Segment Reporting

9 Months Ended

Sep. 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 its Mortgage segment, whose activities also include the servicing of residential mortgage loans and the packaging and securitization of loans to third party private investors or government sponsored agencies.

The financial performance of the Mortgage segment is assessed based on results of operations reflecting direct revenues and expenses and allocated expenses. Management feels this approach provides a better indication of the operating performance of this segment. When assessing the Banking segment’s financial performance, the CEO utilizes reports with indirect revenues and expenses including the core banking business as well as 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 reporting. Additionally, the Banking segment includes the results of the Company's specialty lending group, which is focuses on 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. There is no comprehensive, authoritative body of guidance for management accounting equivalent to GAAP; therefore, the financial results of the Company's individual segments are not necessarily comparable with similar information reported by other financial institutions.

During the second quarter of 2022, the Mortgage segment exited the direct-to-consumer internet delivery channel, resulting in the recognition of $12,458 of restructuring expenses during the nine months ended September 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 and retain mortgage servicing rights within its Mortgage segment through its retail channel, 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Interest rate lock commitment volume by delivery    channel:
Direct-to-consumer	$	—	$	—	$	—	$	663,848
Retail	373,068		408,879		1,151,061		1,755,008
Total	$	373,068	$	408,879	$	1,151,061	$	2,418,856
Mortgage loan sales	$	325,321	$	569,655	$	987,954	$	2,723,825

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

Three Months Ended September 30, 2023	Banking(2)		Mortgage		Consolidated
Net interest income	$	100,926	$	—	$	100,926
Provisions for credit losses	2,821		—		2,821
Mortgage banking income	—		15,722		15,722
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(3,724)		(3,724)
Other noninterest income	(4,031)		75		(3,956)
Depreciation and amortization	2,514		167		2,681
Amortization of intangibles	889		—		889
Other noninterest expense	67,571		11,856		79,427
Income before income taxes	$	23,100	$	50	$	23,150
Income tax expense					3,975
Net income applicable to FB Financial Corporation and noncontrolling interest					19,175
Net income applicable to noncontrolling interest(2)					—
Net income applicable to FB Financial Corporation					$	19,175
Total assets	$	11,900,598	$	589,033	$	12,489,631
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 September 30, 2022	Banking(2)		Mortgage		Consolidated
Net interest income	$	111,384	$	—	$	111,384
Provisions for credit losses	11,367		—		11,367
Mortgage banking income	—		16,729		16,729
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(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(2)					—
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) 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.

Nine Months Ended September 30, 2023	Banking(2)		Mortgage		Consolidated
Net interest income	$	306,129	$	—	$	306,129
Provisions for credit losses	2,234		—		2,234
Mortgage banking income	—		47,669		47,669
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(11,353)		(11,353)
Other noninterest income	18,942		(54)		18,888
Depreciation and amortization	6,783		578		7,361
Amortization of intangibles	2,819		—		2,819
Other noninterest expense	197,375		37,174		234,549
Income (loss) before income taxes	$	115,860	$	(1,490)	$	114,370
Income tax expense					23,507
Net income applicable to FB Financial Corporation and noncontrolling interest					90,863
Net income applicable to noncontrolling interest(2)					8
Net income applicable to FB Financial Corporation					$	90,855
Total assets	$	11,900,598	$	589,033	$	12,489,631
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.

Nine Months Ended September 30, 2022	Banking(3)		Mortgage		Consolidated
Net interest income	$	301,739	$	(2)	$	301,737
Provisions for credit losses	19,438		—		19,438
Mortgage banking income	—		69,718		69,718
Change in fair value of mortgage servicing rights, net of hedging(1)	—		(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(2)	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(3)					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)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 originate mortgage loans until those mortgage loans can be sold at which time the warehouse line of credit is repaid. 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 $4,033 and $12,283 for the three and nine months ended September 30, 2023, respectively, and $4,143 and $14,659 for the three and nine months ended September 30, 2022, respectively.