Business Overview and History
FB Financial Corporation (FBK) is a Tennessee-based bank holding company that has established itself as a prominent player in the Southeastern United States banking landscape. With a focus on personalized community banking, the company has carved out a unique niche that has allowed it to navigate challenging industry conditions and position itself for continued success.
FB Financial Corporation was originally chartered in 1906, making it one of the longest continuously operating banks in Tennessee. The company's growth trajectory underwent a significant shift in 1984 when an experienced banker and entrepreneur partnered to acquire Farmers State Bank and rebranded it as FirstBank, laying the foundation for the current franchise.
In 1988, Farmers State Bank purchased the assets of First National Bank of Lexington, Tennessee, and changed the name to FirstBank. James W. Ayers became FirstBank's sole shareholder in 1990 and remained so until the company's initial public offering in September 2016. Under Ayers' leadership, the bank grew from just $14 million in assets in 1984 to $13.16 billion in total assets as of December 31, 2024.
From 1984 to 2001, FB Financial primarily operated as a community bank, expanding organically and through small acquisitions in West Tennessee. In 2001, the company's strategy evolved to include a modest presence in metropolitan markets, laying the groundwork for its subsequent expansion. FB Financial entered the Nashville and Memphis markets in 2001 by opening branches in each of those cities. The company then expanded into Knoxville in 2004 and Chattanooga in 2008.
FB Financial's metropolitan market presence grew significantly in the 2010s, with the company establishing a strong foothold in the Nashville MSA, which now accounts for 41.5% of the company's total deposits. This strategic shift, coupled with targeted acquisitions, has transformed FB Financial into a well-diversified institution with a balanced business model serving both metropolitan and community markets.
In 2014, FB Financial expanded into the Huntsville, Alabama MSA, and in 2020, it entered the Bowling Green, Kentucky MSA through an acquisition. During 2021, the company also expanded its banking division into Central Alabama by hiring additional experienced senior bankers in Birmingham.
Financial Performance and Ratios
As of December 31, 2024, FB Financial reported total assets of $13.16 billion, loans held for investment of $9.60 billion, total deposits of $11.21 billion, and total common shareholders' equity of $1.57 billion. The company's financial performance has been consistently strong, with the following key metrics:
- Revenue (2024): $725.54 million - Net Income (2024): $116.03 million - Operating Cash Flow (2024): $416.50 million - Free Cash Flow (2024): $132.25 million
In the most recent quarter (Q4 2024), FB Financial reported revenue of $130.38 million and net income of $37.9 million, representing year-over-year growth of 12% and 28.7%, respectively.
FB Financial's solid financial position is further underscored by its robust capital ratios, with a tangible common equity to tangible assets ratio of 10.2% and a preliminary CET1 ratio of 12.8% as of December 31, 2024. The company also reported a total risk-based capital ratio of 15.2%. These metrics, along with the company's impressive return on average assets (0.91% in 2024) and return on average tangible common equity (9.24% in 2024), demonstrate FB Financial's financial strength and resilience.
Liquidity
FB Financial maintains a strong liquidity position, which is crucial for meeting its financial obligations and supporting its growth initiatives. The company's liquidity management strategy includes maintaining diverse funding sources, including a stable deposit base, access to wholesale funding markets, and available borrowing capacity through various channels.
As of December 31, 2024, FB Financial reported cash and cash equivalents of $1.04 billion. The company's debt-to-equity ratio stood at 0.148, indicating a conservative leverage profile. FB Financial also maintains significant borrowing capacity, including a $1.4 billion line of credit with the Federal Home Loan Bank (FHLB), which remains fully available, and $370 million in unsecured borrowing capacity with other commercial banks, also fully available.
This robust liquidity profile enables FB Financial to navigate market fluctuations and capitalize on opportunities as they arise.
Business Segments
FB Financial operates through two main business segments: Banking and Mortgage.
The Banking segment is the company's primary segment, providing a full range of deposit and lending products and services to corporate, commercial, and consumer customers. This includes commercial and industrial loans, construction loans, residential real estate loans, multi-family loans, commercial real estate loans, and consumer loans. The Banking segment generates the majority of the company's net interest income, which increased by $9.5 million or 2.4% year-over-year to $410.8 million in 2024. This was driven by an increase in yields on interest-earning assets, particularly loans and taxable investment securities, which more than offset the increase in the cost of interest-bearing liabilities. The Banking segment represented $12.55 billion in total assets as of December 31, 2024.
The Mortgage segment focuses on originating conforming residential mortgage loans, which are then sold to third-party private investors or government sponsored agencies. The Mortgage segment generates revenue primarily from mortgage banking income, which increased by $1.9 million or 4.3% year-over-year to $46.6 million in 2024. This increase was driven by higher gains and fees from the origination and sale of mortgage loans held for sale, as well as an increase in the net change in fair value of mortgage servicing rights and related hedging derivatives. The Mortgage segment represented $603.1 million in total assets as of December 31, 2024.
Overall, the Banking segment remains the larger and more profitable of the two business lines, contributing $143.1 million in income before taxes compared to $3.6 million for the Mortgage segment in 2024. However, the Mortgage segment provides diversification and an additional revenue stream for the company.
Operational Highlights and Strategies
One of the key factors contributing to FB Financial's success is its unique operating model, which combines a community banking approach with the resources and capabilities of a larger institution. The company's local market authority model empowers experienced bankers in each of its markets to make decisions and deliver personalized service to customers, while still providing a robust product suite and technology infrastructure.
This strategy has allowed FB Financial to capitalize on growth opportunities in both its metropolitan and community markets. In the company's metropolitan markets, such as Nashville, the Bank has achieved top-10 deposit market share positions through a combination of organic growth and strategic acquisitions. In its community markets, FB Financial has been able to leverage its deep local relationships and product offerings to maintain a strong competitive position.
Looking ahead, FB Financial remains focused on several key priorities: 1) Enhancing market penetration in its existing footprint, 2) Pursuing strategic and accretive acquisitions, and 3) Improving operational efficiency through technology and scalability initiatives. The company's strong capital position and experienced management team position it well to execute on these initiatives and drive continued growth.
Risks and Challenges
Like any financial institution, FB Financial faces a variety of risks, including credit risk, interest rate risk, liquidity risk, and operational risk. The company's risk management framework, which includes robust policies, procedures, and oversight, is designed to identify, monitor, and mitigate these risks.
One specific risk factor for FB Financial is its geographic concentration in the Southeastern United States, particularly in Tennessee. While this region has experienced significant growth and economic dynamism, any downturn in the local economy could have a disproportionate impact on the company's performance.
Additionally, the banking industry as a whole continues to grapple with the challenges posed by technological disruption, regulatory changes, and evolving customer preferences. FB Financial's ability to adapt and innovate will be crucial in maintaining its competitive edge.
Guidance and Future Outlook
FB Financial has provided guidance for the upcoming periods, demonstrating confidence in its strategic direction and growth prospects. For the first quarter of 2025, the company expects its net interest margin to range between 3.54% and 3.61%. Banking non-interest expense is projected to be between $64 million and $66 million for the same period.
Looking at the full year 2025, FB Financial anticipates growing banking expenses by approximately 4% to 5% as it continues to expand its business. The company is targeting a low double-digit to high single-digit loan growth rate for the year, reflecting its optimistic outlook on market opportunities and its ability to capture market share.
FB Financial remains committed to deploying capital to drive earnings per share growth and create long-term shareholder value. The company's capital allocation priorities include organic growth, potential bank acquisitions, and exploring opportunities for securities repositioning and/or share buybacks.
These projections build upon FB Financial's strong performance in 2024, where the company reported earnings per share of $2.48, or $3.40 on an adjusted basis, representing a 13% year-over-year increase. The company's full-year 2024 pre-tax pre-provision net revenue was $158.7 million, or $217.1 million on an adjusted basis, marking a 20% year-over-year increase.
Conclusion
FB Financial Corporation has established itself as a premier community bank in the Southeastern United States, leveraging its unique operating model and strategic focus to deliver consistent financial performance and create long-term value for its shareholders. With a strong capital position, experienced management team, and well-defined growth strategies, the company appears poised to navigate industry challenges and capitalize on emerging opportunities in its markets.
As the banking landscape continues to evolve, FB Financial's commitment to personalized service, local decision-making, and prudent risk management positions it as a resilient and adaptable institution capable of driving sustainable growth and delivering attractive returns for its investors. The company's robust financial performance, strong liquidity position, and clear strategic vision provide a solid foundation for future success in the competitive banking industry.