FBK - Earnings call transcript Q2 2024 | FB Financial Corporation

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Operator

Good morning, and welcome to the FB Financial Corporation Second Quarter 2024 Earnings Conference Call. Hosting the call today from FB Financial are Mr. Chris Holmes, President and Chief Executive Officer; and Mr. Michael Mettee, Chief Financial Officer. Also joining the call for the question-and-answer session is Mr. company's Officer. Please this Financial's on morning's Relations of Banking financial release the Chief page and www.firstbankonline.com. information presentation the Edmondson, note earnings FB supplemental Investor Travis at website are available on Securities www.sec.gov. Exchange website Commission's And at the and

and being hour on an be available the Instructions]. conclusion of Today's FB recorded for website Financial's call will is [Operator approximately after replay the call.

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

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

description these Financial's may more periodic A FB recent the risks reports differ results and in as to SEC, that actual current cause Except Financial's by filed required of expectations contained Form most FB materially law. with detailed from is including and XX-K. other

obligation in disclaims events a to revise Financial statements or contained otherwise. or any FB of new forward-looking the any as whether future presentation, update result information,

remarks addition, G. defined as Regulation these may SEC In include certain measures non-GAAP by financial

like Mr. and go Holmes Executive website comparable GAAP the comparable at website presentation, the directly presentation FB Financial's the financial over is Investors and Please at measures The to the morning's and www.firstbankonline.com measures Chris Relations supplemental company's most the in measures. of www.sec.gov. I earnings available this Officer. which the sir. now financial FB a of on presentation GAAP would information release, turn A on non-GAAP SEC's available to ahead, are of Chief President Financial's and reconciliation page

Christopher Holmes

in FB We you this We Financial. thank interest you, for appreciate good and Thank morning. right. appreciate joining us Chuck. your All that, morning, and

assets the of share, of our $X.XX and XX.X% growth at For EPS earnings the value on EPS PPNR share average per the assets of return XX% quarter, adjusted excluding of was prior annual up average adjusted IPO. an grown and relatively AOCI We've rate X.XX% per book an our X.X%. the prior and Adjusted compound and since $X.XX. impact reported We flat reported we adjusted quarter on by X% return increased adjusted while tangible of from X.X% with a of year-over-year. quarter PPNR year-over-year,

foundation, earnings strength The past themes. quarter few operating our well. perform sheet our the of momentum our continue and in quarters, this Operationally, balance I emphasized have those we to continues

to relationship sheet to us in be the scale back Our the are benefits to and we managers realize allow our limited a near-term platform and support customers, office. that enabling areas our revenue with and of will responsive the help us balance additional have grow investments

income ratio million. our quarter core segment focus quarter. for light grew Banking fee earnings segment X.XX%. For inflection point from by margin, expansion Mortgage had the delivered net the our declined points quarter. solid a by With expanded environment the $XXX,XXX, an of incremental to XX.X% prior with this X% of while as that of income efficiency and as in a on interest basis XX it to pretax quarter saw in interest contribution quarter margin last of $XX.X core we rate momentum, Banking to improvement the we And reasonable the saw efficiency continue

total of XX.X%, ratio and a of CETX XX.X% strength sheet, the our assets a on risk-based strong exceptionally are capital finally, equity our to tangible balance ratios with of common ratio capital And tangible XX.X%. of

funds whom rate-sensitive company today reduced concentrations XX%, ratios, or geography. Today, from of almost keep concentration billion $X.X built and capital within to ratio our of our attractive was also an C&D exposure is XXXX profile, CRE C&D manage customers lower-risk growth strong $X.X public will but our billion with to our ratio the you economic gives and quarter have in working in our we've also of same time, the second remaining accounts consider At XXX% continued relationships. relationships XX%. the we've discuss our the detail, while our when concentration CRE especially to that Michael have us we our checking a As more range there with XXX%. we

more that our hasn't so and while balance in is more sheet safer, profitable valuable. materially So it has been remixed grown quarters, recent

that to effectively to continue we forward, explore we've most how capital Looking built. deploy the

first is for capital organic that always priority Our growth.

quarter, and year. While give us to confidence we this the And a next the some growth were expect second low are of growth the that loan in few growth deposit returning range year. flat organic mid-single-digit half basically our trends there XX% targets over to muted net in

relationship is increasing XX our management We've brought XX new in in mortgage to in success managers addition and trend managers. groups. relationship in have that producers XXXX we attracting One senior wealth revenue on

is Our consistent. simple and story

long You a team is career. on will great and being can us that count help you your here term, for the advance this

management We make and run are team a [ with conservatively strong runway. have ], a deep return a long

us. enjoy you working think also We with

familial full clients. a you to serve capabilities culture, authority your a and have to model local We allow

growth second that and will supporting shrinking next The headwinds portfolios no longer managed These to for are is year's that estate this sustainable. year's won't be supporting growth, be our portfolios factor growth. levels we've real

decline, our future our our markets. X%. our last quarter, this net Year-over-year, reference, with credit the organic factor of in growth environment is that construction For C&D excluding approximately would have annualized loans we supports X%. The shown comfort decline our by loan we've grown excluding growth approximately

months. situations towards We slowing are expect the the we're portfolio charge-offs for our the own seeing move some next that the over one-off byproduct more And to industry XX historical in XX to economy. of trends

plenty guarantees confident our we credit we existing and have However, and of continued With collateral investment in with have quality. our strong in-migration continued don't opportunities. much on attractive and migration whole, And of significant content. growth see with about feel most development -- loss corporate we the relocations, credits,

Our governing rate deposits. the factor generate which at asset growth core we will be on

loan-to-deposit are much currently comfortable is and a that. we operating at level higher Our ratio currently, XX% than

capital opportunistic second deployment acquisitions. priority for is of Our

to those be a interested names to a believe We handful are of to continue are in partner. additive to and that when we find ready franchise our act be would ready banks

earnings for capital execute through marginal continuing third on improvement and sheet additive Our priority team balance continue in his that's Michael optimization. transactions. deployment, our to

as million. $XX.X shares This XXX,XXX we approximately quarter, like that stock for purchased buybacks looked

team quarter. this summarize, So results to for of I'm very our the proud

We us to metrics. done well built. are our in we've some into enhance platform feel that and like revenue to profitability help added sheet strong we've the optimizing going the grow that continue really producers balance We we've

Now I'm to let going go more some into Michael detail. financial the results in

Michael Mettee

this costs, million, morning, earnings the a were a We $XX.X of reported the $XX.X million $X walk million noninterest in core of minute Chris, was million. benefit, income segment. Adjusting was income from million life core Reported separation million. for And noninterest through everyone. of which $XX.X Banking We quarter's you, on world. from million, adjusting net I'll good and which reported expense $XX.X loss $X.X of adjusted $XXX,XXX income million $XX.X cash for came was PPNR assets, Banking core interest expense of million noninterest $XX.X came to insurance first $XX.X altogether, take Thank earnings. $XXX.X million. noninterest sale in

assets. income million. up Going reaped as in quarter a income restructuring margin. the the decline was grew into million for $X.X interest slight We increased interest points, in the first We securities the on more despite or earning average XX detail on net of by X% securities benefit securities the our by basis yield $X.X on and portfolio quarter activities

to over allowed X deposits us to increase cost point the deposits X of our which bank, basis higher by a deposits yield cost interest-bearing some have point and held also on the investment of X third yield cost first increase We straight That our interest-bearing contractual quarter. in for the basis contractual to that lead basis more compared loans than quarter on deposits. of interest-bearing grown marks hold we helped our increase cost a point in

investment the in came repricing remains Half we within $XXX maturing of have loans interest floating our variable billion in June $X.X and X.XX%. rate loans, that of $XXX held of rate reprice June, in portfolio the with For of loan on in we have of with the $X X.XX%, mature our yield And change XXXX Of billion XX with X.XX%. in remainder loans our of days yield over immediately yield for rate X.X%. XXXX, of month million move fixed a on commitments our new those loans a million of around a those rates. in $X.X yield contractual with and was billion rates

was June, cost For versus the X.XX% X.XX% deposits month for the quarter. of interest-bearing of

I've amount stood about noted index will the the Those second target now deposits rate. $X.X reprice immediately balances As funds quarter. in previously, with at a of billion Fed change end at of significant a we the have that

I on our relationships. discussing some detail I'm base, public our deposit giving While spend to want fund time

more to we've made accounts Chris act past relationships. like the that X brokered and years As minimize our to deposits mentioned, customer concerted true rate-sensitive exposure a effort over

And outstanding. billion public second had $X.X funds the as of quarter, we in

checking XX% checking our Our X.XX% accounts quarter second for X.XX% in are in cost interest-bearing the customers accounts. of have and balances interest-bearing of was our accounts of with public XX% us public deposits. funds funds public our to of compared cost overall funds

indicative public primary payroll with accounts for view as us, funds being customer checking of which relationship. We a keeps every our -- we also account those nearly banking process that

we remainder interest X.XX% margin expect For range concentrate as to the to relatively higher net be income the modestly settle and across on footprint. to the of into X.XX% creating more stable year, we a relationships to core for

core fees. than income. swap to by noninterest Banking income noninterest million, typical were At Moving $XX.X driven segment stronger

been year, expect and which to reasonable million the in market the the quarter per experiencing our $XX was profitable challenges rate quarter more a we the a $XXX,XXX the pretax housing result of For another current environment. $XX volatility we've to Mortgage of contribution million remainder in with of range that had be the total recently. given would

of segment benefit for Our noninterest drive core quarter the as operational see the expect second million changes short-term to to in and first $XX.X our expenses an calls, We as discussed we in the quarter million segment compared that and expect performance XXXX. increase million $XXX for of was million $XX.X quarter continued to XXXX expense expense would $XXX incentive have Banking compensation. of $XX.X million in still on Banking the prior we to

continue FirstBank also on the recruiting focus experienced to team. relationship managers to talented We and

$X additional loss quarter. basis That points that one remained specific did or X credit and as experienced credit of that On million on for we credit -- added in and fairly quality, an have and $X.X of the the against we credit we resolution allowance would million quarter third this fourth charge-offs. benign said, reserve total a relationship expect

to the more ratio. I relative during quarter to the Total reserve our environment a the fund to balances. that was provision expense further $X.X majority kept release credit held loss would of the loans to the led and in those The mentioned due specific allowance, continued flat decline commitments by increase to us for reasonably the of points investment the X.XX%. in on impacted quarter have million to reserve basis again allowance increased X economic Speaking first a to

Tier XX.X% ratios and have of as XX.X%. On tangible ratio mentioned, a and X capital to very developed strong capital, with Chris equity assets we common TCE of

focus way growth tangible to and continue deliver capital earnings on value. long-term best book to consistent and to that deploy We the

I'll call Chris. back now over the to turn

Christopher Holmes

pleased we And our with to All Michael. conclude we're right. make. the that continue just certainly comments, prepared progress you, Thank to as

the balance sheet and a is good in trending position in right is direction. Our profitability our

and So to and best I some think the momentum yet got is we've actually here, think we come.

open will questions. the we for that, line with So

Operator

will question-and-answer the begin And Rabatin the first session. Brett [Operator come the now Hovde We question with from Group. will Instructions].

Brett Rabatin

much out talk depositor the then the up I net relative might checking was any much deposit wanted a how have bit. Can quite to larger mix does interesting How those about we was versus And start X on It relationships? press release the referenced moved relationships. deposits. gross? the shift in that your change. And maybe you to -- interest-bearing

the trends the down. any the talk versus money market quarter? about Your maybe reclassification was Was gross there in or net

Michael Mettee

million yes, $XXX it, those to was, relationships $XXX Brett, call million. X

wasn't relatively and pretty the companies to reclassification relationships the we could on of flat. a X the back Interest-bearing we quarter, of market, depending are that. move other acquired, want of still as the was we kind company did One noninterest-bearing for to manage sides but forward money shift, with see there kind hold like of both how or come that. Mix in well anything

Just now some little instead our transactional market interest bit counterparts are money of of in some more the a a is from of funds it's funds checking basis.

product And better than market of our works so a some clients money fund. that for

Christopher Holmes

Brett, those accounts, plus very offer. know funds with we I'll that were a we moved points willing money long-term at just more add those relationships folks to and basis moved they're on than out basis well, have in, on XX have short-term

And the so that's scenario.

Brett Rabatin

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

Christopher Holmes

momentum comments, we sheet. again, the where remix sheet on We're strength balance with pieces Yes, really company We comment of the mentioned and actually forward. kind there's pleased kind my the or on margin, the moving comment in just balance I'll strength I stand strategy about balance sheet Michael personnel-wise, -- of let I'll X of X wise, talked there. of wise. on of

And need growth. -- so we've we and reemphasizing been to

and -- have not We didn't we've on growth. we gone cautious as I'll cautious growth times where exactly where during been through headed, was say, cautious been economic know we've fairly

in we strategically industry back with better But worse I as the and feel rates. it economy our forward as -- said, we're so more really not expect general. Again, and And the to much economies just to be we we we go charge-off sit to where a that. we expecting much normalized revert than with

we'll if And prepare way, for and -- so it the by is, that.

looking lot we're at opportunities so And we're it a with getting of recruiting. --

year will get of ready about margin giving the the even because the [ we're and it last the marginal to way, the margin. talk us little we And as last ] we use here, in half by that's cost grow we we haven't a been bullets in so months. from some holding And of if bit into some up of margin X kind as

So...

Michael Mettee

Yes.

to think we've as on I want And Brett, you lot you're X%, don't of you grow, and take. nailed down right, the costs. on but a to so it because or some term whole tweaks the cost mainly deposit of edges made deposits give add well,

and But going new business some that's stuff over the If not a months, lot view, think you of that down. are I down next to much. But believe XX sure rates whole rates we've broad the getting term moved those longer-term anyway. how we XX quite weren't yes, and CD frankly, of

-- and competitive certainly growth still as then Chris expected, and we maybe not it so bad than basis, challenged. was core scenarios mentioned competitive, but -- will more is where we that's some a on be So --

higher-priced to to have add You grow. some deposits

Christopher Holmes

Yes. I place lot thing and funding, deposit wholesale leverage more talk broker We will one we about through add on base think of funding. don't our this. a

do to quarter. this X% no term to always generally we of go it at outlets. X-year and not than going we're pay we a can just today, can because so We're have deposit. not And out And not X%. different -- that We're -- those going fund kind we're not going we to on

that's sake of won't the something -- do for we that so we growth. And

Brett Rabatin

sneak if in could I And Okay. one. last one That's great.

sound, maybe there giving overall, change got prospects. with you Or On stock? of Chris, optimistic, later some regime you've it say, capital, would I will hold back your be about opportunities buy more year? I Just, this you guys if landscape, potentially economically to excess political thematically, you do watching you maybe M&A continue capital? with the might obviously, mean,

Christopher Holmes

Yes.

go on buy we tangible and capital know Brett, So approval hate and front, have us, we out as to book the back. certainly have the the value. powder, we diluting we are dry you

so we're where buy back. we careful And

back have transaction calculate a quarter, bought pretty If the we we this you it -- at price in like point. at good which looks this

we're to about lot as anything. as of when what is the to And happens important for market, then happens stocks moving M&A of capability it's things an so there. us, a it it become what we the And function -- available apply certainly forward much -- a on is have with it's of that. But the prepared more piece to

many we balance there because that on And banks. sitting ready so think don't out are attractive sheets we're there really

there And we're so and we're but ready. best when we the one us, it's there's one is, -- and bits the culture are ready. When

Operator

question Next Janney Montgomery from come with Christopher will Marinac Scott.

Christopher Marinac

to I that funds and you go want had Mike and Chris, public made. back the to the comments

them you pay partners you are find payroll, similar you funds, being If do merger if certainly the new replace think the Because them you the several public a down other clients payroll can do customers curious the either with less? that you road that public them sources have or about years? those not I'm you pay rate? next Or of funds that

Travis Edmondson

is including of the Generally Generally, accounts cheaper much for the on funds, are nonpublic payroll speaking, accounts. Travis. funds transactional accounts. look public than all-in our you the Yes, the funds this public rate, payroll kind

Michael Mettee

Yes, payroll. Chris, of excess interest, the Yes. that on top

we I that part comfortable in And so your partnering We question And of we community I that's XX% bank those and that? back consider think our what accounts municipalities. those community being like a we'd are been said, generally with think of value up. can funds I the to so clients, has right? replace pretty of public partnerships. with, that multiple kind is, make we're And think of half

And accounts in If to replace where business the getting those so know, day those on to really -- it that's core with continue partner is we grow accounts, growing you as we up, to small takes it's operating to company. think I focus and our expect not build is find but excess some a our interest, augment and but that. focus to operating while, every them and necessarily yes, alternatives. And management may treasury

Christopher Marinac

build Great. help would you And this reserves? anything What see month build do that of kind you that then the from quick reserve more reserve July the question. you Do external support just quarter? factors a see even in of

Michael Mettee

Yes.

at to and real estate So we used the quarter. was on kind of look than worse scenario June May, for commercial baseline first Moody's

that's kind So the of loan. that evaluated really where came individually growth than from

good out I our think pretty should economically There as good. overall, think mentioned, be nothing here, the that there. increasing seeing really we're are in really a that hey, about with our some anything from position materially else on or specific the in have that reserve spot. scenarios we top economic for seem July C&I good like and you I that are we and you are markets up that feel unknown Chris right says, deal But things we There's it.

Christopher Holmes

continue there. that with. But mean things generally, hadn't few just deal had When to at look those, it's with just ]. [ had said. deal plenty deal commercial on our at would -- and equity been estate lost that we've I real a in things just but credit Michael generally dealt found portfolio, to we related. look of content this we just is one our and amplification we've what guarantors add I that as there with we've we've we had and with to When credit

looking a and resulted have so goes got just -- Where we've this in there. and at could think man, future haven't I -- loss industry-wide. we're they it And us you go

collateral can be think I C&I pop tougher the up don't on those when should -- is had times in economic you're everybody and you have we've different. you have because watching inflation those

not you might sometimes, guarantees. And have

of get credit, not made we reserve the C&I C&I credit. so that buckets And actually specific a that content a might loss out reference you is to CRE more

Operator

come Raymond question Next Steve from will Moss James. with

Stephen Moss

for the for year the to cuts? starting here assume your second of moment. margin any going back Does a half with just guidance Maybe the here rate

Michael Mettee

budget But first Steve, think me, of of rate as had Excuse in XX about September it a contemplate see our I guess, happens the has we yes. one year, not, it kind does since basis We'll and the that but cut point late we there's in XX last that if points did or so coming, for certainly there. cuts basis we've year. maybe targeted cut.

Stephen Moss

by the sensitive judging are year a on especially guys balance maybe And deposit Okay. ago? remixing, you sheet today asset more side, than just the

Michael Mettee

we lean towards Actually, a risk sensitive. to work a income. was more some But interest repricing little that of Yes, we're overall net deposits on from I'd the bit of say asset remove indexing done a still neutral. down we've lot the from

Stephen Moss

Appreciate of just that. I then specialty there? drivers the I'm build. side, some to loans kind the great. maybe lending market, the Okay, And color noticed your bucket on by on lending on underlying terms in continues of curious,

Christopher Holmes

XXX $XX,XXX on you And say, around [ and typical that ] a much that's new that, ramped for to a between it's ]. we it's loaning home the actually average little specialty And add is, producer in a anyway. XX-ish -- been loan on a bucket the that us. when anything... side directly than is. guess, the producer. is balance been say, will pretty probably what home up [ we of -- side On manufactured Yes. to That's that of what for just describe the we've What should portfolio, I month-over-month that bit. [ that Travis, XX lending, retail higher that be -- grown purchaser call up I to of somewhere a the we're it's consistent retail it's is would And ] has steady at, us,

Travis Edmondson

well. No, think it described you I

the having we in business sure retailers which operate. of portion over We retail have offerings just seen tweaking the of months, some states to marketplace make relationships an and few good the uptick in last in the out competitive various our we're with that in

Stephen Moss

there. of hired just mentioned producers XX year? then, managing and Maybe I additional you talent. guidance Chris, does expenses beyond kind that thinking to color about pipeline it And Great. for Is just today? still that curious what looks you looking thinking earlier this about or account for Okay. your you like bigger appreciate

Christopher Holmes

Yes.

I calls folks consistent. get more as around probably been from geography. So inbound recruiters, but not to describe hasn't on today big the pipeline, but with on, would offense calling just recruiters and those. it's a we -- our not and St. It to want consistent, or We're us But we're big interestingly, people frankly, Diego are Nashville get Albuquerque there that don't Louis San of that's or to from -- of move no those, we those. a lot hire we not of many lot

coming folks in aren't that interested through recruiter. that know, we're we a What frankly,

so really really have we the what portfolio. some of a we're and more they in They're that talking And about. recruiters experience do. recruiting geography, in that's And that that's

view And to being us were place things to. so the that I've here People things that the place good going long consistent as made is made actually as it's I the be term. for work in a some reference reference and a to intent, with

seeking. And what folks so are many that's

part takes And or what footprint, so tend our from is that's any turmoil else, that we Memphis, to that. Oxford anywhere in Birmingham whether that's really place or any benefit of

Travis Edmondson

Yes.

to to quarter of the same We're in add. momentum people Just talking in of our a couple points geography. talented third the already really seeing

I'll time, that sales thing excited people referencing our bring continuing are long of we've on favorite to known of So prospects those and is the one to note, on Chris team is about what those And And ]. different for people [ our a specifically, are ready we're the bring long cycles. one times more come we're ]. what recent another here for over many [ FirstBank talking is quarters to some reason just and a we've that to people of to seeing in for been bank or many, RMs

Stephen Moss

last appreciate I me. maybe color that just for great. one there. And one here all Okay,

back off a to portfolio, the have quite bit. construction Going balances loan come

of that great. kind maybe much And could lower be Just go? would color they curious how around

Michael Mettee

Yes, Steve.

construction to we're on we're not -- of epic focused -- relationships. think reduce What kind balances trying actively much. as I is we're

relationships And to that existing some We're back if in not construction happens and with comfortable it to anywhere are. that looking we so new deposits business where to be we're everything, bring where we business. that grow were. We're or

And to relationships more so us. than it about is balances it's

our we kind focus come I business And materially or lower where add kind new so we to that's they of and as can move of new as is. materially take expect but don't relationships. them higher opportunities

Christopher Holmes

Well current on this level of what risk regulatory I That as piece we're eye well, for we accept, one keep willing in to regulatory really think the it is say -- thing said, of is now. and to we And are as being regulatory will and the guidance right relationship-driven environment. think Yes. we're comfortable that own and stated, an have risk where the and our our is the threshold especially that Steve, our about tolerance -- portfolio Michael. we risk own we own construction, about us.

some. mind all of likely say, in have keep would type there we you And transaction did let's out to have drop that some capital

well have to keep And so come as you that mind that down. in could

the sure and you to be you would again, doesn't you, become for make barrier on so -- what to whenever have And there, got room you'd a opportunity that and want taking to on, you. you've dependent do

Stephen Moss

appreciate I the all Great. and color everything.

Operator

The KBW. next will question with from come Mealor Catherine

Catherine Mealor

Back to the margin.

so restructure you towards was cash us piece yield? yields where yields securities to the I up the last bond higher. for half outlook did big the of to is of year? flow security back this know anything else going much? that your yield about late you But about quarter, maybe us can Michael, just going so you quarter push to And the and maybe to talk Just the had a the talk book bond that

Michael Mettee

Yes.

a million of that hundred I throughout the come couple there's back the So or mature year. reprice half think

some reprice X% of it, call saw one the the a X%, treasuries and so in we quarter And went X% to up, from a is benefits yield. second reinvestment

of So reinvested. I of maturing is a at a have apple there quarters we've ago, ]. this much we certainly some couple cycled took to because the lower-yielding [ and don't We that. Obviously, called of bite what through point lot the dogs the as benefit stuff it

much So probably you're I to don't going as basis pops. XX benefit. not point think seeing be

forward. So look continue any kind more reinvestment said, you than, didn't maturing at do a mentioned, as consistency That other just lot being from restructuring of we quarter opportunities. do this reinvesting. and here to deployment We capital and

Catherine Mealor

saw Great. for. makes C&I credit up, -- C&I sense. you I a so little bit mentioned the that your that to we that a credit reserve it And know you added about then go a specific talk and you back C&I Can was reserve

the size industry the any other or within type you any it's in. migration credit, of outside seen classifieds criticized, just the then your of So within portfolio? migration maybe other that one have of and credit,

Travis Edmondson

Yes.

to it's a service one dynamics into they combined to of and And changes On the in the but bankruptcy. industry a another that and company the weeds, to X this what forced in do licensing which for had where fraud, industry, company there was it burden some particular provider not that to the in the unforeseen. substantial specific was service some get credit, the added was it was also was

better. our are of We bit movement I quite a see do but classified stuff without of buckets but a at saying. see I'm see we've what we and on do, migration, We buckets, seeing we we're just that credits, adversely some stuff happened guess, what that specific. And out into come And various getting seeing little going adversely in so the is getting we yes, that's classified. bit out seen always coming still things too more going we in. see that whole, But

Michael Mettee

there, rev it. not asked little about of fully bit but reserved Yes, in And Catherine, we're that's ] of the there's credit the [ C&I on that you collateralized. on credit, so bankruptcy, size a

be... should we So

Travis Edmondson

We're by fully collateralized on credit, not that's reserved estate. the real

Michael Mettee

yes. Right,

if So based additional there you're to on is wouldn't going asking, be it. reserve that, foresee I

Travis Edmondson

Nothing ]. there [

Catherine Mealor

Okay. And the the credit? size what -- what's of current

Christopher Holmes

of a , size Current $X credit million-ish. say the it's is let's

Travis Edmondson

related are $XX No. It's approximately. ones well, roughly the million, all

Christopher Holmes

]. a $XX It's under [ shade million

Operator

will question from come JPMorgan. Alex next The Lau with

Alex Lau

back the growth low growth the the from come half loan for mid-single-digit if confirm of outlook net expect you can you the half the And second to was specifically? loan year? of Chris, where for do to year for

Christopher Holmes

balance we're Yes. so remember with We're loan a If that those targeting of come really check. community does bank. where ourselves numbers And from? of we it kind the think in that you deposit and sheet as keeping there

loan from So multiple and geographies comes from it it comes multiple types.

hope it's is biggest and single -- contributor. think -- we've the so probably C&I we And

so anything going industries. then little that's to lot. And we... a but lending. of Travis, a real multiple come else be specialty that with from continued estate, And There progress not could bit

Travis Edmondson

and the portfolio industry we No, to specific entire growth. get look or We geography hand our at target don't growth specific on. entire footprint to no, that a really the

As absent Chris get we've X% in to down. trying remarks, his grown opening ADC referenced roughly the

that's the way headwinds basically we've down do bucket So another it. the ADC been think is of getting continuing what doing to without to about

Christopher Holmes

like so -- will like be side. would thing I It it both on and is say be the other granular. our and -- The to fairly we portfolio deposit loan

It out be will solid And buying It and so will tell the make syndicated will it growth if be buying but deals. rate It that. you participation. we then lower -- up. be and our what won't That's not be than -- not will can't customers relationship won't it get usual I'll going be. what

Alex Lau

That's in much you great assuming construction And in are runoff color. that loans outlook? how

Michael Mettee

Yes, relatively forward. from flat here

Alex Lau

you were to of decline How Or loan do just of on it, in the balance then commitment $XX is your -- in this outlook? pace the the about the expect And ahead? commitments those side construction down quarters that million. similar commitments

Travis Edmondson

similar I to balanced our think it's outlook.

as see as commitments to the not past going rapidly they think quarters. few the I decline in it's have

Michael Mettee

in down that We're Yes. million to commitments bucket. unfunded $XXX year-over-year

so And at business normal of stabilized. this kind operating most of point, that say is I'd

Alex Lau

quarter, And a public to billion, expecting on it billion. were at peak just you $X.X $X.X funds. Last follow-up then the

customer expectations quarter, recent third your this this peak how actions expect increase seasonal quarter? any this the year? the do has Given for changed in deposits you And

Michael Mettee

No.

I it's as we're construction. -- the almost story same think

flattishness the in think has bucket I that million growth in or of kind We funds. as mentioned, -- we loan from that $XXX here. overcoming kind stability decrease of overcome public construction expect X% Travis deposit growth

at And this bogey well. be kind to so I expect point that as gone of

Travis Edmondson

in clients. have remember funds, But public if seasonality there or we public adding also is regardless we're to to actual the funds, an declining

year, fourth to the they other what holding of to on is point in gets have then of that third and low kind the the start pay they're taxes usually all of season. pay So because for come and next balance things expenses all quarter until tax they the

Alex Lau

does added And year. one are outlook? follow-up year? what this How contribution And Great. of year's producers to revenue being this say, on in revenue type this producers the of you investing this pace compared expecting last to,

Christopher Holmes

Yes.

mindful don't year. places. time than the data, say remember where like looked impact. does an of the to the add it's expense a getting base, same year, It will -- and One, and it much folks continue very we're So that last terms the and I our we're takes at in us we exact But I'd frankly, we add run how of certainly, what basis. of to has the to business-as-usual last higher X to it company expenses add. the disciplined caliber chance on

of stuck this that to to to stick and be on We we that consider top have year. so throughout And that. very this rigidly

And consider that. about We But so we this call allow thought of on to some did for business-as-usual do we on what our of top this we top budget. as expenses. is be

Travis Edmondson

revenue get. producer expense another expense say good I on any very diligent that to going our but on We Yes. the additional is expense take initiatives can that would way we good as to not we're to pass producers revenue number. we're make of mean on

Michael Mettee

they've So other typically, on Alex, institutions. right? in your at been And come as right lot a of Yes. that's aspect, people growth 'XX, on, competing

so And agreements. there's agreement we there, some those honor and

'XX. year. half It's not 'XX, out 'XX, is And of back further necessarily the so growth a in the

Christopher Holmes

about. what we're not not some that that We're but producers reliant us. certainly not counting those get, we've panning necessarily We're makes on be it's Any there them numbers counting be happen out. sure will absolutely make for. on we on to these help I'm talked to for And that grateful

times, said, by of abide those. there we are a in and XXX% Michael place absolutely agreements As lot

on don't that. count And so we

Operator

Instructions]. [Operator

from will Our next come question Russell Gunther with Stephens.

Russell Elliott Gunther

point. A couple of follow-up questions at this

on first loan that in glide 'XX. XX% to number the The growth path

declines that construction willingness you have? parse just the how a new just terms legacy a in guys producers with some by the of that currently in grow longer of to would driven versus balances no much revenue the bit You versus producers be little

Christopher Holmes

Yes.

to it on. We So we assumptions do count the are there's there's producers producers on a currently come bulk has in it. from nice no have. we count because the net And frankly, on unknown, coming that bunch additions of well of all runoff an of from the that

unknown. along lose guess -- all also the you could it's way. But producers So some you I

So of are there a we going are lot -- that. variables that into

on guys at come it. the is bulk the here I we how getting look I'm So you from other relationship count of at table. the from to X of agreement nods that sitting of have force that managers the And

Russell Elliott Gunther

Very good. again on done a have favorable things. then great of you Trends And were expense job guys this quarter. the side

You reiterated And your does core I producers. increase revenue expectations. recall, not full significant that assume a year bank if new in guide

current pipeline punch be on that So I'm you expect to back just suggest guide? does for guys current half outside? year. the expectations your Would potential trying already to parse to within added the the based you've and of the the Or

Michael Mettee

Travis months, quarters, recruiting. -- worth lot be inside But those appreciate to Russell. years is guide. conversations mentioned, of I a Yes, comments, yes, current it the this as expect in and this look, Yes. of we

timing certainly people have value Chris them us, how acquisitions, do. like to bring manage than always attractive we so ready don't bank, and we get to But and to up bring when they're we value we And when to just they bank come it. bring accept and when but choose the they we

a So these I've going guys. put to not I that top-tier away wouldn't -- on turn talent of because number I'm

Christopher Holmes

we I continue think slightly we're shy not as to guidance. investment within in guidance very, be that a to I say, going us from very, And succinctly If we very to more to it said opportunities, that causes the them. think outside it Yes. future. we'll We Michael it's get well, put good away and go that will hey today, think

good get we and today, we if that we're we'll So do. that going within are do to long-term hire to on feel company, pretty as certainly we the things right to update you opportunities our constructive continue we for that, about being

Russell Elliott Gunther

capital switching in repositioning just then saw And to the excess deployment. a numbers the benefit prior Understood. securities quarter. the We this of

You I at active evaluate just were be as basis, like? XQ, set a where And both on look to expect you we does guys more active? opportunity the quarterly you with the understand looked what buyback. would

Michael Mettee

repurchase is daily up. back it kind being on Yes. there sheet evaluate were runoff, a share if ready the of more just I mean but than probably it with it's balance in right now on you said, we're basis. the That

probably evaluate security back desk, to side. of scenarios, will get quarterly, on my but said there waiting couple I'll You to the a be

number But probably it's more share at repurchase spend than So this organically. we'd there love point. it That's to one.

we'd recruiting team that where we've and these lift-outs to been As it. discussing, spend that's love

Russell Elliott Gunther

handful names. And then your also just on the terms reminded and the a desired remind us you last one in Could interest Okay. in Great. size you targeted geographies? of M&A asset of front, of

Michael Mettee

Yes.

$X it, size, billion to asset geographies. Call targeted asset $X Our billion would size. be

range. And wide kind of a so that's

be is say same Maybe western a Carolina, Georgia, say, of those even Mostly, overlap I'd there's presence. Carolina's South contiguous geography. at, South of kind geography or not we X X take of expand state that X South young Alabama we is place we maybe to of interested. to much would those to technically just places Carolina be not mid that very to would contiguous existing as and the out Carolina. very we have and is of side center -- part existing North we our love The I'd are chance but point X and would good and state, do be a on Virginia, we'd we that the of with same. but Virginia, technically got So things western add preferable to if a the that. Geographically, state expand a would the of most Virginia to our of And there,

to most So a a we we're our continue are Tennessee the places we place be is -- where a interested. And to where do we have those we don't friends we those neighbors where other all not, are lot least then understand and to and culture And or exist. grow we the friendly up where state we'd currently think either that's place and a we and we where those be in Northeast of where there. places consider at love the place

Operator

closing question-and-answer This concludes I the ahead. session. to our Mr. Chris for to Holmes back any over Please would go turn remarks. like conference

Christopher Holmes

Yes.

again So always to talk thank We everybody's before, quarter. QX. we'll to this We Thanks. interest. next forward on we talk you look very to this don't you appreciate morning, call you we joining if us much. And and appreciate you

Operator

The conference has now today's attending concluded. Thank for you presentation.

disconnect. may You now

FB Financial (FBK) 16 Jul 242024 Q2 Earnings call transcript