Segment Reporting

9 Months Ended

Sep. 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. The Company also offers conforming residential mortgage loans through the Mortgage segment, which activities also 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. As a result of exiting this channel, the Company incurred $12,458 of restructuring expenses during the second quarter of 2022. No such expenses were incurred during the first or third quarter of 2022. The 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 Mortgage segment's interest rate lock commitment volume and sales volume by line of business for the three and nine months ended September 30, 2022 and 2021 is as follows:

	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Interest rate lock commitment volume by line of   business:
Direct-to-consumer	$	—		$	1,085,180		$	663,848		$	2,948,530
Retail	408,879			926,723			1,755,008			2,726,956
Total	$	408,879		$	2,011,903		$	2,418,856		$	5,675,486
Interest rate lock commitment volume % by line of    business:
Direct-to-consumer	—		%	53.9		%	27.4		%	52.0		%
Retail	100.0		%	46.1		%	72.6		%	48.0		%
Mortgage sales by line of business:
Direct-to-consumer	$	48,490		$	809,887		$	1,024,838		$	2,562,681
Retail	521,165			726,010			1,698,987			2,226,795
Total	$	569,655		$	1,535,897		$	2,723,825		$	4,789,476
Mortgage sales % by line of business:
Direct-to-consumer	8.5		%	52.7		%	37.6		%	53.5		%
Retail	91.5		%	47.3		%	62.4		%	46.5		%

The following tables provide segment financial information for the periods indicated:

Three Months Ended September 30, 2022	Banking(4)		Mortgage		Consolidated
Net interest income	$	111,384	$	—	$	111,384
Provisions for credit losses(1)	11,367		—		11,367
Mortgage banking income(2)	—		16,729		16,729
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(4,345)		(4,345)
Other noninterest income	10,293		(85)		10,208
Depreciation and amortization	1,867		190		2,057
Amortization of intangibles	1,108		—		1,108
Other noninterest expense	62,911		15,771		78,682
Income (loss) before income taxes	$	44,424	$	(3,662)	$	40,762
Income tax expense					8,931
Net income applicable to FB Financial Corporation and noncontrolling interest					31,831
Net income applicable to noncontrolling interest(3)					—
Net income applicable to FB Financial Corporation					$	31,831
Total assets	$	11,648,610	$	609,472	$	12,258,082
Goodwill	242,561		—		242,561

(1)Includes $3,178 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 September 30, 2021	Banking(3)		Mortgage		Consolidated
Net interest income	$	88,576	$	(100)	$	88,476
Provisions for credit losses(1)	(2,531)		—		(2,531)
Mortgage banking income(2)	—		47,751		47,751
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(2,367)		(2,367)
Other noninterest income	13,823		(201)		13,622
Depreciation and amortization	1,791		349		2,140
Amortization of intangibles	1,344		—		1,344
Other noninterest expense	55,642		35,881		91,523
Income before income taxes	$	46,153	$	8,853	$	55,006
Income tax expense					9,716
Net income applicable to FB Financial Corporation and noncontrolling  interest					45,290
Net income applicable to noncontrolling interest(3)					—
Net income applicable to FB Financial Corporation					$	45,290
Total assets	$	10,712,281	$	1,098,009	$	11,810,290
Goodwill	242,561		—		242,561

(1) Includes $301 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.

Nine Months Ended September  30, 2022	Banking(4)		Mortgage		Consolidated
Net interest income	$	301,739	$	(2)	$	301,737
Provisions for credit losses(1)	19,438		—		19,438
Mortgage banking income(2)	—		69,718		69,718
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(5,244)		(5,244)
Other noninterest income	32,975		(251)		32,724
Depreciation and amortization	5,308		797		6,105
Amortization of intangibles	3,546		—		3,546
Other noninterest expense(3)	175,936		82,529		258,465
Income (loss) before income taxes	$	130,486	$	(19,105)	$	111,381
Income tax expense					24,961
Net income applicable to FB Financial Corporation and noncontrolling interest					86,420
Net income applicable to noncontrolling interest(4)					8
Net income applicable to FB Financial Corporation					$	86,412
Total assets	$	11,648,610	$	609,472	$	12,258,082
Goodwill	242,561		—		242,561

(1) Includes $9,197 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.

Nine Months Ended September 30, 2021	Banking(3)		Mortgage		Consolidated
Net interest income	$	257,726	$	(111)	$	257,615
Provisions for credit losses(1)	(30,224)		—		(30,224)
Mortgage banking income(2)	—		146,990		146,990
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(10,775)		(10,775)
Other noninterest income	39,223		(402)		38,821
Depreciation and amortization	5,267		1,021		6,288
Amortization of intangibles	4,178		—		4,178
Other noninterest expense(3)	163,261		108,938		272,199
Income before income taxes	$	154,467	$	25,743	$	180,210
Income tax expense					38,744
Net income applicable to FB Financial Corporation and noncontrolling interest					141,466
Net income applicable to noncontrolling interest(3)					8
Net income applicable to FB Financial Corporation					$	141,458
Total assets	$	10,712,281	$	1,098,009	$	11,810,290
Goodwill	242,561		—		242,561

(1)Includes $(2,875) 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.

The Banking segment provides the 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 the Mortgage segment to the Banking segment under this warehouse line of credit is recorded as interest income to our Banking segment and as interest expense to the Mortgage segment, both of which are included in the calculation of net interest income for each segment. The amount of interest paid by the Mortgage segment to the Banking segment under this warehouse line of credit was $4,143 and $14,659 for the three and nine months ended September 30, 2022, respectively, and $6,075 and $17,585 for the three and nine months ended September 30, 2021, respectively.