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Date

Jan. 22, 2026, 9 a.m. ET

Call participants

  • President and Chief Executive Officer — Christopher T. Holmes
  • Chief Operating and Financial Officer — Michael M. Mettee

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Takeaways

  • GAAP EPS -- $1.07 for the quarter and $2.45 for the year, providing direct baseline profitability figures by standard accounting.
  • Adjusted EPS -- $1.16 for the quarter and $3.99 for the year, reflecting adjustments for items such as merger and integration expenses.
  • Pretax, Pre-provision Net Revenue -- $71.1 million, or $77.1 million on an adjusted basis, capturing core earnings power before credit costs.
  • Net Interest Income -- $150.6 million in the quarter, highlighting the main revenue engine.
  • Net Interest Margin -- 3.98% for the quarter, representing a three basis point sequential increase from the prior quarter.
  • Return on Average Assets -- 1.4% reported and 1.51% adjusted for the quarter, indicating effective utilization of the asset base.
  • Return on Average Tangible Common Equity -- 14.4% reported and 15.9% adjusted for the quarter, providing a direct equity return measure.
  • Loans Held for Investment Growth -- 29% year over year driven by both acquisition and organic expansion.
  • Deposit Growth -- 25% year over year, including both acquisition and internal sources.
  • Quarterly Loan Growth -- $86 million, equating to an approximate 3% annualized rate, with late-quarter payoff activity reducing realized growth by about half.
  • Quarterly Deposit Growth -- $97 million, corresponding to an approximate 3% annualized increase.
  • Adjusted Banking Core Non-Interest Expense -- $88 million for the quarter and $298 million for the full year, providing core cost insights.
  • Merger and Integration Expenses -- $4.6 million in the quarter, with management stating these costs "should largely conclude by the end of the first quarter of 2026."
  • Performance-based Incentive Expense -- $3 million included in adjusted expenses for the quarter, tied to equity and peer compensation benchmarking.
  • Franchise Tax Expense -- $1.2 million added to quarterly expense; management characterized this as nonrecurring.
  • Other Non-Recurring Professional Services and Technology Costs -- $1.5 million in the quarter, which management stated are also not run-rate items.
  • Provision Expense -- $1.2 million, attributed to low charge-offs and minimal modeled reserve changes.
  • Allowance for Loan Losses -- $186 million or 1.5% of loans held for investment, showing reserve strength.
  • Annualized Net Charge-offs -- Five basis points for the quarter, indicating low credit loss content.
  • Non-performing Assets Trend -- Slight increase due to higher past dues in some consumer portfolios and a Ginnie Mae repurchase portfolio, though loss content remains low.
  • Loan Production Yields -- New loans originated at approximately 6.75% during the quarter.
  • New Deposit Costs -- New deposit funding cost averaged around 3% during the quarter.
  • Share Repurchase -- Over 1.7 million shares repurchased in the quarter, representing about 3% of the company, involving the estate of the late James Ayers as the counterparty.
  • Non-Interest Income Improvement -- Increased in the quarter, driven by higher swap fees, investment services revenue, and non-recurring items.
  • Net Interest Margin Guidance -- Management expects a margin exclusive of loan accretion to be 3.78%-3.83% for the next quarter and full year, with loan accretion expected to add about 15 basis points.
  • Fee Income Outlook -- Anticipated upper single-digit percentage growth, supported by added product offerings and customer relationships.
  • 2026 Banking Expense Guidance -- Expected full-year banking expense between $325 million and $335 million, targeting an efficiency ratio in the low 50% range and 50% by year-end.
  • 2026 Growth Guidance -- Mid to high single-digit growth targeted for both loans and core customer deposits.
  • Mortgage Segment Turnaround -- Michael M. Mettee stated, "this year it actually went from a negative to a positive," indicating a return to profitability for the mortgage business.

Summary

FB Financial Corporation (FBK 1.23%) emphasized its ability to integrate the Southern States Bank acquisition swiftly, which increased company size by roughly 20%. Executive commentary highlighted that current organic growth in core loans and deposits was below typical levels, attributed to both economic conditions and acquisition-related distractions. Management reiterated a focus on expanding market share through customer-centric strategies, leveraging recent talent additions for growth without relying on new team hiring. A significant share repurchase involving over 1.7 million shares from the Ayers estate effectively reduced outstanding share count by 3%. The company anticipates a return to its historic high-single-digit organic growth in both loans and deposits for 2026 and projects stable-to-slightly expanding net interest margin despite an expectation of at least one rate cut. Management disclosed nonrecurring fourth-quarter expenses totaling $5-$6 million, with the remaining banking expense and efficiency initiatives explicitly outlined in 2026 projections.

  • Holmes said, "our bottom line results were where they need to be," aligning actual returns with internal performance expectations.
  • Mettee stated, "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 those to grow that high single-digit range without adding another person."
  • Holmes described Nashville as comprising "approaches half of our loans in deposit base," marking it as the company's most significant geographic engine for 2026.
  • Management expects incremental deposit betas to remain in the 55%-60% range and acknowledged potential deposit pricing competition in their markets.
  • The use of "brokered" deposit funding is limited, representing "4% or so, balances," according to Mettee, with core deposit gathering prioritized in strategy.
  • Potential future M&A targets are expected to be located in the Southeast, with deal size preference between $2 billion and $7 billion in assets, mainly focusing on contiguous markets.
  • The mortgage segment is highlighted as a possible "bright spot" for 2026, with management citing improved operating leverage and profitability.

Industry glossary

  • Net Interest Margin (NIM): The ratio of net interest income to average earning assets, measuring the profitability of lending/funding operations.
  • Loan Accretion: Incremental interest income recognized over time from acquired loan portfolios, as fair value marks reverse.
  • Deposit Beta: The sensitivity of a bank’s deposit cost to changes in benchmark interest rates, affecting funding expense as rates change.
  • CRE: Commercial Real Estate; loans secured by commercial property such as office buildings, retail centers, or warehouses.
  • C&I: Commercial and Industrial; loans to businesses for purposes other than real estate.
  • Core Deposits: Stable, relationship-based deposits such as checking, savings, and non-brokered money market accounts.
  • Efficiency Ratio: Non-interest expense divided by the sum of net interest income and non-interest income, indicating cost efficiency.

Full Conference Call Transcript

Mike Orcutt: Hosting the call today from FB Financial are Christopher T. Holmes, President and Chief Executive Officer, and Michael M. Mettee, Chief Operating and Financial Officer. Please note, FB Financial's earnings release and supplemental financial information, and this morning's presentation 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. 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. 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 put 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. 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. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC rules.

A presentation of the most directly comparable GAAP financial measure and a reconciliation of non-GAAP measures to comparable GAAP measures is available in FB Financial's earnings release, supplemental financial information, 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. I would like to now turn the presentation over to Mr. Christopher T. Holmes, FB Financial's President and CEO.

Christopher T. Holmes: Alright. Thank you very much, Mike. Thank you to everyone for joining us on the call this morning and for your interest in FB Financial. 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. This quarter, our pretax, 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 costs 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. 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. This 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. 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 that meet my expectations as the 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. Our results for organic growth in loans and deposits were the only real notable area of underperformance in 2025, which 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. 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, and 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.

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 M. Mettee. Michael?

Michael M. 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, which 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 a three basis point expansion over the third quarter. 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 in 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. Included 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 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. 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 past dues in some of our consumer portfolios and 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 remains 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.

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.

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. Even with softer organic growth during the fourth quarter, we believe the wind is at our backs and our sails are up. The company has significant opportunity to grow market share organically as we continue to bring new relationships to the bank. With that, you should expect us to 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, representing about 3% of the company. The transaction was with our largest shareholder, the estate of the late Mr. 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 are 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 the first quarter and on a full-year basis consistent with where we are today, 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. 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 million 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 a mid to high single-digit loan growth in core customer deposit growth in that same mid to high single digits that we've spoken about for the full year 2026.

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 back over to Chris.

Christopher T. Holmes: Alright. Thanks for the color, 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 questions.

Operator: Once again, that is star and then one. Our first question today comes from Brett Rabatin from Hobby Group. Please go ahead with your question.

Anya Palsh: This is Anya Palsh. I'm asking questions on behalf of Brett. So he was wondering if management anticipates any additional share repurchases from the Ayers estate.

Christopher T. Holmes: 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. 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.

Anya Palsh: Okay. Thank you. And 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?

Michael M. 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 2025 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. You know, tweaks to the platform, I would say, just like on the banking side, we are 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 expect big things from them.

Christopher T. Holmes: Yeah. And I would just add in terms of tweaks, let's say we're always tweaking. Whether that's more 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. And when we look at '26, that is a potential for it's a very positive potential for overperformance, I would say. As Mike 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 based on what we have put in our expectations for this year.

Anya Palsh: Okay. Thank you. And, you know, what do you guys, what does management think about the current M&A climate? And is there any optimism on additional deals?

Christopher T. Holmes: 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. People evaluating strategically what the future holds for them. When we think about us, specifically, we'll continue to evaluate our opportunities. In prepared remarks, one of the things I talked about is really our customer focus. We have to maintain that and we have to make sure 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. And so when it's worth it, then we're going to be in a place to take advantage of it.

Anya Palsh: Sounds good. Thank you. Appreciate the answers.

Christopher T. Holmes: Sure. Thank you. Give Brett our best.

Operator: Our next question comes from Russell Gunther from Stephens. Please go ahead with your question.

Russell Gunther: Hey, good morning, guys.

Christopher T. Holmes: Hey, Russell.

Russell Gunther: Morning, Chris. Morning, Michael. On the loan growth front, so you called out the elevated pay downs 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. 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 M. Mettee: Yeah. So I would say, Russell, in the fourth quarter, payoffs were a bit elevated, especially at the latter part of the quarter. Chris would let us all go home on December 24. 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. You know, 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.

That being said, we're going to pay off in the first quarter this year and second quarter this year. And so 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 those to grow that high single-digit range without adding another person. And where can I come from? Yeah. We came into Asheville, North Carolina last year. They're off to a good start. You know, Tuscaloosa, Alabama, smaller market, but had a really strong year. But every market, especially in our metro areas, have a lot of in-migration and growth opportunities.

And then in our more community markets, expect to continue to grow market share on both sides of the balance sheet. And we're focused on growing deposits and loans, not just the loan side. Then asset class, look, we pride ourselves on being a community bank. 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. So I'd expect that to be broad-based.

Christopher T. Holmes: Yeah. So Russell, okay. If I can just make 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 six-ish, and if you compare average to average, you would see that in our numbers. Point to point was one thing, but we don't get obsessive over that because we feel pretty good about the run rate right where it is. You asked 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.

And then on geographies, there's one other thing I would say is Nashville approaches half of our loans in deposit base. And so that becomes an important part of that picture for 2026 and beyond. That's either, you know, so that becomes probably the biggest part of that. And as you know, we've had some changes there. 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 4Q 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 as a follow-up, last quarter, you mentioned the 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, you know, materialized in this fourth quarter 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?

Michael M. Mettee: Yes. Thanks, Russell. Just to clarify on the expense base, there was $3 million that was performance-based related to long-term and incentive, which is equity, which is really a peer comp analysis. So that resulted in, you know, Chris mentioned our returns. It's a return-based compensation model, and as we saw our returns continue to perform at a higher level, that's what drove that. 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, we should that shouldn't be reoccurring as well.

And then the other piece, we did the share repurchase 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, you know, $5 or $6 million of that was not what I would call run-rate, but it was expense. It hit in the fourth quarter, and that's really why we reiterated our guide for '26 is that we gave last quarter. We don't see those as continuous. Although, would love to have yes, it was we outperform on a return basis if our performance shares go up, then 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's how I said it. But, you know, I think about it in two buckets, really. We have our normal course of business, as Chris mentioned, or you said, players and seats. And that goes for the entire company. Yeah. 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.

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, you know, the transfer portal. You gotta make sure you got your team recruiting all the time, internal and external. And so we actively do that. And then ads, yeah, we added a couple of key people during the quarter. We're really excited about those. And we expect that to continue for the long term. But really, all that's just heating up, and it's, yeah, it's a full-time responsibility to make sure that we're recruiting the right people for FB Financial.

Christopher T. Holmes: Yep. 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. And I think what that creates, you know, 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, and so that what that does is, you know, they're just recruiting anybody and everybody. And so your people are getting calls, and our people are getting calls. And we say this internally, and I'm certainly saying it on this call. We don't want any of our people underpaid, and so we will make sure that they're all fairly compensated. And if they're not, we want to correct that. And so, as Mike said, that's part of us just making sure 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. Okay? We can compete with anybody from the largest bank on the planet to the smallest community bank that we can compete with. And so, we feel very strong about our position there. So if you and if that's the case and you take that off the table, it really comes down to culture, where the company is headed, and how they feel that they can take care of their customers and compete. And that's where we think we, over the long term, we're gonna win. So that's how we do it.

Russell Gunther: That's great, guys. Thank you for all the help and for taking my question.

Operator: Our next question comes from Will Jones from KBW. Please go ahead with your question.

Will Jones: Yes. Hey, great. Good morning, guys. Punching for Catherine here. Maybe I just wanted to stick along the same lines. Like a lot has been made about some of the M&A 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, you know, 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, you know, is it out there, you know, right now?

Is it, you know, is the, are you actively seeing, you know, this big opportunity we're talking about in hiring in terms of just your boots on the ground there?

Christopher T. Holmes: Yeah. Good morning, Will. It's Chris. You know, I think these things, and I don't want to point to anything specific, so I'll point I'll look in the mirror. 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, and it creates a lot of activity. And I think all that depends on a lot of things. You know, how quickly the transaction closes, what the communication is during all that period, when conversion actually takes place, conversions become a big deal. But actually, the most important part of a transaction is integration. Because that's, and sometimes folks confuse conversion and integration.

Integration starts from the second, actually, it starts before you make the announcement. Because, you know, 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, you know, all of us approach that a little differently, I would tell you. Some folks, especially if they're the lead acquirer, they say, yeah. 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 an approach of what we call a best athlete approach, and we take folks from both companies depending on what works best for the whole. And so again, I'm telling you all that to tell you, it is not, there is, it's so much more art than science. 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 gonna work. Okay? Or it's not gonna work for me. Other times, there's never an exodus of people, and I'd say most commonly, there's a slow drip.

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 make sure that they can take care of their clients. That's, that is the most, I'd say, important thing.

And so I wish I could give you a little 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, you know, 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.

Michael M. Mettee: Yeah. And, Will, this is Michael. You know, to your point on disruption, and Chris mentioned some other calls. You know, 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, you know, we look up in the fourth quarter and we're really excited about the team we have in Huntsville right now. Yeah. And so, but there's, and amongst banks, I mean, I don't, you know, write this in stone, but there's, we have 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. So not even M&A related. It's just opportunity related. And so that's, it's happening in and all around us. And we think we're poised to, are 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 and just wanted to see if maybe there's an immediacy to it or from your lens that it might take a little time to get there. So I appreciate that context.

Michael M. Mettee: 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? Yeah. This is a three, five, seven-year kind of opportunity with all this going on. And so, you know, these things take a little bit of time. So to answer both, it's probably not what you're looking for.

Christopher T. Holmes: But Michael, I was gonna say exactly the same thing. They enter 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 they view us as being able to, they view us as having a really bright path forward. And so that helps us and we play the long game there. So we're much more interested in, hey, we're gonna be here. We're gonna play the long game, and we think that's gonna be a winning formula. So it is both.

Will Jones: 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 NIM 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, you know, good managers of deposit costs. But as we enter kind of a '26 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?

Michael M. 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, you know, as people come in entrance, you know, sometimes, when you hire people or not sometimes, a lot of times, to bring over relationships, you gotta start with bringing over a customer and it's probably paying above market for deposit costs and then you earn their business every time and we fully expect that our bankers can do that and will do it. So, and of course, I'm sure our competitors do as well.

So, more people coming into our markets, you know, paying higher costs. I personally get flyers from a lot of large banks, you know, twice a week or mail offering things that are pretty exorbitant. So we do realize it's out there. Really comes down to the customer experience and relationship long term. And earning that business, and 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 meeting competitive wise as well. You know, kind of lowering cost as rates go down.

I will say this too, though, Will, because this is counterintuitive to maybe a lot of other institutions. Yeah. We want to be a fair value proposition to our customers. We want to earn, Chris mentioned the long game. We're thinking, yeah, 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 their entire family, their business, everybody. And so, we expect that on both sides of the balance sheet. We have fair loan yield. We won't be the lowest loan pricing either. But we want to take care of our customers.

And so, you know, 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 and for the company and for the shareholders. So that's kind of a different approach probably.

Will Jones: Yes. Just maybe expectations on what incremental deposit betas will look like in this kind of competitive market you're describing?

Michael M. Mettee: Yes. I mean, think if you're still looking at that 55%, 60% range, which is where it's been. I think on interest-bearing, but we'll see how, you know, 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 treasury money market funds, which could impact that. But we've been pretty consistently able to move down deposit cost with rate cuts. That being said, we only think there's gonna 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 will look like 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 maybe as you think about the right size, the right geography, just what you would look for in an M&A transaction today?

Christopher T. Holmes: Yeah. So geographically, we're gonna 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, 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 have to be contiguous to some of our existing geography. And here's an example of what I mean by that. 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, they are the places like, I don't know, I'm hesitant to name the towns. So I'm a little hesitant to get too specific. But you can understand what I mean by, you know, 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, but, you know, the Carolinas certainly of interest. Georgia, Alabama, all of our existing Southeastern, let's say, geography.

And then, you know, 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. 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, you know, 6 or 7 even billion in assets. So we would, 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 small in that. Asset-wise.

Will Jones: Okay. That's great color, Chris. I appreciate it, guys. Thanks for the questions and congrats on a great year.

Christopher T. Holmes: Thanks, Will. Thank you so much, Will.

Operator: Our next question comes from Steve Moss from Raymond James. Please go ahead with your question.

Thomas: 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?

Michael M. Mettee: Yeah, Tom. Good morning. It's Michael. Yes. Actually, the pipeline is pretty strong. I think we've been saying that we've been seeing strong pipelines. There's some deals that pushed into '26 from '25. And so I'd reiterate that they've been strong. 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. 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 C&I activities picking up. So, really actually pretty positive operating environment business-wise.

Thomas: Okay, great. Appreciate that color. 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 the fourth quarter. I saw you took on some brokered. Can you maybe talk about your core deposit growth outlook for 2026 and maybe the strategy that's gonna get you there?

Michael M. Mettee: Yeah. With core deposit growth always a focus for us, you know, we've got a lot of funding capabilities that you, 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, is another word for core. And a lot of times, you know, if that didn't materialize ever, you know, some period of time, you know, and they're higher cost, 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 and that's a continuous process. Brokered small number for us, you know, 4% or so, balances. We do make sure that we have funding in place if need be. And I think from a perspective of how we're gonna do it in '26, I do think it gets back to what Chris said in his comments is, you know, the focus on the customer, customer experience, making sure we have the right treasury management, platform and products, as we go, I'll call more upstream a little bit opportunities, you know, that kind of middle market commercial client, a lot of opportunity there.

But even, you know, half our business is consumer as well. And so, 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.

Thomas: Okay. Got it. Thanks for taking my questions and congrats on a good year.

Michael M. Mettee: Thanks, Tom. I appreciate it, Tom. Bye.

Operator: And at this time, we'll be ending today's question and answer session. I'd like to turn the floor back over to Christopher T. Holmes for any closing remarks.

Christopher T. Holmes: Alright. Thank you so much again. We appreciate everybody joining us on the call. And we're glad to have had a good year. We're looking forward to 2026. And so thank you all and reach out directly if we need to give you more information.

Operator: And 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.