FB Financial: It's Going To Get Worse Before It Gets Better

With the Fed hiking interest rates another 50bp as of this writing and signaling a willingness to go even further, it's going to be even harder to be in the banking business over the next several quarters. Tennessee's FB Financial (NYSE:FBK) is a case in a point, as management has already said they're going to pull back on lending in the face of rising deposit betas, and with little help coming from mortgage banking or credit, pre-provision profit growth is going to get harder to come by.

I believe FB Financial's operations in Tennessee do have some value, given the above-average growth in the region, but I believe today's price pretty fairly reflects that value. Mid-to-high single-digit core earnings growth can support a fair value in the mid-to-high $30s, but the stock is less attractive on multiples-based valuation and I frankly see more things that could go worse over the next 12 months relative to expectations than go better.

 

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FB Financial: It's Going To Get Worse Before It Gets Better