FB Financial Corp (FBK) stock intrinsic value fair value estimate & owner earnings analysis

FB Financial is the holding company for FirstBank, a Nashville, Tennessee bank that serves customers primarily in Tennessee, Alabama, Kentucky, Georgia and North Carolina. It earns most of its income from the spread between what it charges on loans and what it pays on deposits. It also runs a much smaller home-mortgage arm. In 2020 that arm booked $270.8 million of gains on loan sales; in 2025 the figure was $38.7 million, and the mortgage segment earned only $3.6 million before tax. The mortgage boom that lifted 2020 and 2021 has reversed, so we do not count those years as normal. What we measured. For a bank, cash flow from operations swings wildly with the timing of mortgage loans made and sold (in 2022 alone, sales of loans exceeded new loans by about $664 million). We strip out that timing effect, along with other working-capital movements, and we also subtract stock compensation and the part of capital spending needed just to maintain the business. That gives owner earnings per share of about $2.31 in 2022, $2.99 in 2023, $4.14 in 2024 and $4.59 in 2025. We use the middle of those four years, about $3.56 a share, as the earnings level. We start in 2022 because that is when the mortgage business had already shrunk to its current small size; the boom years before it describe a different company. This figure is well above reported earnings per share ($2.45 in 2025) because it adds back non-cash charges, chiefly the $60.5 million and $56.4 million losses booked in 2025 and 2024 when management chose to sell lower-yielding bonds, plus credit-loss provisions that in 2025 were mostly reserve building (actual net charge-offs were only $6.7 million). We think these add-backs are appropriate, but a reader should know they are the reason owner earnings run ahead of reported profit. Base case, about $59 a share. Earnings stay at $3.56 a share with no growth credited, discounted at 6%. Last year owner earnings per share rose about 11%; we assume no growth in the first year, below that pace. In July 2025 the bank completed its merger with Southern States Bancshares, adding $2.8 billion of assets, $2.3 billion of loans and $2.5 billion of deposits, so 2026 will carry a full year of that business against half a year in 2025. We deliberately did not lift the earnings level for this, because the 2025 filing does not let us measure its earnings separately, and the $3.56 level already sits below 2025's $4.59. We also credited no loan growth: the loan book grew only 2% in 2024, and growth beyond that is not something the bank has demonstrated on its own. The earnings are assumed to persist because the deposit franchise and banking charter are in place and earnings held up through the rate changes of 2022 to 2025. Bear case, about $31 a share. Owner earnings fall back to the 2022 low of $2.31 and then shrink 3% a year for ten years before levelling off. The evidence for this: non-interest-bearing deposits, the cheapest funding, fell from 21.0% of deposits in 2023 to 18.9% in 2025; problem loans rose from 0.65% to 0.97% of loans over the same period; and the net interest margin, which helped 2025, widened from 3.44% in 2023 to 3.81% and could give some of that back. The bear value is close to the $30.27 of tangible book value per share at the end of 2025. Bull case, about $88 a share. Owner earnings hold at 2025's $4.59 a share, a level the bank has actually reached, and grow 2% a year for ten years, then stay flat. The 2% is at or below the loan growth of 2024 and below the deposit growth that year of about 6%. We did not credit further acquisitions or a recovery in mortgage banking, because neither is something the bank has shown it can repeat on its own. What could make this wrong. Owner earnings for a bank do not deduct credit losses that reserves later absorb; a real downturn in Tennessee, Alabama or Georgia lending, where the filing notes geographic concentration, would hit harder than reported profit suggests. The 2025 merger added integration risk ($23.8 million of merger costs were already expensed in 2025), and the bank issued about 8.1 million shares to complete it. We also could not separate the acquired bank's earnings from the rest. Margin-of-safety price: about $34 a share, roughly the bear value plus a little, reflecting a leveraged, moderately rate-sensitive business with a recent large merger.