What changed in FB Financial Corp's 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of FB Financial Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+660 added−825 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-28)
Top changes in FB Financial Corp's 2023 10-K
660 paragraphs added · 825 removed · 463 edited across 1 sections
- Item 5. Market for Registrant's Common Equity+660 / −825 · 463 edited
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
463 edited+197 added−362 removed120 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
463 edited+197 added−362 removed120 unchanged
2022 filing
2023 filing
Biggest changeFranklin, Tennessee February 28, 2023 83 FB Financial Corporation and subsidiaries Consolidated balance sheets (Amounts are in thousands except share and per share amounts) December 31, 2022 2021 ASSETS Cash and due from banks $ 259,872 $ 91,333 Federal funds sold and reverse repurchase agreements 210,536 128,087 Interest-bearing deposits in financial institutions 556,644 1,578,320 Cash and cash equivalents 1,027,052 1,797,740 Investments: Available-for-sale debt securities, at fair value 1,471,186 1,678,525 Equity securities, at fair value 2,990 3,367 Federal Home Loan Bank stock, at cost 58,641 32,217 Loans held for sale (includes $113,240 and $752,223 at fair value, respectively) 139,451 752,223 Loans held for investment 9,298,212 7,604,662 Less: allowance for credit losses 134,192 125,559 Net loans held for investment 9,164,020 7,479,103 Premises and equipment, net 146,316 143,739 Other real estate owned, net 5,794 9,777 Operating lease right-of-use assets 60,043 41,686 Interest receivable 45,684 38,528 Mortgage servicing rights, at fair value 168,365 115,512 Goodwill 242,561 242,561 Core deposit and other intangibles, net 12,368 16,953 Bank-owned life insurance 75,329 73,519 Other assets 227,956 172,236 Total assets $ 12,847,756 $ 12,597,686 LIABILITIES Deposits Noninterest-bearing $ 2,676,631 $ 2,740,214 Interest-bearing checking 3,059,984 3,418,666 Money market and savings 3,697,245 3,546,936 Customer time deposits 1,420,131 1,103,594 Brokered and internet time deposits 1,843 27,487 Total deposits 10,855,834 10,836,897 Borrowings 415,677 171,778 Operating lease liabilities 69,754 46,367 Accrued expenses and other liabilities 180,973 109,949 Total liabilities 11,522,238 11,164,991 Commitments and contingencies (Note 16) SHAREHOLDERS' EQUITY Common stock, $1 par value per share; 75,000,000 shares authorized; 46,737,912 and 47,549,241 shares issued and outstanding, respectively 46,738 47,549 Additional paid-in capital 861,588 892,529 Retained earnings 586,532 486,666 Accumulated other comprehensive (loss) income, net (169,433) 5,858 Total FB Financial Corporation common shareholders' equity 1,325,425 1,432,602 Noncontrolling interest 93 93 Total equity 1,325,518 1,432,695 Total liabilities and shareholders' equity $ 12,847,756 $ 12,597,686 See the accompanying notes to the consolidated financial statements. 84 FB Financial Corporation and subsidiaries Consolidated statements of income ) (Amounts are in thousands, except per share amounts) 5 Years Ended December 31, 2022 2021 2020 Interest income: Interest and fees on loans $ 436,363 $ 359,262 $ 294,596 Interest on securities Taxable 25,469 15,186 10,267 Tax-exempt 7,332 7,657 7,076 Other 12,258 2,893 2,705 Total interest income 481,422 384,998 314,644 Interest expense: Deposits 56,642 30,189 42,859 Borrowings 12,545 7,439 6,127 Total interest expense 69,187 37,628 48,986 Net interest income 412,235 347,370 265,658 Provision for credit losses 10,393 (38,995) 94,606 Provision for credit losses on unfunded commitments 8,589 (1,998) 13,361 Net interest income after provisions for credit losses 393,253 388,363 157,691 Noninterest income: Mortgage banking income 73,580 167,565 255,328 Service charges on deposit accounts 12,049 10,034 9,160 ATM and interchange fees 15,600 19,900 14,915 Investment services and trust income 8,866 8,558 7,080 (Loss) gain from securities, net (376) 324 1,631 (Loss) gain on sales or write-downs of other real estate owned (114) 2,504 (1,491) (Loss) gain from other assets (151) 323 (90) Other income 5,213 19,047 15,322 Total noninterest income 114,667 228,255 301,855 Noninterest expenses: Salaries, commissions and employee benefits 211,491 248,318 233,768 Occupancy and equipment expense 23,562 22,733 18,979 Legal and professional fees 15,028 9,161 7,654 Data processing 9,315 9,987 11,390 Merger costs — — 34,879 Amortization of core deposit and other intangibles 4,585 5,473 5,323 Advertising 11,208 13,921 10,062 Mortgage restructuring expense 12,458 — — Other expense 60,699 63,974 55,030 Total noninterest expense 348,346 373,567 377,085 Income before income taxes 159,574 243,051 82,461 Income tax expense 35,003 52,750 18,832 Net income applicable to FB Financial Corporation and noncontrolling interest 124,571 190,301 63,629 Net income applicable to noncontrolling interest 16 16 8 Net income applicable to FB Financial Corporation $ 124,555 $ 190,285 $ 63,621 Earnings per common share Basic $ 2.64 $ 4.01 $ 1.69 Diluted 2.64 3.97 1.67 See the accompanying notes to the consolidated financial statements. 85 FB Financial Corporation and subsidiaries Consolidated statements of comprehensive (loss) income (Amounts are in thousands) Years Ended December 31, 2022 2021 2020 Net income $ 124,571 $ 190,301 $ 63,629 Other comprehensive (loss) income, net of tax: Net change in unrealized (loss) gain in available-for-sale securities, net of tax (benefits) expenses of $(62,316), $(7,224), and $5,781 (176,798) (22,475) 18,430 Reclassification adjustment for gain on sale of securities included in net income, net of tax expenses of $—, $33 and $348 (1) (93) (987) Net change in unrealized gain (loss) in hedging activities, net of tax expenses (benefits) of $532, $293 and $(363) 1,508 831 (1,031) Reclassification adjustment for gain on hedging activities, net of tax expenses of $—, $— and $337 — — (955) Total other comprehensive (loss) income, net of tax (175,291) (21,737) 15,457 Comprehensive (loss) income applicable to FB Financial Corporation and noncontrolling interest (50,720) 168,564 79,086 Comprehensive income applicable to noncontrolling interest 16 16 8 Comprehensive (loss) income applicable to FB Financial Corporation $ (50,736) $ 168,548 $ 79,078 See the accompanying notes to the consolidated financial statements. 86 FB Financial Corporation and subsidiaries Consolidated statements of changes in shareholders’ equity (Amounts are in thousands except per share amounts) Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss), net Total common shareholders' equity Noncontrolling interest Total shareholders' equity Balance at December 31, 2019 $ 31,034 $ 425,633 $ 293,524 $ 12,138 $ 762,329 $ — $ 762,329 Cumulative effect of change in accounting principle — — (25,018) — (25,018) — (25,018) Balance at January 1, 2020 $ 31,034 $ 425,633 $ 268,506 $ 12,138 $ 737,311 $ — $ 737,311 Net income attributable to FB Financial Corporation and noncontrolling interest — — 63,621 — 63,621 8 63,629 Other comprehensive income, net of taxes — — — 15,457 15,457 — 15,457 Common stock issued in connection with acquisition of FNB Financial Corp., net of registration costs (See Note 2) 955 33,892 — — 34,847 — 34,847 Common stock issued in connection with merger with Franklin Financial Network, Inc., net of registration costs (See Note 2) 15,058 429,815 — — 444,873 93 444,966 Stock based compensation expense 22 10,192 — — 10,214 — 10,214 Restricted stock units vested and distributed, net of shares withheld 123 (1,633) — — (1,510) — (1,510) Shares issued under employee stock purchase program 30 948 — — 978 — 978 Dividends declared ($0.36 per share) — — (14,502) — (14,502) — (14,502) Noncontrolling interest distribution — — — — — (8) (8) Balance at December 31, 2020 $ 47,222 $ 898,847 $ 317,625 $ 27,595 $ 1,291,289 $ 93 $ 1,291,382 Net income attributable to FB Financial Corporation and noncontrolling interest — — 190,285 — 190,285 16 190,301 Other comprehensive loss, net of taxes — — — (21,737) (21,737) — (21,737) Repurchase of common stock (179) (7,416) — — (7,595) — (7,595) Stock based compensation expense 7 10,275 — — 10,282 — 10,282 Restricted stock units vested and distributed, net of shares withheld 462 (10,620) — — (10,158) — (10,158) Shares issued under employee stock purchase program 37 1,443 — — 1,480 — 1,480 Dividends declared ($0.44 per share) — — (21,244) — (21,244) — (21,244) Noncontrolling interest distribution — — — — — (16) (16) Balance at December 31, 2021 $ 47,549 $ 892,529 $ 486,666 $ 5,858 $ 1,432,602 $ 93 $ 1,432,695 Net income attributable to FB Financial Corporation and noncontrolling interest — — 124,555 — 124,555 16 124,571 Other comprehensive loss, net of taxes — — — (175,291) (175,291) — (175,291) Repurchase of common stock (997) (38,982) — — (39,979) — (39,979) Stock based compensation expense 3 9,854 — — 9,857 — 9,857 Restricted stock units vested and distributed, net of shares withheld 156 (2,998) — — (2,842) — (2,842) Shares issued under employee stock purchase program 27 1,185 — — 1,212 — 1,212 Dividends declared ($0.52 per share) — — (24,689) — (24,689) — (24,689) Noncontrolling interest distribution — — — — — (16) (16) Balance at December 31, 2022 $ 46,738 $ 861,588 $ 586,532 $ (169,433) $ 1,325,425 $ 93 $ 1,325,518 See the accompanying notes to the consolidated financial statements. 87 FB Financial Corporation and subsidiaries Consolidated statements of cash flows (Amounts are in thousands) Years Ended December 31, 2022 2021 2020 Cash flows from operating activities: Net income applicable to FB Financial Corporation and noncontrolling interest $ 124,571 $ 190,301 $ 63,629 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization of fixed assets and software 8,017 8,416 7,536 Amortization of core deposit and other intangibles 4,585 5,473 5,323 Capitalization of mortgage servicing rights (20,809) (39,018) (47,025) Net change in fair value of mortgage servicing rights (32,044) 3,503 47,660 Stock-based compensation expense 9,857 10,282 10,214 Provision for credit losses 10,393 (38,995) 94,606 Provision for credit losses on unfunded commitments 8,589 (1,998) 13,361 Provision for mortgage loan repurchases (2,989) (766) 2,607 Amortization of premiums and accretion of discounts on acquired loans, net 1,020 853 (3,788) Amortization of premiums and accretion of discounts on securities, net 6,589 8,777 7,382 Loss (gain) from securities, net 376 (324) (1,631) Originations of loans held for sale (2,403,476) (6,300,892) (6,650,258) Repurchases of loans held for sale (194) (487) — Proceeds from sale of loans held for sale 3,067,204 6,387,110 6,487,809 Gain on sale and change in fair value of loans held for sale (47,783) (161,964) (270,802) Net loss (gain) or write-downs of other real estate owned 114 (2,504) 1,491 Loss (gain) on other assets 151 (323) 90 Provision for deferred income taxes 12,552 30,770 (25,530) Earnings on bank-owned life insurance (1,452) (1,542) (1,556) Changes in: Operating leases 5,030 (969) 2,664 Other assets and interest receivable (17,222) 59,283 (57,316) Accrued expenses and other liabilities 56,247 (100,108) 43,532 Net cash provided by (used in) operating activities 789,326 54,878 (270,002) Cash flows from investing activities: Activity in available-for-sale securities: Sales 1,218 8,855 146,494 Maturities, prepayments and calls 204,748 296,256 220,549 Purchases (242,889) (847,212) (424,971) Net change in loans (1,719,652) (457,042) 4,383 Net change in commercial loans held for sale 43,676 147,276 114,031 Sales of FHLB stock — 4,294 — Purchases of FHLB stock (26,424) (5,279) (515) Purchases of premises and equipment (10,629) (6,102) (5,934) Proceeds from the sale of premises and equipment 875 — — Proceeds from the sale of other real estate owned and other assets 4,959 9,396 6,937 Proceeds from bank-owned life insurance — — 715 Net cash acquired in business combinations — — 248,447 Net cash (used in) provided by investing activities (1,744,118) (849,558) 310,136 Cash flows from financing activities: Net (decrease) increase in demand deposits (262,109) 1,685,033 1,519,868 Net increase (decrease) in time deposits 290,893 (306,173) (328,035) Net increase in securities sold under agreements to repurchase and federal funds purchased 46,229 8,517 5,262 Payments on FHLB advances — — (250,000) Net increase in short-term FHLB advances 175,000 — — Issuance of subordinated debt, net of issuance costs — — 98,189 Payments on subordinated debt — (60,000) — Amortization of issuance costs and (accretion) of subordinated debt fair value premium, net 387 17 (397) (Payments on) proceeds from other borrowings — (15,000) 15,000 Share based compensation withholding payments (2,842) (10,158) (1,510) Net proceeds from sale of common stock under employee stock purchase program 1,212 1,480 978 Repurchase of common stock (39,979) (7,595) — Dividends paid on common stock (24,503) (20,866) (14,177) Dividend equivalent payments made upon vesting of equity compensation (168) (717) (87) Noncontrolling interest distribution (16) (16) (8) Net cash provided by financing activities 184,104 1,274,522 1,045,083 Net change in cash and cash equivalents (770,688) 479,842 1,085,217 Cash and cash equivalents at beginning of the period 1,797,740 1,317,898 232,681 Cash and cash equivalents at end of the period $ 1,027,052 $ 1,797,740 $ 1,317,898 Supplemental cash flow information: Interest paid $ 63,701 $ 41,238 $ 48,679 Taxes paid 906 61,693 20,419 Supplemental noncash disclosures: Transfers from loans to other real estate owned $ 1,437 $ 5,262 $ 2,746 Transfers from other real estate owned to premises and equipment 351 — 841 Loans provided for sales of other real estate owned — 704 305 Transfers from loans to loans held for sale 46,364 10,408 11,483 Transfers from loans held for sale to loans 24,479 86,315 55,766 Rebooked GNMA loans under optional repurchase program 26,211 — — Stock consideration paid in business combination — — 480,867 Dividends declared not paid on restricted stock units 222 400 238 Decrease to retained earnings for adoption of ASU 2016-13 — — 25,018 Right-of-use assets obtained in exchange for operating lease liabilities 25,399 970 2,393 See the accompanying notes to the consolidated financial statements. 88 FB Financial Corporation and subsidiaries Notes to consolidated financial statements (Unaudited) (Dollar amounts are in thousands, except share and per share amounts) Note (1)—Basis of presentation: (A) Organization and Company overview: FB Financial Corporation is a financial holding company headquartered in Nashville, Tennessee.
Biggest changeFranklin, Tennessee February 27, 2024 81 FB Financial Corporation and subsidiaries Consolidated balance sheets (Amounts are in thousands except share and per share amounts) December 31, 2023 2022 ASSETS Cash and due from banks $ 146,542 $ 259,872 Federal funds sold and reverse repurchase agreements 83,324 210,536 Interest-bearing deposits in financial institutions 581,066 556,644 Cash and cash equivalents 810,932 1,027,052 Investments: Available-for-sale debt securities, at fair value 1,471,973 1,471,186 Equity securities, at fair value — 2,990 Federal Home Loan Bank stock, at cost 34,190 58,641 Loans held for sale (includes $46,618 and $113,240 at fair value, respectively) 67,847 139,451 Loans held for investment 9,408,783 9,298,212 Less: allowance for credit losses on loans HFI 150,326 134,192 Net loans held for investment 9,258,457 9,164,020 Premises and equipment, net 155,731 146,316 Operating lease right-of-use assets 54,295 60,043 Interest receivable 52,715 45,684 Mortgage servicing rights, at fair value 164,249 168,365 Bank-owned life insurance 76,143 75,329 Other real estate owned, net 3,192 5,794 Goodwill 242,561 242,561 Core deposit and other intangibles, net 8,709 12,368 Other assets 203,409 227,956 Total assets $ 12,604,403 $ 12,847,756 LIABILITIES Deposits Noninterest-bearing $ 2,218,382 $ 2,676,631 Interest-bearing checking 2,504,421 3,059,984 Money market and savings 4,204,851 3,697,245 Customer time deposits 1,469,811 1,420,131 Brokered and internet time deposits 150,822 1,843 Total deposits 10,548,287 10,855,834 Borrowings 390,964 415,677 Operating lease liabilities 67,643 69,754 Accrued expenses and other liabilities 142,622 180,973 Total liabilities 11,149,516 11,522,238 SHAREHOLDERS' EQUITY Common stock, $1 par value per share; 75,000,000 shares authorized; 46,848,934 and 46,737,912 shares issued and outstanding, respectively 46,849 46,738 Additional paid-in capital 864,258 861,588 Retained earnings 678,412 586,532 Accumulated other comprehensive loss, net (134,725) (169,433) Total FB Financial Corporation common shareholders' equity 1,454,794 1,325,425 Noncontrolling interest 93 93 Total equity 1,454,887 1,325,518 Total liabilities and shareholders' equity $ 12,604,403 $ 12,847,756 See the accompanying notes to the consolidated financial statements. 82 FB Financial Corporation and subsidiaries Consolidated statements of income (Amounts are in thousands, except per share amounts) 5 Years Ended December 31, 2023 2022 2021 Interest income: Interest and fees on loans $ 599,195 $ 436,363 $ 359,262 Interest on investment securities Taxable 27,257 25,469 15,186 Tax-exempt 7,153 7,332 7,657 Other 44,805 12,258 2,893 Total interest income 678,410 481,422 384,998 Interest expense: Deposits 258,819 56,642 30,189 Borrowings 12,374 12,545 7,439 Total interest expense 271,193 69,187 37,628 Net interest income 407,217 412,235 347,370 Provision for (reversal of) credit losses on loans HFI 16,738 10,393 (38,995) (Reversal of) provision for credit losses on unfunded commitments (14,199) 8,589 (1,998) Net interest income after provision for (reversal of) credit losses 404,678 393,253 388,363 Noninterest income: Mortgage banking income 44,692 73,580 167,565 Service charges on deposit accounts 12,154 12,049 10,034 Investment services and trust income 11,320 8,866 8,558 ATM and interchange fees 10,282 15,600 19,900 (Loss) gain from investment securities, net (13,973) (376) 324 (Loss) gain on sales or write-downs of other real estate owned and other assets (27) (265) 2,827 Other income 6,095 5,213 19,047 Total noninterest income 70,543 114,667 228,255 Noninterest expenses: Salaries, commissions and employee benefits 203,441 211,491 248,318 Occupancy and equipment expense 28,148 23,562 22,733 Data processing 9,230 9,315 9,987 Legal and professional fees 8,890 15,028 9,161 Advertising 8,267 11,208 13,921 Amortization of core deposit and other intangibles 3,659 4,585 5,473 Mortgage restructuring expense — 12,458 — Other expense 63,294 60,699 63,974 Total noninterest expense 324,929 348,346 373,567 Income before income taxes 150,292 159,574 243,051 Income tax expense 30,052 35,003 52,750 Net income applicable to FB Financial Corporation and noncontrolling interest 120,240 124,571 190,301 Net income applicable to noncontrolling interest 16 16 16 Net income applicable to FB Financial Corporation $ 120,224 $ 124,555 $ 190,285 Earnings per common share: Basic $ 2.57 $ 2.64 $ 4.01 Diluted 2.57 2.64 3.97 See the accompanying notes to the consolidated financial statements. 83 FB Financial Corporation and subsidiaries Consolidated statements of comprehensive income (loss) (Amounts are in thousands) Years Ended December 31, 2023 2022 2021 Net income $ 120,240 $ 124,571 $ 190,301 Other comprehensive income (loss), net of tax: Net unrealized gain (loss) in available-for-sale securities, net of tax expense (benefit) of $8,706, $(62,316), and $(7,224) 24,802 (176,798) (22,475) Reclassification adjustment for loss (gain) on sale of securities included in net income, net of tax benefit (expense) of $3,668, $—, and $(33) 10,406 (1) (93) Net unrealized (loss) gain in hedging activities, net of tax (benefit) expense of $(176), $532, and $293 (500) 1,508 831 Total other comprehensive income (loss), net of tax 34,708 (175,291) (21,737) Comprehensive income (loss) applicable to FB Financial Corporation and noncontrolling interest 154,948 (50,720) 168,564 Comprehensive income applicable to noncontrolling interest 16 16 16 Comprehensive income (loss) applicable to FB Financial Corporation $ 154,932 $ (50,736) $ 168,548 See the accompanying notes to the consolidated financial statements. 84 FB Financial Corporation and subsidiaries Consolidated statements of changes in shareholders’ equity (Amounts are in thousands except per share amounts) Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss), net Total common shareholders' equity Noncontrolling interest Total shareholders' equity Balance at December 31, 2020 $ 47,222 $ 898,847 $ 317,625 $ 27,595 $ 1,291,289 $ 93 $ 1,291,382 Net income attributable to FB Financial Corporation and noncontrolling interest — — 190,285 — 190,285 16 190,301 Other comprehensive loss, net of taxes — — — (21,737) (21,737) — (21,737) Repurchase of common stock (179) (7,416) — — (7,595) — (7,595) Stock based compensation expense 7 10,275 — — 10,282 — 10,282 Restricted stock units vested and distributed, net of shares withheld 462 (10,620) — — (10,158) — (10,158) Shares issued under employee stock purchase program 37 1,443 — — 1,480 — 1,480 Dividends declared and paid ($0.44 per share) — — (21,244) — (21,244) — (21,244) Noncontrolling interest distribution — — — — — (16) (16) Balance at December 31, 2021: $ 47,549 $ 892,529 $ 486,666 $ 5,858 $ 1,432,602 $ 93 $ 1,432,695 Net income attributable to FB Financial Corporation and noncontrolling interest — — 124,555 — 124,555 16 124,571 Other comprehensive loss, net of taxes — — — (175,291) (175,291) — (175,291) Repurchase of common stock (997) (38,982) — — (39,979) — (39,979) Stock based compensation expense 3 9,854 — — 9,857 — 9,857 Restricted stock units vested, net of taxes 156 (2,998) — — (2,842) — (2,842) Shares issued under employee stock purchase program 27 1,185 — — 1,212 — 1,212 Dividends declared and paid ($0.52 per share) — — (24,689) — (24,689) — (24,689) Noncontrolling interest distribution — — — — — (16) (16) Balance at December 31, 2022 $ 46,738 $ 861,588 $ 586,532 $ (169,433) $ 1,325,425 $ 93 $ 1,325,518 Net income attributable to FB Financial Corporation and noncontrolling interest — — 120,224 — 120,224 16 120,240 Other comprehensive income, net of taxes — — — 34,708 34,708 — 34,708 Repurchase of common stock (136) (4,808) — — (4,944) — (4,944) Stock based compensation expense 9 10,372 — — 10,381 — 10,381 Restricted stock units vested, net of taxes 149 (2,213) — — (2,064) — (2,064) Performance-based restricted stock units vested, net of taxes 68 (1,383) — — (1,315) — (1,315) Shares issued under employee stock purchase program 21 702 — — 723 — 723 Dividends declared and paid ($0.60 per share) — — (28,344) — (28,344) — (28,344) Noncontrolling interest distribution — — — — — (16) (16) Balance at December 31, 2023 $ 46,849 $ 864,258 $ 678,412 $ (134,725) $ 1,454,794 $ 93 $ 1,454,887 See the accompanying notes to the consolidated financial statements. 85 FB Financial Corporation and subsidiaries Consolidated statements of cash flows (Amounts are in thousands) Years Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income applicable to FB Financial Corporation and noncontrolling interest $ 120,240 $ 124,571 $ 190,301 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of fixed assets and software 11,180 8,017 8,416 Amortization of core deposit and other intangibles 3,659 4,585 5,473 Amortization of issuance costs on subordinated debt and accretion of subordinated debt fair value premium, net 387 387 17 Capitalization of mortgage servicing rights (7,192) (20,809) (39,018) Net change in fair value of mortgage servicing rights 11,308 (32,044) 3,503 Stock-based compensation expense 10,381 9,857 10,282 Provision for (reversal of) credit losses on loans HFI 16,738 10,393 (38,995) (Reversal of) provision for credit losses on unfunded commitments (14,199) 8,589 (1,998) Provision for mortgage loan repurchases (650) (2,989) (766) (Accretion) amortization of discounts and premiums on acquired loans, net (694) 1,020 853 Amortization (accretion) of premiums and discounts on securities, net 6,106 6,589 8,777 Loss (gain) from investment securities, net 13,973 376 (324) Originations of loans held for sale (1,199,362) (2,403,476) (6,300,892) Repurchases of loans held for sale — (194) (487) Proceeds from sale of loans held for sale 1,276,596 3,067,204 6,387,110 Gain on sale and change in fair value of loans held for sale (28,541) (47,783) (161,964) Net loss (gain) on write-downs of other real estate owned and other assets 27 265 (2,827) Provision for deferred income taxes (1,415) 12,552 30,770 Earnings on bank-owned life insurance (1,871) (1,452) (1,542) Changes in: Operating lease assets and liabilities, net 3,637 5,030 (969) Other assets and interest receivable 6,564 (17,222) 59,283 Accrued expenses and other liabilities (15,800) 56,247 (100,108) Net cash provided by operating activities 211,072 789,713 54,895 Cash flows from investing activities: Activity in available-for-sale securities: Sales 100,463 1,218 8,855 Maturities, prepayments and calls 128,206 204,748 296,256 Purchases (202,054) (242,889) (847,212) Proceeds from sales of equity securities 3,091 — — Net change in loans (97,302) (1,675,976) (309,766) Sales of FHLB stock 32,444 — 4,294 Purchases of FHLB stock (7,993) (26,424) (5,279) Purchases of premises and equipment (20,229) (10,629) (6,102) Proceeds from the sale of premises and equipment 123 875 — Proceeds from the sale of other real estate owned 6,083 4,959 9,396 Proceeds from the sale of other assets 1,717 — — Proceeds from bank-owned life insurance 236 — — Net cash used in investing activities (55,215) (1,744,118) (849,558) Cash flows from financing activities: Net (decrease) increase in deposits (312,897) 28,784 1,378,860 Net increase in securities sold under agreements to repurchase and federal funds purchased 21,819 46,229 8,517 Net (decrease) increase in short-term FHLB advances and Bank Term Funding Program (45,000) 175,000 — Payments on subordinated debt — — (60,000) Payments on other borrowings — — (15,000) Share based compensation withholding payments (3,379) (2,842) (10,158) Net proceeds from sale of common stock under employee stock purchase program 723 1,212 1,480 Repurchase of common stock (4,944) (39,979) (7,595) Dividends paid on common stock (28,057) (24,503) (20,866) Dividend equivalent payments made upon vesting of equity compensation (226) (168) (717) Noncontrolling interest distribution (16) (16) (16) Net cash (used in) provided by financing activities (371,977) 183,717 1,274,505 Net change in cash and cash equivalents (216,120) (770,688) 479,842 Cash and cash equivalents at beginning of the period 1,027,052 1,797,740 1,317,898 Cash and cash equivalents at end of the period $ 810,932 $ 1,027,052 $ 1,797,740 86 FB Financial Corporation and subsidiaries Consolidated statements of cash flows (continued) (Amounts are in thousands) Years Ended December 31, 2023 2022 2021 Supplemental cash flow information: Interest paid $ 261,032 $ 63,701 $ 41,238 Taxes paid, net 37,937 906 61,693 Supplemental noncash disclosures: Transfers from loans to other real estate owned $ 2,736 $ 1,437 $ 5,262 Transfers from loans to other assets 2,925 — — Transfers from other real estate owned to other assets 75 — — Transfers from other real estate owned to premises and equipment — 351 — Loans provided for sales of other real estate owned — — 704 Loans provided for sales of other assets 911 — — Transfers from loans to loans held for sale 13,720 46,364 10,408 Transfers from loans held for sale to loans 3,273 24,479 86,315 (Decrease) increase in rebooked GNMA loans under optional repurchase program (4,982) 26,211 — Dividends declared not paid on restricted stock units 287 222 400 Right-of-use assets obtained in exchange for operating lease liabilities 7,300 25,399 970 See the accompanying notes to the consolidated financial statements. 87 FB Financial Corporation and subsidiaries Notes to consolidated financial statements (Dollar amounts are in thousands, except share and per share amounts) Note (1)—Basis of presentation (A) Organization and Company overview FB Financial Corporation (the “Company”) is a financial holding company headquartered in Nashville, Tennessee.
Noninterest income for the year ended December 31, 2022 decreased by $113.6 million to $114.7 million, down from $228.3 million for prior year period.
Noninterest income for the year ended December 31, 2022 decreased by $113.6 million to $114.7 million, down from $228.3 million for the prior year period.
Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Our lending activity is heavily concentrated in the geographic market areas we serve, with highest concentration in Tennessee.
Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Our lending activity is heavily concentrated in the geographic market areas we serve, with the highest concentration in Tennessee.
Our commercial real estate non-owner occupied loans include loans to finance commercial real estate non-owner occupied investment properties for various purposes including use as offices, warehouses, health care facilities, hotels, mixed-use residential/commercial, manufactured housing communities, retail centers, multifamily properties, assisted living facilities and agricultural based facilities.
Our commercial real estate non-owner occupied loans include loans to finance commercial real estate investment properties for various purposes including use as offices, warehouses, health care facilities, hotels, mixed-use residential/commercial, manufactured housing communities, retail centers, multifamily properties, assisted living facilities and agricultural based facilities.
Management’s determination of the appropriateness of the allowance is based on periodic evaluation of the loan portfolio, lending-related commitments and other relevant factors, including macroeconomic forecasts and historical loss rates. In future quarters, the Company may update information and forecasts that may cause significant changes in the estimate in those future quarters.
Management’s determination of the appropriateness of the allowance is based on periodic evaluation of the loan portfolio, lending-related commitments and other relevant factors, including macroeconomic forecasts and historical loss rates. In the future, the Company may update information and forecasts that may cause significant changes in the estimate in those future quarters.
The majority of the investment portfolio was either government guaranteed or an issuance of a government sponsored entity or highly rated by major credit rating agencies and the Company has historically not recorded any losses associated with these investments.
The majority of the investment portfolio was either government guaranteed, an issuance of a government sponsored entity or highly rated by major credit rating agencies, and the Company has historically not recorded any credit losses associated with these investments.
In accordance with the SEC's rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows.
In accordance with the SEC's rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our consolidated statements of income, balance sheets or statements of cash flows.
If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the expected credit loss recognized in earnings is equal to the entire difference between its amortized cost basis and its fair value at the date it was determined to be impaired due to credit losses or other factors.
If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the expected credit loss recognized in earnings is equal to the difference between its amortized cost basis and its fair value at the date it was determined to be impaired due to credit losses or other factors.
Rent expense and variable lease expense are included in occupancy and equipment expense on the Company's Consolidated statements of income. The Company's variable lease expense include rent escalators that are based on the Consumer Price Index or market conditions and include items such as common area maintenance, utilities, parking, property taxes, insurance and other costs associated with the lease.
Rent expense and variable lease expense are included in occupancy and equipment expense on the Company's consolidated statements of income. The Company's variable lease expense includes rent escalators that are based on the Consumer Price Index or market conditions and include items such as common area maintenance, utilities, parking, property taxes, insurance and other costs associated with the lease.
The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of ASU No. 2022-01 for any entity that has adopted the amendments in ASU No.2017-12 for the corresponding period.
The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of ASU 2022-01 for any entity that has adopted the amendments in ASU 2017-12 for the corresponding period.
Liquidity and capital resources Bank liquidity management We are expected to maintain adequate liquidity at the Bank to meet the cash flow requirements of clients who may be either depositors wishing to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs.
Liquidity and capital resources We are expected to maintain adequate liquidity at the Bank to meet the cash flow requirements of clients who may be either depositors wishing to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs.
Under the terms of the award, the number of units that will vest and convert to shares of common stock will be based on the extent to which the Company achieves specified performance criteria relative to a predefined peer group during a fixed three-year performance period.
Under the terms of a PSU award, the number of units that will vest and convert to shares of common stock will be based on the extent to which the Company achieves specified performance criteria relative to a predefined peer group during a fixed three-year performance period.
Investment securities valued using quoted market prices of similar instruments or that are valued using matrix pricing are classified as Level 2. When significant inputs to the valuation are unobservable, the available-for-sale securities are classified within Level 3 of the fair value hierarchy.
Investment securities valued using quoted market prices of similar instruments or that are valued using matrix pricing are classified as Level 2. When significant inputs to the valuation are unobservable, the available-for-sale debt securities are classified within Level 3 of the fair value hierarchy.
The adjustment to convert certain income to a tax-equivalent basis consists of dividing tax exempt income by one minus the combined federal and blended state statutory income tax rate of 26.06% for the years ended December 31, 2022 and 2021.
The adjustment to convert certain income to a tax-equivalent basis consists of dividing tax-exempt income by one minus the combined federal and blended state statutory income tax rate of 26.06% for the years ended December 31, 2023, 2022, and 2021.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 82 Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 80 Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
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 is recorded as interest income to the 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 purchase authorizations granted under the new repurchase plan will terminate either on the date on which the maximum dollar amount is repurchased under the new repurchase plan or on January 31, 2024, whichever date occurs earlier.
The purchase authorizations granted under the repurchase plan will terminate either on the date on which the maximum dollar amount is repurchased under the repurchase plan or on January 31, 2024, whichever date occurs earlier.
Other comprehensive income includes unrealized gains and losses on available-for-sale securities and derivatives designated as cash flow hedges, net of taxes. (V) Loss contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
Other comprehensive income includes unrealized gains and losses on available-for-sale securities and derivatives designated as cash flow hedges, net of taxes. (S) Loss contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
The level of net interest income is primarily a function of the 41 average balance of interest-earning assets, the average balance of interest-bearing liabilities and the spread between the contractual yield on such assets and the contractual cost of such liabilities.
The level of net interest income is primarily a function of the average balance of interest-earning assets, the average balance of interest-bearing liabilities and the spread between the contractual yield on such assets and the contractual cost of such liabilities.
Our current financial position is combined with assumptions regarding future business to calculate net interest income under varying hypothetical rate scenarios. Economic Value of Equity measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time.
Our current financial position is combined with assumptions regarding future business to calculate net interest income under varying hypothetical rate scenarios. EVE measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Note (18)—Fair value of financial instruments: FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Note (16)—Fair value of financial instruments FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Our Liquidity Policy is intended to cause the Bank to maintain adequate liquidity and, therefore, enhance our ability to raise funds to support asset growth, meet deposit withdrawals and lending needs, maintain reserve requirements and otherwise sustain our operations. We accomplish this through management of the maturities of our interest-earning assets and interest-bearing liabilities.
Our Liquidity Policy is intended to cause the Bank to maintain adequate liquidity and, therefore, enhance our ability to raise funds to support asset growth, meet deposit withdrawals and lending needs and otherwise sustain our operations. We accomplish this through management of the maturities of our interest-earning assets and interest-bearing liabilities.
GAAP reconciliation and management explanation of non-GAAP financial measures We identify certain financial measures discussed in this Report as being "non-GAAP financial measures." The non-GAAP financial measures presented in this Report are adjusted efficiency ratio (tax equivalent basis), tangible book value per common share, tangible common equity to tangible assets and return on average tangible common equity.
GAAP reconciliation and management explanation of non-GAAP financial measures We identify certain financial measures discussed in this Report as being “non-GAAP financial measures.” The non-GAAP financial measures presented in this Report are adjusted efficiency ratio (tax-equivalent basis), tangible book value per common share, tangible common equity to tangible assets and return on average tangible common equity.
Loan losses are charged against the allowance when we believe the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses is based on the loan's amortized cost basis, excluding accrued interest receivable, as we promptly charge off accrued interest receivable determined to be uncollectible.
Loan losses are charged against the allowance when we believe the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses is based on the loan's amortized cost basis, excluding accrued interest receivable, as we promptly charge off uncollectible accrued interest receivable.
The Pass category also includes commercial loans rated as Watch, which include those that management believes have conditions that have occurred, or may occur, which could result in the loan being downgraded to an inferior category. Special Mention. Loans rated Special Mention are those that have potential weakness that deserve management’s close attention.
The Pass category also includes commercial loans rated as Watch, which include those that management believes have conditions that have occurred, or may occur, which could result in the loan being downgraded to an inferior category. Special Mention. Loans rated Special Mention are those that have potential weaknesses that deserve management’s close attention.
Note (15)—Dividend restrictions: Due to regulations of the Tennessee Department of Financial Institutions, the Bank may not declare dividends in any calendar year that exceeds the total of its net income of that year combined with its retained net income of the preceding two years without the prior approval of the TDFI Commissioner.
Note (13)—Dividend restrictions Due to regulations of the Tennessee Department of Financial Institutions, the Bank may not declare dividends in any calendar year that exceeds the total of its net income of that year combined with its retained net income of the preceding two years without the prior approval of the TDFI Commissioner.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders of Record FB Financial Corporation's common stock is traded on the New York Stock Exchange under the symbol "FBK" and has traded on that market since September 16, 2016.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders of Record FB Financial Corporation's common stock is traded on the New York Stock Exchange under the symbol “FBK” and has traded on that market since September 16, 2016.
In making the assessment, management used the “Internal Control — Integrated Framework” promulgated by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment management has determined that, as of December 31, 2022, the Company's internal control over financial reporting is effective based on the COSO 2013 framework.
In making the assessment, management used the “Internal Control — Integrated Framework” promulgated by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment management has determined that, as of December 31, 2023, the Company's internal control over financial reporting is effective based on the COSO 2013 framework.
The quantitative models require loan data and macroeconomic variables based on the inherent credit risks in each portfolio to more accurately measure the credit risks associated with each. Each of the quantitative models pools loans with similar risk characteristics and collectively assesses the lifetime loss rate for each pool to estimate its expected credit loss.
The quantitative models require loan data and macroeconomic variables based on the inherent credit risks in each portfolio to more accurately measure the credit risks associated with each. The quantitative models pool loans with similar risk characteristics and collectively assesses the lifetime loss rate for each pool to estimate its expected credit loss.
Holding company liquidity management The Company is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. The Company’s main source of funding is dividends declared and paid to it by the Bank. Statutory and regulatory limitations exist that affect the ability of the Bank to pay dividends to the Company.
The Company is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. The Company’s main source of funding is dividends declared and paid by the Bank to the Company. Statutory and regulatory limitations exist that affect the ability of the Bank to pay dividends to the Company.
(2) The percentage change in this column represents our EVE in a stable interest rate environment versus EVE in the various rate scenarios. The results for the net interest income simulations as of December 31, 2022 and 2021 resulted in an asset sensitive position.
(2) The percentage change in this column represents our EVE in a stable interest rate environment versus EVE in the various rate scenarios. The results for the net interest income simulations as of December 31, 2023 and 2022 resulted in an asset sensitive position.
Adjusted efficiency ratio (tax equivalent basis) The adjusted efficiency ratio (tax equivalent basis) is a non-GAAP measure that excludes certain gains (losses), merger and offering-related expenses and other selected items. Our management uses this measure in its analysis of our performance.
Core efficiency ratio (tax-equivalent basis) The core efficiency ratio (tax-equivalent basis) is a non-GAAP measure that excludes certain gains (losses), merger and offering-related expenses and other selected items. Our management uses this measure in its analysis of our performance.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2022.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2023.
The Company's loss rate models estimate the lifetime loss rate for pools of loans by combining the calculated loss rate based on each variable within the model (including the macroeconomic variables). The lifetime loss rate for the pool is then multiplied by the loan balances to determine the expected credit losses on the pool.
The Company's loss rate models estimate the lifetime loss rate for the pools of loan segments by combining the calculated loss rate based on each variable within the model, including the macroeconomic variables. The lifetime loss rate for the pool is then multiplied by the loan balances to determine the expected credit losses on the pool.
The Company considers the need to qualitatively adjust its modeled quantitative expected credit loss estimate for information not already captured in the model loss estimation process. These qualitative factor adjustments may increase or decrease the Company’s estimate of expected credit losses.
The Company considers the need to qualitatively adjust its modeled quantitative expected credit loss estimate for information not otherwise captured in the model loss estimation process. These qualitative factor adjustments may increase or decrease the Company’s estimate of expected credit losses.
For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volumes and changes due to rates, with the changes in both volumes and rates allocated to these two categories based on the proportionate absolute changes in each category.
For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volume and changes due to interest rates, with the changes in both volume and interest rates allocated to these two categories based on the proportionate absolute changes in each category.
During the year ended December 31, 2022, the Company recorded $364 of lease impairment related to vacating two locations associated with restructuring the Company's Mortgage segment and recorded gains of $18 related to early lease terminations and modifications on other vacated locations.
During the year ended December 31, 2022, the Company recorded $364 of loss on lease modifications and terminations related to vacating two locations associated with restructuring the Company's Mortgage segment and recorded gains of $18 related to early lease terminations and modifications on other vacated locations.
We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
(L) Other real estate owned: Real estate acquired through, or in lieu of, loan foreclosure is initially recorded at fair value less the estimated cost to sell at the date of foreclosure, which may establish a new cost basis.
(K) Other real estate owned Real estate acquired through, or in lieu of, loan foreclosure is initially recorded at fair value less the estimated cost to sell at the date of foreclosure, which may establish a new cost basis.
Management strives to operate within the thresholds set forth above. When our ratios are in excess of one or both of these guidelines, banking regulators generally require an increased level of monitoring in these lending areas by management. The table below shows concentration ratios for the Bank and Company as of December 31, 2022 and 2021.
Management strives to operate within the thresholds set forth above. 54 When our ratios are in excess of one or both of these guidelines, banking regulators generally require an increased level of monitoring in these lending areas by management. The table below shows concentration ratios for the Bank and Company as of December 31, 2023 and 2022.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.
Losses due to the valuation of the property are included in gain (loss) on sales or write-downs of other real estate owned. (M) Leases: The Company leases certain banking, mortgage and operations locations.
Losses due to the valuation of the property are included in gain (loss) on sales or write-downs of other real estate owned. (L) Leases The Company leases certain banking, mortgage and operations locations.
These expenses include $10.0 million related to salaries, commissions and employee benefits expense, including severance and the acceleration of vesting on restricted stock units. Other components of this expense includes $1.1 million related to software license and maintenance fees, $0.4 million impairment of our operating lease right-of-use assets, and $0.9 million loss on disposal of fixed assets.
These expenses primarily include $10.0 million related to salaries, commissions and employee benefits expense, including the acceleration of vesting on restricted stock units. Other components of this expense include $1.1 million related to software license and maintenance fees, $0.4 million impairment of our operating lease right-of-use assets, and $0.9 million loss on disposal of fixed assets.
The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan modifications and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures.
The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan modifications and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables by year of origination in the vintage disclosures.
Management believes that these limitations will not impact the Company’s ability to meet its ongoing short-term cash obligations. For additional information regarding dividend restrictions, see the “Item 1. Business - Supervision and regulation,” "Item 1A. Risk Factors - Risks related to our 73 business" and " Item 5.
Management believes that these limitations will not impact the Company’s ability to meet its ongoing short-term cash obligations. For additional information regarding dividend restrictions, see the “Item 1. Business - Supervision and regulation,” “Item 1A. Risk Factors - Risks related to our business” and “Item 5.
ITEM 6 — [RESERVED] ITEM 7 — Management's discussion and analysis of financial condition and results of operations Overall Objective The following is a discussion of our financial condition at December 31, 2022 and 2021, and our results of operations for the years ended December 31, 2022 and 2021, and should be read in conjunction with our audited consolidated financial statements included elsewhere herein.
ITEM 6 — [RESERVED] 35 ITEM 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations Overall Objective The following is a discussion of our financial condition at December 31, 2023 and 2022, and our results of operations for the years ended December 31, 2023 and 2022, and should be read in conjunction with our audited consolidated financial statements included elsewhere herein.
Under FASB ASC Topic 860, “Transfers and Servicing,” this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional.
Under ASC 860, “Transfers and Servicing,” this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional.
The restricted stock unit awards and related expense are amortized over the required service period, if any. Compensation expense for PSUs is estimated each period based on the fair value of the stock at the grant date and the most probable outcome of the performance condition, adjusted for the passage of time within the vesting period of the awards.
The RSUs and related expense are amortized over the required service period, if any. Compensation expense for PSUs is estimated each period based on the fair value of the stock at the grant date and the most probable outcome of the performance condition, adjusted for the passage of time within the vesting period of the awards.
In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method", to expand the current single-layer method of electing hedge accounting to allow multiple hedged layers of a single closed portfolio under the method. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method.
In March 2022, the FASB issued ASU 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method,” to expand the current single-layer method of electing hedge accounting to allow multiple hedged layers of a single closed portfolio under the method. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method.
Additionally, based upon management's assessment, the Company determined that there were no material weaknesses in its internal control over financial reporting as of December 31, 2022.
Additionally, based upon management's assessment, the Company determined that there were no material weaknesses in its internal control over financial reporting as of December 31, 2023.
A decrease in EVE due to a specified rate change indicates a 78 decline in the long-term earnings capacity of the balance sheet assuming that the rate change remains in affect over the life of the current balance sheet. For purposes of calculating EVE, a zero percent floor is assumed on discount factors.
A decrease in EVE due to a specified rate change indicates a decline in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet. For purposes of calculating EVE, a zero percent floor is assumed on discount factors.
Municipal securities with market values below amortized cost at December 31, 2022 were reviewed for material credit events and/or rating downgrades with individual credit reviews performed.
Municipal securities with market values below amortized cost at December 31, 2023 were reviewed for material credit events and/or rating downgrades with individual credit reviews performed.
The Company recognizes a right-of-use asset and a finance lease liability at the lease commencement dated on the estimated present value of lease payments over the lease term for finance leases.
The Company recognizes a right-of-use asset and a finance lease liability at the lease commencement date on the estimated present value of lease payments over the lease term for finance leases.
Note (17)—Derivatives: The Company utilizes derivative financial instruments as part of its ongoing efforts to manage its interest rate risk exposure as well as the exposure for its customers.
Note (15)—Derivatives The Company utilizes derivative financial instruments as part of its ongoing efforts to manage its interest rate risk exposure as well as interest rate exposure for its customers.
Certain of the Company’s derivative instruments are subject to master netting agreements, however the Company has not elected to offset such financial instruments in the consolidated balance sheets.
Certain of the Company’s derivative instruments are subject to master netting agreements, however the Company has not elected to offset such financial instruments on the consolidated balance sheets.
Stock-based compensation expense is recognized in accordance with ASC 718-20, “ Compensation – Stock Compensation Awards Classified as Equity”. Expense is recognized based on the fair value of the portion of stock-based payment awards that are ultimately expected to vest, reduced for forfeitures based on grant-date fair value.
Stock-based compensation expense is recognized in accordance with ASC 718-20, “Compensation – Stock Compensation Awards Classified as Equity.” Expense is recognized based on the fair value of the portion of stock-based payment awards that are ultimately expected to vest, reduced for forfeitures based on grant-date fair value.
Other real estate owned may also include excess facilities and properties held for sale as described in Note 7, "Other real estate owned". Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan.
Other real estate owned may also include excess facilities and properties held for sale as described in Note 5, “Other real estate owned.” Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan.
Banking regulators have established thresholds of less than 100% of tier 1 capital plus allowance for credit losses in construction lending and less than 300% of tier 1 capital plus allowance for credit losses in commercial real estate lending 58 that management monitors as part of the risk management process.
Banking regulators have established guidelines of less than 100% of tier 1 capital plus allowance for credit losses in construction lending and less than 300% of tier 1 capital plus allowance for credit losses in commercial real estate lending that management monitors as part of the risk management process.
The graph assumes an initial $100 investment on December 31, 2016 through December 31, 2022. Data for the S&P 500 and S&P 500 Bank Industry Group assumes reinvestment of dividends. Returns are shown on a total return basis. The performance graph represents past performance and should not be considered to be an indication of future performance.
The graph assumes an initial $100 investment on December 31, 2018 through December 31, 2023. Data for the S&P 500 and S&P 500 Bank Industry Group assumes reinvestment of dividends. Returns are shown on a total return basis. The performance graph represents past performance and should not be considered to be an indication of future performance.
The decrease was primarily attributable to the expiration of our temporary exemption from the Durbin amendment during the second half of the year ended December 31, 2022. The Durbin amendment limits the amount of interchange transaction fees that banks with asset sizes greater than $10 billion are permitted to charge retailers for debit card processing.
The decrease was primarily attributable to the expiration of our temporary exemption from the Durbin amendment during the second half of 2022. The Durbin amendment limits the amount of interchange transaction fees that banks with asset sizes greater than $10 billion are permitted to charge retailers for debit card processing.
Note (13)—Borrowings: The Company has access to various sources of funds that allow for management of interest rate exposure and liquidity.
Note (11)—Borrowings The Company has access to various sources of funds that allow for management of interest rate exposure and liquidity.
This geographic concentration subjects our loan portfolio to the general economic conditions within the state. The risks created by this concentration have been considered by management in the determination of the appropriateness of the allowance for credit losses.
This geographic concentration subjects our loan portfolio to the general economic conditions within the state. The risks created by this concentration have been considered by management in the determination of the appropriateness of the allowance for credit losses on loans HFI.
Additionally, as of December 31, 2022, the Company had $26,211 of government guaranteed GNMA loans that were greater than 90 days delinquent under their contractual terms that were eligible for optional repurchase and recorded in both loans HFS and other borrowings.
Additionally, as of December 31, 2023 and 2022, the Company had $21,229 and $26,211, respectively, of government guaranteed GNMA loans that were greater than 90 days delinquent under their contractual terms that were eligible for optional repurchase and recorded in both loans HFS and other borrowings.
FBK Aviation, LLC also maintains a non-exclusive aircraft lease agreement with an entity owned by one of the Company's directors. During the years ended December 31, 2022 and 2021, the Company recognized income amounting to $52 and $21, respectively, under this agreement.
FBK Aviation, LLC also maintains a non-exclusive aircraft lease agreement with an entity owned by one of the Company's directors. The Company recognized income of $28, $52, and $21 during the years ended December 31, 2023, 2022, and 2021, respectively, under this agreement.
This investment is included in other assets on the consolidated balance sheets with a carrying amount of $10,000 as of December 31, 2022 and is being accounted for as an equity security without readily determinable market value. No gains or losses have been recognized to date associated with this investment. 145 ITEM 9.
This investment is included in other assets on the consolidated balance sheets with a carrying amount of $10,000 as of both December 31, 2023 and 2022, and is being accounted for as an equity security without readily determinable market value. No gains or losses have been recognized to date associated with this investment.
Stock Performance Graph The performance graph and table below compares the cumulative total stockholder return on the common stock of the Company with the cumulative total return on the equity securities included in the Standard & Poor’s 500 Index (S&P 500), which reflects overall stock market performance and the S&P 500 Bank Industry Group, which is a GICS Level 2 industry group consisting of 18 regional and national publicly traded banks.
Stock Performance Graph The performance graph and table below compares the cumulative total stockholder return on the common stock of the Company with the cumulative total return on the equity securities included in the Standard & Poor’s 500 Index (S&P 500), which reflects overall stock market performance and the S&P 500 Bank Industry Group, which is a Global Industry Classification Standard Level 2 industry group consisting of 15 regional and national publicly traded banks.
Further discussion on the components of mortgage banking income and additional details related to the Mortgage restructuring are included under the subheadings 'Noninterest income' and 'Noninterest expense', respectively, included within this management's discussion and analysis. 48 Results of operations Throughout the following discussion of our operating results, we present our net interest income, net interest margin and efficiency ratio on a fully tax-equivalent basis.
Further discussion on the components of mortgage banking income and additional details related to the Mortgage restructuring are included under the subheadings “Noninterest income” and “Noninterest expense,” respectively, included within this management's discussion and analysis. 44 Results of operations Throughout the following discussion of our operating results, we present our net interest income, net interest margin and efficiency ratio on a fully tax-equivalent basis.
As of both December 31, 2022 and 2021, we also had an additional $50.0 million available through the IntraFi network, which allows us to offer banking customers access to FDIC insurance protection on deposits through our Bank which exceed FDIC insurance limits.
As of both December 31, 2023 and 2022, we also had $50.0 million available through the IntraFi network, which allows us to offer banking customers access to FDIC insurance protection on deposits through our Bank which exceed FDIC insurance limits.
Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2022, has been audited by Crowe LLP, an independent registered public accounting firm, as stated in their report which appears herein. 81 Report of Independent Registered Public Accounting Firm Shareholders and the Board of Directors of FB Financial Corporation Nashville, Tennessee Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of FB Financial Corporation (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive (loss) income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").
The effectiveness of the Company's internal control over financial reporting as of December 31, 2023, has been audited by Crowe LLP, an independent registered public accounting firm, as stated in their report which appears herein. 79 Report of Independent Registered Public Accounting Firm Shareholders and the Board of Directors of FB Financial Corporation Nashville, Tennessee Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of FB Financial Corporation (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive (loss) income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).
In cases where the expected credit loss can only be captured through a discounted cash flow analysis (such as an interest rate modification for a TDR loan), the allowance is measured by the amount which the loan’s amortized cost exceeds the discounted cash flow analysis.
In cases where the expected credit loss could only be captured through a discounted cash flow analysis (such as an interest rate modification for a TDR loan), the allowance was measured by the amount which the loan’s amortized cost exceeds the discounted cash flow analysis.
While there can be no such assurance that any increases or decreases in the federal funds rate will occur, these projections imply up to a 75 basis point increase in the federal funds rate during 2023, followed by a 100 basis point decrease in 2024.
While there can be no assurance that any increases or decreases in the federal funds rate will occur, these projections imply up to a 75 basis point decrease in the federal funds rate during 2024, followed by a 100 basis point decrease in 2025.
It is the Company’s policy to apply the Section 162(m) limitations to stock-based compensation first and then followed by cash compensation. As a result of the vesting of these units and cash compensation paid to date, the Company has disallowed a portion of its compensation paid to the applicable individuals.
It is the Company’s policy to apply the Section 162(m) limitations to stock-based compensation first followed by cash compensation. As a result of the vesting of this stock-based compensation and cash compensation paid to date, the Company has disallowed a portion of its compensation paid to the applicable individuals.
The current operating environment also has heightened supervisory expectations in areas such as consumer compliance, the Bank Secrecy Act and anti-money laundering compliance, risk 42 management and internal audit. We expect to incur increased costs for compliance, risk management and audit personnel or professional fees associated with advisors and consultants due the current economic environment.
The current operating environment also has heightened supervisory expectations in areas such as consumer compliance, BSA and anti-money laundering compliance, risk management and internal audit. We expect to incur increased costs for compliance, risk management and audit personnel or professional fees associated with advisors and consultants due the current economic environment.
As described further under “Business: Supervision and regulation,” we are subject to a variety of laws and regulations, including the Dodd-Frank Act. See also “Risk factors: Legal, regulatory and compliance risk”. Financial highlights The following table presents certain selected historical consolidated income statement data and key indicators as of the dates or for the years indicated.
As described further under “Business: Supervision and regulation,” we are subject to a variety of laws and regulations, including the Dodd-Frank Act. See also “Item 1A. Risk factors: Legal, regulatory and compliance risk.” 38 Financial highlights The following table presents certain selected historical consolidated income statement data and key indicators as of the dates or for the years indicated.
Investment portfolio Our investment portfolio objectives include maximizing total return after other primary objectives are achieved such as, but not limited to, providing liquidity, capital preservation, and pledging collateral for various lines of credit and other borrowings. The investment objectives guide the portfolio allocation among securities types, maturities, and other attributes.
AFS debt securities portfolio Our investment portfolio objectives include maximizing total return after other primary objectives are achieved such as, but not limited to, providing liquidity, capital preservation, and pledging collateral for certain deposit types, various lines of credit and other borrowings. The investment objectives guide the portfolio allocation among security types, maturities, and other attributes.
In addition, dividends paid by the Bank to the Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the year ended December 31, 2022, there were $49.0 million in cash dividends approved by the board for payment from the Bank to the holding company.
In addition, dividends paid by the Bank to the Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During both the years ended December 31, 2023 and 2022, there were $49.0 million in cash dividends approved by the Board for payment from the Bank to the holding company.
On March 14, 2022, the Company announced the board of directors’ authorization of a share repurchase program pursuant to which the Company may purchase up to $100 million in shares of the Company’s issued and outstanding common stock. The Company purchased 852,144 shares pursuant this plan during the year ended December 31, 2022.
On March 14, 2022, the Company announced the board of directors’ authorization of a share repurchase program pursuant to which the Company may purchase up to $100 million in shares of the Company’s issued and outstanding common stock. The Company purchased 136,262 shares pursuant to this plan during the year ended December 31, 2023.
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