FB Bancorp, Inc. (FBLA) Q3 2026 earnings review
FB Bancorp ends mortgage losses, but problem commercial loans double
FB Bancorp, the parent of Louisiana's Fidelity Bank, finished winding down its money-losing mortgage unit while credit trouble hit its commercial loan book. Third-quarter profit from continuing operations fell by half from a year ago to $466 thousand as new employee stock grants kept expenses over 92% of revenue. Heavy share buybacks cut the share count by 20% and lifted book value per share to $17.26.
| Net interest income (continuing) | $12.1M -1.3% from a year ago |
|---|---|
| Profit per share (continuing) | $0.03 $0.06 a year ago |
| Substandard loans | $38.8M $20.0M at year-end 2025 |
| Discontinued mortgage unit outlook | Zero losses wound down with no future losses expected |
⚖️ Verdict: 🔴 Bearish
The story got worse because a single $20 million commercial borrower in Chapter 11 bankruptcy caused problem loans to nearly double. Management downgraded the loan to substandard after the quarter closed, pushing total substandard loans to $38.8 million, yet set aside zero specific loss reserves while waiting on a new property appraisal. On the bright side, losses from the sold mortgage business dropped to zero, and the company expects no further charges from that exit.
The question now is whether the bankrupt commercial borrower's real estate collateral covers the entire $20 million debt. Either a new tenant lease supports the property's value above the loan balance, or the updated appraisal forces a multi-million-dollar credit charge that wipes out annual earnings. The new appraisal results and fourth-quarter loan loss provisions will tell.
🐂 Bull Case
Aggressive Buybacks Cut the Share Count by 20%
FB Bancorp, the parent of Louisiana-based Fidelity Bank, holds more than double the capital regulators require after its late-2024 stock conversion. The company uses that cash to buy its own shares below book value, which is the accounting net worth per share. Diluted shares fell 20.2% from a year ago to 14.6 million.
Buying shares at roughly $13 while book value sits above $17 raises the net worth of every remaining share. Even though nine-month net income barely passed $500 thousand and bond portfolio losses grew, book value per share rose from $17.05 a year ago to $17.26. The bank still has 1.3 million shares left on its third repurchase plan.
What to watch: the quarterly pace of share repurchases in the fourth-quarter report. Slowing buybacks while capital ratios sit near 30% would remove the main driver lifting book value per share.
Exiting the Mortgage Unit Ended Discontinued Losses
Fidelity Bank closed the sale of NOLA Lending Group, its money-losing home mortgage unit, on March 1, 2026. The unit lost $2.7 million in 2025 and another $1.1 million during the first half of 2026 as the bank wound down remaining loans and severance obligations.
In the third quarter, losses from the exited unit dropped to zero, and FB Bancorp "does not currently expect material future operating activity or losses associated with the discontinued operations". Ending that drain let total net income match continuing profit at $466 thousand, after the mortgage exit pushed the bank into a $70 thousand net loss last quarter.
What to watch: other general and administrative expenses in the fourth quarter. With the mortgage exit finished, overhead should fall as shared service contracts wind down.
🐻 Bear Case
Substandard Loans Nearly Doubled on a $19.8M Bankruptcy
Two co-borrowers on a $19.8 million commercial real estate loan filed for Chapter 11 bankruptcy protection in June 2026. Management initially kept the loan's passing grade, but downgraded it to substandard in the third quarter after reviewing updated payment information. That single downgrade pushed total substandard loans from $20.0 million at year-end to $38.8 million.
- Substandard loans: $38.8 million, up 94.0% from December 2025
- Non-performing loans (loans not paying on schedule): $16.1 million, up 16.7% from last quarter
- Allowance for credit losses to non-performing loans: 41.52%, down from 49.43% last quarter
FB Bancorp set aside zero specific reserves for the bankrupt borrower because an older appraisal valued the loan at 66% of the property's worth, and management noted a new lease that it "anticipates will increase the net cash flows of the real estate collateral and may increase its value". However, the bank has ordered a new appraisal, and non-performing loans elsewhere rose $2.3 million in the quarter.
What to watch: the updated property appraisal and the fourth-quarter provision for credit losses. If the new valuation comes in lower, even a 10% writedown on this $19.8 million loan would wipe out more than a full year of the bank's current profit.
Stock Grants Pushed the Efficiency Ratio Over 92%
FB Bancorp's efficiency ratio — non-interest expenses as a share of total revenue — worsened by 4.7 percentage points from a year ago to 92.15%. That leaves less than eight cents of every revenue dollar to cover loan losses and taxes, which is why quarterly profit from continuing operations fell 54.2% to $466 thousand.
The main culprit was salaries and employee benefits, which climbed 4.1 percentage points of revenue by our math, from 48.2% a year ago to 52.4%. Even though the bank cut continuing staff from 222 to 199 employees, $686 thousand in new stock-based compensation outweighed what the release called "partially offset by reductions in ongoing payroll". Without those stock grants, compensation costs would have fallen 4.2% by our math.
What to watch: quarterly salaries and employee benefits in the fourth quarter. With stock grant costs now built into the run rate, the bank needs revenue growth or deeper staff cuts to bring the efficiency ratio below 90%.
Wholesale Borrowings Replaced Departing Customer Deposits
Customer deposits have dropped $40.0 million since the end of 2025, led by three commercial clients who pulled $19.7 million out of their accounts. To plug that gap without selling bonds at a loss, Fidelity Bank added $10.2 million in brokered deposits and increased borrowings from the Federal Home Loan Bank (FHLB) by 36.6% to $106.9 million.
Replacing local deposits with wholesale debt squeezes lending profit because FHLB advances cost the bank an average interest rate of 3.92% in the third quarter, compared with 2.18% for interest-bearing deposits. That shift pushed quarterly interest expense on borrowed funds up 59.7% from a year ago to $1.1 million.
What to watch: core customer deposit balances and FHLB borrowing levels in the fourth-quarter report. Further commercial deposit outflows would force the bank to rely even more on nearly 4% wholesale debt.
👓 Other Themes
Bond Portfolio Repricing Helped Stabilize the Margin
Higher market yields on investment securities helped lift the bank's net interest margin — the spread between what it earns on loans and bonds and what it pays on deposits — by 0.1 percentage points from last quarter to 4.30%. The average yield on the bond portfolio rose from 3.85% a year ago to 4.41%, lifting quarterly securities income 35.1% to $3.7 million and offsetting lower loan yields.
💲 Other KPIs
Total loans held for investment shrank by $8.5 million from last quarter and $7.0 million since year-end 2025. Commercial loans grew 10.0%, or $34.0 million, over the first nine months, but $44.1 million in residential mortgage paydowns more than erased that gain and reduced loan interest income.
Deposits edged up $604 thousand from the second quarter, stabilizing after a $30.4 million drop in the first half of 2026. However, the nine-month decline of 3.5% reflects $40.0 million in customer outflows partially masked by $10.2 million in higher-cost brokered funding.
The Tier 1 leverage ratio — core capital as a percentage of average assets — rose from 20.32% last quarter and 20.05% a year ago. A shrinking asset base and positive retained earnings kept the capital cushion growing even as the New Orleans lender spent $32.3 million on share buybacks this year.
🔮 Guidance
Unchanged. FB Bancorp still "expects continued runoff of total residential mortgage loans" now that it no longer owns NOLA Lending Group to originate replacements. Residential mortgages shrank by $44.1 million over the first nine months of 2026, which keeps a lid on total loan growth even as commercial lending expands.
Improved. Management now expects no material future losses from the sold mortgage business, an upgrade from last quarter's view that losses would merely shrink in the second half. With remaining mortgage assets and liabilities settled by September 30, future bottom-line results will reflect the core bank alone.
❓ Key Questions
What will the new appraisal show for the bankrupt loan?
A $19.8 million commercial loan in Chapter 11 carries zero specific loss reserves based on an old 66% loan-to-value appraisal. The bank ordered a new appraisal; any drop in property value below the loan balance would force a large credit provision.
What caused non-performing loans to jump $2.3M this quarter?
Non-performing loans rose from $13.8 million in June to $16.1 million in September, yet the release did not break out whether the increase came from Gulf Coast residential mortgages or commercial credits.
Where did the promised $749K in reorganization savings go?
Last quarter management projected $749 thousand in annual cost savings from staff reorganization, yet third-quarter non-interest expenses still rose 3.3% from a year ago and the efficiency ratio remained above 92%.
Have the three large commercial depositors finished pulling cash?
Three commercial clients withdrew $19.7 million over the first nine months, up from $15.2 million through June. Investors need to know if those accounts are now closed or if more cash could leave.