partners if be qualities the to However, presents potential we the that with itself. our act opportunity to position a the have in value, that want we

summarize, with strongly get outlook. we when position put a to over on defensively improve go XXXX offensive to company of the profitability comfortable economic half the So, and ourselves positioned in last to the we the

and of efficient our that shareholders create more will and superior number and We've also strategic for return We business customers strong opportunities. on a capitalize a associates and this undertaken capacity organic growth operators. the us customers to benefit believe the improvement will make initiatives through

on to quarter. the I'll provide Michael more things our to in detail now turn financial over performance fourth

Michael Mettee

everyone. and our you, in in first bank. Thank quarter's this speak Chris, I'll morning, core results good

to slide XXX.X run income the supplement, are tax we in of of quarter. bank and this on core income baseline XX.X equivalent million ratio the net deck fourth According rate Page financial which quarter. had in XX the was reconciliations, pretax interest efficiency Page Our pre-provision core XX million the

interest net Along bank with we non-interest in in million that core XX.X had income, income. XXX.X million

expense. grown the million PTPP, million XX.X fourth that Finally, in run XX.X Together, million quarter of of XXXX. XX.X% the has over rate to delivered non-interest had XX.X we comparable comes our in that we bank which

of of our restructure interest attributed basis loan at accelerating were decline the can net of interest less and points of attributed the rate on bearing on with XX detail primarily quarter. Page to this faster earning origination by to balance Moving net than points be the decline yield the third margin The activity. on summary of be loan can contracted basis a result from interest that assets. a remainder fees X.XX% deck, cost slide X lower liabilities sheet our to margin of X our

month our points the margin range, December for margin, XX in of of for we of basis the loans. forward fees on Looking run X.XX% had rate a inclusive

in X.XX% cost. the estimate beta quarter. February that for trial was versus of deposits Our interest-bearing our XX% we in deposit cost experienced December, roughly month a bearing of through December deposit X.XX% we cost interest XXXX have From the our for of

Contractual quarter. X.XX% loans to on December from a yield for for as rate X.XX% compared the continues was hikes to of the month and get Fed lift

the in new reprice lines existing ultimately originated excess overall in quarter, to on new margin, on led to of X%. we cost portfolio of our continues yield While as deposit in decline fourth deposits the raised, contractual be which spread to compared

are With rapidly guidance. as deposit quarter, in we forward costs as in having in our cautious the they accelerated the increase fourth have

for now incremental right will growth to deposit the December's funding to that we single-digit sources would of manage cost growth. we best quarter We our anticipate mid-to-high first the relatively hold close work estimate and year Our margin. margin loan be for the

XX.X non-interest our banking the range. the in fourth in mentioned be $XX quarter. million core banking quarter per I in earlier, to anticipate noninterest We And as was expense XXXX income million

We expect noninterest regulatory due inflationary our continued growth in and to pressures. higher expenses banking costs

currently are estimating rate quarter's we of run growth digit the XXX.X over XXXX, For annualized million. fourth mid-single

quarter we of posted mortgage, the rates the drove impact locks to for subsequently quarter-over-quarter, by XX% interest seasonality rising Moving combined as of a with rate down demand revenue. loss reducing

position to had to volume restructuring, additional and with organizational headwinds created to of in operational continued reduction hoped our the in pace. this that evaluation this we done we ourselves structure were seasonal return profitability at While order staffing

expect environment QX – be to be profitable, do we current if in not While the QX while this we state. we to would do expect holds expect losses minimal

overall loans reserve points quarter allowance required offset release X XXX,XXX. losses, of ACL by and we Moving from a on improving a to portfolio and to deteriorating our slightly quarter-to-quarter we forecasts unfunded our Economic for basis credit this metrics recorded were by commitments. saw decreased lower

that experiencing ACL We investment and If term. inflation change, and interim] we optimism have the anticipate many will continued are we [ph] similar near local for we're maintaining our held growth to do increasing loans would health economies level of long-term see of of economists recession. we conviction closely over the that where conditions not watching [an for

back with that, to call Chris. over And turn I'll the

Chris Holmes

quarter again, forward And prepared to for we're we how will look prepared Michael. the Thanks, for are what's and positioned coming. pleased questions. we for remarks the Thanks with and

Operator

question Thank you. from first go Olney comes ahead. [Operator Inc. Instructions] Stephens at Today's Please Matt

Matt Olney

Hey, everybody. thanks. morning Good

Michael Mettee

Hey, good morning Matt.

Matt Olney

and growth the You continue recent growth, in-line would growth be are more the mentioned seeing for the color with the deposit deposit loan any what I relatively on in market rates you're incremental weeks? think

Chris Holmes

average but I mean, funds, the that's is rates we're around saw time basis points to – And on we call Yes. coming in. market XX-month XXX came and of XX% market money of like XX% Hi, funds Matt. term Fed and it term Fed below deposits then seeing Good money coming market where kind morning. Yes, there. an of kind weighted in depending rates in

right at market really So, there.

Matt Olney

And on did balances in that prepared we Chris, just Okay. quarter, that about it perhaps and any the get more saw same not on I that why comments, the right that bearing be? color pressure non-interest Thanks, to fourth expect would thinking Michael. deposits, those continued like then degree on you your the sounds

Chris Holmes

Yes. it mean, additional shed light me think [down heard the I in continue yes, really right, as they'll to let [ph] I think I that quarter. fourth move – but it. some I on did] yes, you – they think don't don't I

pretty of to I they'll fact, to that's a it likely seen point I do going of – the degree, years large I couple last but stabilize think grow a that matter mean, easily. think over pressure. a frankly you've be As of

do You didn't even much. to have

of balance you of of these The there question answered having know, calls half go throughout that XXXX, and, was really XXXX know. common real? and And the grew, if you how others latter is not in we and we back you How when the is were you I think a just – most think much don't know others always much sticky. We're too. We of that did question, sure. to

And fact don't of know. so, matter, still really a as we

be guess, to those and seeing would you're especially leaving consumer balances would some the We we but non-interest or we call for fruit begin begin balances [the in tough a second the had pre-COVID, it to think with that qualifying year, sure low in for fourth we we're half quarter of think you year, to also bearings be that the in knew leave you. they finally by saying going of of that leave, last to be market say XXXX. knew that [ph] a and return left honest in that lot the of so accounts the] it just the that not the likely – in also to I'd – I half I hanging I'm the probably you that's But think see

Matt Olney

Understood.

as things. finally, interest you mentioned as I the few Michael, margin, think just net far on a And Okay. the outlook

in me you there incremental to right? I December think similar again? the mentioned you December saw would And XXXX I what Did in just be that catch level. remind spread

Michael Mettee

December Yes. interest The [X.XX] margin net about was [ph]. for

in So, right new feel coming loans now, Spread we around versus outlook, is like points. deposits that the basis new on XXX of kind over maintain we level.

I’d number, [ph] I just in about are to So, plus cost [X.XX] if that on [ph] on that loans of that kind coming say think [X.XX] range. you your deposit you question, new pointed

Matt Olney

Got it.

Thanks guys. Okay.

Chris Holmes

thing. We on side. front need I Matt. a the One deposit add this did get to deposits. just Hey, on would feel other out

quarter as sort [ph] get loan a we at but from look expected to in, it [arrows] you that was a difficult. plus obviously, knowing to three trending of deposit deposit and loan and to with quarters and were is way growth ratio in, the that going big if especially it expensive so, deeper where had be we And headed we deposit XX% our get growth we and

did remember, plus. also was of $XXX account July we that one didn't million we That back actually reduction plus have in And renew. account, a a

get need front. really And we so, out to all the that, felt with

it'd about forward. of our moving at regards and so, look And knew we and projections, to XXXX feel but we pretty where how put we margin at we when look balance good with ourselves the – be we expensive looks

Matt Olney

Understood. guys. Thank you,

Chris Holmes

Very good. Thank you.

Operator

gentlemen, And comes question ahead. our Mealor from today ladies next KBW. Catherine and go Please with

Catherine Mealor

Thanks. Good morning.

Chris Holmes

Hi, Catherine.

Catherine Mealor

outlook guidance Chris, mortgage this you initiatives Thanks. of efficiency excluding growth some thoughts you on separately, bank within to as expense talked help] a about you kind specifically around lot give you core that any And efficiency [got have profitability can then the maybe of year, initiatives mortgage noise? well? that [ph] just

Chris Holmes

sure, Yes, Catherine.

So, things. billion historically initiatives, When from or again coming today we're a talk both we to closed [ph] about asset and two in XX later, XXXX closed at went in efficiency acquisitions billion] billion we we X – acquisitions the remember later went during through the I XXXX of COVID where converted we couple two barrier. start one size of also there, from, then the in remotely, way, in was XXXX. that by but was converted One [$XX

scalability, community years. things And a said, scalable the collection our so be core sure that, the XXXX and we've model bank with. got the refer make scalable. with banking dive We a moving to forward all that we we learned to good a of model, so in to as able ourselves really a that on time That's that got we've right right sure we've make do deeper the over it's were just

done that. so, And we've

of we as we're that pieces us. to what about that different means in so, phases, excited implement And

the some in why of we We and efficiency scalability terms It one the sure efficiency frankly ratio, is, – make to it. efficiency exercise is gain that be for we're the it did of But the we purposes going an had to not did from model right. it. terms efficiency outcomes of not efficiency ratio that's in intended an to

spent go we X% of into next being said, we're of over frankly lot we at a about year. looking as fourth those. that. growth feel expense haven't so, a to type That good And X% And time quantifying we pretty quarter

when On point, that I'd I'd expenses been expense your approach And is two in a try part said, hard. of call also, year, still vigilant of forecasting of mortgage have but than a not at front, been we've that. then the it next forecast – again, in, very of to And is second sort certainly we through, this We're frankly look a the it's to to the reduction hard we question, it's say part it now, there. phases positive to have we're mortgage comfortable much saying more business. contribution

should the normal be first fourth in able where – experience be the we level we'll see lower the quarter, should the quarter, a that's than Other but third lower really seasonality, to quarters contribution. of higher second, in we'll

that is, expense helped if a initiative on know don't for I constant it's So, know given you than you where other mortgage us. that it's, it the fact

Catherine Mealor

so for that's then so ex-mortgage base X% to that to that, of are expense for million to X% at number XX this grow growth And rate, expense it. fourth I Got annual your the take and XXXX? X% XXXX comment on and [indiscernible], you my X% should quarter about saying

Michael Mettee

That's Catherine. right,

we'd annualize in X% of it If where I some X% that million then we when will off yes, take say, that, in that up. was end And and you I and stuff grow to comments, – XX basically, you think there. regulatory there's base my is

expense of well. that have some as going up and You

range. So, should fungible, little that the be but bit

Catherine Mealor

I at next still of growing balance you're then an X% I NIM a than I but coming that an new we still it. margin X%-ish that's feel And costs Is like mean, you were you slower sheet obviously to of kind growth with and into in year, last got, coming for growth your in correct? if – Got yields, X% mean, with expense year. that, kind expectation deposit pace And still your still should loan still at incremental the is guide XXXX. just given growth NII December that difference and

Michael Mettee

You're right. Yes.

Catherine Mealor

kind have margin comes is, guess NII the have less expected? growth operating you the you flexibility than how your as leverage in And control expected Great. then if do expense plan that compresses the through to do if in we year? more of much the question move than I flexibility

Michael Mettee

Yes.

of feel we So, of equation. in sides like we on on create expense levers, were the both bit that's a places the was do side. trying then we that have of to what couple pull margin] and that And we [net have give the some can side quarter, also we fourth Catherine. again, ourselves that in trying [ph] some leverage on We a little levers to pull

Catherine Mealor

Great. Thanks commentary. for the

Michael Mettee

you. Thank

Operator

Hovde next our question Brett And Group. ahead. with you. today from Rabatin go comes Thank Please

Brett Rabatin

Hey, guys. Good morning.

Michael Mettee

are Good How morning, Brett. you doing?

Brett Rabatin

analogy, a and of year. use Doing banking college in mortgage been you Thanks. the has great. here profitability, playoffs And guys football football that the a you usually know, but Wanted to Chris, terms in in to are analogy. past obviously stymie

my of reserve the in to play in this you industry a that get the you're question you get playoffs? the you banking is, mortgage to to initiatives first really need is, offs? than get solid Or related profitability could obviously and you back so, in back a place back but do my question think then way do And have of a in bank to need, lot position build better the level

Chris Holmes

the your Like Yeah. way. by analogy,

has And – of going he so, the you At sucks, back. to Michael of one on. pointing as was which I'm give Alabama risk University to

Brett, the And football I the college at use the hours but and and that's because do have keep for new analogy. big risk use of folks. analogy. I two our – so, about this I world. a of analogy – our use won't football I Every in know, through a an all I going I'll spend hire single part And hires all mission culture I do values. orientation of short, with I new

to people and is, some hey, would like analogy by University – really to we I’d need because but like you you you like national I And year. compete – envious Alabama I’d people this just you them joined one what football a signed for – of say it, feel scholarship the championship the and are some exactly we the Bank, of of you need things play to tell that's feel with say, way go every First to

to almost football playoff college every the go year. We Okay.

time to First be on all there expect just job the and that's for you took realize We what signed you Bank. with a when

I So, tougher to [greatest] I when refer analogy the the say a internally playoffs our all little very the I you folks. book, talk Facts. the a use I the that almost – similar than very, you when internal [ph] missed of lot. a this Confront going you said, I to And another would missed I'm Brutal I'd talk to the say term is year. playoffs use use, one this And year, our

this we've on You that never facts good a public profitability. since year had been X.X% company, less confront haven't we've need a return you And brutal had go back, we in the until assets a to year. of if terms than

so, we'll And of could this doesn't front have we We that can and do in playoffs. pull, right [indiscernible], not. we organization about levers pull the because levers miss we you ask

then don't also tell not it's the in we're I unless top performance. acceptable We them like, quartile,

mortgage great And now us. a specifics, contributor been to has of so, couple for a

$XXX had to XXXX to million mortgage. from go we when contribution have back You'll

to mortgage been we're very have great It's not been and us. And do so, specific. an it's for important contributor us. have for a additive We

a look a segment notice bank some And of pretty You'll had That talk at about actually year on again, the good segment bank lot, bank a lot. numbers the if pretty the segment, we you good a there. year.

our had And a And a made in our of this We of close group – $X.XX a mortgage to [indiscernible] as significant on negative a top few probably more. group. half we some EPS we've quartile standalone. would top make there changes the impact well a continue be It's and year. certainly than peer we'll $X.XX bank more to peer

than So, to it, have higher to we expect that don't X.X% actually with ROA, be to have but that. be we mortgage

So that's that view we the way it.

Brett Rabatin

on understood make end lot And can other just That's it the talked you I the great maybe about I extra go to and – the sure similar how thing a the going was in What of obviously between might forward. know it's improve that cash and Okay. to sheet interplay you term? other balance quarter the into color. you're some at the I And wanted and seasonal any of much quarter affect this come if managing balance change expecting linked the you liquidity, the do environment you mix the down? what near sheet in increase tough shift funds back other with the

Chris Holmes

Yes.

let Just I'll you – in. Michael, couple I'll come a make of comments.

post the year. had it's the zero and we We end So, the of by down the of some actually end it that at end the so XXX quarter. Loan paid today. That's of million the off Federal significantly borrows, Bank third Home the by We year. paid subsequently, way,

And customer our sheet through expect funded so, deposits. have – always we we balance to

they'll start be And usually usually to quarter late quarter, the we the of third down first robust when into Public they intend they and year. to that. down continue pay through but funding the then and actually the so some will funds, do stay start to pretty end quarter pay second at it

and so, manage And cycle that. we that's the [indiscernible]. we see around Michael,

Brett Rabatin

Okay. Yes, that's great it. color. Appreciate

Operator

our comes ahead. Scouten from Sandler. Thank with go question you. Stephen And Please Piper next today

Stephen Scouten

morning, Hey, everyone. good

Chris Holmes

Good morning, Stephen.

Stephen Scouten

or of deposits around XXX% the more funds said indexed funds little more like maybe betas? customer much longer-term follow play tied costs if And curious, out a of deposits bit you at incremental so of core are maybe kind are versus in the and maybe interest-bearing of where to to just, metrics? one back and on then, public far can deposit directly funding particular? I to I'm on a cycle just terms those Michael, of in your to kind that XX% us you could public made think looking think we what expect different how were remind kind that you see wanted you and date some I

Michael Mettee

Yes.

of much sure is and exactly the an mixture. that On a it's to I'm funds will first index, public I I but Stephen, how don't have say, tied

the We even in in, there the of non-time but that not some would a bit some in non-indexed, well the indexed in mixture those frankly, that'd bearing not be And loan a lot over the all lot indexed and be a a sits be it indexed. that non-time of as have there's of is that least. non-time negotiated the and time, bulk And instrument non-interest bulk not a as little are it. in time There's a time. – would of

lot time, little but a bit. have of will there's We a just

So…

Chris Holmes

Stephen, Yes. in mid-XX recognizing look we total is going mean, that, I this on a with deposit low is came to where see expect fourth kind deposits. the feel are peers interest-bearing look would that our back really we on on betas go in beta, maintain on significantly. There you what obviously, February XX% quarter, XXs to Yes, costs as XXXX, we level up. you but of I range, range do. And go if can accelerate highly saw it forward there and grade, cycle we'll of through dependent and that beta deposit our the We kind like

any of XXX% to I have will lot say that stuff index, rate. a don't on we whole indexed

one So, just of stuff. but not a on on number, that There's XXX% mentioned, up accounts. it's deposit one the Fed up, that fund not goes kind exact Chris as not, gives for cost

costs deposit a Fed higher, with we right the percentage, to certainly while is definitely [indiscernible] here varies go seen a type of and normal up it expecting move get incrementally So, but and operating environment. we'll have it

Stephen Scouten

Yes.

comments, some you put and think you I maybe have kind Okay. feels That's to think strong put mean, growth with to growth quarter about behind of is you on degree right really you, like curve know peers may guess listening that throughout to I'm the it I relative this the curve year the helpful. holistically, And for ahead to guys if deposits your of way it? the rest you maybe XXXX, overall, of the

Chris Holmes

said. Yes. Well

Stephen Scouten

you of notable about the mentioned numbers? Okay. call anything embedded other there good Great. up Great. expenses, were I And of costs regulatory or briefly kind a Was bit. really is there noticed that these is in that thinking to expenses of out some Michael some

Michael Mettee

Nothing too noticeable.

different is was major of the that – through it excise in versus quarter. That there. fourth third wasn't the quarters think quarter kind piece third [indiscernible] in franchise quarter and the tax well I fourth a

Stephen Scouten

growth? for about maybe quick on bit there others? little spoke CRE And of participation than then sound that to me. like just and Are a more the C&D ones pace trying just of Got or like out you. is was controlling particular more more management Maybe left about you but both. indeed than two maybe so management, that categories Got side, One, to risk sheet you. that balance participate the you're

Chris Holmes

total it's Yes, balance sheet management.

to think going If you the it from be about to we're friends risk side, management participate folks to are ours. going that a of

risk. – And so, to anything anything. going credit participate create them. for to we're we're risk that’s not credit going Well, to going create let to participate me knowingly It's never going

So, about management all it's balance sheet us. for

because versus harder versus is some peers can and do CRE. side would And larger us smaller to frankly, love that banks, rest type to a would a they than that with friends one two bit on CRE. community than participating if participate them when our or And we of a on we're patient it more just we be us and it the size it's with are work construction, it are Occasionally, can regularly withdrawals CRE bulk lines, quite construction against own CRE sell either down. are it's and that little there's of they good that we a get the or do that participation the are that usually

Stephen Scouten

Got And you last X back think, become had the bought on if on little some is buys How about is quarter, my here? capital that Stocks insider from repurchase lower, in the million active the levels I thing, million, you about you said a do you at I repurchase, even maybe as know helpful. well. where then you've it. just share these That's correct, the in or X constraint in do quarter, there? think repurchase that more math

Chris Holmes

think I need – it. we say have about if Yes. it be to wouldn't to capital cautiously do do we think it here, about but we We that from to very we'll able but the cautiously. do

tool we'll a that it's – use. so And

Stephen Scouten

for color. Thanks Appreciate Very it. all helpful. the Got it. guys

Chris Holmes

Thanks Stephen.

Operator

D.A. Please you. our Fitzsimmons comes Thank next Davidson. go with And from Kevin question today ahead.

Kevin Fitzsimmons

how morning. good Hey Guys, are you?

Chris Holmes

We’re good are. Kevin. Hope you

Kevin Fitzsimmons

this, make a about I thinking want but number to Good, of questions it just on way. of We've – think sure thank you. right had I'm the

accelerated deposit deposit Is position where keeping in-line growth be, a a to growth it now So, really put very correct? and was the expect that you're past of the then loan that you And it's kind expecting going effort in quarter. ratio roughly loan-to-deposit more thus this forward, – in is. you

Chris Holmes

we we you're to ratio ended range. of XX% correctly. Kevin, just over last We When the want XX% – loan to that deposit be Yes. XX% in in quarter. that thinking were

bother that doesn't to to us it up XX%. So, get

– it So, that see manage it we'll within range. you'll

so, be we And so but our loan portfolio. because – short-term, we feel – It we'll we deposits feel what and of do be some position. ourselves also grow we – in means gave mean, that good paid room. and don't is, that – like off we we as mean, I any again, growing we And – loan we're we'll we basically really borrowings – pay have – short-term pay a I we is

Kevin Fitzsimmons

heights I looking to about level, appreciate hold NII at XXXX? before, from color If you're few reasonable throughout far drive level. as that think of dollars the to through, still basis a the margin. the think lower think more December margin able margin roughly it just And the what was, and how as here [X.XX] that margin, beyond have probably higher we assuming was of I that alluded sheet to said on to the points, we're Okay. going grinding And XX is you that so to growth just but the balance

Chris Holmes

with during that, XXXX. – spread year. a we good we'd into getting going growth – the said, growth budget less at for loan and been as So, little some a be anticipate traditionally healthy get we to is into forward growth XX% look – could we think as harder organically, year, and get We've move our a loan be to but than the XX% loan healthy certainly the we year on that. we've do I

but that demand become ability it if our led and peers way, an growth. terms typically We've see loan that, significantly in that issue so, metric grinding could don't with NIM we generating the of at you And look to that generate this. below

bit we – there, It at hold to going – flexibility bit look again, to least out we're to – us in to for range range going near could give a of little little but try with of try as we are, where we're the we're year, a flexibility there.

Kevin Fitzsimmons

Got your loan comment it. growth. about before, just And Chris,

proactive participating So, much as more dramatic really terms loan and the yet? CRE want you and some out C&D seen runoff, far that as of haven't in [reining] growth of and a core [ph] in to demand the loans but loan in letting was book, that fall-off on you

Chris Holmes

haven't. really we No,

have in We did we We slow slower as slow some. the seen the well. it late It's see demand year loan year. start as

I them we or do So, some are months loan been months has they three things the demand ago ago accomplish, Reserve terms of Federal we think the did of demand. all that see because than do I six think even in trying less to

if if to said, annualized on that like we those have grown take back basis. XX% you add sheet, quarter – you balance participations being said, an the in I the Now

but So, plus three we pretty previous that's still XX% were the strong, quarters.

Kevin Fitzsimmons

Okay. Alright, thanks very much.

Chris Holmes

Kevin. Thanks,

Operator

Scott. question with Janney Please next Strickland Today's Instructions] Feddie ahead. Montgomery from comes [Operator go

Feddie Strickland

morning. good Hey

Chris Holmes

morning. Good

Feddie Strickland

on continue going clarify you're like earlier confident growth It accordingly. manage to to loan point. deposits your just can sounds So, grow more and one you time

see shouldn't increase right? funding really couple we the of that over next So, quarters, wholesale is

Chris Holmes

to do this the is our to Well, let is, have is that same put to own okay? improve our won’t our in to try grow your intent deposits to our it want because rate, access wholesale we funding, want order we about the the to premises to loans to that me we be because I have have correct able way, think use and don't at but view growth. We use profitability. Now, funding fund – we

over want couldn't a we we so, we to have get And not it to tool, as use on overextended. rely something – as get because

Feddie Strickland

And asset Got it. your That you're the of managing collateral kind whether same along Federal is securities, of it's potential earning sense. as places [ph] that to loans growth, makes line or like Home questioning, of of not [pluggability] Loan in as a got to Bank sheet on like much enough the terms balance collateral choosing really assets consideration? that's already you feel do decide further you've or of you what put consideration a that

Chris Holmes

consideration like always and keep as a you possible. because as flexible because always almost to yourself lean Well, that’s

deposits. causes we to do have. think required some reference and go public keeping cheaper us because instance by us, much about made the knew just collateral we for customers pledging, from – could so, we free that collateral And And assets rate same for that not get the increasing how at we or funds money customer I

in position And so, present approach again, we we'd when have like opportunistic be as to much be we as themselves. possible, to like take to the of, a opportunities free collateral because

– other CDs brokered is no utilize balance books. all I funding – the going customer we time, when years back to talk And customer sheet it time, almost and about long loans. XXX% back the thing, haven't about our direct then almost we this three a we direct one used in have We ago, talked or on four

And no – million, on books through almost have CDs deposits Internet that think. have X and less We we and only came I than acquisition are they're there. broker the still

less in So, than X deposits. time million

customer broker just is we customer we use by franchise your we so, again, and funding, is utilize deposits And customers. value which how think don't in deposits, those direct you building and direct assets build

have our we like I not because do channels profitability, terms to it. think about said, to those is, when we wholesale, we're that the tapping so, is improve just And

So...

Feddie Strickland

helpful. really for me. question That's just then it. one And last Got

I banks? little both? competition, more another? local in curious it a terms curious, markets is you are than of one in Just a bigger more Is your just aggressive smaller national competitors? was the Is of deposit whether bank mix of seeing from it type

Chris Holmes

it the Yes, is answer.

it, more away money and you – not they're products – it it, So, that's has from The say product, a particular in move the of the would profile versus still that couple one reactive seen banks pockets. them. I'd from say, they're bank, it's regionals from, And some I'd as size banks. I of We've say, some bank. bigger of very but I comes – big guess, from almost attraction of the to almost

same that to growing because and are, call are. them they're high-performing, the do I’m They're going in can't rapidly deposits. and Those deposit side growing franchise the that competitive that their business, banks we their you really position without growing are on banks they're

And so, aggressive. they're

on small this more size, is us, depends some the profile of it say, – thing see from say our markets. versus is out things and I'd other crazy some heck in would just banks some we so, the the I the of And but frustrates

over mean And I'll of CD it ad, for week, apparently I mean see funds, small – banks. $X it, see less ad, that needs markets bank be [ph] a – folks we sending a an an our from billion one a money X% do but bit will that call than quite we of market. is folks [X.XX] literally a I Xx campaigns, running running

Feddie Strickland

again. guys and the Interesting. Appreciate color thanks

Chris Holmes

Feddie. Thanks

Operator

our Securities. Thank question Jennifer you. Please today And next at comes from Truist ahead. go Demba

Jennifer Demba

morning Good everybody. Thanks.

Chris Holmes

Good morning, Jennifer.

Jennifer Demba

categories in strong. loan your has as concern the economy significantly most just asset curious, really your I'm quality portfolio really, Chris, here? weakens you know, if stayed You – what

Chris Holmes

Yes.

construction but the because – we three the say my and it's CRE often hey, especially going. [indiscernible], be would head and credit of on you concern the folks I'd feeling, most. say asset ones go, that can a would get day go things. I your pockets just how's stick I surprised, you So, Construction how risky CRE. just Certain

And construction, construction our we so, customers and I know well. ask and about

great, – that. credit of And side not and I come going or don't didn't ones. I And that's all they're their for so, I bank up credit a side a so the time, to bigger and be I industry, on say I bank, the thinks say think probably commercial the say, concern the is while the always the every

and most long I long, said, about a and our really know of for big construction being them had feel That good them. time, customers, we've we

of are of I do office that our industry. think get office, because estate again, I there can worry for about for get office do can frankly, lot but quite much it as don't a about – pockets don't as worry soft. I I things the commercial we the space portfolio, So could real have –

has think places. in gotten it soft I

again, on can quite we residential, stuff but some – there again, or construction feel good have Our residential small other have book, we have, stuff some in small big the could about. we we

in other manufactured one think we The have portfolio I specialty about is, housing. a remember,

years. [indiscernible] watch watch And And on dues again, a so, quite that the I acquisition back a it's you past we've bit. standpoint. from nonaccrual the I'll performed as go – else anything been if to going it in right. of you they've and And go, that happen for what's here's XX to dues been business before they'll Clayton, we've the know – in well, the been calling past [indiscernible],

of so, where And XXXX they were in so. past dues they're back up out are bit, with or not but line a little

– particularly on. vigilant all that stay ones are the I the are those So, but those

Jennifer Demba

what of sense office a FBK? does portfolio us give you look for the Could like

Chris Holmes

have smaller On with other buildings – of are do good Memphis that feel really at We I any do. in Yes, think got sitting our CRE any pretty we office is in downtown XX% exposure now, Nashville, the there, CRE, we office-related. think really, some high don't least I or We clients don't good we there's rises downtown about deck. have don't that. have that. about we out again, but downtown our a right slide

we balance big – going have it's direct that just a we that originated – buildings. for of in would be not and and what be know, portfolio. to customer portfolio $XXX It's our it's us. be, pieces office in we we said, million to going don't I is a don't to those manageable have As We don't have again, office

Jennifer Demba

year? Okay. question, if the last What end your kind is could. one of of scenario economic reserve assumed as loss loan in I And of the

Michael Mettee

have quarter change there's [indiscernible] actually between a and as here well. It's We about fourth economic Jennifer. pretty XX% Hi but XX% in [ph]. third there baseline, scenarios The quarter. baseline SX, some and rapidly mix [SX] between

Jennifer Demba

much. so Thanks

Chris Holmes

did any one we that of is, I Jennifer, we on haven't on, thing figure don't course, Yes, question touched have [indiscernible]. a

have amount at related have We negative a and ACL. we a unfunded to our look small added HFI, or had small commitments. a did provision – of you loans to provision, our unfunded commitments release very which a would our actually If provision again, those

to the with we've And the tried the conservative be particularly we led area, and you Again, actually be at that's we've it's again, release. comfortable were we've to still experience. commitments of it ACL, it we to small managing X.XX% for terms kept quite we, though look investment, portfolio those as managing relative could even and loans in in construction loss that loan been – as in to high what down, in absolutely of if find managing held at and – that at which be

we where it so, good we about still pretty – feel And sits.

Jennifer Demba

Great. Thank you.

Chris Holmes

Thank you.

Operator

like I'd the And back to this for Mr. any to gentlemen, conference turn our closing ladies and question-and-answer over remarks. concludes Holmes session.

Chris Holmes

interest All right. your very Once being much. appreciate We appreciate this again, Financial. we're We you you with And in thank us. FB always operator, at point, finished.

much. So, thanks very

Operator

sir. concludes This today's you, Thank call. conference

You may have and wonderful disconnect a your day. all lines,

FB Financial (FBK) 17 Jan 232022 Q4 Earnings call transcript