Given the new deposit blended rate increased to 3% and the recent rate hike, will deposit costs continue to trend higher, and how do deposit and loan betas compare in this rate cycle?

September deposit costs were higher than July and August, reflecting the rate increase. A potential December Fed hike would impact late Q4. Deposit betas are estimated at 40-50%, with loan betas roughly similar, though competitive pressure on loan yields has been observed. “Yes, deposit costs in September were higher than July and August. I do you think that's reflective of the rate increase. And if you've got kind of a 50% beta in there, 40%, 50% as we see that.”

Will the company's asset sensitivity continue to offset funding pressure from future rate hikes, or will deposit competition become too fierce?

For every 25 bps Fed funds increase, NIM should increase by about 3 bps, but competitive deposit pricing could mute this. Management prioritizes growing net interest income and customer relationships, accepting slight margin compression for double-digit growth. “I mean roughly for every 25 basis point increase in Fed funds, you should see, I'm going to say, around a 3 basis point increase in our margin.”

Are there pricing differentials between metro and community markets, and how did clients react to the September rate hike?

FB Financial aims for fair and consistent pricing across all markets, with no significant pricing difference between metro and community. Indexed deposits and proactive rate adjustments help manage client expectations and reduce defensive calls, fostering strong relationships. “We're going to make sure we're presenting that to you whether you're calling us when rates change or not.”

FBK

FB Financial (FBK) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Sep 2026 (Q3 FY26)· Financials· Oct 13, 2026

Source: earnings call transcript

Executive summary

FB Financial Q3 FY26 — Strong Loan and Deposit Growth, Stable Credit, and Maintained Margin Outlook

FB Financial delivered robust loan and deposit growth in Q3 FY26, driven by strong customer acquisition and relationship-focused strategies across its diversified footprint. Despite industry-wide deposit pricing pressures and mortgage banking headwinds, the company maintained solid profitability and stable credit quality. Management remains optimistic about future growth opportunities, emphasizing disciplined capital management and strategic investments in talent and technology.

Highlights

Reported adjusted EPS of $1.21 and adjusted net income of $60.9 million.
Achieved annualized loan growth of 9.7%, at the high end of their forecasted range.
Customer deposits grew at an annualized rate of 11.2%, contributing to overall deposit growth of 8.8%.
Maintained strong profitability with adjusted return on average tangible common equity of 15.7%.
Banking segment efficiency ratio improved to 50.8%.

Concerns

Net interest margin compressed by 12 basis points QoQ to 3.83%, primarily due to deposit pricing pressure.
Mortgage Banking segment faced headwinds from rising interest rates, impacting income and requiring a one-time $719,000 transition expense.
Experienced a $1 million interest income reversal on a $13 million loan moved to nonaccrual, impacting NIM by 3 basis points.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year loan and deposit growth	mid- to high single digits high materiality	FY26	High
Full-year net interest margin (excluding loan accretion)	3.7% to 3.8% high materiality	FY26	High
Q4 core margin outlook	remain near third quarter levels high materiality	Q4 · FY26	High
Banking segment expense guidance	$325 million to $335 million medium materiality	FY26	Medium
Provision expense outlook	driven primarily by loan growth and changes in individually evaluated credits medium materiality	Future	Medium
Net charge-offs outlook	remain within our long-term target range medium materiality	Future	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Mortgage Banking Faced headwinds from sharp rise in interest rates, impacting origination volumes and profitability. Remains strategically important for new customer relationships and balance sheet optionality. Actively managing expenses while balancing profitability with relationship growth. One-time transition expense: $719,000New customer relationship program: 83% of participating borrowers have checking relationshipAverage deposit balances for new mortgage customers: approximately twice existing customer averageMedian FICO scores for new mortgage customers: above current portfolio averageLoan-to-value ratio for new mortgage customers: below secondary market originated loan values	—	—	—	profitable (absent one-time expense)
Banking Demonstrated strong operating performance with a solid efficiency ratio. Efficiency ratio: 50.8%	—	—	—	—

FBK operating KPIs by quarter

FBK operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Jun 2026 Q2 FY26	This call Sep 2026 Q3 FY26	Change vs prior quarter
Efficiency ratio Banking	49.5% As a result, our efficiency ratio improved to 52.3%, while our banking segment had a sub-50 efficiency ratio of 49.5%. Source: earnings call transcript	50.8% On an adjusted basis, the efficiency ratio was 54.3% and the Banking segment efficiency ratio was 50.8%. Source: earnings call transcript	+1.3 pt
Common equity tier 1 ratio (CET1)	11% As a result, our capital ratios remain well above the regulatory requirements with a common equity Tier 1 ratio of 11%, a Tier 1 leverage ratio of 10.1% and a total risk-based capital of 12.9%. Source: earnings call transcript	11% Our capital ratios remain well above regulatory requirements with our common equity Tier 1 ratio of 11%, a Tier 1 leverage ratio of 10% and a total risk-based capital ratio of 13.6% at quarter end. Source: earnings call transcript	0 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
Mortgage Customer Relationship Deepening Program	launch	Q3 FY26

Risks & headwinds

Mortgage Banking segment headwinds Near-term (Q4 FY26 and 2027)

Lower origination volumes and profitability due to sharp rise in interest rates.

Mitigation:Actively managing expenses, balancing profitability with relationship growth, retaining high-quality team, and offering competitive products.

Nonaccrual loan Q3 FY26

$13 million loan moved to nonaccrual; resulted in $1 million interest income reversal.

Mitigation:Credit is managed by special assets team, working constructively with borrower; supported by adequate collateral values with limited loss content.

Deposit pricing pressure Ongoing

Cost of deposits increased 6 basis points; blended rates on new production ended the quarter at approximately 3%.

Mitigation:Emphasizing profitable growth and disciplined pricing; relationship-based deposit gathering; fair and proactive adjustment of deposit rates for clients.

Industry expense pressures Ongoing

Elevated, particularly across compensation, benefits, insurance, and technology.

Mitigation:Careful expense management while investing for long-term growth; narrowing Banking segment expense guidance to $325 million to $335 million.

Potential for loan growth to slow with continued rate increases Future, if rates continue to rise

Not yet observed, but a possibility if rates continue to increase and deals no longer pencil out.

Mitigation:Focus on building market share and expanding presence in any rate environment; growing relationships and deepening customer engagement.

What to watch in Q4 FY26

Full-year loan and deposit growth

End of FY26

Current 9.7% annualized loan growth, 8.8% annualized deposit growth (Q3 FY26)

Target Mid- to high single digits

Why it matters

Verifies management's ability to sustain strong balance sheet expansion despite potential Q4 seasonality and higher rates.

Pipelines remain healthy, and we continue to expect full year loan and deposit growth within our mid to high single-digit range.

Find out whether FBK delivers this. Inve re-checks your case every morning.

Q&A highlights

Can the high single-digit loan growth pace be sustained, or will rising rates lead to demand destruction and slower growth?

Management expects to end the year in high single-digit loan growth, with strong pipelines into 2027. Current C&I utilization rates are below normal, offering upside. While continued rate increases could slow demand, they haven't seen it yet.

“Yes, you're right. We've been, I'd say, practically double digits, at least most of the year, start out the year a little bit slower, but we're high single digits at this point in terms of loan growth, and we expect to end up the year in high single digits.”

asked by Russell Elliott Gunther · answered by Christopher Holmes

2 min read 6 chapters

Detailed narrative

Strong Balance Sheet Expansion

FB Financial reported significant balance sheet growth in Q3 FY26, with loans increasing at an annualized rate of 9.7% and deposits at 8.8%. Customer deposits, excluding brokered deposits, grew even faster at an annualized 11.2%, reflecting successful customer acquisition and relationship deepening efforts across both commercial and consumer businesses. The diversified footprint, including strong performance in community and metro markets, contributed to this meaningful expansion.

Net Interest Margin Dynamics

The company's net interest margin compressed by 12 basis points quarter-over-quarter to 3.83%. This was primarily due to continued industry-wide deposit pricing pressure, with new deposit production blended rates around 3%. The margin was also impacted by a $1 million interest income reversal on a nonaccrual loan and a reduction in purchase accounting accretion.

Despite this, management maintains its full-year NIM outlook, expecting Q4 core margin to remain near Q3 levels due to asset sensitivity and balance sheet growth.

Mortgage Banking Headwinds and Strategic Value

The Mortgage Banking segment faced challenges due to a sharp rise in interest rates, leading to lower origination volumes and profitability, including a one-time $719,000 transition expense. Despite these headwinds, management views mortgage banking as strategically important for new customer relationships, balance sheet growth optionality, and fee income.

A new program to deepen relationships with mortgage customers has shown encouraging early results, with high checking relationship penetration and strong deposit balances.

Credit Quality and Outlook

Credit quality across the loan portfolio remained stable, with a modest provision expense of $1.4 million and an allowance coverage ratio of 1.47%. Net charge-offs and nonperforming asset ratios also remained stable. While one $13 million loan moved to nonaccrual, it is adequately collateralized, and management believes loss content is limited.

The company expects provision expense to be driven mainly by loan growth and individually evaluated credits, with NCOs remaining within the long-term target range.

Capital Management and Flexibility

FB Financial issued $125 million in subordinated debt to strengthen its capital position and support future growth. Despite continued share repurchases, capital ratios remain strong, with a CET1 ratio of 11%, Tier 1 leverage of 10%, and total risk-based capital of 13.6%.

The investment portfolio is 61% floating rate, providing balance sheet flexibility in varying interest rate environments, and the company's AOCI plus HTM securities marks are very low relative to peers.

Talent and Market Expansion

The company continues to invest in talent, hiring approximately 10 bankers this quarter and focusing on developing internal talent for long-term growth. They also expanded their physical footprint by converting a loan production office in Asheville, North Carolina, into a full-service location, signaling organic growth ambitions in new markets.

Management expressed openness to M&A opportunities that align culturally and strategically, emphasizing a patient and thoughtful approach.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.