FB Financial Corporation (NYSE:FBK) Q4 2022 Earnings Call Transcript

Kevin Fitzsimmons: Okay. And as far as the margin, how to think that through, so I appreciate the color on the December margin. And I think what was said was, you’re probably going to hold the margin roughly at that level. If we’re looking beyond that and just assuming we have a few more heights here of 25 basis points, is it reasonable to think about the margin just grinding lower from that level, but the balance sheet growth you alluded to before, still able to drive dollars of NII higher throughout 2023?

Chris Holmes: So, as we move forward with our budget and look at €“ into the year €“ we’ve traditionally said, we’d be 10% to 12% loan growth organically, and for the year, we could be a little less than that, but we certainly anticipate a healthy €“ some healthy loan growth during the year. We’ve been getting a good spread on that. I do think loan growth is going to get harder as we get into 2023. And so, demand could become an issue with generating loan growth. We’ve typically led our peers in terms of that metric and that ability to generate that, but if you look at it that way, we don’t see the NIM grinding significantly below this. It could give us a little bit of range there, but we’re €“ as we look out in the year, we’re going to try to €“ we’re going to try to hold near at least where we are, again, with a little bit of flexibility €“ range for flexibility there.

Kevin Fitzsimmons: Got it. And just your comment before, Chris, about loan growth. So, really the in on loan growth was much more proactive in terms of participating out and letting some of that C&D and CRE runoff, but as far as core loan demand and the loans you want to book, you haven’t seen a dramatic fall-off in that yet?

Chris Holmes: No, we really haven’t. We have seen it slow late in the year. We did see loan demand slow some. It’s slower as we start the year as well. So, I do think all the things that the Federal Reserve has been trying to accomplish, I think some of them they are because we do see less demand than we did six months ago or even three months ago in terms of loan demand. Now that being said, like I said, if you take €“ if you add those participations back to the balance sheet, we have grown 14% in the quarter on an annualized basis. So, that’s still pretty strong, but we were 20% plus the previous three quarters.

Kevin Fitzsimmons: Okay. Alright, thanks very much.

Chris Holmes: Thanks, Kevin.

Operator: Today’s next question comes from Feddie Strickland with Janney Montgomery Scott. Please go ahead.

Feddie Strickland: Hey good morning.

Chris Holmes: Good morning.

Feddie Strickland: So, just going to clarify one more time on your earlier point. It sounds like you’re confident you can continue to grow deposits and manage loan growth accordingly. So, we really shouldn’t see wholesale funding increase over the next couple of quarters, is that right?

Chris Holmes: Well, let me put it this way, I think your premises is correct because our intent is to try to grow loans and deposits at about the same rate, okay? Now, we do have access to the wholesale funding, but we want €“ our view is, we won’t be able to use that to improve our profitability. We don’t want to use that because we have to have the funding in order to fund our own growth. And so, we want to use it as a tool, not as something we have to rely on because we get over €“ couldn’t get overextended.

Feddie Strickland: Got it. That makes sense. And kind of along that same line of questioning, as you’re managing your earning asset growth, whether it’s loans or securities, is of potential collateral to places like the Federal Home Loan Bank a consideration in terms of choosing what assets you decide to put on the balance sheet or do you already feel like you’ve got further enough collateral that that’s not really as much of a consideration?