fbk-20200930

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 September 30, 2020

☐ 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 300 Nashville, 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 October 31, 2020 was 47,198,737.

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

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019	3
	Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2020 and 2019	4
	Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2020 and 2019	5
	Consolidated Statements of Changes in Shareholders' Equity (Unaudited) for the three and nin e months ended September 30, 2020 and 2019	6
	Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2020 and 2019	8
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	56
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	101
Item 4.	Controls and Procedures	103
PART II.	OTHER INFORMATION
Item1.	Legal Proceedings	104
Item 1A.	Risk Factors	104
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	105

Item 6.	Exhibits	106
Signatures		107

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)


	September 30,		December 31,
	2020 (Unaudited)		2019
ASSETS
Cash and due from banks	$	69,798	$	48,806
Federal funds sold	118,588		131,119
Interest-bearing deposits in financial institutions	874,005		52,756
Cash and cash equivalents	1,062,391		232,681
Investments:
Available-for-sale debt securities, at fair value	1,160,521		688,381
Equity securities, at fair value	4,389		3,295
Federal Home Loan Bank stock, at cost	31,232		15,976
Loans held for sale, at fair value	851,951		262,518
Loans	7,213,538		4,409,642
Less: allowance for credit losses	183,973		31,139
Net loans	7,029,565		4,378,503
Premises and equipment, net	136,774		90,131
Other real estate owned, net	12,748		18,939
Operating lease right-of-use assets	52,410		32,539
Interest receivable	47,120		17,083
Mortgage servicing rights, at fair value	71,535		75,521
Goodwill	236,086		169,051
Core deposit and other intangibles, net	23,924		17,589
Other assets	289,792		122,714
Total assets	$	11,010,438	$	6,124,921
LIABILITIES
Deposits
Noninterest-bearing	$	2,287,911	$	1,208,175
Interest-bearing checking	2,005,536		1,014,875
Money market and savings	3,236,670		1,520,035
Customer time deposits	1,471,556		1,171,502
Brokered and internet time deposits	92,074		20,351
Total deposits	9,093,747		4,934,938
Borrowings	438,838		304,675
Operating lease liabilities	56,705		35,525
Accrued expenses and other liabilities	176,057		87,454
Total liabilities	9,765,347		5,362,592
SHAREHOLDERS' EQUITY
Common stock, $1 par value per share; 75,000,000 shares authorized; 47,191,677 and 31,034,315 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	47,192		31,034
Additional paid-in capital	896,158		425,633
Retained earnings	276,361		293,524
Accumulated other comprehensive income, net	25,287		12,138
Total common shareholders' equity	1,244,998		762,329
Noncontrolling interests	93		—
Total shareholders' equity	1,245,091		762,329
Total liabilities and shareholders' equity	$	11,010,438	$	6,124,921

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Consolidated statements of income

(Unaudited)

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Interest income:
Interest and fees on loans	$	76,504	$	67,639	$	201,350	$	194,363
Interest on securities
Taxable	2,286		3,137		7,961		10,254
Tax-exempt	1,933		1,174		4,956		3,478
Other	404		1,292		2,141		2,799
Total interest income	81,127		73,242		216,408		210,894

Interest expense:
Deposits	10,573		13,522		32,050		38,865
Borrowings	1,726		1,415		3,944		3,685
Total interest expense	12,299		14,937		35,994		42,550
Net interest income	68,828		58,305		180,414		168,344
Provision for credit losses	45,834		1,831		97,837		4,103
Provision for credit losses on unfunded commitments	9,567		—		13,050		—
Net interest income after provisions for credit losses	13,427		56,474		69,527		164,241

Noninterest income:
Mortgage banking income	84,686		29,193		189,599		74,740
Service charges on deposit accounts	2,162		2,416		6,583		6,822
ATM and interchange fees	3,913		3,188		10,653		8,846
Investment services and trust income	1,828		1,336		4,893		3,918
Gain (loss) from securities, net	583		(20)		618		75
(Loss) gain on sales or write-downs of other real estate owned	(1,505)		(126)		(1,368)		112
Gain (loss) from other assets	226		44		(156)		52
Other income	5,133		2,114		10,395		5,598
Total noninterest income	97,026		38,145		221,217		100,163

Noninterest expenses:
Salaries, commissions and employee benefits	67,676		40,880		166,556		112,495
Occupancy and equipment expense	4,892		4,058		13,166		12,107
Legal and professional fees	1,917		1,993		5,427		5,412
Data processing	2,994		2,816		8,229		7,843
Merger costs	20,730		295		25,366		4,699
Amortization of core deposit and other intangibles	1,417		1,197		3,825		3,180





Advertising	2,256		1,895		7,236		7,066
Other expense	16,210		9,801		37,425		29,353
Total noninterest expense	118,092		62,935		267,230		182,155

(Loss) income before income taxes	(7,639)		31,684		23,514		82,249
Income tax (benefit) expense	(2,040)		7,718		5,495		20,007
Net (loss) income	(5,599)		23,966		18,019		62,242
Net income applicable to noncontrolling interests	—		—		—		—
Net (loss) income applicable to FB Financial Corporation	$	(5,599)	$	23,966	$	18,019	$	62,242

(Loss) earnings per common share
Basic	$	(0.14)	$	0.77	$	0.52	$	2.01
Diluted	(0.14)		0.76		0.52		1.97

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Consolidated statements of comprehensive income

(Unaudited)

(Amounts are in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net (loss) income	$	(5,599)	$	23,966	$	18,019	$	62,242
Other comprehensive income, net of tax:
Net change in unrealized gain in available-for-sale securities, net of taxes of $521, $1,296, $5,225, and $6,430	1,788		3,762		15,091		18,265
Reclassification adjustment for (gain) loss on sale of securities included in net income, net of taxes of $(137), $20, $(137), and $20	(387)		55		(387)		56
Net change in unrealized gain (loss) in hedging activities, net of taxes of $40, $(90), $(403), and $(407)	112		(256)		(1,145)		(1,151)
Reclassification adjustment for gain on hedging activities, net of taxes of $(41), $(46), $(145), and $(121)	(115)		(130)		(410)		(343)
Total other comprehensive income, net of tax	1,398		3,431		13,149		16,827
Comprehensive (loss) income	(4,201)		27,397		31,168		79,069
Comprehensive (loss) income applicable to noncontrolling interests	—		—		—		—
Comprehensive (loss) income applicable to FB Financial Corporation	$	(4,201)	$	27,397	$	31,168	$	79,069

See the accompanying notes to the consolidated financial statements.

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 common shareholders' equity		Noncontrolling interests		Total shareholders' equity














Balance at June 30, 2020	$	32,101	$	462,930	$	286,296	$	23,889	$	805,216	$	—	$	805,216

Net (loss) income	—		—		(5,599)		—		(5,599)		—		(5,599)
Other comprehensive income, net of taxes	—		—		—		1,398		1,398		—		1,398
Common stock issued in connection with acquisition of Franklin Financial Network, Inc., net of registration costs (See Note 2)	15,058		429,815		—		—		444,873		93		444,966




Stock based compensation expense	6		3,014		—		—		3,020		—		3,020
Restricted stock units vested and distributed, net of shares withheld	9		(115)		—		—		(106)		—		(106)
Shares issued under employee stock purchase program	18		514		—		—		532		—		532
Dividends declared ($0.09 per share)	—		—		(4,336)		—		(4,336)		—		(4,336)
Balance at September 30, 2020	$	47,192	$	896,158	$	276,361	$	25,287	$	1,244,998	$	93	$	1,245,091

Balance at December 31, 2019	$	31,034	$	425,633	$	293,524	$	12,138	$	762,329	$	—	$	762,329
Cumulative effect of change in accounting principle (See Note 1)	—		—		(25,018)		—		(25,018)		—		(25,018)
Balance at January 1, 2020	31,034		425,633		268,506		12,138		737,311		—		737,311
Net income	—		—		18,019		—		18,019		—		18,019
Other comprehensive income, net of taxes	—		—		—		13,149		13,149		—		13,149
Common stock issued in connection with acquisition of FNB Financial Corp., net of registration costs (See Note 2)	955		33,892		—		—		34,847		—		34,847
Common stock issued in connection with acquisition of Franklin Financial Network, Inc., net of registration costs (See Note 2)	15,058		429,815		—		—		444,873		93		444,966
Stock based compensation expense	17		7,236		—		—		7,253		—		7,253
Restricted stock units vested and distributed, net of shares withheld	98		(1,366)		—		—		(1,268)		—		(1,268)
Shares issued under employee stock purchase program	30		948		—		—		978		—		978
Dividends declared ($0.27 per share)	—		—		(10,164)		—		(10,164)		—		(10,164)
Balance at September 30, 2020	$	47,192	$	896,158	$	276,361	$	25,287	$	1,244,998	$	93	$	1,245,091

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 common shareholders' equity		Noncontrolling interests		Total shareholders' equity














Balance at June 30, 2019	$	30,866	$	425,644	$	253,080	$	9,169	$	718,759	$	—	$	718,759

Net income	—		—		23,966		—		23,966		—		23,966
Other comprehensive income, net of taxes	—		—		—		3,431		3,431		—		3,431
Stock based compensation expense	3		1,833		—		—		1,836		—		1,836



Restricted stock units vested and distributed, net of shares withheld	47		(1,089)		—		—		(1,042)		—		(1,042)
Shares issued under employee stock purchase program	12		428		—		—		440		—		440


Dividends declared ($0.08 per share)	—		—		(2,555)		—		(2,555)		—		(