FBLA

FB Bancorp, Inc. 10-Q Summary: Q2 2025

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2025. FB Bancorp, Inc. serves as the bank holding company for Fidelity Bank, following a conversion from a mutual to a stock form of organization completed on October 22, 2024. The company operates primarily in Louisiana, focusing on residential and commercial real estate lending, consumer loans, and mortgage banking. As of August 13, 2025, there were 19,837,500 shares of common stock outstanding.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability: Net income for the six months ended June 30, 2025, was $1.584 million, a significant increase from $42,000 in the same period in 2024. This improvement was driven by a $4.2 million increase in net interest income and a $717,000 decrease in non-interest expenses.
• Net Interest Income: Increased 19.1% year-over-year (YTD) to $26.0 million, fueled by a $118.1 million growth in average interest-earning assets and a reduction in interest-bearing borrowing costs.
• Non-Interest Income: Decreased 22.1% YTD to $9.3 million. This decline is primarily attributed to a $2.3 million reduction in gains from the sale of mortgage servicing rights, which occurred in the prior year but not in the current period.
• Expense Management: Non-interest expenses decreased 2.2% YTD to $32.5 million. Savings were achieved through reduced salaries and employee benefits (due to staffing reductions in the mortgage banking segment) and a 54.8% drop in advertising and marketing expenses.
• Asset Quality: Non-performing loans increased to $13.0 million (1.68% of total loans) from $9.8 million (1.35%) in the prior year, with 72.5% of the increase concentrated in one- to four-family residential loans.

Guidance, Outlook, and Risks

• Business Strategy: Management intends to continue growing the commercial real estate and commercial loan portfolios to diversify assets and increase yield. The company plans to maintain current levels of residential mortgage originations for sale into the secondary market.
• Expansion: The company is expanding into the Baton Rouge and Lafayette, Louisiana markets, including a new branch in Lafayette scheduled to open in August 2025. They are also investing in digital banking infrastructure ("Andi").
• Capital Position: The bank is categorized as "well-capitalized" by the FDIC. Total risk-based capital ratio stands at 30.12%, significantly exceeding the 10.00% requirement for well-capitalized status.
• Market Risk: The primary market risk is interest rate sensitivity. Modeling indicates that a 200 basis point increase in rates would result in a 3.00% increase in Net Interest Income (NII) but a 9.57% decrease in Economic Value of Equity (EVE).
• Contingencies: The company has $233.7 million in outstanding commitments to originate loans. Management believes legal proceedings are routine and not expected to have a material effect on financial position.

Investor Verification Checklist

• Loan Portfolio Concentration: Verify the specific risk profile of the $13.0 million in non-performing loans, particularly the concentration in residential mortgages.
• Mortgage Banking Volatility: Assess the sustainability of non-interest income given the absence of mortgage servicing rights sale gains in the current period compared to the prior year.
• Deposit Mix: Review the shift in deposit composition, noting the 22.5% increase in certificates of deposit (CDs) versus the 3.2% decrease in core deposits, and the associated cost of funds.
• Staffing Reductions: Confirm the long-term impact of the reduction in full-time equivalent employees (from 368 to 324) on operational capacity and customer service.
• Capital Deployment: Monitor the utilization of the $198.4 million raised in the 2024 stock offering, specifically regarding the funding of loan growth and the new Lafayette branch.