Segment Reporting

3 Months Ended

Mar. 31, 2022

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, 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. For periods prior to and for the three months ended March 31, 2022, the Company offered conforming residential mortgage loans and services through two delivery channels: retail and our national Direct-to-Consumer internet delivery channel. Additionally, the Mortgage segment activities include 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.

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 and uses proceeds from loan sales to repay obligations due to the Banking segment.

On May 10, 2022, the Company announced the restructuring of its Mortgage segment, including the discontinuation of the Direct-to-Consumer delivery channel, which is one of two delivery channels in the Mortgage segment. For the three months ended March 31, 2022 and 2021, the Direct-to-Consumer channel comprised 43.4% and 50.2% of the Company's total interest rate lock volume and 50.7% and 52.8% of the Company's sales volume, respectively. As a result of exiting this channel, the Company expects to incur total pre-tax restructuring charges of approximately $11,000 to $13,000 through the remainder of 2022 and to halt operations in this channel prior to the fourth quarter of 2022. The Company plans to continue originating and selling residential mortgage loans within its Mortgage segment through its traditional mortgage retail channel, retain mortgage servicing rights and continue holding residential 1-4 family mortgage loans in the loan portfolio.

The following tables provide segment financial information for three months ended March 31, 2022 and 2021 as follows:

Three Months Ended March 31, 2022	Banking		Mortgage		Consolidated
Net interest income	$	88,184	$	(2)	$	88,182
Provisions for credit losses(1)	(4,247)		—		(4,247)
Mortgage banking income(2)	—		29,278		29,278
Change in fair value of mortgage servicing rights, net of hedging(2)	—		253		253
Other noninterest income	11,983		(122)		11,861
Depreciation and amortization	1,710		326		2,036
Amortization of intangibles	1,244		—		1,244
Other noninterest expense	56,630		29,362		85,992
Income (loss) before income taxes	$	44,830	$	(281)	$	44,549
Income tax expense					9,313
Net income applicable to FB Financial Corporation and noncontrolling interest					35,236
Net income applicable to noncontrolling interest(3)					—
Net income applicable to FB Financial Corporation					$	35,236
Total assets	$	11,890,847	$	783,344	$	12,674,191
Goodwill	242,561		—		242,561

(1)Included $1,882 in provision for credit losses on unfunded commitments.

(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.

(3)Banking segment includes noncontrolling interest.

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(2)	—		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	1,728		328		2,056
Amortization of intangibles	1,440		—		1,440
Other noninterest expense	52,567		38,635		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(4)					—
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)Includes $2,222 in provision for credit losses on unfunded commitments.

(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.

(3)Banking segment includes noncontrolling interest.

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, 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 $5,666 and $5,400 for the three months ended March 31, 2022 and 2021, respectively.