FB Financial Corp. (Pending:FBK) filed its S-1/A with the Securities and Exchange Commission, announcing that it plans to raise $121,764,672 in its upcoming initial public offering on Sept. 16.
We previewed this deal on our IPO Insights platform with a solid rating.
The company plans to offer 5,882,352 shares of its common stock at a price range of $16 to $18 per share. Of the offered amount, 882,352 shares are offered as an overallotment option. The lead underwriters for the offering include J.P. Morgan, UBS Investment Bank and Keefe, Bruyette & Woods and the co-managers for the offering are Raymond James, Sandler O'Neill + Partners, L.P. and Stephens Inc.
Business Summary and Assets Under Management
Headquartered in Nashville, Tennessee, FB Financial Corp. wholly owns its subsidiary bank, FirstBank, which is the third largest bank in the state. It has 45 full-service bank branches located in Tennessee and certain markets in Alabama and Georgia. The bank reports it had $2.9 billion in assets as of June 30, 2016; along with $2.5 billion in deposits and $2.1 billion in loans. It is expected that FB Financial Corp. will price during the week of Sept. 12, 2016.
Executive Management Team
Christopher T. Holmes is the CEO and president of FirstBank and the chief banking officer of FirstBank Corporation. He joined FirstBank in 2010. He has served as the CEO since Feb. 2013 and as the president since May 1, 2012. Prior to coming to work for FirstBank, Holmes served as the senior executive vice president and chief retail banking officer for The South Financial Group Inc. from 2008 to 2010. His banking experience dates to 1994 working in a variety of increasingly responsible roles for various banks and financial corporations.
James W. Ayers is the founder of First Financial Investors and serves as the chairman and executive chairman of FirstBank and FB Financial Corp. He is also the director of Premium Surgery LLC. He is the sole shareholder of FirstBank.
A Range of Competitors
FB Financial Corp. states that it has many competitors, including other banks, credit unions, online mortgage lenders, mortgage banking firms and numerous others. The company states that the banking industry is very competitive, and it notes that an increasing number of banks have entered the Tennessee market in the main metropolitan areas where FirstBank also operates.
Additional Financial Highlights and Risks
For the first six months of 2016, FB Financial Corp. indicates it had $30.4 million in net income. For the year ending on Dec. 31, 2015, the company reports that it had $47.86 million in net income. FB Financial has a market cap of $393.1 million.
A risk that FB Financial Corp. notes is that it is primarily centered in Tennessee, making its revenue sources geographically concentrated. The company's biggest market is Nashville, and it notes that adverse economic conditions in Nashville's metropolitan area or statewide could have an adverse impact on the bank's profitability. The bank also notes that its loan portfolio is made up of 75 percent of real estate loans. If there is a downturn in the real estate market, the bank could suffer harm if mortgagees are unable to repay their loans. Regulators have warned about banks concentrating too high percentages of their loan portfolios to real estate loans, especially involving commercial real estate.
Conclusion: Consider A Modest Allocation
FB Financial Corp. and its subsidiary bank, FirstBank, has a strong regional presence in Tennessee. It has consistently generated profits and has grown substantially since it was first founded in 1984 by James Ayers from one bank to 45 branches.
The bank's loan portfolio percentage of 75 percent devoted to real estate loans is concerning.
Recent regional bank IPOs have gone well including First Hawaiian Bank (FHB), which we previously previewed.
We suggest investors consider a modest allocation.
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