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Why the Motley Fool says this Nashville bank’s stock is one of the country’s best

DECEMBER 22, 2017

Dec 22, 2017, 11:27am CST

Meg Garner | Nashville Business Journal

Nashville-based FirstBank is the country’s highest-performing bank stock, at least on one metric.

This week financial investing site The Motley Fool ranked the nation’s top four bank stocks based on their year-to-date total return, with the $4.6 billion lender’s stock — which only went public in September 2016 — topping the list with a 65.1 percent year-to-date total return.

Here’s a snippet of what The Motley Fool said about FirstBank:

For starters, check out these numbers. FB Financial generates a return on assets of 1.62% and a return on equity of 13%, both of which handily surpass the industry’s benchmarks of 1% and 10%, respectively. Not only are these numbers impressive, but they also have improved significantly in recent years.

Finally, the bank has done a great job of improving its efficiency. Since the end of 2015, FB Financial’s efficiency ratio has fallen from 73.1% to 68.8%. If all of these trends continue (growth, profitability and efficiency), there could be more good times ahead for FB Financial shareholders.

It’s been a big year for FirstBank after the company snapped up a pair of banks from billionaire Jim Clayton — Knoxville’s Clayton Bank and Trust and Tullahoma’s American City Bank — for $284.2 million. The deal cemented FirstBank’s status as the state’s third-largest homegrown lender and filled in geographic gaps in the bank’s footprint.

To be sure, there are several ways to measure a company’s performance on the stock market. One commonly referred to metric is a stock price’s price-to-earnings ratio, which shows how a company’s current share price is relative to its current earnings per share.

FirstBank, which trades under the name FB Financial Corp. (NYSE: FBK), still excels on that mark, with a price-to-earnings ratio of 30.07.

By comparison, Pinnacle Financial Partners (Nasdaq: PNFP) the city’s largest locally based lender, has a ratio of 20.84. Williamson County-based Franklin Synergy Bank, which trades under its holding company Franklin Financial Network Inc. (NYSE: FSB), has a ratio of 14.19. Nashville-based CapStar Financial Holdings (Nasdaq: CSTR)currently has a ratio of 65.48.

 

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