3 Attractive Aspects For FB Financial

In September, FB Financial Corporation FBK completed its IPO to create Tennessee’s third-largest publicly traded bank. There is 14 percent upside from the company’s current share price, Keefe, Bruyette & Woods' Catherine Mealor said in a report. She initiated coverage of FB Financial with an Outperform rating and a price target of $25.

“FBK offers a unique opportunity to invest in a high-performing bank with an attractive mix of both metro and community markets, a distinctive mortgage banking platform that adds diversity to the income stream, and a team that we expect will be able to execute on improved organic growth and additional M&A opportunities over time,” analyst Mealor commented.

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Above Average Growth

Mealor expects FB Financial to continue to generate higher profitability that the industry, with expectations of 1.2–1.3 percent return on assets and 12–15 percent return on tangible common equity. The company is also likely to achieve double-digit growth in tangible book value, with 14 percent expected for 2017.

The analyst believes FB Financial would grow its balance sheet “at a steady high-single-digit pace,” and use excess capital to make accretive acquisitions. “While our expectation for earnings-per-share (EPS) growth is relatively low, more importantly, returns are superior and TBV will grow at a faster pace than the industry, in our view.”

Full ratings data available on Benzinga Pro.