FB Financial ratings affirmed by KBRA with stable outlook

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FB Financial ratings affirmed

Highlights

KBRA affirms FB Financial’s long-term and short-term debt ratings with a Stable Outlook, reflecting resilience post-Southern States Bancshares acquisition adding $2.8 billion in assets by July 2025.
Profitability strengthens as core return on assets reaches approximately 1.4%, driven by above-average net interest margin, low credit costs, and an efficient operating model amid securities restructurings.
Capital remains conservative with a tangible common equity ratio of 9.8% and CET1 of 11.5% in Q1 2026, while deposit costs and risk-weighted asset density stay above peer averages.

Rating action and acquisition effects

As reported by Kroll Bond Rating Agency, FB Financial Corporation keeps its senior unsecured debt rating at BBB+, its subordinated debt rating at BBB and its short-term debt rating at K2. KBRA also affirms FirstBank's deposit and senior unsecured debt ratings at A-, its subordinated debt rating at BBB+, and its short-term deposit and debt ratings at K2, with a Stable Outlook on all long-term ratings.

KBRA says the ratings are supported by FB Financial's established banking franchise across the U.S. Southeast, centered on Tennessee and backed by favorable demographic and economic trends. The July 2025 acquisition of Southern States Bancshares adds about $2.8 billion in assets and strengthens the group's position in Alabama and Georgia.

Profitability improves following the 2024-2025 securities restructurings and the Southern States deal, producing core return on assets of about 1.4% in recent periods. KBRA says earnings benefit from an above-average net interest margin, low credit costs and a more efficient operating model, while the mortgage banking business provides added diversification in lower-rate environments.

Asset quality, capital and funding profile

Asset quality remains supportive of the ratings, even as risk-weighted asset density stays somewhat above some peers because of construction and development, and specialty consumer lending exposures. Net charge-offs remain consistently below peer averages, reserve coverage stands at 1.49% of loans, and KBRA views underwriting and risk management as appropriate for the bank's size and complexity.

Capital management remains relatively conservative, with the first-quarter 2026 tangible common equity ratio at 9.8%, while the CET1 ratio is 11.5% and modestly lower than peers. Core capital declines after the Southern States acquisition and increased share repurchases, but stays within the company's historical operating range, and KBRA expects capital ratios to improve gradually through 2026 as earnings support further accretion.

Funding and liquidity also remain sound, supported by a largely core deposit base and limited reliance on wholesale funding. Deposit costs stay above peer averages because of a lower share of noninterest-bearing deposits and competitive market conditions, although recent repricing reduces funding costs, while available liquidity and contingent funding capacity cover about 2.7 times uninsured and uncollateralized deposits.

In our earlier coverage of Toronto Dominion Bank’s share performance, we highlighted record Q2 earnings across key business lines and a 3.7% dividend increase as major drivers of investor demand. The article also noted that new fixed-income offerings broadened TD’s funding base, while technical indicators pointed to strong momentum but potential near-term overbought conditions and a likely consolidation range.

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