Key Points
The company met the consensus analyst estimate for profitability, but whiffed on revenue.
On a brighter note, it managed to grow both deposits and loans.
FB Financial wasn't improving its investors' financials on Tuesday. Many of them traded out of the regional bank's stock following its release of quarterly results. By the end of the day, its shares had fallen by more than 4%, contrasting unfavorably with the flat performance of the benchmark S&P 500 index.
Modest growth
For its third quarter, FB Financial earned just under $174.5 million in total revenue. That was up only slightly from the $173.9 million in the same period last year. At least its deposit base and loan book grew; total deposits increased by almost 9% year over year to $14.7 billion, while loans held for investment advanced by just under 10% to $13.2 billion.
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On the bottom line, FB Financial's net income not under generally accepted accounting principles (non-GAAP, or adjusted) rose by nearly 6% to $60.9 million, or $1.21 per share.
The latter figure matched the consensus analyst estimate, but the bank missed on revenue, as those pundits were collectively modeling $181.6 million.
The company said that while it was successful in growing loans and deposits, it was affected by a decline in mortgage banking profitability and "continued investments in growth initiatives."
Justified impatience?
While no one likes a revenue miss, I think the bigger issue for FB Financial, in investors’ eyes, is those "growth initiatives." Yes, certain key balance sheet items were rising, but shareholders also want to see this reflected in the top and bottom lines. Until FB Financial can prove its efforts can result in meaningful improvement in the headline fundamentals, investors will probably give its stock a miss.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.