Segment Reporting

6 Months Ended

Jun. 30, 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 the periods prior to and for the six months ended June 30, 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. Additionally, the Banking segment includes the results of the Company's specialty lending group, which is concentrated in manufactured housing lending. 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 exit from the direct-to-consumer delivery channel, which is one of two delivery channels in the Mortgage segment. For the three and six months ended June 30, 2022, the direct-to-consumer channel comprised 13.7% and 33.0%, respectively, of the Company's total interest rate lock volume compared to 51.5% and 50.9% for the three and six months ended June 30, 2021, respectively. For the three and six months ended June 30, 2022, the direct-to-consumer channel comprised 37.4% and 45.3% of the Company's sales volume, and 54.9% and 53.9% for the three and six months ended June 30, 2021, respectively. As a result of exiting this channel, the Company incurred $12,458 of restructuring expenses during the three and six months ended June 30, 2022. The current repositioning of our Mortgage segment does not qualify to be reported as discontinued operations. 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 the periods indicated:

Three Months Ended June 30, 2022	Banking(4)		Mortgage		Consolidated
Net interest income	$	102,171	$	—	$	102,171
Provisions for credit losses(1)	12,318		—		12,318
Mortgage banking income(2)	—		23,711		23,711
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(1,152)		(1,152)
Other noninterest income	10,699		(44)		10,655
Depreciation and amortization	1,731		281		2,012
Amortization of intangibles	1,194		—		1,194
Other noninterest expense(3)	56,395		37,396		93,791
Income (loss) before income taxes	$	41,232	$	(15,162)	$	26,070
Income tax expense					6,717
Net income applicable to FB Financial Corporation and noncontrolling interest					19,353
Net income applicable to noncontrolling interest(4)					8
Net income applicable to FB Financial Corporation					$	19,345
Total assets	$	11,469,762	$	724,100	$	12,193,862
Goodwill	242,561		—		242,561

(1)Includes $4,137 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)Includes $12,458 in Mortgage restructuring expenses in the Mortgage segment related to the exit from the direct-to-consumer delivery channel.

(4)Banking segment includes noncontrolling interest.

Three Months Ended June 30, 2021	Banking(3)		Mortgage		Consolidated
Net interest income	$	86,553	$	10	$	86,563
Provisions for credit losses(1)	(13,839)		—		(13,839)
Mortgage banking income(2)	—		38,644		38,644
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(3,145)		(3,145)
Other noninterest income	14,002		(201)		13,801
Depreciation and amortization	1,618		344		1,962
Amortization of intangibles	1,394		—		1,394
Other noninterest expense	55,182		34,422		89,604
Income before income taxes	$	56,200	$	542	$	56,742
Income tax expense					13,440
Net income applicable to FB Financial Corporation and noncontrolling  interest					43,302
Net income applicable to noncontrolling interest(3)					8
Net income applicable to FB Financial Corporation					$	43,294
Total assets	$	10,908,107	$	1,010,260	$	11,918,367
Goodwill	242,561		—		242,561

(1) Includes $(954) 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.

Six Months Ended June 30, 2022	Banking(4)		Mortgage		Consolidated
Net interest income	$	190,355	$	(2)	$	190,353
Provisions for credit losses(1)	8,071		—		8,071
Mortgage banking income(2)	—		52,989		52,989
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(899)		(899)
Other noninterest income	22,682		(166)		22,516
Depreciation and amortization	3,441		607		4,048
Amortization of intangibles	2,438		—		2,438
Other noninterest expense(3)	113,025		66,758		179,783
Income (loss) before income taxes	$	86,062	$	(15,443)	$	70,619
Income tax expense					16,030
Net income applicable to FB Financial Corporation and noncontrolling interest					54,589
Net income applicable to noncontrolling interest(4)					8
Net income applicable to FB Financial Corporation					$	54,581
Total assets	$	11,469,762	$	724,100	$	12,193,862
Goodwill	242,561		—		242,561

(1) Includes $6,019 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) Includes $12,458 in Mortgage restructuring expenses in the Mortgage segment related to the exit from the direct-to-consumer delivery channel.

(4) Banking segment includes noncontrolling interest.

Six Months Ended June 30, 2021	Banking(3)		Mortgage		Consolidated
Net interest income	$	169,150	$	(11)	$	169,139
Provisions for credit losses(1)	(27,693)		—		(27,693)
Mortgage banking income(2)	—		99,239		99,239
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(8,408)		(8,408)
Other noninterest income	25,400		(201)		25,199
Depreciation and amortization	3,476		672		4,148
Amortization of intangibles	2,834		—		2,834
Other noninterest expense(3)	107,619		73,057		180,676
Income before income taxes	$	108,314	$	16,890	$	125,204
Income tax expense					29,028
Net income applicable to FB Financial Corporation and noncontrolling interest					96,176
Net income applicable to noncontrolling interest(3)					8
Net income applicable to FB Financial Corporation					$	96,168
Total assets	$	10,908,107	$	1,010,260	$	11,918,367
Goodwill	242,561		—		242,561

(1)Includes $(3,176) 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 $4,850 and $10,516 for the three and six months ended June 30, 2022, respectively, and $6,110 and $11,510 for the three and six months ended June 30, 2021, respectively.