Last Update 20 May 26
Fair value Decreased 0.66%FBK: Share Repurchases And Stable Credit Costs Will Support Future Upside
Analysts have trimmed their price target on FB Financial slightly to align with updated fair value estimates around $64.43, reflecting modest adjustments to assumptions for the discount rate, revenue growth, profit margin, and future P/E multiples.
What's in the News
- The Board of Directors authorized a new share buyback plan on April 27, 2026, signaling ongoing capital return activity to shareholders (Key Developments).
- FB Financial announced a share repurchase program of up to US$175 million of common stock, set to end once the full amount is used or on June 30, 2027, whichever comes first (Key Developments).
- From January 1, 2026 to March 31, 2026, the company repurchased 426,983 shares, or 0.83% of its shares, for US$21.84 million, bringing total repurchases under the September 15, 2025 plan to 2,144,931 shares, or 4.04%, for US$109.74 million (Key Developments).
- For the first quarter ended March 31, 2026, FB Financial reported net charge-offs of US$3.5 million, equal to annualized net charge-offs of 0.11% of average loans HFI, compared with 0.05% in the prior quarter and 0.14% in the first quarter of 2025 (Key Developments).
Valuation Changes
- Fair Value: Trimmed slightly from $64.86 to $64.43 per share, in line with updated assumptions.
- Discount Rate: Risen slightly from 6.98% to 7.11%, indicating a modestly higher required return in the model.
- Revenue Growth: Adjusted slightly lower from 22.20% to 21.63% in the updated forecasts.
- Net Profit Margin: Adjusted marginally from 41.46% to 41.38%, reflecting a very small change in expected profitability.
- Future P/E: Reduced meaningfully from 11.67x to 8.58x, implying a lower valuation multiple applied to projected earnings.
Key Takeaways
- The planned merger with Southern States Bank could boost revenue and margins through market expansion and stabilization.
- Strategic growth in commercial loans and hiring aims to enhance revenue, leverage, and potential EPS through efficient capital use.
- Integration risks, economic uncertainty, and competition pressure margins, potentially impacting profitability and operational efficiency.
Catalysts
About FB Financial- Operates as a bank holding company for FirstBank that provides a suite of commercial and consumer banking services.
- The planned combination with Southern States Bank is expected to enhance scale and market opportunities, potentially benefiting revenue growth through expanded market presence and improved margin stabilization.
- FB Financial's ability to adjust cost structures, such as repricing certificates of deposit at lower rates, indicates management's focus on improving net margins by reducing the cost of funds.
- Organic growth, particularly in focus areas like Commercial & Industrial (C&I) and owner-occupied Commercial Real Estate (CRE), demonstrates a strategic push to build loan portfolios, which should positively impact revenue as loan balances increase.
- The continued hiring of revenue producers aims to drive loan and deposit growth, which is critical for sustaining revenue growth and improving operating leverage over time.
- Strong capital levels and the potential for strategic deployment, including share repurchases and further acquisitions, position the company to enhance earnings per share through opportunistic capital allocation in the future.
FB Financial Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?
- Analysts are assuming FB Financial's revenue will grow by 21.6% annually over the next 3 years.
- Analysts assume that profit margins will increase from 25.2% today to 41.4% in 3 years time.
- Analysts expect earnings to reach $415.1 million (and earnings per share of $8.11) by about May 2029, up from $140.8 million today.
- In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 8.6x on those 2029 earnings, down from 18.9x today. This future PE is lower than the current PE for the US Banks industry at 11.2x.
- Analysts expect the number of shares outstanding to decline by 4.32% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.11%, as per the Simply Wall St company report.
Risks
What could happen that would invalidate this narrative?- The planned combination with Southern States Bank presents integration risks, which could impact earnings and operational efficiency if not executed smoothly.
- The economic uncertainty and potential policy changes from Washington create a volatile environment, which could negatively affect revenue and net interest margins.
- The company's credit exposure, particularly in the Commercial and Industrial (C&I) portfolio, poses risks as charge-offs have been elevated, potentially impacting net income.
- Rising competition for deposits and the need for cost of funds management could pressure the net interest margin, affecting overall profitability.
- The economic dependency of the mortgage banking division suggests that adverse changes in mortgage interest rates could impact noninterest income and overall earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?
- The analysts have a consensus price target of $64.43 for FB Financial based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $1.0 billion, earnings will come to $415.1 million, and it would be trading on a PE ratio of 8.6x, assuming you use a discount rate of 7.1%.
- Given the current share price of $51.61, the analyst price target of $64.43 is 19.9% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.