Segment Reporting

6 Months Ended

Jun. 30, 2023

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 originates 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.

During the second quarter of 2022, the Company exited the direct-to-consumer internet delivery channel, which was 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 three and six months ended June 30, 2022. The repositioning of the Mortgage segment did not qualify to be reported as discontinued operations. The Company continues to originate and sell residential mortgage loans within its Mortgage segment through its traditional mortgage retail channel, retain mortgage servicing rights and continues to hold residential mortgage loans in the loan HFI portfolio.

Interest rate lock commitment volume and sales volume included in the Mortgage segment are as follows for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Interest rate lock commitment volume by delivery    channel:
Direct-to-consumer	$	—	$	95,756	$	—	$	663,848
Retail	402,951		605,114		777,993		1,346,129
Total	$	402,951	$	700,870	$	777,993	$	2,009,977
Mortgage loan sales	$	330,326	$	869,688	$	662,633	$	2,154,170

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

Three Months Ended June 30, 2023	Banking(2)		Mortgage		Consolidated
Net interest income	$	101,543	$	—	$	101,543
Provisions for credit losses	(1,078)		—		(1,078)
Mortgage banking income	—		16,454		16,454
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(4,222)		(4,222)
Other noninterest income	11,480		101		11,581
Depreciation and amortization	2,220		232		2,452
Amortization of intangibles	940		—		940
Other noninterest expense	64,493		13,407		77,900
Income (loss) before income taxes	$	46,448	$	(1,306)	$	45,142
Income tax expense					9,835
Net income applicable to FB Financial Corporation and noncontrolling interest					35,307
Net income applicable to noncontrolling interest(2)					8
Net income applicable to FB Financial Corporation					$	35,299
Total assets	$	12,302,812	$	584,583	$	12,887,395
Goodwill	242,561		—		242,561

(1) 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.

(2) Banking segment includes noncontrolling interest.

Three Months Ended June 30, 2022	Banking(3)		Mortgage		Consolidated
Net interest income	$	102,171	$	—	$	102,171
Provisions for credit losses	12,318		—		12,318
Mortgage banking income	—		23,711		23,711
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(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(2)	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(3)					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) 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.

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

(3) Banking segment includes noncontrolling interest.

Six Months Ended June 30, 2023	Banking(2)		Mortgage		Consolidated
Net interest income	$	205,203	$	—	$	205,203
Provisions for credit losses	(587)		—		(587)
Mortgage banking income	—		31,947		31,947
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(7,629)		(7,629)
Other noninterest income	22,973		(129)		22,844
Depreciation and amortization	4,269		411		4,680
Amortization of intangibles	1,930		—		1,930
Other noninterest expense	129,804		25,318		155,122
Income (loss) before income taxes	$	92,760	$	(1,540)	$	91,220
Income tax expense					19,532
Net income applicable to FB Financial Corporation and noncontrolling interest					71,688
Net income applicable to noncontrolling interest(2)					8
Net income applicable to FB Financial Corporation					$	71,680
Total assets	$	12,302,812	$	584,583	$	12,887,395
Goodwill	242,561		—		242,561

(1) 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.

(2) Banking segment includes noncontrolling interest.

Six Months Ended June 30, 2022	Banking(3)		Mortgage		Consolidated
Net interest income	$	190,355	$	(2)	$	190,353
Provisions for credit losses	8,071		—		8,071
Mortgage banking income	—		52,989		52,989
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(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(2)	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(3)					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)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.

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

(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 the Company's 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 $4,319 and $8,250 for the three and six months ended June 30, 2023, respectively, and $4,850 and $10,516 for the three and six months ended June 30, 2022, respectively.