Note (2)—Mergers and acquisitions:

Clayton Bank and Trust and American City Bank

On July 31, 2017, the Bank completed its previously-announced merger with Clayton Bank and Trust (“CBT”) and American City Bank (“ACB” and together with CBT, the “Clayton Banks”), pursuant to the Stock Purchase Agreement with Clayton HC, Inc., a Tennessee corporation (“Seller”), and James L. Clayton, the majority shareholder of Seller, dated February 8, 2017, as amended on May 26, 2017, with a purchase price of approximately $236,484. The Company issued 1,521,200 shares of common stock and paid cash of $184,200 to purchase all of the outstanding shares of the Clayton Banks. At closing, the Clayton Banks merged with and into FirstBank, with FirstBank continuing as the surviving banking entity.

Prior to the merger, the Clayton Banks operated 18 banking locations across Tennessee. The merger with the Clayton Banks has allowed the Company to further its strategic initiatives by expanding its geographic footprint in Knoxville and other Tennessee markets and accelerates the growth of the Company’s Banking segment.

Goodwill of $92,043 recorded in connection with the transaction resulted primarily from anticipated synergies arising from the combination of certain operational areas of the Clayton Banks and the Company as well as the purchase premium inherent to buying a complete and successful banking operation. Goodwill is included in the Banking segment as substantially all of the operations resulting from the Clayton Banks merger is included in the Banking segment.

In connection with the transaction, the Company incurred $15,711 and $16,965 in merger and conversion expenses during the three and nine months ended September 30, 2017, respectively.

For income tax purposes, the merger with the Clayton Banks was treated as an asset purchase. As an asset purchase for income tax purposes, the carrying value of assets and liabilities for the Clayton Banks are the same for both financial reporting and income tax purposes; therefore, no deferred taxes were recorded at the date of acquisition. Additionally, this treatment allows for the deductibility of the goodwill and core deposit intangible for income tax purposes over 15 years.

The Company accounted for the Clayton Banks transaction under the acquisition method under ASC Topic 805. Accordingly, the purchase price is allocated to the fair value of the assets acquired and liabilities assumed as of the date of the merger. The Company is finalizing the fair value of net assets acquired and as such, the purchase price allocation related to loans, other identifiable intangibles, other assets and assumed liabilities. Accordingly, the determination of goodwill is preliminary and may change. The Company’s operating results for 2017 include the operating results of the acquired assets and assumed liabilities of the Clayton Banks subsequent to the acquisition date.

The following tables present the preliminary fair value of net assets acquired as of the July 31, 2017 acquisition date and the consideration paid and an allocation of the purchase price to net assets acquired:

	As of July 31, 2017
	Combined Clayton Banks Historical Cost Basis (1)			Fair Value Adjustments			As Recorded by FB Financial Corporation
Assets
Cash and cash equivalents	$	49,059		$	—		$	49,059
Investment securities		59,108			385			59,493
FHLB stock		3,409			—			3,409
Loans		1,075,441			(14,933	)		1,060,508
Allowance for loan losses		(19,985	)		19,985			—
Premises and equipment		15,011			4,469			19,480
Other real estate owned		6,244			644			6,888
Core deposit intangible		—			9,060			9,060
Other assets		15,322			(9,184	)		6,138
Total assets	$	1,203,609		$	10,426		$	1,214,035
Liabilities
Interest-bearing deposits	$	669,745		$	309		$	670,054
Non-interest bearing deposits		309,464			—			309,464
Borrowings		84,110			721			84,831
Accrued expenses and other liabilities		4,577			668			5,245
Total liabilities	$	1,067,896		$	1,698		$	1,069,594
Net assets acquired	$	135,713		$	8,728		$	144,441

Purchase price:
Equity consideration
Common stock issued		1,521,200
Price per share as of July 31, 2017	$	34.37
Total equity consideration			$	52,284
Cash consideration				184,200	(2)
Total consideration paid			$	236,484
Preliminary allocation of consideration paid:
Fair value of net assets acquired including identifiable intangible assets			$	144,441
Goodwill				92,043
Total consideration paid			$	236,484

(1)	Amounts include certain reclassifications of opening balances to conform to the Company’s presentation.

(2)	Amount was deposited into an interest-bearing account with the Bank of which $34,200 was included in cash and cash equivalents and interest-bearing deposits in the above schedule of net assets acquired as of July, 31, 2017.

The following table presents the fair value of acquired purchase credit impaired loans accounted for in accordance with ASC 310-30 from the Clayton Banks as of the July 31, 2017 acquisition date:

	July 31, 2017
Contractually-required principal and interest	$	112,584
Nonaccretable difference		12,117
Cash flows expected to be collected		100,467
Accretable yield		18,457
Fair value	$	82,010

The following unaudited pro forma condensed consolidated financial information presents the results of operations for the three and nine months ended September 30, 2017 and 2016 as though the merger had been completed as of January 1, 2016. The unaudited estimated pro forma information combines the historical results of the Clayton Banks with the Company’s historical consolidated results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the periods presented. The pro forma information is not indicative of what would have occurred had the acquisition taken place on January 1, 2016 and does not include the effect of all cost-saving or revenue-enhancing strategies.

	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Net interest income	$	49,408	$	42,971	$	142,972	$	126,115
Total revenues	$	88,013	$	88,568	$	250,676	$	243,877
Net income	$	11,719	$	15,402	$	50,426	$	49,434

Northwest Georgia Bank

On September 18, 2015, the Bank completed its acquisition of Northwest Georgia Bank (“NWGB”), a bank headquartered in Ringgold, Georgia, pursuant to that certain Agreement and Plan of Merger dated April 27, 2015 by and between the Bank and NWGB. Pursuant to the Agreement and Plan of Merger, NWGB was merged with and into the Bank, with the Bank as the surviving entity. Prior to the acquisition, NWGB operated six banking locations in Georgia and Tennessee. The acquisition of NWGB allowed the Company to further its strategic initiatives by expanding its geographic footprint into certain markets of Georgia and Tennessee. The Company acquired NWGB in a $1,500 cash purchase and recorded a bargain purchase gain of $2,794 and a core deposit intangible asset of $4,931 in connection with the transaction.

During the three and nine months ended September 30, 2016, the Company incurred $1,122 and $3,268, respectively, in merger and conversion expenses.