FB Financial Q3 Profit Rises as Credit Provision Falls

FB Financial Corporation (NYSE: FBK) reported higher third-quarter earnings as a sharp decline in credit-loss provisions offset pressure from deposit costs, weaker mortgage activity and increased compensation expenses. Net income for the quarter ended September 30, 2026, rose to $60.2 million, or $1.20 per diluted share, from $23.4 million, or $0.43 per share, a year earlier.

Adjusted net income, which excludes items management does not consider indicative of ongoing performance, was $60.9 million, or $1.21 per diluted share. That compared with $57.6 million, or $1.07 per share, in the third quarter of 2025. Adjusted return on average tangible common equity was 15.7%, while adjusted return on average assets was 1.44%.

The provision for credit losses fell to $1.4 million from $10.1 million in the second quarter and $34.4 million a year earlier. FB Financial said an improved macroeconomic outlook largely offset reserves associated with new loan production. The year-earlier provision included an initial reserve for acquired non-purchased credit-deteriorated loans and unfunded commitments.

Revenue was broadly stable at $174.5 million, compared with $174.8 million in the preceding quarter and $173.9 million a year earlier. Pre-tax income increased to $77.0 million from $73.2 million in the second quarter, while adjusted pre-tax pre-provision net revenue was $79.4 million.

Loan Growth Supports Interest Income as Funding Costs Rise

Tax-equivalent net interest income increased to $150.8 million from $149.8 million in the second quarter, supported by loan growth and one additional day in the reporting period. Those benefits were partly offset by higher deposit volumes and rates, as well as a roughly $1 million reversal of interest on a nonaccrual loan.

The tax-equivalent net interest margin declined to 3.83% from 3.95% in the previous quarter. The nonaccrual interest reversal reduced the margin by about three basis points, while deposit-cost pressure accounted for additional compression. Contractual loan rates were nearly unchanged at 6.21%, compared with 6.22% in the second quarter.

Loans held for investment rose by $314 million during the quarter to $13.18 billion, representing annualized growth of 9.68%. Residential first-lien mortgages contributed $134 million of the increase, commercial real estate added $92 million and multifamily loans rose by $42 million. Construction balances increased by $19 million.

Deposits reached $14.7 billion, reflecting annualized growth of 8.82%, while client deposits grew at an 11.0% annualized rate. The company attributed the increase to new consumer and commercial customers. Brokered deposits declined as maturing balances were allowed to run off. The total cost of deposits rose six basis points sequentially to 2.32% amid deposit competition and higher market rates.

Mortgage Weakness and Higher Incentive Costs Weigh on Expenses

Noninterest income decreased to $24.5 million from $25.8 million in the second quarter. Mortgage banking income fell by $1.7 million as higher market rates reduced customer demand and sales volumes. The decline was partly offset by a $516,000 increase in swap fees and a $414,000 rise in investment services and trust income, which the company linked to growth in assets under management.

The mortgage segment recorded a GAAP pre-tax loss of $655,000, compared with pre-tax income of $1.6 million in the previous quarter. Excluding a $719,000 one-time mortgage loan subservicer transition charge, the segment generated adjusted pre-tax income of about $64,000. Segment revenue fell to $13.3 million from $14.9 million, while interest-rate lock commitments declined to $330 million from $436 million.

Companywide noninterest expense rose to $96.0 million from $91.5 million in the second quarter, including approximately $2.4 million of higher performance-based compensation and the subservicer transition cost. Advertising and data-processing expenses also increased. The reported efficiency ratio was 55.0%, and the adjusted ratio was 54.3%.

Credit Costs Remain Modest, Though Coverage Declines

Annualized net charge-offs were 0.04% of average loans, down from 0.06% in the preceding quarter. The allowance for credit losses remained at approximately $194 million, while the coverage ratio declined to 1.47% from 1.51% as loan balances expanded.

Nonperforming loans represented 1.18% of loans held for investment, compared with 1.17% in the second quarter. Office loans totaled $514.8 million, or about 4% of the loan portfolio. The company said 98% of office exposure was pass-rated and current, with $59.5 million, or 12% of the office portfolio, scheduled to mature by the end of 2026.

Capital Issuance Expands Funding for Growth

FB Financial completed a $125 million subordinated debt issuance during the quarter, which increased its total risk-based capital ratio to a preliminary 13.6% from 12.9% in the second quarter. The preliminary common equity Tier 1 ratio remained at 11.0%, while the non-GAAP tangible common equity-to-tangible assets ratio declined to 9.32% from 9.49%.

The company repurchased about 545,000 shares for $29 million during the quarter. It reported $1.8 billion of on-balance-sheet liquidity and $8.6 billion of other available liquidity sources. Its $1.5 billion securities portfolio, representing about 9% of total assets, contained no held-to-maturity securities and had approximately $60 million of after-tax unrealized losses in accumulated other comprehensive income.

Management indicated that continued loan and deposit growth, capital deployment and strategic investment remain priorities. Results remain exposed to deposit competition and funding costs, changes in interest rates, weaker mortgage demand, deterioration in commercial real estate or borrower credit quality, and the execution risks associated with growth initiatives and acquisitions.