FB Financial Q4 2025 FB Financial Corporation Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 FB Financial Corporation Earnings Call
Speaker #1: Can you take this one?
Speaker #2: Good morning, everyone, and welcome to the FB Financial fourth quarter 2025 earnings call. Please note today's event is being recorded. At this time, I'd like to turn the conference call over to Mike Orkut with FB Financial.
Speaker #2: Please go
Mike Orcutt: Good morning and welcome to FB Financial Corporation's Q4 2025 earnings conference call. Hosting the call today from FB Financial are Chris Holmes, President and Chief Executive Officer, and Michael Mettee, Chief Operating and Financial Officer. Please note FB Financial's earnings release and supplemental financial information.
Speaker #3: Good morning, and welcome to FB Financial Corporation's fourth quarter 2025 earnings conference call. Hosting the call today from FB Financial are Chris Holmes, President and Chief Executive Officer, and Michael Mettee, Chief Operating and Financial Officer.
Speaker #3: Please note, FB Financial's earnings released in supplemental financial information and this morning's presentations are available on the investor relations page of the company's website at www.firstbankonline.com.
This morning's presentations are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the Securities and Exchange Commission website at www.sec.gov. Today's call is being recorded and will be available for replay on FB Financial's website approximately an hour after the conclusion of the call. At this time, all participants have been placed in a listen-only mode.
Speaker #3: And on the Securities and Exchange Commission's website at www.sec.gov, today's call is being recorded and will be available for replay on FB Financial's website approximately an hour after the conclusion of the call.
Speaker #3: At this time, all participants have been placed in a listen-only mode. The call will be open for questions after the presentation. During this presentation, FB Financial may make comments which constitute forward-looking statements under the Federal Securities Laws.
Mike Orcutt: The call will be open for questions after the presentation. During this presentation, FB Financial may make comments which constitute forward-looking statements under the federal securities laws. Forward-looking statements are based on management's current expectations and assumptions and are subject to risks, uncertainties, and other factors that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to place undue reliance on such forward-looking statements. A more detailed description of these and other risks that may cause actual results to materially differ from expectations is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K.
The call will be open for questions after the presentation. During this presentation, FB Financial may make comments which constitute forward-looking statements under the federal securities laws. Forward-looking statements are based on management's current expectations and assumptions and are subject to risks, uncertainties, and other factors that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements.
Speaker #3: Forward-looking statements are based on management's current expectations and assumptions, and are subject to risks, uncertainties, and other factors that may cause actual results, performance, or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements.
Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to place undue reliance on such forward-looking statements. A more detailed description of these and other risks that may cause actual results to materially differ from expectations is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K.
Speaker #3: Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to put undue reliance on such forward-looking statements.
Speaker #3: A more detailed description of these and other risks that may cause actual results to materially differ from expectations is contained in FB Financial's periodic and current reports filed with the SEC.
Speaker #3: Including FB Financial's most recent form, 10-K. Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise.
Mike Orcutt: Except as required by law, SB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of non-GAAP measures to comparable GAAP measures is available in SB Financial's earnings release supplemental financial information in this morning's presentation, which are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. I would like to now turn the presentation over to Mr. Chris Holmes, SB Financial's President and CEO. All right. Thank you very much, Mike. And thank you to everyone for joining us on the call this morning, and for your interest in SB Financial.
Except as required by law, SB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise.In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G.
Speaker #3: In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of non-GAAP measures to comparable GAAP measures is available in FB Financial's earnings release and supplemental financial information.
A presentation of the most directly comparable GAAP financial measures and a reconciliation of non-GAAP measures to comparable GAAP measures is available in SB Financial's earnings release supplemental financial information in this morning's presentation, which are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. I would like to now turn the presentation over to Mr. Chris Holmes, SB Financial's President and CEO. All right.
Speaker #3: And this morning's presentation, which are available on the investor relations page of the company's website at www.firstbankonline.com, and on the SEC's website at www.sec.gov.
Speaker #3: I would now like to turn the presentation over to Mr. Chris Holmes, FB Financial’s President and CEO.
Speaker #4: All right. Thank you very much, Mike. And thank you to everyone for joining us on the call this morning and for your interest in FB Financial.
Christopher Holmes: Thank you very much, Mike. And thank you to everyone for joining us on the call this morning, and for your interest in SB Financial.
Speaker #5: But for the quarter, we reported EPS of $1.07 and adjusted EPS of $1.16. We've grown our tangible book value, excluding the impact of AOCI, at a compound annual growth rate of 11.6% since we became a public company with our IPO.
Mike Orcutt: But for the quarter, we reported EPS of $1.07 and adjusted EPS of $1.16. We've grown our tangible book value, excluding the impact of AOCI, at a compounded annual growth rate of 11.6% since we became a public company with our IPO. This quarter, our pre-tax pre-provision net revenue was $71.1 million or $77.1 million on an adjusted basis. Earnings were led by net interest income of $150.6 million, a net interest margin of 3.98%, and low credit cost in the quarter. Adjusted returns were solid, reporting a return on average assets of 1.4% or 1.51% on an adjusted basis, and a return on average tangible common equity of 14.4% or 15.9% on an adjusted basis. For the year, we reported EPS of $2.45 and an adjusted EPS of $3.99.
But for the quarter, we reported EPS of $1.07 and adjusted EPS of $1.16. We've grown our tangible book value, excluding the impact of AOCI, at a compounded annual growth rate of 11.6% since we became a public company with our IPO. This quarter, our pre-tax pre-provision net revenue was $71.1 million or $77.1 million on an adjusted basis.
Speaker #5: This quarter, our pre-tax pre-provision net revenue was $71.1 million, or $77.1 million on an adjusted basis. Earnings were led by interest income of $150.6 million, a net interest margin of 3.98%, and low credit cost in the quarter.
Earnings were led by net interest income of $150.6 million, a net interest margin of 3.98%, and low credit cost in the quarter. Adjusted returns were solid, reporting a return on average assets of 1.4% or 1.51% on an adjusted basis, and a return on average tangible common equity of 14.4% or 15.9% on an adjusted basis. For the year, we reported EPS of $2.45 and an adjusted EPS of $3.99.
Speaker #5: Adjusted returns were solid, reporting a return on average assets of 1.4% or 1.51% on an adjusted basis, and a return on average tangible common equity of 14.4% or 15.9% on an adjusted basis.
Speaker #5: For the year, we reported EPS of $2.45 and an adjusted EPS of $3.99. Our balance sheet grew through the acquisition of Southern State Bank and was complemented by organic growth in our key businesses and geographies. All in, loans held for investment grew 29%, and deposits were up 25% year over year.
Mike Orcutt: Our balance sheet grew through the acquisition of Southern States Bank and was complemented by organic growth in our key businesses and geographies. All in, loans held for investment grew 29%, and deposits were up 25% year over year. As I reflect back on 2025 and think forward into 2026, there are two key themes that stand out to me. The first of those is growth, both in our financial assets but also in our capabilities, which comes in the form of talented new teammates. During the past year, we executed on an acquisition in record time. We grew our talent base by adding new associates across the company, and we reorganized leadership responsibilities in various areas to optimize our organization.
Our balance sheet grew through the acquisition of Southern States Bank and was complemented by organic growth in our key businesses and geographies. All in, loans held for investment grew 29%, and deposits were up 25% year over year. As I reflect back on 2025 and think forward into 2026, there are two key themes that stand out to me.
Speaker #5: As I reflect back on 2025 and think forward into 2026, there are two key themes that stand out to me. The first of those is growth.
The first of those is growth, both in our financial assets but also in our capabilities, which comes in the form of talented new teammates. During the past year, we executed on an acquisition in record time. We grew our talent base by adding new associates across the company, and we reorganized leadership responsibilities in various areas to optimize our organization.
Speaker #5: Both in our financial assets, but also in our capabilities, which comes in the form of talented new teammates. During the past year, we executed on an acquisition in record time; we grew our talent base by adding new associates across the company, and we reorganized leadership responsibilities in various areas to optimize our organization.
Speaker #5: And we expect to see these actions pay off in 2026 and beyond, through enhanced customer experience, contributions to our strong and inviting company culture, and ultimately continuing our history of outstanding growth.
Mike Orcutt: And we expect to see these actions pay off in 2026 and beyond through enhanced customer experience, contributions to our strong and inviting company culture, and ultimately continuing our history of outstanding growth. The second area is we're generating earnings and financial returns now that meet my expectations as a CEO of the company and as a shareholder with high expectations. This year, and particularly this quarter, our bottom-line results were where they need to be with adjusted returns of about 1.5% on assets and approximately 16% on tangible common equity, and that's with a TCE ratio of almost 10%. These profitability results are within the range of expectations we set for ourselves.
And we expect to see these actions pay off in 2026 and beyond through enhanced customer experience, contributions to our strong and inviting company culture, and ultimately continuing our history of outstanding growth.
The second area is we're generating earnings and financial returns now that meet my expectations as a CEO of the company and as a shareholder with high expectations. his year, and particularly this quarter, our bottom-line results were where they need to be with adjusted returns of about 1.5% on assets and approximately 16% on tangible common equity, and that's with a TCE ratio of almost 10%. These profitability results are within the range of expectations we set for ourselves.
Speaker #5: The second area is we're generating earnings and financial returns now that meet my expectations as CEO of the company, and as a shareholder with high expectations.
Speaker #5: This year, and particularly this quarter, our bottom line results were where they need to be with adjusted returns of about one and a half percent on assets and approximately 16% on tangible common equity, and that's with a TCE ratio of almost 10%.
Speaker #5: These profitability results are within the range of expectations we set for ourselves. Our results for organic growth in loans and deposits were the only real notable area of underperformance in 2025, and that comes from a combination of economic conditions, some distractions, from the acquisition, and some related organizational changes.
Mike Orcutt: Our results for organic growth in loans and deposits were the only real notable area of underperformance in 2025, and that comes from a combination of economic conditions, some distractions from the acquisition, and some related organizational changes. As we look into 2026, we're very excited about the prospect for strong growth opportunities, both organically and otherwise. We did accomplish a lot during the year, which reinforces the strength and determination of our team and franchise. I'm pleased with our results, proud of the team, and I'm very bullish on the year ahead.
Our results for organic growth in loans and deposits were the only real notable area of underperformance in 2025, and that comes from a combination of economic conditions, some distractions from the acquisition, and some related organizational changes.
As we look into 2026, we're very excited about the prospect for strong growth opportunities, both organically and otherwise. We did accomplish a lot during the year, which reinforces the strength and determination of our team and franchise. I'm pleased with our results, proud of the team, and I'm very bullish on the year ahead.
Speaker #5: As we look into 2026, we're very excited about the prospect for strong growth opportunities both organically and otherwise. We did accomplish a lot during the year, which reinforces the strength and determination of our team and franchise.
Speaker #5: I'm pleased with our results, proud of the team, and I'm very bullish on the year ahead. So, while I could use some additional time today to give you my perspective on a multitude of other topics like the regulatory environment, views on M&A, or our myriad of metrics and goals that we've set for ourselves in 2026, I'm simply going to reiterate our top priority for the year ahead, which is to cement our focus on the customer.
Mike Orcutt: So while I could use some additional time today to give you my perspective on a multitude of other topics like regulatory environment, views on M&A, our myriad of metrics and goals that we set for ourselves in 2026, I'm simply going to reiterate our top priority for the year ahead, which is to cement our focus on the customer. Through this simple action, we'll deepen relationships, we'll provide better products and service, and we'll acquire more new associates and customers. And it's that focus that's going to allow us to grow the business. Very simply, that's going to be our winning formula in 2026. So with that, I'd like to turn the call over to our Chief Financial and Operating Officer, Michael Mettee. Michael. Thank you, Chris, and good morning, everyone. I'll pick up right where Chris left off.
So while I could use some additional time today to give you my perspective on a multitude of other topics like regulatory environment, views on M&A, our myriad of metrics and goals that we set for ourselves in 2026, I'm simply going to reiterate our top priority for the year ahead, which is to cement our focus on the customer. Through this simple action, we'll deepen relationships, we'll provide better products and service, and we'll acquire more new associates and customers.
Speaker #5: Through this simple action, we'll deepen relationships, we'll provide better products and service, and we'll acquire more new associates and customers. And it's that focus that's going to allow us to grow the business.
And it's that focus that's going to allow us to grow the business. Very simply, that's going to be our winning formula in 2026. So with that, I'd like to turn the call over to our Chief Financial and Operating Officer, Michael Mettee. Michael.
Speaker #5: Very simply, that's going to be our winning formula in 2026. So that, I'd like to turn the call over to our Chief Financial and Operating Officer, Michael
Speaker #5: Mettee. Michael. Thank
Michael Mettee: Thank you, Chris, and good morning, everyone. I'll pick up right where Chris left off.Over the past year, we've laid a solid foundation that positions us to accelerate into a period of significant opportunity. We've acquired and converted Southern States. That added approximately 20% to our size.
Speaker #6: Thank you, Chris, and good morning, everyone. I'll pick up right where Chris left off. Over the past year, we've laid a solid foundation that positions us to accelerate into a period of significant opportunity.
Mike Orcutt: Over the past year, we've laid a solid foundation that positions us to accelerate into a period of significant opportunity. We've acquired and converted Southern States. That added approximately 20% to our size. We've seen market disruption in our geographies, which has created opportunity in our markets, and we've added talent in key areas of our company. So as we move into 2026, we really couldn't be more excited about the year ahead. Turning to our results for the quarter and for the full year, net income on a reported basis for the quarter was $57 million or $61.5 million on an adjusted basis. For the year, we delivered net income of $122.6 million and adjusted net income of just over $200 million. Our net interest margin for the quarter came in at 3.98%, which is three basis point expansion over the third quarter.
Speaker #6: We've acquired and converted Southern States. That added approximately 20% to our size. We've seen market disruption in our geographies, which has created opportunity in our markets.
We've seen market disruption in our geographies, which has created opportunity in our markets, and we've added talent in key areas of our company. So as we move into 2026, we really couldn't be more excited about the year ahead. Turning to our results for the quarter and for the full year, net income on a reported basis for the quarter was $57 million or $61.5 million on an adjusted basis.
Speaker #6: And we've added talent in key areas of our company. So, as we move into 2026, we really couldn't be more excited about the year ahead.
Speaker #6: Turning to our results for the quarter and for the full year, net income on a reported basis for the quarter was $57,61.5 million on an adjusted basis.
For the year, we delivered net income of $122.6 million and adjusted net income of just over $200 million. Our net interest margin for the quarter came in at 3.98%, which is three basis point expansion over the third quarter.
Speaker #6: For the year, we delivered net income of $122.6 million, an adjusted net income of just over $200 million. Our net interest margin for the quarter came in at 3.98%, which is three basis point expansion over the third quarter.
Speaker #6: Even with the Fed rate cuts and lower loan yields, we're able to manage our liability side of the balance sheet to expand margin, namely through deposit repricing and benefits realized on our third quarter sub debt and trust preferred payoff.
Mike Orcutt: Even with the Fed rate cuts and lower loan yields, we were able to manage our liability side of the balance sheet to expand margin, namely through deposit repricing and benefits realized on our third quarter sub-debt and trust preferred payoff. Non-interest income improved in the quarter as we saw stronger swap fees and investment services revenue, along with benefits from non-recurring items, which we've detailed in our supplement. On the expense side, fourth quarter non-interest expense came in at $107.6 million or $100.4 million on an adjusted basis, including, in the reported results, roughly $4.6 million in merger and integration expenses, which should largely conclude by the end of the first quarter of 2026. In our adjusted non-interest expense, we had an additional $3 million in performance-based incentive expense and roughly $1.2 million in higher franchise tax expense.
Even with the Fed rate cuts and lower loan yields, we were able to manage our liability side of the balance sheet to expand margin, namely through deposit repricing and benefits realized on our third quarter sub-debt and trust preferred payoff. Non-interest income improved in the quarter as we saw stronger swap fees and investment services revenue, along with benefits from non-recurring items, which we've detailed in our supplement.
Speaker #6: Non-interest income improved in the quarter as we saw a stronger swap fees and investment services revenue, along with benefits from non-reoccurring items, which we've detailed in our supplement.
On the expense side, fourth quarter non-interest expense came in at $107.6 million or $100.4 million on an adjusted basis, including, in the reported results, roughly $4.6 million in merger and integration expenses, which should largely conclude by the end of the first quarter of 2026. In our adjusted non-interest expense, we had an additional $3 million in performance-based incentive expense and roughly $1.2 million in higher franchise tax expense.
Speaker #6: On the expense side, fourth quarter non-interest expense came in at $107.6 million, or $100.4 million on an adjusted basis. Including in the reported results is roughly $4.6 million in merger and integration expenses, which should largely conclude by the end of the first quarter 2026.
Speaker #6: In our adjusted non-interest in expense, we had an additional $3 million in performance-based incentive expense and roughly $1.2 million in higher franchise tax expense.
Speaker #6: We also had higher than expected year-end increases related to the share repurchase transaction, which I'll detail in a bit, technology costs, and other professional services totaling about a million and a half that are not run rate expenses.
Mike Orcutt: We also had higher-than-expected year-end increases related to the share repurchase transaction, which I'll detail in a bit, technology costs, and other professional services totaling about $1.5 million that are not run rate expenses. All in, our banking core non-interest expense totaled $88 million for the quarter and $298 million for the full year. Looking at credit, our reported provision expense was lighter this quarter at $1.2 million due to low charge-offs and minimal changes in modeled reserves. Non-performing assets ticked up slightly this quarter with higher pass dues in some of our consumer portfolios and in our optional Ginnie Mae repurchase portfolio, but loss content remains low as annualized net charge-offs totaled only five basis points in the quarter. Overall, our credit outlook remained stable for our portfolios and geographies. All in, our allowance for loan losses settled at $186 million or 1.5% of our loans held for investment.
We also had higher-than-expected year-end increases related to the share repurchase transaction, which I'll detail in a bit, technology costs, and other professional services totaling about $1.5 million that are not run rate expenses. All in, our banking core non-interest expense totaled $88 million for the quarter and $298 million for the full year.
Speaker #6: All in, our banking core non-interest expense totaled $88 million for the quarter and $298 million for the full year. Looking at credit, our reported provision expense was lighter this quarter at $1.2 million, due to low charge-offs and minimal changes in modeled reserves.
Looking at credit, our reported provision expense was lighter this quarter at $1.2 million due to low charge-offs and minimal changes in modeled reserves. Non-performing assets ticked up slightly this quarter with higher pass dues in some of our consumer portfolios and in our optional Ginnie Mae repurchase portfolio, but loss content remains low as annualized net charge-offs totaled only five basis points in the quarter.
Speaker #6: Non-performing assets ticked up slightly this quarter, with higher past dues in some of our consumer portfolios and in our optional Ginnie Mae repurchase portfolio but lost content remains low as annualized net charge-offs totaled only five basis points in the quarter.
Overall, our credit outlook remained stable for our portfolios and geographies. All in, our allowance for loan losses settled at $186 million or 1.5% of our loans held for investment.
Speaker #6: Overall, our credit outlook remains stable for our portfolios and geographies. All in, our allowance for loan losses settled at $186 million, or one and a half percent of our loans held for investment.
Speaker #6: Looking at the balance sheet, you'll see loan growth of $86 million for the quarter and total deposit growth of $97 million, both roughly 3% on an annualized basis.
Mike Orcutt: Looking at the balance sheet, you'll see loan growth of $86 million for the quarter and total deposit growth of $97 million, both roughly 3% on an annualized basis. In the fourth quarter, we experienced a pickup in late quarter payoff activity, which reduced our loan growth by about half. This activity was spread across several loan categories, but was mostly pronounced in our C&I and CRE buckets. As Chris mentioned earlier, these organic growth levels for the quarter are below what we expect and what we've historically delivered. However, when I look at average balances for the quarter, we show annualized 6% loan growth and 7% deposit growth. For the year, we're pleased to have grown the company 29% on loans and approximately 25% on deposits.
Looking at the balance sheet, you'll see loan growth of $86 million for the quarter and total deposit growth of $97 million, both roughly 3% on an annualized basis. In the fourth quarter, we experienced a pickup in late quarter payoff activity, which reduced our loan growth by about half. This activity was spread across several loan categories, but was mostly pronounced in our C&I and CRE buckets.
Speaker #6: In the fourth quarter, we experienced a pickup in late-quarter payoff activity, which reduced our loan growth by about half. This activity was spread across several loan categories but was most pronounced in our C&I and CRE buckets.
As Chris mentioned earlier, these organic growth levels for the quarter are below what we expect and what we've historically delivered. However, when I look at average balances for the quarter, we show annualized 6% loan growth and 7% deposit growth. For the year, we're pleased to have grown the company 29% on loans and approximately 25% on deposits.
Speaker #6: As Chris mentioned earlier, these organic growth levels for the quarter are below what we expect and what we've historically delivered. However, when I look at average balances for the quarter, we show annualized 6% loan growth and 7% deposit growth.
Speaker #6: And for the year, we're pleased to have grown the company 29% on loans and approximately 25% on deposits. New production trends remain competitive. Both on rate and structure, with new loan yields priced around 6.75% for the quarter and new deposit costs around 3% for the quarter.
Mike Orcutt: New production trends remain competitive, both on rate and structure, with new loan yields priced around 6.75% for the quarter and new deposit costs around 3% for the quarter. Even with softer organic growth during the fourth quarter, we believe the wind is at our backs and our sales are up. The company has significant opportunity to grow market share organically as we continue bringing new relationships to the bank. With that, you should expect a return to our normal high single-digit growth rate in 2026. As it pertains to capital, I want to highlight the large stock repurchase transaction that we executed in the quarter. In total, we repurchased just over 1.7 million shares, which represented about 3% of the company. The transaction was with our largest shareholder, the estate of the late Mr.
New production trends remain competitive, both on rate and structure, with new loan yields priced around 6.75% for the quarter and new deposit costs around 3% for the quarter. Even with softer organic growth during the fourth quarter, we believe the wind is at our backs and our sales are up.
Speaker #6: Even with softer organic growth during the fourth quarter, we believe the wind is at our backs and our sales are up. The company has significant opportunity to grow market share organically as we continue bringing new relationships to the bank.
The company has significant opportunity to grow market share organically as we continue bringing new relationships to the bank. With that, you should expect a return to our normal high single-digit growth rate in 2026. As it pertains to capital, I want to highlight the large stock repurchase transaction that we executed in the quarter. In total, we repurchased just over 1.7 million shares, which represented about 3% of the company. The transaction was with our largest shareholder, the estate of the late Mr.
Speaker #6: With that, you should expect a return to our normal high single-digit growth rate in 2026. As it pertains to capital, I want to highlight the large stock repurchase transaction that we executed in the quarter.
Speaker #6: In total, we repurchased just over $1.7 million shares, which represented about 3% of the company. The transaction was with our largest shareholder, the estate of the late Mr. Jim Ayers.
Mike Orcutt: Jim Ayers, which allowed the estate to diversify its holdings and gain some liquidity while also allowing the company to deploy excess capital in a beneficial way. We were proud to participate in this transaction with other large institutional investors, and this investment in ourselves demonstrates our belief in our franchise and our growing business. As we move into 2026, we expect our net interest margin, exclusive of loan accretion, to land between 3.78% and 3.83% in Q1 and on a full-year basis, consistent with where we are today. That assumes a rate cut baked into our forecast for 2026. We would then expect the benefit from loan accretion to add an additional 15 basis points or so, and that's exclusive of any accelerated accretion that might pull through.
Jim Ayers, which allowed the estate to diversify its holdings and gain some liquidity while also allowing the company to deploy excess capital in a beneficial way. We were proud to participate in this transaction with other large institutional investors, and this investment in ourselves demonstrates our belief in our franchise and our growing business.
Speaker #6: This allowed the estate to diversify its holdings and gain some liquidity, while also allowing the company to deploy excess capital in a beneficial way.
Speaker #6: We were proud to participate in this transaction with other large institutional investors, and this investment in ourselves demonstrates our belief in our franchise and our growing business.
As we move into 2026, we expect our net interest margin, exclusive of loan accretion, to land between 3.78% and 3.83% in Q1 and on a full-year basis, consistent with where we are today. That assumes a rate cut baked into our forecast for 2026. We would then expect the benefit from loan accretion to add an additional 15 basis points or so, and that's exclusive of any accelerated accretion that might pull through.
Speaker #6: As we move into 2026, we expect our net interest margin, exclusive of loan accretion, to land between 3.78% and 3.83% in the first quarter and on a full-year basis, consistent with where we are today.
Speaker #6: And that assumes a rate cut baked into our forecast for 2026. We would then expect the benefit from loan accretion to add an additional 15 basis points or so, and that's exclusive of any accelerated accretion that might pull through.
Speaker #6: In banking, we're expecting to see fee income grow in the upper single-digit range. As we continue to grow our customer base, add product offerings, and deepen relationships with our current customers.
Mike Orcutt: In banking, we're expecting to see fee income grow in the upper single-digit range as we continue to grow our customer base, add product offerings, and deepen relationships with our current customers. On expenses, I'll reiterate the full-year guide that we gave last quarter as we expect banking expense to land between $325 to $335 million, which puts our efficiency ratio in the low 50s for the full year and at 50% by year-end 2026. This guide is run rate only and would not include any investments made in revenue producers or market expansion. From a balance sheet standpoint, we're sticking with the mid to high single-digit loan growth and core customer deposit growth in that same mid to high single digits that we've spoken about for full-year 2026.
In banking, we're expecting to see fee income grow in the upper single-digit range as we continue to grow our customer base, add product offerings, and deepen relationships with our current customers. On expenses, I'll reiterate the full-year guide that we gave last quarter as we expect banking expense to land between $325 to $335 million, which puts our efficiency ratio in the low 50s for the full year and at 50% by year-end 2026.
Speaker #6: On expenses, I'll reiterate the full year guide that we gave last quarter. As we expect banking expense to land between $325 and $335 million, which puts our efficiency ratio in the low 50s for the full year and at 50% by year-end 2026.
This guide is run rate only and would not include any investments made in revenue producers or market expansion. From a balance sheet standpoint, we're sticking with the mid to high single-digit loan growth and core customer deposit growth in that same mid to high single digits that we've spoken about for full-year 2026.
Speaker #6: This guide is run-rate only and would not include any investments made in revenue producers or market expansion. From a balance sheet standpoint, we're sticking with a mid- to high-single-digit loan growth and core customer deposit growth in that same mid- to high-single digits that we've spoken about for the full year 2026.
Speaker #6: So, as I conclude, I want to thank the team for their work this year, and I look forward to a prosperous 2026. With that, I'll turn the call.
Mike Orcutt: So as I conclude, I want to thank the team for their work this year, and I'll look forward to a prosperous 2026. With that, I'll turn the call back over to Chris. All right. Thanks for the call, Michael. And thanks again to everybody for joining us on the call this morning in your interest in FB Financial. And operator, at this time, we'll open the line for questions. Ladies and gentlemen, at this time, if you would like to ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality. Once again, that is star and then one to join the question queue.
So as I conclude, I want to thank the team for their work this year, and I'll look forward to a prosperous 2026. With that, I'll turn the call back over to Chris.
Speaker #6: Back over to Chris. All right.
Christopher Holmes: All right. Thanks for the call, Michael. And thanks again to everybody for joining us on the call this morning in your interest in FB Financial. And operator, at this time, we'll open the line for questions.
Speaker #1: Thanks for the call, Michael. And thanks again to everybody for joining us on the call this morning and your interest in FB Financial. And operator at this time, we'll open the line for
Speaker #1: questions. Ladies and
Operator: Ladies and gentlemen, at this time, if you would like to ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality. Once again, that is star and then one to join the question queue.
Speaker #2: gentlemen, at this time, if you would like to ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two.
Speaker #2: If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality.
Speaker #2: Once again, that is star, and then one. To join the question queue, we'll pause momentarily to assemble the roster. Our first question today comes from Brett Rabbiton from Hobby Group.
Mike Orcutt: We'll pause momentarily to assemble the roster. Our first question today comes from Brett Rabatin from Hovde Group. Please go ahead with your question. Hi, guys. This is Anya Pelshaw. I'm asking questions on behalf of Brett. So he was wondering if management anticipates any additional share repurchases from the Ayers estate. Yeah, that is a good question. We do not actually anticipate that. So the conversation we've had, we do not anticipate that. That does not mean, just like any of us, that folks will change their mind. But all the conversations we've had, we do not anticipate that. Okay. Thank you. Another question that I have is, do you guys think mortgage banking is on the right path, or does the platform need any additional tweaking? Hey, Anya, good morning. This is Michael. Yeah, actually, mortgage had a really good year.
We'll pause momentarily to assemble the roster. Our first question today comes from Brett Rabatin from Hovde Group. Please go ahead with your question.
Speaker #2: Please go ahead with your
Speaker #2: question. Hi, guys.
Anna Pelshaw: Hi, guys. This is Anya Pelshaw. I'm asking questions on behalf of Brett. So he was wondering if management anticipates any additional share repurchases from the Ayers estate.
Speaker #3: This is Anya Pelshaw. I'm asking questions on behalf of Brett. So, he was wondering if management anticipates any additional sherry purchases from the Ayers estate?
Christopher Holmes: Yeah, that is a good question. We do not actually anticipate that. So the conversation we've had, we do not anticipate that. That does not mean, just like any of us, that folks will change their mind. But all the conversations we've had, we do not anticipate that.
Speaker #1: Yeah, that is a good question. And we do not actually anticipate that. And so the conversation we've had is that we do not anticipate that.
Speaker #1: That does not mean, just like any of us, that folks will change their mind. But all the conversations we've had, we do not anticipate.
Speaker #1: that. Okay.
Anna Pelshaw: Okay. Thank you. Another question that I have is, do you guys think mortgage banking is on the right path, or does the platform need any additional tweaking?
Speaker #3: Thank you. And another question that I have is, is mortgage—do you guys think mortgage banking is on the right path, or does the platform need any additional tweaking?
Michael Mettee: Hey, Anya, good morning. This is Michael. Yeah, actually, mortgage had a really good year.And if you think about where we were two years ago in the mortgage environment versus today, 26 versus 25 versus 23, we originated the same amount of volume, but the contribution went from a negative to a nice positive number. So they're definitely on the right track.
Speaker #1: Hey, Anya, good morning. This is Michael. Yeah, actually, mortgage had a really good year. And if you think about where we were two years ago in the mortgage environment versus today, '26 versus '25 versus '23, we originated the same amount of volume, but the contribution went from a negative to a nice positive number.
Mike Orcutt: And if you think about where we were two years ago in the mortgage environment versus today, 26 versus 25 versus 23, we originated the same amount of volume, but the contribution went from a negative to a nice positive number. So they're definitely on the right track. Tweaks to the platform, I would say, just like on the banking side, we're open for business, looking for revenue producers that can continue to expand our relationships and bring core customers to the bank. So we're pleased with mortgage, and we expect big things from them. Yeah. And I would just add, in terms of tweaks, let's say we're always tweaking, whether that's mortgage, as Michael said, we're tweaking things every day. But in terms of the basic structure and the elements of what we have in that business, we're actually quite pleased with it.
Speaker #1: So they're definitely on the right track. Tweaks to the platform, I would say, just like on the banking side, we're open for business, looking for revenue producers that can continue to expand our relationships and bring core customers to the bank.
Tweaks to the platform, I would say, just like on the banking side, we're open for business, looking for revenue producers that can continue to expand our relationships and bring core customers to the bank. So we're pleased with mortgage, and we expect big things from them.
Speaker #1: So we're pleased with mortgage, and we expect big things from them.
Christopher Holmes: Yeah. And I would just add, in terms of tweaks, let's say we're always tweaking, whether that's mortgage, as Michael said, we're tweaking things every day. But in terms of the basic structure and the elements of what we have in that business, we're actually quite pleased with it.
Speaker #4: Yeah. And I would just add, in terms of tweaks, let's say we're always tweaking—whether that's mortgage, as Michael said, we're tweaking things every day.
Speaker #4: But in terms of the basic structure and the elements of what we have in that business, we're actually quite pleased with it. And when we look at '26, that is a potential for—it's a very positive potential for overperformance, I would say.
Mike Orcutt: When we look at 26, that is a potential for; it's a very positive potential for overperformance, I would say. As Michael said, this year, it actually went from a negative to a positive. Depending on what happens in the world and what happens in the market, that's an area that could be a bright spot for us based on what we have put in our expectations for next year. Okay. Thank you. What do you guys what does management think about the current M&A climate, and is there any optimism on additional deals? Climate-wise, I would say, climate-wise, a lot of conversations going on out there. I think at every level, that's just an industry comment, not specific to us. But I'd say there's a lot of things happening out there, people evaluating strategically what the future holds for them.
When we look at 26, that is a potential for; it's a very positive potential for overperformance, I would say. As Michael said, this year, it actually went from a negative to a positive. Depending on what happens in the world and what happens in the market, that's an area that could be a bright spot for us based on what we have put in our expectations for next year.
Speaker #4: We—as Michael said, this year, it actually went from a negative to a positive. And depending on what happens in the world and what happens in the market, that's an area that could be a bright spot for us.
Speaker #4: Based on what we have put in our expectations for next
Speaker #4: year. Okay.
Anna Pelshaw: Okay. Thank you. What do you guys what does management think about the current M&A climate, and is there any optimism on additional deals?
Speaker #3: Thank you. And what do you guys—what does management think about the current M&A climate? And is there any optimism on additional deals?
Christopher Holmes: Climate-wise, I would say, climate-wise, a lot of conversations going on out there. I think at every level, that's just an industry comment, not specific to us. But I'd say there's a lot of things happening out there, people evaluating strategically what the future holds for them.
Speaker #4: So, climate-wise, I would say—climate-wise, a lot of conversations going on out there. I think at every level, that's just an industry comment. It's not specific to us, but I'd say there's a lot of things happening out there and people evaluating strategically what the future holds for them.
Speaker #4: When we think about us specifically, we'll continue to evaluate opportunities in my prepared remarks. One of the things I talked about are really our customer focus.
Mike Orcutt: When we think about us specifically, we'll continue to evaluate opportunities. In my prepared remarks, one of the things I talked about are really our customer focus. We have to maintain that, and we have to make sure that that's at the top of our priority list and for our objectives for the year. But as we get opportunities, which we do, we have conversations and we get opportunities, we'll continue to evaluate those. And if the right one comes along, certainly, we would be in a position to act on it. The Southern States combination that we did in 2025 was very positive. We feel like all the way around. They always do cause some distraction from your normal operating environment. And so we weigh that anytime we're considering a transaction.
When we think about us specifically, we'll continue to evaluate opportunities. In my prepared remarks, one of the things I talked about are really our customer focus. We have to maintain that, and we have to make sure that that's at the top of our priority list and for our objectives for the year. But as we get opportunities, which we do, we have conversations and we get opportunities, we'll continue to evaluate those.
Speaker #4: We have to maintain that, and we have to make sure that that's at the top of our priority list and for our objectives for the year.
Speaker #4: But as we get opportunities, which we do, we have—we have conversations and we get opportunities. We'll continue to evaluate those, and if the right one comes along, certainly we would be in a position to act on it.
And if the right one comes along, certainly, we would be in a position to act on it. The Southern States combination that we did in 2025 was very positive. We feel like all the way around. They always do cause some distraction from your normal operating environment. And so we weigh that anytime we're considering a transaction.And so when it's worth it, then we're going to be in a place to take advantage of it.
Speaker #4: The Southern States combination that we did in 2020 was very positive, we feel like all the way around. They always do cause some distraction from your normal operating environment.
Speaker #4: And so we weigh that anytime we're considering a transaction. And so when it's worth it, then we're going to be in a place to take advantage of it.
Mike Orcutt: And so when it's worth it, then we're going to be in a place to take advantage of it. Sounds good. Thank you. Appreciate the answers. Sure. Thank you. Give Brett our best. Our next question comes from Russell Gunther from Stephens. Please go ahead with your question. Hey, good morning, guys. I am on the loan growth front. Good morning, Chris. Morning, Michael. On the loan growth front, so you called out the elevated paydowns and how they impacted this quarter. Would be helpful just to quick level set where those levels compared to last quarter. And then as a follow-up, you guys tend to position yourselves as a high single-digit to low double-digit grower. It sounds like you're guiding to high single digits for this year.
Speaker #3: Sounds good. Thank you. Appreciate it.
Anna Pelshaw: Sounds good. Thank you. Appreciate the answers.
Speaker #3: answers. Sure.
Christopher Holmes: Sure. Thank you. Give Brett our best.
Speaker #4: Thank you. Give Brett our best.
Operator: Our next question comes from Russell Gunther from Stephens. Please go ahead with your question.
Speaker #2: Our next question comes from Russell Gunther from Stephens. Please go ahead with your question.
Russell Gunther: Hey, good morning, guys. I am on the loan growth front. Good morning, Chris. Morning, Michael. On the loan growth front, so you called out the elevated paydowns and how they impacted this quarter. Would be helpful just to quick level set where those levels compared to last quarter. And then as a follow-up, you guys tend to position yourselves as a high single-digit to low double-digit grower. It sounds like you're guiding to high single digits for this year.
Speaker #1: Hey, good morning, guys. I. Good morning, Chris.
Speaker #1: Good morning, Russell, Michael. On the loan growth front, you called out the elevated paydowns and how they impacted this quarter. It would be helpful just to quickly level set where those levels compare to last quarter.
Speaker #1: And then, as a follow-up, you guys tend to position yourselves as a high single-digit to low double-digit grower. It sounds like you're guiding to the high single digits for this year.
Speaker #1: So maybe if you could just kind of walk us through the asset class and geographic loan leaders, and just whether or not that assumes that level of growth can happen with the players on the field today versus incremental.
Mike Orcutt: So maybe if you could just kind of walk us through the asset class and geographic loan leaders and just whether or not that assumes that level of growth can happen with the players on the field today versus incremental hires. Michael, you want to go first? Yeah. So I would say, Russell, in the fourth quarter, payoffs were a bit elevated, and especially at the latter part of the quarter. Chris would have let us all go home on 24 December. We probably would be having a different point-to-point conversation. But you work full year. So that last week of the year is where we saw a lot of the payoffs come. Every company has ebbs and flows, right? Every company faces payoffs. So that's just part of business. That's just something you have to do. But on a percentage basis, it was elevated in the fourth quarter.
So maybe if you could just kind of walk us through the asset class and geographic loan leaders and just whether or not that assumes that level of growth can happen with the players on the field today versus incremental hires.
Speaker #1: Hires. Michael, you want to go first? Yeah. So, I would say, Russell, in the fourth quarter, payoffs were a bit elevated, and especially at the latter part of the quarter.
Christopher Holmes: Michael, you want to go first?
Michael Mettee: Yeah. So I would say, Russell, in the fourth quarter, payoffs were a bit elevated, and especially at the latter part of the quarter. Chris would have let us all go home on 24 December. We probably would be having a different point-to-point conversation. But you work full year.
Speaker #1: Chris would let us all go home on December 24th. We probably would be having a different point-to-point conversation. But you worked full year. So that last week of the year is where we saw a lot of the payoffs come.
So that last week of the year is where we saw a lot of the payoffs come. Every company has ebbs and flows, right? Every company faces payoffs. So that's just part of business. That's just something you have to do. But on a percentage basis, it was elevated in the fourth quarter.
Speaker #1: Every company has ebbs and flows, right? Every company faces payoffs. So that's just part of business. That's just something you have to do. But on a percentage basis, it was elevated in the fourth quarter.
Speaker #1: That being said, we're going to have payoffs in the first quarter of this year and the second quarter of this year. And so, we expect to grow through it as a company.
Mike Orcutt: That being said, we're going to have payoffs in the Q1 of this year and Q2 of this year. So we expect to grow through it as a company. Our growth forecast is not predicated on hiring new people. It's the team we have in place with the relationship managers and bankers that we have. We would expect us to grow that high single-digit range without adding another person. And where can it come from? We came into Asheville, North Carolina, last year. They're off to a good start. Tuscaloosa, Alabama, smaller market, but had a really strong year. Every market, especially in our metro areas, have a lot of in-migration and growth opportunities. Then in our more community markets, we expect to continue to grow market share, both sides of the balance sheet.
That being said, we're going to have payoffs in the Q1 of this year and Q2 of this year. So we expect to grow through it as a company. Our growth forecast is not predicated on hiring new people. It's the team we have in place with the relationship managers and bankers that we have. We would expect us to grow that high single-digit range without adding another person.
Speaker #1: Our growth forecast is not predicated on hiring new people. The team we have in place, with the relationship managers and bankers that we have, we would expect those to grow that high single-digit range.
Speaker #1: Without adding another person. And where can that come from? We came into Asheville, North Carolina, last year. They're off to a good start. Tuscaloosa, Alabama—smaller market, but had a really strong year.
And where can it come from? We came into Asheville, North Carolina, last year. They're off to a good start. Tuscaloosa, Alabama, smaller market, but had a really strong year. Every market, especially in our metro areas, have a lot of in-migration and growth opportunities. Then in our more community markets, we expect to continue to grow market share, both sides of the balance sheet.
Speaker #1: But every market, especially in our metro areas, have a lot of in-migration and growth opportunities. And then in our more community markets, we expect to continue to grow market share.
Speaker #1: Both sides of the balance sheet. And we're focused on growing deposits and loans, not just the loan side. And then asset class. We pride ourselves on being a community bank.
Mike Orcutt: We're focused on growing deposits and loans, not just the loan side. And then asset class, we pride ourselves on being a community bank. And so that means we serve all asset classes. And so we're not saying, "Hey, you can only grow one or the other." But we want to be full-service to our clients. And so I'd expect that to be broad-based. Yeah. So Russell, if I could just make just a couple of comments, and I want to reiterate two things, two or three things Michael said or amplify them. He is right. If we were to stop the world in motion there and not have the last week of the quarter, we'd have been north of 5% in terms of loan growth, actually 6-ish. And if you compare average to average, you would see that in our numbers.
We're focused on growing deposits and loans, not just the loan side. And then asset class, we pride ourselves on being a community bank. And so that means we serve all asset classes. And so we're not saying, "Hey, you can only grow one or the other." But we want to be full-service to our clients. And so I'd expect that to be broad-based.
Speaker #1: And so that means we serve all asset classes. And so we're not saying, "Hey, you can only grow one or the other." But we want to be full-service to our clients.
Speaker #1: And so, I'd expect that to be broad-based.
Christopher Holmes: Yeah. So Russell, if I could just make just a couple of comments, and I want to reiterate two things, two or three things Michael said or amplify them. He is right. If we were to stop the world in motion there and not have the last week of the quarter, we'd have been north of 5% in terms of loan growth, actually 6-ish. And if you compare average to average, you would see that in our numbers.
Speaker #4: Yeah. So Russell, if I could just make just a couple of comments, and I want to reiterate two things or two or three things Michael said or amplify them.
Speaker #4: He is right. If we were to stop the world in motion there, and not have the last week of the quarter, we'd have been north of 5% in terms of loan growth.
Speaker #4: Actually, six-ish. And then, if you compare average to average, you would see that in our numbers. So point-to-point was one thing, but we're not—we don't get obsessive over that.
Mike Orcutt: So point-to-point is one thing, but we don't get obsessive over that because we feel pretty good about the run rate where it is. You ask about can it happen with current players. I think that's an important part of kind of how we project ourselves for the future and how we budget. We budget current players, and we budget very normal activity. We don't budget things like, we certainly don't budget acquisitions. We do not budget bringing over big teams. And so it's current player activity. And Michael, he also made a statement in his prepared remarks. Our expense side is the same. Our expense side is also current players with a very, I'll say, normal measured growth rate versus having the big moves in there on either the revenue or expense side. So I think that's important.
So point-to-point is one thing, but we don't get obsessive over that because we feel pretty good about the run rate where it is. You ask about can it happen with current players. I think that's an important part of kind of how we project ourselves for the future and how we budget. We budget current players, and we budget very normal activity. We don't budget things like, we certainly don't budget acquisitions. We do not budget bringing over big teams.
Speaker #4: Because we feel pretty good about the run rate where it is. You ask about can it happen with current players. I think that's an important part of kind of how we project ourselves for the future and how we budget.
Speaker #4: We budget current players, and we budget a very normal activity. We don't budget things like—we certainly don't budget acquisitions. We do not budget bringing over big teams, and so it's current player activity.
And so it's current player activity. And Michael, he also made a statement in his prepared remarks. Our expense side is the same. Our expense side is also current players with a very, I'll say, normal measured growth rate versus having the big moves in there on either the revenue or expense side. So I think that's important.
Speaker #4: And Michael, he also made a statement in his prepared remarks. Our expense side is the same. Our expense side is also current players with a very—I'll say normal, measured growth rate, versus having the big moves in there on either the revenue or expense side.
Speaker #4: So, I think that's important. And then, on geographies, there's one other thing I would say: Nashville approaches half of our loans and deposit base.
Mike Orcutt: And then on geographies, there's one other thing I would say is Nashville approaches half of our loans and deposit base. And so that becomes an important part of that picture for 2026 and beyond. So that becomes probably the biggest part of that. And as you know, we've had some changes there, and we continue to be actually really bullish headed into 2026 on that part of our geography. That's really helpful. Thank you both. And then my last question would be on the expense front. So it would be helpful to get a sense for how the full-year run rate shapes up. Michael, I think you called out $1.5 million of non-run rate expenses, but please correct me if I misheard that.
And then on geographies, there's one other thing I would say is Nashville approaches half of our loans and deposit base. And so that becomes an important part of that picture for 2026 and beyond. So that becomes probably the biggest part of that. And as you know, we've had some changes there, and we continue to be actually really bullish headed into 2026 on that part of our geography.
Speaker #4: And so that becomes an important part of that picture for 2026 and beyond. So that becomes probably the biggest part of that. And as you know, we've had some changes there, and we continue to be actually really bullish headed into '26 on that part of our geography.
Russell Gunther: That's really helpful. Thank you both. And then my last question would be on the expense front. So it would be helpful to get a sense for how the full-year run rate shapes up. Michael, I think you called out $1.5 million of non-run rate expenses, but please correct me if I misheard that.
Speaker #1: That's really helpful. Thank you both. And then my last question would be on the expense front. So it would be helpful to get a sense for how before Q run rate shapes up.
Speaker #1: Michael, I think you called out $1.5 million of non-run-rate expenses, but please correct me if I misheard that. And then as a follow-up, last quarter, you mentioned a willingness to kind of toss that expense guide out the window if you think you can hire commercial lenders the way you'd like.
Mike Orcutt: And then as a follow-up, last quarter, you mentioned a willingness to kind of toss that expense guide out the window if you think you can hire commercial lenders the way you'd like. So I was just curious if any of that materialized in this Q4 result, and have any changes been made to the comp structure in order to be able to kind of help attract the type of talent you'd like to get or that might shake loose? Yeah. Thanks, Russell. Just to clarify on the expense base, there was $3 million that was performance-based related to long-term incentive, which is equity, which is really a peer comp analysis. So that resulted in Chris mentioned our returns. It's a return-based compensation model. And so as we saw our returns continue to perform at a higher level, that's what drove that.
And then as a follow-up, last quarter, you mentioned a willingness to kind of toss that expense guide out the window if you think you can hire commercial lenders the way you'd like. So I was just curious if any of that materialized in this Q4 result, and have any changes been made to the comp structure in order to be able to kind of help attract the type of talent you'd like to get or that might shake loose?
Speaker #1: So, I was just curious if any of that materialized in this fourth quarter result, and have any changes been made to the comp structure in order to be able to help attract the type of talent you'd like to get, or that might shake loose?
Michael Mettee: Yeah. Thanks, Russell. Just to clarify on the expense base, there was $3 million that was performance-based related to long-term incentive, which is equity, which is really a peer comp analysis. So that resulted in Chris mentioned our returns. It's a return-based compensation model. And so as we saw our returns continue to perform at a higher level, that's what drove that.
Speaker #4: Yeah. Thanks, Russell. Just to clarify on the expense base, yeah, there was 3 million that was performance-based, related to long-term incentive, which is equity.
Speaker #4: Which is really a peer comp analysis. So that resulted in Chris mentioning our returns. It's a return-based compensation model. And so, as we saw our returns continue to perform at a higher level, that's what drove that.
Speaker #4: So that's not necessarily reoccurring, because we should be in line with where we expect our performance shares to pay out on a go-forward. And then franchise tax, which was another thing I called out, 1.2 million.
Mike Orcutt: So that's not necessarily recurring because we should be in line with where we expect our performance shares to pay out on a go-forward. And then franchise tax, which was another thing I called out, $1.2 million, that shouldn't be recurring as well. And then the other piece, we did the share repurchase, the transaction, and had some professional services fees in there, which I said was non-run rate. So if I looked at $88 million on the banking side outside of merger and integration costs, and I'd say $5 or $6 million of that was not what I would call run rate, but it was expense. It hit in Q4. And that's really why we reiterated our guide for 2026 that we gave last quarter is we don't see those as continuous.
So that's not necessarily recurring because we should be in line with where we expect our performance shares to pay out on a go-forward. And then franchise tax, which was another thing I called out, $1.2 million, that shouldn't be recurring as well. And then the other piece, we did the share repurchase, the transaction, and had some professional services fees in there, which I said was non-run rate.
Speaker #4: That shouldn't be reoccurring, as well. And then the other piece, we did the share repurchase, the transaction. And had some professional services fees in there, which I said was non-run rate.
Speaker #4: So if I looked at $88 million on the banking side, outside of merger and integration costs, I'd say $5 or $6 million of that was not what I would call run rate.
So if I looked at $88 million on the banking side outside of merger and integration costs, and I'd say $5 or $6 million of that was not what I would call run rate, but it was expense. It hit in Q4. And that's really why we reiterated our guide for 2026 that we gave last quarter is we don't see those as continuous.
Speaker #4: But it was expense. It hit in the fourth quarter. And that's really why we reiterated our guide for '26 that we gave last quarter—we don't see those as continuous.
Speaker #4: Although I would love to have, as we outperform on a return basis, if our performance shares go up, then that's actually a good problem for everybody, I think.
Mike Orcutt: Although I would love to have, as we outperform on a return basis, if our performance shares go up, then that's actually a good problem for everybody, I think. So the other piece you mentioned, throwing out the expense guide out the window, I like how you put that. I don't know that that's how I said it. But I think about it in two buckets. Really, we have our normal course of business, as Chris mentioned, or you said players in seat, and that goes for the entire company. We've got to maintain discipline and create operating leverage. And so we'll continue to do that. We do recognize that as opportunities come, there's an expense outlay that occurs. And so, yeah, we're certainly willing to do that for the right people, the right teams. We don't hire just to hire.
Although I would love to have, as we outperform on a return basis, if our performance shares go up, then that's actually a good problem for everybody, I think. So the other piece you mentioned, throwing out the expense guide out the window, I like how you put that. I don't know that that's how I said it.
Speaker #4: So the other piece you mentioned throwing out the expense guide out the window. I like how you put that. I don't know that that's how I said it, but I think about it in two buckets, really.
But I think about it in two buckets. Really, we have our normal course of business, as Chris mentioned, or you said players in seat, and that goes for the entire company. We've got to maintain discipline and create operating leverage. And so we'll continue to do that. We do recognize that as opportunities come, there's an expense outlay that occurs. And so, yeah, we're certainly willing to do that for the right people, the right teams. We don't hire just to hire.
Speaker #4: We have our normal course of business, as Chris mentioned, or as you said, players in seat. And that goes for the entire company. We've got to maintain discipline and create operating leverage.
Speaker #4: And so we'll continue to do that. We do recognize that as opportunities come, there's an expense outlay that occurs. And so yeah, we're certainly willing to do that for the right people, the right teams.
Speaker #4: We don't hire just to hire. We also recognize that it's a very fluid environment, and all of our people get recruited as well. And so, we play offense and defense.
Mike Orcutt: We also recognize that it's a very fluid environment, and all of our people get recruited as well. And so we play offense and defense. I'm a college football guy, so it's a little bit like the transfer portal. You got to make sure you got your team recruiting all the time, internal and external. And so we actively do that. And then adds, yeah, we added a couple of key people during the quarter, and we're really excited about those. And we expect that to continue to pay out for the long term. But really, all that's just heating up. And it's a full-time responsibility to make sure that we're recruiting the right people for FB Financial. Yeah. I think excellently put all the way around, Michael. I want to add two things.
We also recognize that it's a very fluid environment, and all of our people get recruited as well. And so we play offense and defense. I'm a college football guy, so it's a little bit like the transfer portal. You got to make sure you got your team recruiting all the time, internal and external. And so we actively do that. And then adds, yeah, we added a couple of key people during the quarter, and we're really excited about those.
Speaker #4: I'm a college football guy, so it's a little bit like the transfer portal. You got to make sure you've got your team recruiting all the time.
Speaker #4: Internal and external. And so we actively do that. And then ads. Yeah, we added a couple of key people during the quarter, and we're really excited about those.
And we expect that to continue to pay out for the long term. But really, all that's just heating up. And it's a full-time responsibility to make sure that we're recruiting the right people for FB Financial.
Speaker #4: And we expect that to continue to pay off for the long term. But really, all that's just heating up. And it's full-time responsibility to make sure that we're recruiting the right people for FB Financial.
Christopher Holmes: Yeah. I think excellently put all the way around, Michael. I want to add two things.There's a lot of disruption in a lot of places, not just our markets, all around the country. I think that creates, even if you look at comments made on earnings calls so far this cycle, you've seen banks get pretty bold and say, "Hey, I'm coming after you," to some of the regional banks.
Speaker #1: Yeah. I think excellently put all the way around, Michael. I would add two things. As a lot of disruption in a lot of places, not just our markets, all around the country.
Mike Orcutt: There's a lot of disruption in a lot of places, not just our markets, all around the country. I think that creates, even if you look at comments made on earnings calls so far this cycle, you've seen banks get pretty bold and say, "Hey, I'm coming after you," to some of the regional banks. You've seen others talk about their hiring goals and that kind of thing. So I would, and so you have to realize we have a lot of people coming into our markets in Middle Tennessee, East Tennessee, Georgia, Alabama. So what that does is they're just recruiting anybody and everybody. So your people are getting calls, and our people are getting calls. We say this internally, and I'll certainly say it on this call. We don't want any of our people underpaid.
Speaker #1: And I think what that creates, even if you look at comments made on earnings calls so far this cycle, you've seen banks get pretty bold in saying, "Hey, I'm coming after you." To some of the regional banks, you've seen others talk about their hiring goals and that kind of thing.
You've seen others talk about their hiring goals and that kind of thing. So I would, and so you have to realize we have a lot of people coming into our markets in Middle Tennessee, East Tennessee, Georgia, Alabama. So what that does is they're just recruiting anybody and everybody. So your people are getting calls, and our people are getting calls. We say this internally, and I'll certainly say it on this call. We don't want any of our people underpaid.
Speaker #1: So I would—and so you have to realize, we have a lot of people coming into our markets in Middle Tennessee, East Tennessee, Georgia, and Alabama.
Speaker #1: And so what that does is they're just recruiting anybody and everybody. And so your people are getting calls, and our people are getting calls.
Speaker #1: And we say this internally, and I'll certainly say it on this call: we don't want any of our people underpaid. And so we want to make sure that they're all fairly compensated, and if they're not, we want to correct that.
Mike Orcutt: We want to make sure that they're all fairly compensated. If they're not, we want to correct that. As Michael said, that's part of us, just make sure we're taking care of our folks. When it comes to those A players that may be available out in the market, we will not miss the opportunity because of comp. Okay? We can compete with anybody from the largest bank on the planet to the smallest community bank that we can compete with. We feel very strong about our position there. If that's the case and you take that off the table, it really comes down to culture, where the company's headed, and how they feel that they can take care of their customers and compete. That's where we think over the long term, we're going to win.
We want to make sure that they're all fairly compensated. If they're not, we want to correct that. As Michael said, that's part of us, just make sure we're taking care of our folks. When it comes to those A players that may be available out in the market, we will not miss the opportunity because of comp. Okay? We can compete with anybody from the largest bank on the planet to the smallest community bank that we can compete with.
Speaker #1: And so as Michael said, that's part of us, just make sure we're being—we're taking care of our folks. And then when it comes to those A players that may be available out in the market, we will not miss the opportunity because of comp.
Speaker #1: Okay? We can compete with anybody, from the largest bank on the planet to the smallest community bank—we can compete with them. And so we feel very strong about our position there.
We feel very strong about our position there. If that's the case and you take that off the table, it really comes down to culture, where the company's headed, and how they feel that they can take care of their customers and compete. That's where we think over the long term, we're going to win.So that's how we do it.
Speaker #1: So if that's the case and you take that off the table, it really comes down to culture, where the company's headed, and how they feel that they can take care of their customers and compete.
Speaker #1: And that's where we think, over the long term, we're going to win. So that's how we do.
Mike Orcutt: So that's how we do it. That's great, guys. Thank you for all the help and for taking my question. Sure. Our next question comes from Will Jones from KBW. Please go ahead with your question. Yeah. Hey, great. Good morning, guys. Continuing for Katherine here. Maybe I just wanted to stick along the same lines. I feel like a lot has been made about some of the M&A disruption that is out there and what that could mean for the talent acquisition front as well as the client acquisition front. But I wanted to ask you guys, we're talking about how big this opportunity is, but you guys are seeing it and living it every day on the ground. Is that opportunity, is it out there right now?
Speaker #1: it. That's great,
Russell Gunther: That's great, guys. Thank you for all the help and for taking my question.
Speaker #2: guys. Thank you for all the help and for taking my question.
Christopher Holmes: Sure.
Operator: Our next question comes from Will Jones from KBW. Please go ahead with your question.
Speaker #2: Our next question comes from Will Jones from QBW. Please go ahead with your question.
Will Jones: Yeah. Hey, great. Good morning, guys. Continuing for Katherine here. Maybe I just wanted to stick along the same lines. I feel like a lot has been made about some of the M&A disruption that is out there and what that could mean for the talent acquisition front as well as the client acquisition front. But I wanted to ask you guys, we're talking about how big this opportunity is, but you guys are seeing it and living it every day on the ground. Is that opportunity, is it out there right now?
Speaker #3: Yeah. Hey, great. Good morning, guys. Continuing for Catherine here. Maybe I just wanted to stick along the same lines I feel like a lot has been made about some of the M&A disruption that is out there and what that could mean for the talent acquisition front, as well as the client acquisition front.
Speaker #3: But one of the asks you guys—we're talking about how big this opportunity is, but you guys are seeing it and living it every day on the ground.
Speaker #3: Is that opportunity—is it out there right now? Is it the—are you actively seeing this big opportunity we're talking about in hiring, in terms of just your boots on the ground there?
Mike Orcutt: Are you actively seeing this big opportunity we're talking about in hiring in terms of just your boots on the ground there? Yeah. Good morning, Will. This is Chris. I think these things, and I don't want to point to anything specific, so I'll look in the mirror. Okay. Remember, we did a transaction in 2025. Again, it just creates a lot of disruption for your own company, but also for others, and it creates a lot of activity. I think all that depends on a lot of things: how quickly the transaction closes, what the communication is during all that period, and when conversion actually takes place. Conversions become a big deal. But actually, the most important part of a transaction is integration. Sometimes folks confuse conversion and integration.
Are you actively seeing this big opportunity we're talking about in hiring in terms of just your boots on the ground there?
Christopher Holmes: Yeah. Good morning, Will. This is Chris. I think these things, and I don't want to point to anything specific, so I'll look in the mirror. Okay. Remember, we did a transaction in 2025. Again, it just creates a lot of disruption for your own company, but also for others, and it creates a lot of activity.
Speaker #1: Yeah, good morning, Will. This is Chris. I think these things—and I don't want to point to anything specific, so I'll look in the mirror.
Speaker #1: Okay? Remember, we did a transaction in 2025. And again, it just creates a lot of disruption for your own company, but also for others.
Speaker #1: And it creates a lot of activity. And I think all that depends on a lot of things: how quickly the transaction closes, what the communication is during all that period, when conversion actually takes place—conversions become a big deal.
I think all that depends on a lot of things: how quickly the transaction closes, what the communication is during all that period, and when conversion actually takes place. Conversions become a big deal. But actually, the most important part of a transaction is integration. Sometimes folks confuse conversion and integration.
Speaker #1: But actually, the most important part of a transaction is integration. Because that's—and sometimes folks confuse conversion and integration. But integration starts from the second—actually, it starts before you make the announcement.
Mike Orcutt: But integration starts from the second. Actually, it starts before you make the announcement because teams are working together, and you see how that goes. You then make an announcement, and you then go through all this period of, frankly, changes to how people do business. And all of us approach that a little differently, I would tell you. Some folks, especially if they're the lead acquirer, they say, "Let me tell you how you do business now." And some folks don't like that and they'll go somewhere else. Our approach tends to be a best approach. We evaluate how both companies do business, and we end up adopting some of both. And we also end up adopting. We take the approach of what we call a best athlete approach, and we take folks from both companies depending on what works best for the whole.
But integration starts from the second. Actually, it starts before you make the announcement because teams are working together, and you see how that goes. You then make an announcement, and you then go through all this period of, frankly, changes to how people do business. And all of us approach that a little differently, I would tell you.
Speaker #1: Because teams are working together, and you see how that goes. You then make an announcement, and you then go through all this period of, frankly, changes to how people do business.
Speaker #1: And all of us approach that a little differently, I would tell you. Some folks—especially if they're the lead acquirer—they say, "Let me tell you how you do business now." And some folks don't like that.
Some folks, especially if they're the lead acquirer, they say, "Let me tell you how you do business now." And some folks don't like that and they'll go somewhere else. Our approach tends to be a best approach. We evaluate how both companies do business, and we end up adopting some of both. And we also end up adopting. We take the approach of what we call a best athlete approach, and we take folks from both companies depending on what works best for the whole.
Speaker #1: And they'll go somewhere else. Our approach tends to be the best approach. We evaluate how both companies do business, and we end up adopting some of both.
Speaker #1: And we also end up adopting—we take the approach of what we call a best athlete approach. And we take folks from both companies depending on what works best for the whole.
Speaker #1: And so, again, I'm telling you all that to tell you it is not—it's so much more art than science, that all of that's going on in a lot of places right now.
Mike Orcutt: And so again, I'm telling you all that to tell you it is not, it's so much more art than science that all of that's going on in a lot of places right now. And so it evolves over time. Sometimes there's an immediate exodus of people because they just go, "This is not going to work," okay? Or, "It's not going to work for me." Other times, there's never an exodus of people. And I'd say most commonly, there's a slow drift. And so all of those are going on with multiple transactions, and we're out there playing in that sandbox. But again, our approach is, "Hey, make sure we have the right culture. Make sure that people know our long-term plan and that this is a great place to be.
And so again, I'm telling you all that to tell you it is not, it's so much more art than science that all of that's going on in a lot of places right now. And so it evolves over time. Sometimes there's an immediate exodus of people because they just go, "This is not going to work," okay? Or, "It's not going to work for me." Other times, there's never an exodus of people.
Speaker #1: And so it evolves over time. Sometimes there's an immediate exodus of people because they just go, "This is not going to work." Okay? Or, "It's not going to work for me." Other times, there's never an exodus of people.
And I'd say most commonly, there's a slow drift. And so all of those are going on with multiple transactions, and we're out there playing in that sandbox. But again, our approach is, "Hey, make sure we have the right culture. Make sure that people know our long-term plan and that this is a great place to be.
Speaker #1: And I'd say that most commonly, there's a slow drift. And so all of those are going on with multiple transactions. And we're out there playing in that sandbox.
Speaker #1: But again, our approach is, "Hey, make sure we have the right culture. Make sure that people know our long-term plan and that this is a great place to be." And make sure that they can take care of their clients.
Mike Orcutt: And make sure that they can take care of their clients." That is the most, I'd say, important thing. And so again, I wish I could give you something a little more formulaic that could work its way into an EPS model. But all of that's going on. And depending on who you're talking about, I would say there's a couple of big transactions going on in our market. And I think that the two different bigger transactions are taking different approaches. Yeah. And Will, this is Michael. To your point on disruption, and Chris mentioned some other calls, one of the markets that's been called out, and some of it's Huntsville, Alabama. And if you look at Huntsville bankers, there hasn't been necessarily M&A that's driven, but banker disruption has been on fire for six months.
And make sure that they can take care of their clients." That is the most, I'd say, important thing. And so again, I wish I could give you something a little more formulaic that could work its way into an EPS model. But all of that's going on. And depending on who you're talking about, I would say there's a couple of big transactions going on in our market.
Speaker #1: That is the most, I'd say, important thing. And so, again, I wish I could give you something a little more formulaic that could work its way into a DPS model.
Speaker #1: But all of that's going on. And depending on who you're talking about, I would say there's a couple of big transactions going on in our market.
Speaker #1: And I think that the two different bigger transactions are taking different—
And I think that the two different bigger transactions are taking different approaches.
Speaker #1: approaches. Yeah.
Michael Mettee: Yeah. And Will, this is Michael. To your point on disruption, and Chris mentioned some other calls, one of the markets that's been called out, and some of it's Huntsville, Alabama. And if you look at Huntsville bankers, there hasn't been necessarily M&A that's driven, but banker disruption has been on fire for six months.
Speaker #3: And Will, this is Michael. To your point on disruption, and Chris mentioned some other calls, one of the markets that's been called out, and some of it's Huntsville, Alabama, and if you look at Huntsville, bankers, there hasn't been necessarily M&A that's driven, but banker disruption has been on fire for six months.
Speaker #3: And we looked up in the fourth quarter, and we were really excited about the team we have in Huntsville right now.
Mike Orcutt: And we looked up in the Q4, and we are really excited about the team we have in Huntsville right now. And so, but there's probably amongst banks, I mean, I don't write this in stone, but there's 50 or 60 bankers that moved between banks in the past six months. And we look at our team, and we see the opportunity there. We're super excited about them, relatively new, but very experienced market bankers. And so not even M&A related, it's just opportunity related. And so it's happening in and all around us. And we think we're poised to, or well-positioned to be successful with that. That's great. Thank you both. That's all very helpful content. I think we're all just trying to contextualize what we're talking euphorically about this hiring opportunity that exists.
And we looked up in the Q4, and we are really excited about the team we have in Huntsville right now. And so, but there's probably amongst banks, I mean, I don't write this in stone, but there's 50 or 60 bankers that moved between banks in the past six months. And we look at our team, and we see the opportunity there. We're super excited about them, relatively new, but very experienced market bankers.
Speaker #3: And Yeah. so but there's probably—and amongst banks, I mean, I don't write this in stone, but there's 50 or 60 bankers that moved between banks in the past six months.
Speaker #3: And we look at our team, and we see the opportunity there. We're super excited about them—relatively new, but very experienced market bankers. And so, not even M&A-related, it's just opportunity-related.
And so not even M&A related, it's just opportunity related. And so it's happening in and all around us. And we think we're poised to, or well-positioned to be successful with that.
Speaker #3: And so that's happening in and all around us, and we think we're poised to, or well positioned to, be successful with that.
Will Jones: That's great. Thank you both. That's all very helpful content. I think we're all just trying to contextualize what we're talking euphorically about this hiring opportunity that exists.
Speaker #2: That's great. Thank you both. That's all very helpful content. I think we're all just trying to contextualize what we're talking about. Euphorically about this hiring opportunity that exists, and just wanted to see if maybe there's an immediacy to it, or from your lens, it might take a little time to get there.
Mike Orcutt: And just wanted to see if maybe there's an immediacy to it, or from your lens, it might take a little time to get there. So I appreciate that context. And Michael, maybe for you. I will just, sorry, not to interrupt you, but I think the answer to that is both. There is immediacy, but we're not just thinking about the next two weeks, right? This is a three, five, seven-year kind of opportunity with all this going on. And so these things take a little bit of time. So the answer is both. That's probably not what you're looking for. But Michael, I was going to say exactly the same thing. The answer is both. And I would say this is what folks, what tends to be, what helps FBK is folks view us as having a very long runway.
And just wanted to see if maybe there's an immediacy to it, or from your lens, it might take a little time to get there. So I appreciate that context. And Michael, maybe for you.
Speaker #2: So I appreciate that context.
Speaker #2: And Michael, maybe for you. I will—
Michael Mettee: I will just, sorry, not to interrupt you, but I think the answer to that is both. There is immediacy, but we're not just thinking about the next two weeks, right? This is a three, five, seven-year kind of opportunity with all this going on. And so these things take a little bit of time. So the answer is both. That's probably not what you're looking for.
Speaker #3: just—sorry, not to interrupt you, but I think the answer to that is both. There is immediacy just thinking about the next two weeks, right?
Speaker #3: This is a three-, five-, seven-year kind of opportunity with all this going on. And so, these things take a little bit of time. So the answer is both.
Speaker #3: And that's probably not what you're looking for.
Speaker #3: but.
Christopher Holmes: But Michael, I was going to say exactly the same thing.The answer is both. And I would say this is what folks, what tends to be, what helps FBK is folks view us as having a very long runway.
Speaker #1: Michael, I was going to say exactly the same.
Speaker #1: thing. The answer is both. And I would say this. What folks tend to be—what helps FBK is folks view us as having a very long runway.
Speaker #1: And they view us as being able to—they view us as having a really bright path forward. And so that's helping us. And we play the long game there.
Mike Orcutt: And they view us as being able to, they view us as having a really bright path forward. And so that's helping us. And we play the long game there. So we're much more interested in, "Hey, we're going to be here. We're going to play the long game." And we think that's going to be a winning formula. So it is both. Yeah. Okay. That's very helpful. I appreciate you guys contextualizing that for us. Michael, maybe one for you on the margin. It's great to see the higher in this quarter. You guys seem to consistently outperform where you guys expect the margin to be. And then we have a little bit of higher guide. And it's really just been a large function of you guys being good managers of deposit costs.
And they view us as being able to, they view us as having a really bright path forward. And so that's helping us. And we play the long game there. So we're much more interested in, "Hey, we're going to be here. We're going to play the long game." And we think that's going to be a winning formula. So it is both.
Speaker #1: So we're much more interested in, 'Hey, we're going to be here. We're going to play the long game.' And we think that's going to be a winning formula.
Speaker #1: So it is
Speaker #1: both. Yeah.
Will Jones: Yeah. Okay. That's very helpful. I appreciate you guys contextualizing that for us. Michael, maybe one for you on the margin. It's great to see the higher in this quarter. You guys seem to consistently outperform where you guys expect the margin to be. And then we have a little bit of higher guide. And it's really just been a large function of you guys being good managers of deposit costs.
Speaker #2: Okay, that's very helpful. Guys contextualizing that for us—I appreciate you. Michael, maybe one for you on the margin. It's great to see the hiring in this quarter.
Speaker #2: You guys seem to consistently outperform what you guys expect the margin to be. And then we have a little bit of hire guide. And it's really just been a large function of you guys being good managers of deposit costs.
Speaker #2: But as we enter kind of a 26 period where we expect growth to pick up even from where we are, today, DDA, what do you think just incremental deposit betas will look like?
Mike Orcutt: But as we enter kind of a 2026 period where we expect growth to pick up, even from where we are today, what do you think just incremental deposit betas will look like? And what kind of leverage do you feel like you still have to manage deposit costs over the course of next year? Yeah. Well, that's a really good question. Yeah. We feel good about the margin guide and the growth opportunity. I will say that mid- to high single-digit growth at a 3.80% kind of core margin. However, as you mentioned, as people come in, entrants, sometimes when you hire people, or not sometimes, a lot of times, to bring over relationships, you got to start with bringing over a customer. And it's probably paying above market for deposit costs. And then you earn their business over time.
But as we enter kind of a 2026 period where we expect growth to pick up, even from where we are today, what do you think just incremental deposit betas will look like? And what kind of leverage do you feel like you still have to manage deposit costs over the course of next year?
Speaker #2: And what kind of leverage do you feel like you still have to manage deposit costs over the course of next year?
Michael Mettee: Yeah. Well, that's a really good question. Yeah. We feel good about the margin guide and the growth opportunity. I will say that mid- to high single-digit growth at a 3.80% kind of core margin. However, as you mentioned, as people come in, entrants, sometimes when you hire people, or not sometimes, a lot of times, to bring over relationships, you got to start with bringing over a customer. And it's probably paying above market for deposit costs. And then you earn their business over time.
Speaker #3: Yeah, well, that's a really good question. Yeah, we feel good about the margin guide. And the growth opportunity, I will say, that mid to high single-digit growth at a 3.80% kind of core margin.
Speaker #3: However, as you mentioned, as people come in—entrance—sometimes when you hire people, or not sometimes, a lot of times, to bring over relationships, you’ve got to start with bringing over a customer.
Speaker #3: And it's probably paying above market for a deposit cost. And then you earn their business over time. And we fully expect that our bankers can do that and will do it.
Mike Orcutt: We fully expect that our bankers can do that. We'll do it. Of course, I'm sure our competitors do as well. More people coming into our markets, paying higher costs. I personally get flyers from a lot of large banks twice a week or mail offering things that are pretty exorbitant. So we do realize it's out there. It really comes down to the customer experience and relationship long term and earning that business. That's what we're focused on. So you could see both on the loan and deposit side, some margin compression if things get really, really kind of dicey or competitive out there. But I think so far, everybody's pretty focused on everybody, meaning competitive-wise as well, kind of lowering costs as rates go down. I will say this too, though, Will, because this is counterintuitive to maybe a lot of other institutions.
We fully expect that our bankers can do that. We'll do it. Of course, I'm sure our competitors do as well. More people coming into our markets, paying higher costs. I personally get flyers from a lot of large banks twice a week or mail offering things that are pretty exorbitant.
Speaker #3: So and of course, I'm sure our competitors do as well. So more people coming into our markets, paying higher costs, I personally get flyers from a lot of large banks twice a week or mail offering things that are pretty exorbitant.
So we do realize it's out there. It really comes down to the customer experience and relationship long term and earning that business. That's what we're focused on. So you could see both on the loan and deposit side, some margin compression if things get really, really kind of dicey or competitive out there.
Speaker #3: So we do realize it's out there. It really comes down to the customer experience and relationship long term, and earning that business. And that's what we're focused on.
Speaker #3: So you could see both on the loan and deposit side, some margin compression if things get really kind of dicey or competitive out there.
Speaker #3: But I think so far, everybody's pretty focused on everybody meeting, competitive-wise, as well. Kind of lowering cost as rates go down. I will say this too, though, Will, because this is counterintuitive.
But I think so far, everybody's pretty focused on everybody, meaning competitive-wise as well, kind of lowering costs as rates go down. I will say this too, though, Will, because this is counterintuitive to maybe a lot of other institutions.
Speaker #3: To maybe a lot of other institutions, we want to be a fair value proposition to our customers. We want to earn—Chris mentioned the long game.
Mike Orcutt: We want to be a fair value proposition to our customers. We want to earn. Chris mentioned the long game. We're thinking years and decades. And so we're not trying to get everybody to zero-cost deposit. We want to be fair. We want them to have their money here. We want it to be the entire family, their business, everybody. And so we expect that on both sides of the balance sheet. We're going to have fair loan yield. We won't be the lowest loan pricing either, but we want to take care of our customers. And so our deposit cost does run a little bit higher than some others, and our loan yields run a little bit higher. And so we think that's the fair thing for the customer, for the company, and for the shareholders. So that's kind of a different approach, probably. Yeah.
We want to be a fair value proposition to our customers. We want to earn. Chris mentioned the long game. We're thinking years and decades. And so we're not trying to get everybody to zero-cost deposit. We want to be fair. We want them to have their money here. We want it to be the entire family, their business, everybody. And so we expect that on both sides of the balance sheet.
Speaker #3: We're thinking years and decades. And so we're not trying to get everybody to zero-cost deposit. We want to be fair. We want them to have their money here.
Speaker #3: We want it to be the entire family, their business, everybody. And so we expect that on both sides of the balance sheet. We're going to have fair loan yield.
We're going to have fair loan yield. We won't be the lowest loan pricing either, but we want to take care of our customers. And so our deposit cost does run a little bit higher than some others, and our loan yields run a little bit higher. And so we think that's the fair thing for the customer, for the company, and for the shareholders. So that's kind of a different approach, probably.
Speaker #3: We won't be the lowest loan pricing either. But we want to take care of our customers, and so our deposit cost does run a little bit higher than some others.
Speaker #3: And our loan yields run a little bit higher. And so we think that's the fair thing for the customer, and for the company, and for the shareholders.
Speaker #3: So that's kind of a different approach, probably.
Will Jones: Yeah.Just maybe expectations on what incremental deposit betas will look like in this kind of competitive market you're describing.
Speaker #2: Yeah, just maybe expectations on what incremental deposit betas will look like in this kind of competitive market you're describing?
Mike Orcutt: Just maybe expectations on what incremental deposit betas will look like in this kind of competitive market you're describing. Yeah. I mean, I think if you're still looking at that 55% to 60% range, which is where it's been, I think on interest bearing. But we'll see how Treasuries are up, right? A lot of external noise to the banking system that could put pressure on money moving back into some of those US Treasuries or money market funds, which could impact that. But we've been pretty consistently able to move down deposit costs with rate cuts. That being said, we only think there's going to be one or so where we sit today. Yeah. Okay. Good stuff. Maybe just lastly for me, Chris, we talked a little bit about just the appetite for what incremental M&A would look like.
Michael Mettee: Yeah. I mean, I think if you're still looking at that 55% to 60% range, which is where it's been, I think on interest bearing. But we'll see how Treasuries are up, right? A lot of external noise to the banking system that could put pressure on money moving back into some of those US Treasuries or money market funds, which could impact that.
Speaker #3: Yeah, I mean, I think if you're still looking at that 55–60% range, which is where it's been, I think, on interest-bearing.
Speaker #3: But we'll see how Treasuries are up, right? A lot of external noise. To the banking system, that could put pressure on money moving back into some of those U.S. Treasuries or money market funds.
Speaker #3: Which could impact that. But we've been pretty consistently able to move down deposit costs with rate cuts. That being said, we only think there's going to be one or so, where we sit today.
But we've been pretty consistently able to move down deposit costs with rate cuts. That being said, we only think there's going to be one or so where we sit today.
Will Jones: Yeah. Okay. Good stuff. Maybe just lastly for me, Chris, we talked a little bit about just the appetite for what incremental M&A would look like.
Speaker #2: Yeah, okay, good stuff. Maybe just lastly for me, Chris, we talked a little bit about just the appetite for what incremental M&A would look like.
Speaker #2: And you mentioned for the right opportunity. You guys would keep your eyes and ears open. What could you just frame what that opportunity would look like?
Mike Orcutt: You mentioned for the right opportunity, you guys would keep your eyes and ears open. Could you just frame what that opportunity would look like? Maybe as you think about the right size, the right geography, just what you would look for in an M&A transaction today? Yeah. So geographically, we're going to be looking around the Southeast and the Carolinas, even into Virginia, which is a contiguous state for us from where we are today and not far at all geographically. So, Carolinas, Virginia, Georgia, Alabama, and some things that could even get down into the northern part of Florida would all be the types of places we would be looking. We would prefer, okay, not necessarily it has to be contiguous to some of our existing geography. And here's an example of what I mean by that. I mentioned Virginia.
You mentioned for the right opportunity, you guys would keep your eyes and ears open. Could you just frame what that opportunity would look like? Maybe as you think about the right size, the right geography, just what you would look for in an M&A transaction today?
Speaker #2: Maybe as you think about the right size, the right geography, just what you would look for in an M&A transaction today?
Christopher Holmes: Yeah. So geographically, we're going to be looking around the Southeast and the Carolinas, even into Virginia, which is a contiguous state for us from where we are today and not far at all geographically.
Speaker #1: Yeah. So, geographically, we're going to be looking around the Southeast and the Carolinas, even into Virginia, which is a contiguous state for us from where we are today.
Speaker #1: And not far at all geographically. So Carolinas, Virginia, Georgia, Alabama, some things that could even get down into the northern part of Florida would all be the types of places we would be looking.
So, Carolinas, Virginia, Georgia, Alabama, and some things that could even get down into the northern part of Florida would all be the types of places we would be looking. We would prefer, okay, not necessarily it has to be contiguous to some of our existing geography. And here's an example of what I mean by that. I mentioned Virginia.
Speaker #1: We would prefer—okay, not necessarily that it has to be contiguous to some of our existing geography. And here's an example of what I mean by that.
Speaker #1: I mentioned Virginia. Hampton Roads, Virginia is actually quite a long way from us, and so that would be less interesting for us than, let's say, western Virginia.
Mike Orcutt: Hampton Roads, Virginia, is actually quite a long way from us. And so that would be less interesting for us than, let's say, Western Virginia and places like, I don't know, I'm hesitant to throw out names of towns. Sometimes I get calls going, "Are you talking about us on your earnings call?" So I don't want to, so I'm a little hesitant to get too specific. But you can understand what I mean by jumping over big parts of geography is generally not what we're looking for. We like for it to be a little closer to our existing, but in all of those locations. So I would think of more kind of Western Virginia. And Carolinas certainly of interest, the Georgia, Alabama, all of our existing southeastern, let's say, geography.
Hampton Roads, Virginia, is actually quite a long way from us. And so that would be less interesting for us than, let's say, Western Virginia and places like, I don't know, I'm hesitant to throw out names of towns. Sometimes I get calls going, "Are you talking about us on your earnings call?" So I don't want to, so I'm a little hesitant to get too specific.
Speaker #1: The places like—I don't know—I'm hesitant to throw out names of towns, or sometimes I get calls going, "Are you talking about us on your earnings call?" So I don't want to—so I'm a little hesitant to get too specific.
Speaker #1: But you can understand what I mean by jumping over big parts of geography is generally not what we're looking for. We'd like for it to be a little closer to our existing.
But you can understand what I mean by jumping over big parts of geography is generally not what we're looking for. We like for it to be a little closer to our existing, but in all of those locations. So I would think of more kind of Western Virginia. And Carolinas certainly of interest, the Georgia, Alabama, all of our existing southeastern, let's say, geography.
Speaker #1: But in all of those locations, so I would think of more kind of western Virginia. But in the Carolinas, certainly of interest. Georgia, Alabama, all of our existing southeastern, let's say, geography.
Speaker #1: And then we like banks that we generally aren't looking for things that we have to fix in a significant way. We like companies that perform well.
Mike Orcutt: We like banks that we generally aren't looking for things that we have to fix in a significant way. We like companies that perform well in asset-wise or size of the institution. We love things that are called anywhere from a couple of billion in assets all the way up to six or seven even billion in assets. So we love that's a description of what we target. There are some cases where we may go smaller than that on the asset side. If it's a market that we're particularly interested in and we like what they do in that market, so there are cases where we go smaller than that asset-wise. Yeah. Okay. That's great color, Chris. I appreciate it, guys. Thanks for the questions. Congrats on a great year. Thanks, Will. Thank you so much, Will.
We like banks that we generally aren't looking for things that we have to fix in a significant way. We like companies that perform well in asset-wise or size of the institution. We love things that are called anywhere from a couple of billion in assets all the way up to six or seven even billion in assets. So we love that's a description of what we target.
Speaker #1: In asset-wise or size of the institution, we love things that are—call it anywhere from a couple of billion in assets all the way up to $6 or $7, even, billion in assets.
Speaker #1: So, we would love—that's a description of what we target. There are some cases where we may go smaller than that on the asset side.
There are some cases where we may go smaller than that on the asset side. If it's a market that we're particularly interested in and we like what they do in that market, so there are cases where we go smaller than that asset-wise.
Speaker #1: If it's a market that we're particularly interested in and we like what they do in that market. So there are cases where we go smaller than that.
Speaker #1: Asset-wise.
Will Jones: Yeah. Okay. That's great color, Chris. I appreciate it, guys. Thanks for the questions. Congrats on a great year.
Speaker #2: Yeah. Okay. That's great color, Chris. I appreciate it, guys. Thanks for the questions. And then congrats on a great year.
Michael Mettee: Thanks, Will.
Speaker #1: Thanks, Will. Thank you so much, Will.
Christopher Holmes: Thank you so much, Will.
Speaker #4: Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and then two.
Mike Orcutt: Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question comes from Steve Moss from Raymond James. Please go ahead with your question. Hey, guys. This is Thomas on for Steve. Could you just talk maybe about the loan pipeline and client sentiment broadly? How is client confidence these days and what is their appetite for investment? Yeah, Tom, good morning. It's Michael. Yeah. Actually, pipeline is pretty strong. I think we've been saying that. We've been seeing strong pipelines. Some deals have pushed into 2026 from 2025. And so I'd reiterate that they've been strong. Yeah. Clients, I think a lot of the noise that happened maybe early last year that limited some of that early growth is past. All the noise is still out there.
Operator: Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question comes from Steve Moss from Raymond James. Please go ahead with your question.
Speaker #4: Our next question comes from Steve Moss from Raymond James. Please go ahead with your question.
[Analyst] (Raymond James): Hey, guys. This is Thomas on for Steve. Could you just talk maybe about the loan pipeline and client sentiment broadly? How is client confidence these days and what is their appetite for investment?
Speaker #5: Hey, guys. This is Thomas on for Steve. Could you just talk maybe about the loan pipeline and client sentiment broadly? How is client confidence these days, and what does their appetite for—
Speaker #5: investment? Yeah, Tom, good
Michael Mettee: Yeah, Tom, good morning.It's Michael. Yeah. Actually, pipeline is pretty strong. I think we've been saying that. We've been seeing strong pipelines. Some deals have pushed into 2026 from 2025. And so I'd reiterate that they've been strong. Yeah. Clients, I think a lot of the noise that happened maybe early last year that limited some of that early growth is past. All the noise is still out there.
Speaker #3: Morning. It's Michael. Yeah, actually, pipeline is pretty strong. I think we've been saying that. We've been seeing strong pipelines. There are some deals that have pushed into '26 from '25.
Speaker #3: And so I'd reiterate that they've been strong. Yeah, clients—I think a lot of the noise that happened maybe early last year that limited some of that early growth is past.
Speaker #3: All the noise is still out there. I think that they're just operating in a way that, 'Hey, it's kind of the new norm, and we're excited about the future and investments occurring.' We're seeing a lot of existing clients start new projects or deals.
Mike Orcutt: I think that they're just operating in a way that, hey, it's kind of new norm, and we're excited about the future and investments occurring. We're seeing a lot of existing clients start new projects or deals. And a lot of times, they're able to take their older stuff to the permanent market if it's multifamily or real estate-based, and seeing our activities picking up. So really, actually pretty positive operating environment business-wise. Okay. Great. Appreciate that, caller. And just one more for me. Last quarter, I know you guys indicated that loan growth would largely be governed by core deposit growth. And it looks like maybe core deposit growth was a little challenged in Q4. I saw you took on some brokers. Can you maybe talk about your core deposit growth outlook for 2026 and maybe the strategy that's going to get you there? Yeah.
I think that they're just operating in a way that, hey, it's kind of new norm, and we're excited about the future and investments occurring. We're seeing a lot of existing clients start new projects or deals. And a lot of times, they're able to take their older stuff to the permanent market if it's multifamily or real estate-based, and seeing our activities picking up.So really, actually pretty positive operating environment business-wise.
Speaker #3: And a lot of times they're able to take their older stuff to the permanent market if it's multifamily or real estate-based. And seeing our activities picking up.
Speaker #3: So really, actually pretty positive operating environment,
Speaker #3: business-wise. Okay.
[Analyst] (Raymond James): Okay. Great. Appreciate that, caller. And just one more for me. Last quarter, I know you guys indicated that loan growth would largely be governed by core deposit growth. And it looks like maybe core deposit growth was a little challenged in Q4. I saw you took on some brokers. Can you maybe talk about your core deposit growth outlook for 2026 and maybe the strategy that's going to get you there? Yeah.
Speaker #5: Great. Appreciate that, Carl. And just one more from me. Last quarter, I know you guys indicated that loan growth would largely be governed by core deposit growth.
Speaker #5: And it looks like maybe core deposit growth was a little challenged in the fourth quarter. I saw you took on some brokerage. Can you maybe talk about your core deposit growth outlook for 2026, and maybe the strategy that's going to get you there?
Speaker #3: Yeah. With core deposit growth, always a focus for us. We've got a lot of funding capabilities that we would exercise in kind of the shorter term if need be.
Mike Orcutt: Core deposit growth, always a focus for us. We've got a lot of funding capabilities that we would exercise in kind of the shorter term if need be. I'd say, actually, when I think about core, it goes back to a comment I made a little bit earlier that sometimes you bring over customers and the intent is to turn them into relationships, which is another word for core. A lot of times, if that doesn't materialize over some period of time and they're higher cost, we'll just go ahead and say, "Hey, maybe we're not the place for you." So that's where you can see deposit movement in and out of the balance sheet. That's a continuous process. Brokered, small number for us, 4% or so of balances. We do make sure that we have funding in place if need be.
Michael Mettee: Core deposit growth, always a focus for us. We've got a lot of funding capabilities that we would exercise in kind of the shorter term if need be. I'd say, actually, when I think about core, it goes back to a comment I made a little bit earlier that sometimes you bring over customers and the intent is to turn them into relationships, which is another word for core.
Speaker #3: I'd say, actually, when I think about core—as it goes back to a comment I made a little bit earlier—sometimes you bring over customers, and the intent is to turn them into relationships, which is another word for core.
A lot of times, if that doesn't materialize over some period of time and they're higher cost, we'll just go ahead and say, "Hey, maybe we're not the place for you." So that's where you can see deposit movement in and out of the balance sheet. That's a continuous process. Brokered, small number for us, 4% or so of balances. We do make sure that we have funding in place if need be.
Speaker #3: And a lot of times, if that doesn't materialize over some period of time and they're higher cost, well, we'll just go ahead and say, 'Hey, maybe we're not the place for you.' And so that's where you can see deposit movement in and out of the balance sheet.
Speaker #3: And that's a continuous process. Brokerage—a small number for us, 4% or so of balances—we do make sure that we have funding in place if need be.
Speaker #3: And I think, from a perspective of how we're going to do it in '26, I do think it gets back to what Chris said in his comments: the focus on the customer experience, making sure we have the right treasury management platform and products, as we go, what I'll call, a little bit more upstream in terms of opportunities.
Mike Orcutt: And I think from a perspective of how we're going to do it in 2026, I do think it gets back to what Chris said in his comments is the focus on the customer experience, making sure we have the right treasury management platform and products as we go, what I'll call more upstream a little bit, opportunities, that kind of middle market commercial client. A lot of opportunity there. But even 1/2 our business is consumer as well. And so our retail network, we've got to reignite the focus on our client there. And we're in the process of that and just really adding and activating relationships. So it's broad-based. You can't point to just a single thing because we're in a lot of these different businesses. And so a lot of opportunity in our geographies. Okay. Got it.
And I think from a perspective of how we're going to do it in 2026, I do think it gets back to what Chris said in his comments is the focus on the customer experience, making sure we have the right treasury management platform and products as we go, what I'll call more upstream a little bit, opportunities, that kind of middle market commercial client. A lot of opportunity there.
Speaker #3: That kind of middle market commercial client a lot of opportunity there. But even half our business is consumer as well. And so our retail network, we've got a reignite the focus on our client there.
But even 1/2 our business is consumer as well. And so our retail network, we've got to reignite the focus on our client there. And we're in the process of that and just really adding and activating relationships. So it's broad-based. You can't point to just a single thing because we're in a lot of these different businesses. And so a lot of opportunity in our geographies.
Speaker #3: And we're in the process of that and just really adding and activating relationships. So it's broad-based. You can't point to just a single thing.
Speaker #3: Because we're in a lot of these different businesses, there's a lot of opportunity in our geographies.
[Analyst] (Raymond James): Okay. Got it.Thanks for taking my questions and congrats on a good year.
Speaker #5: Okay. Got it. Thanks for taking my questions and congrats on a good year.
Mike Orcutt: Thanks for taking my questions and congrats on a good year. Thanks, Tom. I appreciate it, Tom. Thanks. Bye. At this time, we'll be ending today's question and answer session. I'd like to turn the floor back over to Chris Holmes for any closing remarks. All right. Thank you so much again. We appreciate everybody joining us on the call. We are glad to have had a good year. We're looking forward to 2026. So thank you all. Reach out directly if we need to give you more information. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.
Michael Mettee: Thanks, Tom. I appreciate it, Tom.
Speaker #1: I appreciate it, Tom. Thanks, Tom.
Christopher Holmes: Thanks. Bye.
Speaker #5: Bye.
Operator: At this time, we'll be ending today's question and answer session. I'd like to turn the floor back over to Chris Holmes for any closing remarks.
Speaker #4: And at this time, we'll be ending today's question and answer session. I'd like to turn the floor back over to Chris Holmes for any closing
Speaker #4: remarks. All right.
Christopher Holmes: All right. Thank you so much again. We appreciate everybody joining us on the call. We are glad to have had a good year. We're looking forward to 2026. So thank you all. Reach out directly if we need to give you more information.
Speaker #1: Thank you so much again. We appreciate everybody joining us on the call, and we are glad to have had a good year. We're looking forward to 2026.
Speaker #1: And so, thank you all. And reach out directly if we need to give you more.
Speaker #1: information. And
Christopher Holmes: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.
