FirstBank Parent Looking for More M&A

FirstBank parent looking for more M&A

CEO Holmes says team looking to prune some loans ahead of downturn

AUTHORS Geert De Lombaerde

The leaders of FirstBank parent company FB Financial said this week they hope to be able to finalize a few acquisition deals before year’s end and build on the successful purchases of about $1.8 billon in assets in the past four years.

President and CEO Chris Holmes told analysts and investors this week his team is “actively speaking to a few” banks’ leaders and hinted they are either in FirstBank’s existing markets or in contiguous areas. Holmes and his team early this year bulked up by paying about $38 million for 14 Atlantic Capital branches in East Tennessee and North Georgia, filling out FirstBank’s presence in those market.

“We’re seeing more opportunities than ever before,” Holmes said, adding that the higher-quality lenders he’s eyeing will demand an appropriate price and would need to include an amount of cash that could dilute FB’s tangible book value.

Holmes and CFO James Gordon discussed FB’s prospects and outlook on a conference call this week following the release of the company’s second-quarter results. Those showed an adjusted profit of $22.1 million, down slightly from last year’s second quarter, that was weighed down by $4.6 million of one-time expenses related to the Atlantic Capital acquisition as well as the sale of parts of FirstBank’s mortgage group. The company’s net interest margin skipped to 4.39 percent in the quarter versus 4.81 percent in the same period of 2018.

On the call, Holmes and Gordon also said that, keeping an eye on the horizon, they will look to prune their loan portfolio of companies that could struggle when the economy turns south. They don’t have a dollar target or specific industries in mind, but Holmes said the trimming could reduce FB’s loan growth — which was 14 percent on an annualized basis in the first six months of the year — to the low end of the company’s long-term range of 10 percent to 12 percent.

Shares of FB (Ticker: FBK) were up 2.2 percent Wednesday afternoon to $38.01. Year to date, they have risen almost 10 percent.