On Tuesday, Stephens, a financial services firm, increased the price target for FB Financial (NYSE: NYSE:FBK) to $56.00, up from the previous $52.00, while maintaining an Overweight rating on the stock. The revision follows a performance that exceeded consensus expectations, attributed to a stronger-than-anticipated loan growth and net interest margin (NIM) results. This outperformance was partly due to a late-quarter restructuring of the securities portfolio, which is expected to further enhance the NIM in the fourth quarter.
The analyst noted that despite anticipating some NIM compression in the coming quarters, which may result in figures at the lower end of the guidance range, the rise in spread income relative to previous forecasts has led to an increase in the estimated earnings per share (EPS) for 2024 and 2025 by 6%.
Consequently, this has prompted the adjustment of the price target to $56 from $52. The forecast for loan growth is to pick up pace, potentially reaching a low double-digit increase in 2025, which could offer an upside to the consensus if realized.
FB Financial's excess capital, with a tangible common equity (TCE) ratio of 10.4%, is seen as a positive factor, with near-term capital deployment likely to focus more on additional securities restructuring, rather than on stock buybacks and reserves. The allowance for credit losses (ACL) stands at 1.65%. The company's asset quality trends remained stable in the third quarter, with concentrations in commercial real estate (CRE) and construction and development (C&D) within targeted ranges.
The analyst reiterated the Overweight rating, signaling confidence in FB Financial's performance and financial health. The company's strategic decisions, particularly in managing its securities portfolio and capital, are highlighted as key drivers of the positive outlook.
In other recent news, FB Financial Corporation reported third quarter earnings surpassing analyst expectations, but fell short on revenue. The company's adjusted earnings per share for Q3 came in at $0.86, outperforming the projected estimate of $0.80. However, revenue for the quarter was reported at $89.52 million, which did not meet the analyst's forecast of $128.45 million.
FB Financial's net interest income rose to $106.0 million in Q3 from $102.6 million in the previous quarter, and its net interest margin slightly declined to 3.55% from 3.57% in Q2. The company reported an increase in core deposit growth of 5.36% annualized and loan growth of 7.20% annualized.
Total deposits grew to $10.98 billion at the end of Q3, up from $10.47 billion at the end of Q2, and the company's loan portfolio expanded to $9.48 billion compared to $9.31 billion in the previous quarter. FB Financial reported a core efficiency ratio of 58.4% for the quarter, relatively unchanged from 58.3% in Q2.
InvestingPro Insights
FB Financial's recent performance aligns with the positive outlook presented by Stephens. According to InvestingPro data, the company's market capitalization stands at $2.24 billion, with a P/E ratio of 19.3, indicating a reasonable valuation relative to its earnings. This valuation metric complements Stephens' increased price target and Overweight rating.
InvestingPro Tips reveal that FB Financial has raised its dividend for 6 consecutive years, demonstrating a commitment to shareholder returns. This is further supported by a current dividend yield of 1.42% and a robust dividend growth of 13.33% over the last twelve months. These figures underscore the company's financial stability and align with the analyst's positive view on FB Financial's capital position.
The company's strong performance is also reflected in its stock price, with InvestingPro data showing a significant 75.49% total return over the past year and a 38.99% return in the last six months. This impressive price appreciation supports Stephens' optimistic stance on FB Financial's future prospects.
For investors seeking a deeper understanding of FB Financial's potential, InvestingPro offers 7 additional tips, providing a more comprehensive analysis of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.