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 $90,323 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 $19,034 in merger and conversion expenses during the year ended December 31, 2017. This amount includes $10,000 contributed to a charitable foundation established to invest in the communities across the markets of the Clayton Banks.

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 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 fair value of the assets acquired and liabilities assumed along with the resulting goodwill was recorded as of the date of the merger. 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.

As of December 31, 2017, the Company has finalized its valuation of all assets acquired and liabilities assumed, resulting in no material changes to preliminary purchase accounting adjustments. The following tables present the final estimated 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
	As Recorded by FB Financial Corporation
Assets
Cash and cash equivalents	$	49,059
Investment securities		59,493
FHLB stock		3,409
Loans		1,059,728
Allowance for loan losses		-
Premises and equipment		18,866
Other real estate owned		6,888
Intangibles, net		12,334
Other assets		5,978
Total assets	$	1,215,755
Liabilities
Interest-bearing deposits	$	670,054
Non-interest bearing deposits		309,464
Borrowings		84,831
Accrued expenses and other liabilities		5,245
Total liabilities	$	1,069,594
Net assets acquired (excluding goodwill recognized)	$	146,161

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
Allocation of consideration paid:
Fair value of net assets acquired including identifiable intangible assets			$	146,161
Goodwill				90,323
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 deposit account with the Bank in the name of the Seller 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	$	115,448
Nonaccretable difference		(12,430	)
Best estimate of contractual cash flows expected to be collected		103,018
Accretable yield		(18,868	)
Fair value	$	84,150

The following unaudited pro forma condensed consolidated financial information presents the results of operations for the years ended December 31, 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 including loan discount accretion, amortization of core deposit and other intangibles, and amortization of the discount on time deposits 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 reflect any assumptions regarding cost-savings, revenue enhancements, provision for credit losses or asset dispositions. Actual revenues and earnings of the Clayton Banks since the merger date have not been disclosed as it is not practicable as the Clayton Banks were merged into the Company and separate financial information is not readily available.

	Year Ended December 31,
	2017		2016
Net interest income	$	192,633	$	171,383
Total revenues	$	336,404	$	322,045
Net income	$	75,659	$	64,608

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.

The Company recorded a bargain purchase gain of $2,794 and a core deposit intangible asset of $4,931. The fair value of the core deposit intangible is being amortized on a straight-line basis over the estimated useful life, of approximately 10 years at the time of acquisition.

For income tax purposes, the acquisition of NWGB was treated as an asset purchase. As an asset purchase for income tax purposes, the carrying value of assets and liabilities for NWGB are the same for both financial reporting and income tax purposes; therefore, no deferred taxes were recorded at the date of acquisition except for a $191 deferred tax liability recorded for the bargain purchase gain. Additionally, this treatment allows for the deductibility for income tax purposes of the core deposit intangible recorded for the NWGB merger over 15 years, net of the bargain purchase gain.

In connection with the transaction, the Company incurred $3,268 and $3,543 in merger and conversion expenses during the years ended December 31, 2016 and 2015, respectively.

The following tables present the final estimated fair value of net assets acquired as of the September 18, 2015 acquisition date and the consideration paid and an allocation of the purchase price to net assets acquired:

	As of September 18, 2015
	As Recorded by FB Financial Corporation
Assets
Cash and cash equivalents	$	25,495
Investment securities		133,124
FHLB stock		1,154
Loans		78,565
Allowance for loan losses		-
Premises and equipment		15,343
Other real estate owned		5,002
Intangibles, net		4,931
Other assets		8,735
Total assets	$	272,349
Liabilities
Interest-bearing deposits	$	213,126
Non-interest bearing deposits		33,090
Borrowings		20,378
Accrued expenses and other liabilities		1,461
Total liabilities	$	268,055
Net assets acquired (excluding goodwill recognized)	$	4,294

Purchase price:
Cash Consideration paid	$	1,500
Allocation of consideration paid:
Fair value of net assets acquired including identifiable intangible assets		4,294
Bargain purchase gain	$	2,794	⁽¹⁾

(1)	The bargain purchase gain resulting from the merger has been recognized in the Banking operating segment during the year ended December 31, 2015.

The following unaudited pro forma condensed consolidated financial information presents the results of operations for the year ended December 31, 2015 as though the acquisition had been completed as of January 1, 2014. The unaudited estimated pro forma information combines the historical results of NWGB 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, 2014 and does not include the effect of all cost-saving or revenue-enhancing strategies.

	Year Ended December 31, 2015
Net interest income	$	102,290
Total revenues	$	191,002
Net income	$	46,042