FB Financial Q3 2026 Earnings: Lower Credit Costs Lift Net Income

FB Financial (NYSE: FBK) reported Q3 2026 revenue of $174.5 million, up about 0.4% from $173.9 million a year earlier, while diluted EPS increased to $1.20 from $0.43. Net income rose to $60.2 million, primarily as the provision for credit losses fell sharply and prior-year merger and integration costs did not recur, although net interest margin narrowed to 3.83%.

Core Earnings Data

Revenue was nearly unchanged year over year. A 1.8% increase in net interest income was offset by lower noninterest income, including a decline in mortgage banking revenue.

The year-over-year increase in GAAP earnings was much larger than the underlying operating improvement. Adjusted net income rose 5.8%, while adjusted diluted EPS increased 13.1%; the larger per-share gain also reflected a decline in diluted shares outstanding to 50.3 million from 54.0 million. Adjusted pre-tax pre-provision net revenue decreased about 1.9% to $79.4 million.

Adjusted results are non-GAAP measures. The prior-year quarter included $16.1 million of merger and integration costs, which contributed to the unusually large increase in reported net income and EPS.

Loan and Deposit Growth Remained Broad-Based

Loans held for investment reached $13.18 billion at September 30, 2026, up 7.17% year over year and 9.68% on an annualized sequential basis. Sequential growth included increases of $133.6 million in one-to-four-family mortgages, $91.6 million in commercial real estate loans and $41.6 million in multifamily mortgages. Construction, residential credit lines, and consumer and other loans also increased.

Deposits rose 6.18% year over year to $14.67 billion and grew at an 8.82% annualized rate from the previous quarter. However, the mix of growth was concentrated in interest-bearing deposits. Noninterest-bearing deposits remained approximately $2.78 billion, while non-brokered interest-bearing deposits increased to $11.26 billion from $10.89 billion sequentially. Brokered deposits declined to $626.7 million from $685.9 million.

Higher Funding Costs and Lower Mortgage Income Pressured Operating Leverage

The contractual yield on loans held for investment was nearly stable sequentially at 6.21%, compared with 6.22% in Q2. In contrast, the cost of interest-bearing deposits increased to 2.88% from 2.81%, and the total cost of deposits rose to 2.32% from 2.26%. This mismatch pushed net interest margin down 12 basis points sequentially and year over year to 3.83%.

The margin also absorbed a three-basis-point effect from reversing $1.0 million of previously accrued interest on a nonaccrual loan. Purchase-accounting accretion contributed 11 basis points, down from 13 basis points in the prior quarter. Balance-sheet growth still allowed tax-equivalent net interest income to increase modestly to $150.8 million from $149.8 million sequentially.

Fee revenue provided less support. Mortgage banking income declined to $9.4 million from $13.5 million a year earlier and $11.2 million in Q2, contributing to the reduction in total noninterest income to $24.5 million.

Adjusted noninterest expense increased to $95.3 million from $93.5 million a year earlier. The adjusted efficiency ratio consequently rose to 54.3% from 53.3%, showing that higher expenses and weaker mortgage profitability offset much of the benefit from balance-sheet growth. Management attributed the pressure to mortgage banking, funding costs and continued investment in growth initiatives.

Credit Quality and Capital

Lower credit costs were the largest contributor to earnings growth. The quarter’s provision included $1.2 million for loans held for investment and $0.3 million for unfunded commitments. Net charge-offs were $1.2 million, equivalent to 0.04% of average loans on an annualized basis, compared with 0.05% a year earlier.

Asset-quality measures were stable sequentially but higher than a year ago. Nonperforming loans represented 1.18% of loans, versus 1.17% in Q2 and 0.94% in Q3 2025. Nonperforming assets were 1.13% of total assets, compared with 1.14% sequentially and 0.89% a year earlier. The allowance for loan losses remained approximately $194.0 million, but declined to 1.47% of loans from 1.51% in the prior quarter as the loan portfolio expanded.

FB Financial reported a preliminary total risk-based capital ratio of 13.6% and a preliminary common equity Tier 1 ratio of 11.0%. Tangible common equity represented 9.32% of tangible assets. The company also issued $125.0 million of subordinated debt and repurchased 545,214 shares for $29.3 million during the quarter. Tangible book value per share increased 5.6% year over year to $31.50.

Risks Investors Should Watch

• Continued margin pressure: Deposit costs rose while loan yields were almost unchanged, leaving earnings sensitive to further changes in funding costs and deposit mix.
• Weaker fee income: Mortgage banking income declined both sequentially and year over year, reducing diversification outside net interest income.
• Operating leverage: Adjusted expenses increased and the adjusted efficiency ratio worsened despite loan and deposit growth. Returns from current growth investments will be important to future profitability.
• Nonperforming loan levels: Charge-offs remained low, but nonperforming loan and asset ratios were higher than a year earlier, while the allowance ratio declined as loans grew.

Summary

FB Financial’s Q3 2026 earnings benefited mainly from substantially lower credit provisions and the absence of prior-year merger costs. Loan and deposit growth remained healthy, but a higher-cost deposit mix, lower mortgage banking income and increased adjusted expenses limited underlying operating improvement. The main issues to monitor are whether balance-sheet growth can translate into better operating leverage, whether funding costs stabilize and whether nonperforming loan ratios remain contained.