Segment reporting

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment reporting

Segment reporting:

The Company and the Bank are engaged in the business of banking and provide a full range of financial services. The Company determines reportable segments based on the significance of the segment’s operating results to the overall Company, the products and services offered, customer characteristics, processes and service delivery of the segments and the regular financial performance review and allocation of resources by the Chief Executive Officer (“CEO”), the Company’s chief operating decision maker. The Company has identified two distinct reportable segments—Banking and Mortgage. The Company’s primary segment is Banking, which provides a full range of deposit and lending products and services to corporate, commercial and consumer customers. The Company offers full-service conforming residential mortgage products, including conforming residential loans and services through two distinct delivery channels: retail and ConsumerDirect. Additionally, the Mortgage segment includes the servicing of residential mortgage loans and the packaging and securitization of loans to governmental agencies. The Company’s mortgage division represents a distinct reportable segment which differs from the Company’s primary business of commercial and retail banking.

During the three months ended March 31, 2021, the Company re-evaluated its business segments and revised to align all mortgage activities with the Mortgage segment. Previously, the Company had attributed retail mortgage activities originating from geographical locations within the footprint of the Company's branches to the Banking segment. Results for the comparable prior period have been revised to reflect this realignment. The impact of this change on previously reported segment results was the reclassification of mortgage retail footprint total net contribution of $3.5 million from the Banking segment to the Mortgage segment for the three months ended March 31, 2020.

The financial performance of the Mortgage segment is assessed based on results of operations reflecting direct revenues and expenses and allocated expenses. This approach gives management a better indication of the operating performance of the segment. When assessing the Banking segment’s financial performance, the CEO utilizes reports with indirect revenues and expenses including but not limited to the investment portfolio, electronic delivery channels and areas that primarily support the banking segment operations. Therefore these are included in the results of the Banking segment.

Other indirect revenue and expenses related to general administrative areas are also included in the internal financial results reports of the Banking segment utilized by the CEO for analysis and are thus included for Banking segment reporting. The Mortgage segment utilizes funding sources from the Banking segment in order to fund mortgage loans that are ultimately sold on the secondary market. The Mortgage segment uses the proceeds from loan sales to repay obligations due to the Banking segment.

The following tables provide segment financial information for the years ended March 31, 2021 and 2020 as follows:

Three Months Ended March 31, 2021	Banking		Mortgage		Consolidated
Net interest income	$	82,597	$	(21)	$	82,576
Provisions for credit losses(1)	(13,854)		—		(13,854)
Mortgage banking income	—		60,595		60,595
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(5,263)		(5,263)
Other noninterest income	11,398		—		11,398
Depreciation and amortization	1,858		198		2,056
Amortization of intangibles	1,440		—		1,440
Other noninterest expense	52,437		38,765		91,202
Income before income taxes	$	52,114	$	16,348	$	68,462
Income tax expense					15,588
Net income applicable to FB Financial Corporation and noncontrolling interest					$	52,874
Net income applicable to noncontrolling interest(3)					—
Net income applicable to FB Financial Corporation					$	52,874
Total assets	$	10,787,955	$	1,147,871	$	11,935,826
Goodwill	242,561		—		242,561

(1)Included $2,222 in provision for credit losses on unfunded commitments.

(2)Included in mortgage banking income in the Company's consolidated statements of income.

(3)Banking segment includes noncontrolling interest.

Three Months Ended March 31, 2020	Banking		Mortgage		Consolidated
Net interest income	$	56,233	$	16	$	56,249
Provisions for credit losses(1)	29,565		—		29,565
Mortgage banking income	—		38,613		38,613
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(5,868)		(5,868)
Other noninterest income	9,955		—		9,955
Depreciation and amortization	1,492		120		1,612
Amortization of intangibles	1,203		—		1,203
Other noninterest expense(3)	41,122		24,622		65,744
Income before income taxes	$	(7,194)	$	8,019	$	825
Income tax expense					80
Net income applicable to FB Financial Corporation					$	745
Total assets	$	6,122,217	$	533,470	$	6,655,687
Goodwill	174,859		—		174,859

(1)Includes $1,601 in provision for credit losses on unfunded commitments.

(2)Included in mortgage banking income in the Company's consolidated statements of income.

(3)Includes $3,050 in merger costs in the Banking segment,

.

Our Banking segment provides our Mortgage segment with a warehouse line of credit that is used to fund mortgage loans held for sale. The warehouse line of credit, which is eliminated in consolidation, had a prime interest rate of 3.25% as of both March 31, 2021 and 2020, and is limited based on interest income earned by the Mortgage segment. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit is recorded as interest income to our Banking segment and as interest expense to our Mortgage segment, both of which are included in the calculation of net interest income for each segment. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit was $5,400 and $2,375 for the three months ended March 31, 2021 and 2020, respectively.