UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________

FORM 10-Q

______________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-37875

_____________________________________________________________

FB FINANCIAL CORPORATION

(Exact name of Registrant as specified in its Charter)

______________________________________________________________

Tennessee	62-1216058
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
211 Commerce Street, Suite 300Nashville, Tennessee	37201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (615) 564-1212

____________________________________________________________

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Small reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Registrant’s Common Stock outstanding as of July 31, 2020 was 32,103,348.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par Value $1.00 Per Share	FBK	New York Stock Exchange

1

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets as of June 30, 2020 (Unaudited) and December 31, 2019	3
	Consolidated Statements of Income (Unaudited) for the three and six months ended June 30,    2020 and 2019	4
	Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months    ended June 30, 2020 and 2019	5
	Consolidated Statements of Changes in Shareholders' Equity (Unaudited) for the three and six     months ended June 30, 2020 and 2019	6
	Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2020    and 2019	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	51
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	96
Item 4.	Controls and Procedures	98
PART II.	OTHER INFORMATION
Item1.	Legal Proceedings	98
Item 1A.	Risk Factors	98
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	100
Item 6.	Exhibits	101
Signatures		102

2

PART I - FINANCIAL INFORMATION

ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS

FB Financial Corporation and subsidiaries

Consolidated balance sheets

(Amounts are in thousands except share and per share amounts)

	June 30,		December 31,
	2020 (Unaudited)		2019
ASSETS
Cash and due from banks	$	33,710	$	48,806
Federal funds sold	34,638		131,119
Interest-bearing deposits in financial institutions	649,244		52,756
Cash and cash equivalents	717,592		232,681
Investments:
Available-for-sale debt securities, at fair value	747,438		688,381
Equity securities, at fair value	4,329		3,295
Federal Home Loan Bank stock, at cost	17,621		15,976
Loans held for sale, at fair value	435,479		262,518
Loans	4,827,023		4,409,642
Less: allowance for credit losses	113,129		31,139
Net loans	4,713,894		4,378,503
Premises and equipment, net	100,638		90,131
Other real estate owned, net	15,091		18,939
Operating lease right-of-use assets	30,447		32,539
Interest receivable	26,587		17,083
Mortgage servicing rights, at fair value	60,508		75,521
Goodwill	175,441		169,051
Core deposit and other intangibles, net	17,671		17,589
Other assets	192,800		122,714
Total assets	$	7,255,536	$	6,124,921
LIABILITIES
Deposits
Noninterest-bearing	$	1,775,323	$	1,208,175
Interest-bearing checking	1,236,094		1,014,875
Money market and savings	1,749,889		1,520,035
Customer time deposits	1,176,067		1,171,502
Brokered and internet time deposits	15,428		20,351
Total deposits	5,952,801		4,934,938
Borrowings	328,662		304,675
Operating lease liabilities	33,803		35,525
Accrued expenses and other liabilities	135,054		87,454
Total liabilities	6,450,320		5,362,592
SHAREHOLDERS' EQUITY
Common stock, $1 par value per share; 75,000,000 shares authorized;    32,101,108 and 31,034,315 shares issued and outstanding at    June 30, 2020 and December 31, 2019, respectively	32,101		31,034
Additional paid-in capital	462,930		425,633
Retained earnings	286,296		293,524
Accumulated other comprehensive income, net	23,889		12,138
Total shareholders' equity	805,216		762,329
Total liabilities and shareholders' equity	$	7,255,536	$	6,124,921

See accompanying notes to consolidated financial statements.

3

FB Financial Corporation and subsidiaries

Consolidated statements of income

(Unaudited)

(Amounts are in thousands except share and per share amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Interest income:
Interest and fees on loans	$	61,092	$	66,276	$	124,846	$	126,724
Interest on securities
Taxable	2,619		3,548		5,675		7,117
Tax-exempt	1,590		1,160		3,023		2,304
Other	306		735		1,737		1,507
Total interest income	65,607		71,719		135,281		137,652
Interest expense:
Deposits	9,309		13,488		21,477		25,343
Borrowings	961		1,208		2,218		2,270
Total interest expense	10,270		14,696		23,695		27,613
Net interest income	55,337		57,023		111,586		110,039
Provision for credit losses	24,039		881		52,003		2,272
Provision for credit losses on unfunded commitments	1,882		—		3,483		—
Net interest income after provisions for credit losses	29,416		56,142		56,100		107,767
Noninterest income:
Mortgage banking income	72,168		24,526		104,913		45,547
Service charges on deposit accounts	1,858		2,327		4,421		4,406
ATM and interchange fees	3,606		3,002		6,740		5,658
Investment services and trust income	1,368		1,287		3,065		2,582
(Loss) gain from securities, net	(28)		52		35		95
Gain on sales or write-downs of other real estate owned	86		277		137		238
(Loss) gain from other assets	(54)		(183)		(382)		8
Other income	2,487		1,691		5,262		3,484
Total noninterest income	81,491		32,979		124,191		62,018
Noninterest expenses:
Salaries, commissions and employee benefits	55,258		37,918		98,880		71,615
Occupancy and equipment expense	4,096		4,319		8,274		8,049
Legal and professional fees	1,952		1,694		3,510		3,419
Data processing	2,782		2,643		5,235		5,027
Merger costs	1,586		3,783		4,636		4,404
Amortization of core deposit and other intangibles	1,205		1,254		2,408		1,983
Advertising	2,591		2,434		4,980		5,171
Other expense	11,109		10,074		21,215		19,552
Total noninterest expense	80,579		64,119		149,138		119,220
Income before income taxes	30,328		25,002		31,153		50,565
Income tax expense	7,455		6,314		7,535		12,289
Net income	$	22,873	$	18,688	$	23,618	$	38,276
Earnings per common share
Basic	$	0.71	$	0.60	$	0.75	$	1.24
Diluted	0.70		0.59		0.74		1.21

See accompanying notes to consolidated financial statements.

4

FB Financial Corporation and subsidiaries

Consolidated statements of comprehensive income  

(Unaudited)

(Amounts are in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net income	$	22,873	$	18,688	$	23,618	$	38,276
Other comprehensive income, net of tax:
Net change in unrealized gain in available-for-sale      securities, net of taxes of $429, $2,382, $4,704, and $5,134	1,209		6,725		13,303		14,503
Reclassification adjustment for (gain) loss on sale of securities      included in net income, net of taxes of $0, $(2), $0, and $0	—		(3)		—		1
Net change in unrealized loss in hedging activities, net of      taxes of $(40), $(201), $(443), and $(317)	(112)		(564)		(1,257)		(895)
Reclassification adjustment for gain on hedging activities,      net of taxes of $(52), $(42), $(104), and $(75)	(148)		(119)		(295)		(213)
Total other comprehensive income, net of tax	949		6,039		11,751		13,396
Comprehensive income	$	23,822	$	24,727	$	35,369	$	51,672

 See accompanying notes to consolidated financial statements.

5

FB Financial Corporation and subsidiaries

Consolidated statements of changes in shareholders’ equity

(Unaudited)

(Amounts are in thousands except per share amounts)

	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income, net		Total shareholders' equity
Balance at March 31, 2020	$	32,067	$	460,938	$	266,385	$	22,940	$	782,330
Net income	—		—		22,873		—		22,873
Other comprehensive income, net of taxes	—		—		—		949		949
Stock based compensation expense	6		2,344		—		—		2,350
Restricted stock units vested and distributed, net of shares withheld	28		(352)		—		—		(324)
Dividends declared ($0.09 per share)	—		—		(2,962)		—		(2,962)
Balance at June 30, 2020	$	32,101	$	462,930	$	286,296	$	23,889	$	805,216
Balance at December 31, 2019	$	31,034	$	425,633	$	293,524	$	12,138	$	762,329
Cumulative effect of change in accounting principle (See Note 1)	—		—		(25,018)		—		(25,018)
Balance at January 1, 2020	31,034		425,633		268,506		12,138		737,311
Net income	—		—		23,618		—		23,618
Other comprehensive income, net of taxes	—		—		—		11,751		11,751
Common stock issued in connection with acquisition of FNB Financial Corp., net of registration costs (See Note 2)	955		33,892		—		—		34,847
Stock based compensation expense	11		4,222		—		—		4,233
Restricted stock units vested and distributed, net of shares withheld	89		(1,251)		—		—		(1,162)
Shares issued under employee stock purchase program	12		434		—		—		446
Dividends declared ($0.18 per share)	—		—		(5,828)		—		(5,828)
Balance at June 30, 2020	$	32,101	$	462,930	$	286,296	$	23,889	$	805,216

	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive income, net		Total shareholders' equity
Balance at March 31, 2019	$	30,853	$	423,647	$	236,947	$	3,130	$	694,577
Net income	—		—		18,688		—		18,688