FB Financial Q2 2025 slides: NIM expansion and merger progress despite restructuring costs

FB Financial Corporation (NYSE:FBK) presented its second quarter 2025 results on July 15, showing improved core performance despite a significant securities portfolio restructuring that impacted reported earnings. The company highlighted net interest margin expansion, continued loan and deposit growth, and the successful closing of its merger with Southern States Bancshares.

Executive Summary

FB Financial reported net income of $2.9 million for Q2 2025, heavily impacted by a $60 million securities portfolio restructure loss. On an adjusted basis, excluding this one-time event, net income reached $40.8 million. The company posted diluted earnings per share of $0.06 on a reported basis and $0.88 on an adjusted basis.

As shown in the following overview of Q2 2025 results, the company achieved several positive operational metrics despite the restructuring impact:

The bank’s net interest margin expanded by 13 basis points to 3.68%, exceeding previous guidance of 3.55-3.6% mentioned in its Q1 earnings call. This improvement came alongside annualized loan growth of 4.2% and deposit growth of 7.2%, demonstrating continued operational momentum.

Quarterly Performance Highlights

FB Financial’s net interest income increased to $112.2 million in Q2 2025, up from $108.4 million in the previous quarter. This improvement was driven by increased average loan balances of approximately $220 million, reduced deposit costs of about 6 basis points, and one additional day in the quarter.

The following chart illustrates the company’s consistent improvement in net interest margin over recent quarters:

Noninterest income was significantly impacted by the securities restructuring, resulting in a reported figure of $(34.6) million. However, adjusted noninterest income increased by $2.2 million from the previous quarter to $25.8 million, led by improvements in swap fees, mortgage banking income, investment services, and ATM & interchange fees.

The company has demonstrated consistent improvement in key shareholder value metrics over time, as shown in the following performance indicators:

Strategic Initiatives

A major strategic move during the quarter was the $266 million securities portfolio restructuring, which resulted in a $60 million loss. Management indicated this transaction is expected to provide approximately a 6% yield pickup with a payback period of less than four years, positioning the bank for improved future earnings.

The company successfully closed its merger with Southern States Bancshares, Inc. on July 1, 2025, ahead of the previously expected timeline. System conversion is anticipated in Q3 2025, with full integration expected to deliver approximately 12% EPS accretion by 2026 and improve the efficiency ratio to around 50%.

The following timeline and metrics highlight the merger progress and expected benefits:

Loan Portfolio and Credit Quality

FB Financial’s loan portfolio grew by approximately $103 million during the quarter, representing a 4.2% annualized growth rate. The growth was primarily driven by residential mortgage loans and lines of credit (up $56 million), commercial real estate non-owner-occupied balances (up $45 million), and consumer loans (up $43 million).

The company maintains a diversified loan portfolio across various industries and property types, as illustrated in the following breakdown:

Credit quality metrics remained stable, with the allowance for credit losses at $149 million, representing a coverage ratio of 1.51%. Net charge-offs returned to historical levels at an annualized rate of 0.02%, down from 0.14% in the previous quarter. The nonperforming assets to total assets ratio increased slightly to 0.92%, up 8 basis points from the previous quarter.

Deposit Base and Funding

FB Financial reported strong deposit growth of 7.2% annualized in Q2 2025. The company’s strategic focus on growing relationships resulted in higher balances in non-interest bearing and money market accounts, while also seeing an increase in public funds deposits.

The following chart illustrates the company’s deposit composition and trends:

The cost of deposits improved to 2.48% in Q2 2025, down from 2.54% in the previous quarter, reflecting the company’s deliberate runoff of higher-cost non-relationship portfolios. Checking accounts represent 39% of total deposits, providing a stable funding base.

Capital Position and Outlook

Despite the securities restructuring and merger activity, FB Financial maintained strong capital ratios, with a Tangible Common Equity to Tangible Assets ratio of 10.4% and a preliminary Common Equity Tier 1 ratio of 12.3%. The company executed approximately $34 million in share buybacks during the quarter.

Looking forward, FB Financial is focused on completing the integration of Southern States Bancshares, with system conversion expected in Q3 2025. The merger is anticipated to provide meaningful earnings accretion and efficiency improvements by 2026.

The bank’s office loan exposure, which has been a concern for many financial institutions, appears well-managed at 4% of total loans held for investment, with 99% of the portfolio pass-rated and current. The weighted average loan-to-value ratio for office loans over $2 million stands at 56.9%.

FB Financial stock closed at $49.21 on July 14, 2025, up 2.05% for the day, and has shown resilience compared to the 19.8% year-to-date decline reported in its Q1 earnings release. The stock continues to trade within its 52-week range of $38.83 to $58.88.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.