Finance

FB Financial's Net Interest Margin Compresses to 3.83%

The Tip Desk · October 13, 2026 · 3 min read

The Nashville regional's tax-equivalent margin fell 12 bps as deposit costs rose faster than loan yields, even as annualized loan growth slowed to 9.68%.

FB Financial Corporation (FBK), the Nashville-based regional bank that operates FirstBank across Tennessee, Kentucky, Alabama, Georgia and North Carolina, reported net interest margin on a tax-equivalent basis of 3.83% for the third quarter of 2026, down 12 basis points from 3.95% in the second quarter.

The compression marked a break from two quarters in which the margin had held near 3.95%. Funding costs rose faster than earning-asset yields. The decline also included a 3 basis point impact from reversing $1.0 million of previously accrued interest on a nonaccrual loan, and purchase-accounting accretion contributed 11 basis points to margin, down from 13 basis points.

Tax-equivalent net interest income still rose to $150.8 million from $149.8 million. GAAP net interest income was $149.9 million. Yield on interest-earning assets fell to 6.02% from 6.07%, while the cost of interest-bearing liabilities rose to 2.91% from 2.84%.

Loan growth slowed. Loans held for investment ended the quarter at $13.18 billion, an annualized increase of 9.68% from the prior quarter-end, after 11.6% annualized growth in the second quarter. Contractual yield on loans HFI was essentially unchanged at 6.21%. Residential real estate led the build: 1-to-4 family mortgages rose $133.6 million, multi-family $41.6 million, and residential lines of credit $10.0 million. Commercial real estate increased $91.6 million, construction $19.5 million, and consumer and other loans $19.0 million.

Deposits moved the other way. Total deposits were $14.67 billion, an annualized increase of 8.82%, faster than 7.70% in the second quarter. Interest-bearing non-brokered deposits rose 13.7% annualized. Brokered deposits fell 34.3% annualized to $626.7 million. Noninterest-bearing deposits were $2.78 billion, or 18.9% of the total. The cost of interest-bearing deposits increased to 2.88% from 2.81%, and total deposit cost rose to 2.32% from 2.26%, reflecting higher pricing on interest-bearing deposits and continued deposit growth.

Net income was $60.2 million, or $1.20 a share, compared with $1.13 in the second quarter. Adjusted diluted earnings were $1.21 a share. Return on average assets was 1.43%.

Noninterest income declined to $24.5 million from $25.8 million. Mortgage banking income was $9.4 million, down from $11.2 million. Noninterest expense rose to $96.0 million from $91.5 million, including $0.7 million of loan-subservicer transition costs. The efficiency ratio widened to 55.0% from 52.3%; the adjusted efficiency ratio was 54.3%. Chief Financial Officer Michael Mettee said operating leverage was impacted by lower mortgage banking profitability, margin pressure, and continued investments in growth initiatives.

Credit costs eased. Provision expense was $1.4 million, down from $10.1 million. Net charge-offs were $1.2 million, or 0.04% of average loans HFI. The allowance for credit losses on loans HFI was $194.0 million, or 1.47% of loans HFI. Nonperforming loans HFI were 1.18% of loans HFI; nonperforming assets were 1.13% of total assets.

Preliminary common equity tier 1 capital was 11.0% and total risk-based capital was 13.6%. Tangible common equity to tangible assets was 9.32%. The company repurchased 545,214 shares, or $29.3 million, and issued $125.0 million of subordinated debt at a spread of 180 basis points over the five-year U.S. Treasury yield. President and Chief Executive Officer Christopher T. Holmes said the issuance provides added flexibility to support future growth. Book value per common share was $39.11; tangible book value was $31.50.

Holmes said annualized client deposit growth was 11.0% and that the company is encouraged by pipelines across the footprint. Mettee said the company remains focused on disciplined expense management and believes the investments it is making position it to deliver improved earnings growth and operating leverage over time.

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