Financial stock under pressure: FB Financial Corp (NYSE: FBK)

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FB Financial Corp (NYSE: FBK) stock fell over 2.8% on 22nd January, 2020 (As of 9:55 am GMT-5; Source: Google finance) as the Company’s net interest income for the fourth quarter was $57.7 million, representing a decline from $58.3 million last quarter and a rise from $51.4 million for the fourth quarter of 2018.

though the company posted better than expected results for fourth quarter of FY 19 and signed a merger agreement with FB Financial.  The company has reported net income of $21.6 million for the fourth quarter of 2019, compared to net income of $17.0 million for the fourth quarter of 2018. During the year 2019, the company had completed the mortgage restructuring, completed the Atlantic Capital branch acquisition, and announced the merger with Farmers National Bank of Scottsville (KY).

Meanwhile, as per the merger agreement, Franklin shareholders will receive 0.9650 shares of FB Financial common stock and $2 in cash for each share of Franklin stock. Based on FB Financial’s closing price of $38.80 per share as of January 17, 2019, the implied transaction value is about $611 million in the aggregate or $39.44 per share. FB Financial plans to establish a primary operations center and its mortgage headquarters for the combined company at Franklin’s existing corporate headquarters in downtown Franklin, Tennesse after the merger. Further, the deal is anticipated to be approximately 10% accretive to FB Financial’s earnings per share on a fully-phased in basis and neutral to FB Financial’s tangible book value per share at the close of the deal. There are plans to reduce the risk of Franklin’s balance sheet by exiting approximately $430 million of shared national credits and non-strategic healthcare and corporate loans and paying down non-core funding with the net proceeds. The company expects 30% of cost savings through this merger. The merger agreement has been unanimously approved by both companies’ boards of directors. The merger is anticipated to be closed in the third quarter of 2020 after getting requisite regulatory approvals, approval by FB Financial’s and Franklin’s shareholders and other customary closing conditions.

FBK in the fourth quarter of FY 19 has reported the adjusted earnings per share of 70 cents, beating the analysts’ estimates for the adjusted earnings per share of 67 cents, according to Zacks Investment Research. The company had reported the adjusted revenue of $92.9 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $89.1 million.

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