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FB Financial Corporation Reports Annual and Fourth Quarter 2021 Results

Reports Q4 diluted EPS of $1.02, ROAA of 1.60%, and annualized Loan Growth (HFI) of 16.9%

FB Financial Corporation (the “Company”) (NYSE: FBK), parent company of FirstBank, reported net income of $48.8 million, or $1.02 per diluted common share, compared to $0.95 per diluted common share in the same quarter last year and $0.94 in the previous quarter. Adjusted net income was $42.6 million, or $0.89 per diluted common share, compared to $1.14 per diluted common share in the same quarter last year and $0.89 in the previous quarter. The Company's return on average assets for the fourth quarter was 1.60% (1.40% adjusted), return on average common equity was 13.7% (12.0% adjusted) and return on tangible common equity was 16.8% (14.7% adjusted). The Company recorded growth in loans held for investment ("HFI") of $310.0 million in the fourth quarter, or 16.9% annualized. Excluding Paycheck Protection Program ("PPP") loans, the Company recorded HFI loan growth of $315.4 million, or 17.2% annualized.

For the year ended December 31, 2021, the Company reported net income of $190.3 million, or $3.97 per diluted common share, compared to $63.6 million, or $1.67 per diluted common share, for the year ended December 31, 2020. Adjusting for non-operating items, diluted EPS was $3.78 and $3.73 for the years ended December 31, 2021 and 2020, respectively. The Company’s book value per common share at quarter-end was $30.13 and the tangible book value ("TBV") per common share was $24.67.

President and Chief Executive Officer, Christopher T. Holmes stated, “We are pleased with our fourth quarter and full year results. Adjusted loan growth (HFI) of 17% for the quarter and over 10% for the year are both outstanding achievements. I am also proud of our team for their results in 2021 in deposit gathering, credit management and mortgage production, as we grew noninterest bearing deposits over 20%, we experienced net charge-offs of only 8 basis points and we delivered a mortgage contribution of $26.5 million. Our tangible book value, another core metric for us, ended the year at $24.67, which represents an annualized compounded growth rate of 15.5% since becoming a publicly traded company in September of 2016.”

 

 

2021

 

2020

 

Annualized

 

 

(dollars in thousands, except per share data)

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

 

4Q21 / 3Q21

% Change

 

4Q21 / 4Q20

% Change

Balance Sheet Highlights

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

1,681,892

 

 

$

1,577,337

 

 

$

1,176,991

 

 

26.3

%

 

42.9

%

Mortgage loans held for sale, at fair value

 

 

672,924

 

 

 

755,210

 

 

 

683,770

 

 

(43.2

) %

 

(1.59

) %

Commercial loans held for sale, at fair value

 

 

79,299

 

 

 

100,496

 

 

 

215,403

 

 

(83.7

) %

 

(63.2

) %

Loans held for investment (HFI)

 

 

7,604,662

 

 

 

7,294,674

 

 

 

7,082,959

 

 

16.9

%

 

7.37

%

Adjusted loans held for investment*

 

 

7,600,672

 

 

 

7,285,259

 

 

 

6,870,314

 

 

17.2

%

 

10.6

%

Allowance for credit losses

 

 

125,559

 

 

 

139,446

 

 

 

170,389

 

 

(39.5

) %

 

(26.3

) %

Total assets

 

 

12,597,686

 

 

 

11,810,290

 

 

 

11,207,330

 

 

26.5

%

 

12.4

%

Customer deposits

 

 

10,809,410

 

 

 

10,043,901

 

 

 

9,396,478

 

 

30.2

%

 

15.0

%

Brokered and internet time deposits

 

 

27,487

 

 

 

28,017

 

 

 

61,559

 

 

(7.51

) %

 

(55.3

) %

Total deposits

 

 

10,836,897

 

 

 

10,071,918

 

 

 

9,458,037

 

 

30.1

%

 

14.6

%

Borrowings

 

 

171,778

 

 

 

172,710

 

 

 

238,324

 

 

(2.14

) %

 

(27.9

) %

Total common shareholders' equity

 

 

1,432,602

 

 

 

1,400,913

 

 

 

1,291,289

 

 

8.97

%

 

10.9

%

Book value per share

 

$

30.13

 

 

$

29.36

 

 

$

27.35

 

 

10.4

%

 

10.2

%

Total common shareholders' equity to total assets

 

 

11.4

%

 

 

11.9

%

 

 

11.5

%

 

 

 

 

Tangible book value per common share*

 

$

24.67

 

 

$

23.90

 

 

$

21.73

 

 

12.8

%

 

13.5

%

Tangible common equity to tangible assets*

 

 

9.51

%

 

 

9.87

%

 

 

9.38

%

 

 

 

 

* Certain measures are considered non-GAAP financial measures. For a reconciliation and discussion of this non-GAAP measure, see “GAAP Reconciliation and Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in this Earnings Release dated January 18, 2022.

 

 

2021

 

2020

(dollars in thousands, except share data)

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Results of operations

 

 

 

 

 

 

Net interest income

 

$

89,755

 

 

$

88,476

 

 

$

85,244

 

NIM

 

 

3.19

%

 

 

3.20

%

 

 

3.32

%

Provisions for credit losses

 

$

(10,769

)

 

$

(2,531

)

 

$

(2,920

)

Net charge-off ratio

 

 

0.12

%

 

 

0.13

%

 

 

0.58

%

Noninterest income

 

$

53,219

 

 

$

59,006

 

 

$

80,638

 

Mortgage banking income

 

$

31,350

 

 

$

45,384

 

 

$

65,729

 

Total revenue

 

$

142,974

 

 

$

147,482

 

 

$

165,882

 

Noninterest expense

 

$

90,902

 

 

$

95,007

 

 

$

109,855

 

Merger expenses

 

$

 

 

$

 

 

$

9,513

 

Efficiency ratio

 

 

63.6

%

 

 

64.4

%

 

 

66.2

%

Core efficiency ratio*

 

 

67.0

%

 

 

64.7

%

 

 

58.5

%

Adjusted pre-tax, pre-provision earnings*

 

$

43,573

 

 

$

51,240

 

 

$

67,988

 

Total adjusted mortgage banking pre-tax net contribution*

 

$

710

 

 

$

8,853

 

 

$

22,882

 

Net income applicable to FB Financial Corporation(1)

 

$

48,827

 

 

$

45,290

 

 

$

45,602

 

Diluted earnings per common share

 

$

1.02

 

 

$

0.94

 

 

$

0.95

 

Effective tax rate

 

 

22.3

%

 

 

17.7

%

 

 

22.6

%

Adjusted net income*

 

$

42,551

 

 

$

42,699

 

 

$

54,454

 

Adjusted diluted earnings per common share*

 

$

0.89

 

 

$

0.89

 

 

$

1.14

 

Weighted average number of shares outstanding - fully diluted

 

 

47,896,715

 

 

 

48,007,147

 

 

 

47,791,659

 

Actual shares outstanding - period end

 

 

47,549,241

 

 

 

47,707,634

 

 

 

47,220,743

 

Returns on average:

 

 

 

 

 

 

Assets ("ROAA")

 

 

1.60

%

 

 

1.51

%

 

 

1.63

%

Equity ("ROAE")

 

 

13.7

%

 

 

12.9

%

 

 

14.4

%

Tangible common equity ("ROATCE")*

 

 

16.8

%

 

 

15.9

%

 

 

18.2

%

* Certain measures are considered non-GAAP financial measures. For a reconciliation and discussion of this non-GAAP measure, see “GAAP Reconciliation and Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in this Earnings Release dated January 18, 2022.

(1) Includes a dividend declared and paid by the Company's REIT subsidiary to minority interest preferred shareholders in the fourth quarters of 2021 and 2020.

 
 

Balance Sheet and Net Interest Margin

The Company reported loan balances (HFI) of $7.60 billion, an increase of $310.0 million, or 16.9% annualized, from September 30, 2021. Excluding PPP loans, adjusted loans (HFI) increased $315.4 million, or 17.2% annualized, on a linked quarter basis. The contractual yield on loans decreased to 4.17% in the fourth quarter of 2021 from 4.23% in the third quarter of 2021.

The Company's net interest income on a tax-equivalent basis for the fourth quarter of 2021 was $90.5 million, an increase from $89.2 million in the previous quarter. The Company's net interest margin (“NIM”) was 3.19% for the fourth quarter, compared to 3.20% for the third quarter of 2021. The NIM for the fourth quarter of 2021 was impacted by a 4 basis point decline in the yield on interest-earning assets, offset by a 4 basis point decline in the cost of interest-bearing liabilities on a linked quarter basis. During the quarter, on balance sheet liquidity increased to $2.22 billion, or 18.0% of tangible assets, from $1.75 billion, or 15.1% of tangible assets as of September 30, 2021. As of December 31, 2021, our PPP loan balance decreased to $4.0 million from $9.4 million at September 30, 2021.

During the fourth quarter of 2021, total deposits increased by $765.0 million to $10.84 billion on a linked quarter basis, primarily related to seasonal inflows of public funds. Noninterest bearing deposits increased by $130.6 million, or 19.9% annualized, during the fourth quarter. Excluding mortgage-escrow related deposits, noninterest bearing deposits increased by $193.7 million during the fourth quarter, or 31.8% annualized. The Company's total cost of deposits declined by 4 basis points to 0.22% and the cost of interest-bearing deposits decreased to 0.30% from 0.34% in the previous quarter.

Noninterest Income

Noninterest income was $53.2 million for the fourth quarter of 2021, compared to $59.0 million for the third quarter of 2021 and $80.6 million for the fourth quarter of 2020. Mortgage banking income decreased to $31.4 million in the fourth quarter of 2021, compared to $45.4 million for the third quarter of 2021 and $65.7 million for the fourth quarter of 2020.

Noninterest income increased from a $9.4 million realized gain from two relationships in our commercial loans held for sale portfolio that were resolved during the fourth quarter. The remaining portfolio also had $0.5 million of positive fair value changes compared to the previous quarter. The $9.9 million gain on the commercial loans held for sale portfolio compares to a gain of $0.7 million in the third quarter of 2021.

The Company's total mortgage banking pre-tax net contribution for the fourth quarter of 2021 was $0.7 million, compared to $8.9 million for the third quarter of 2021 and $22.2 million for the fourth quarter of 2020. Interest rate lock commitment volume totaled $1.48 billion in the fourth quarter of 2021 compared to $2.01 billion in the third quarter of 2021 and $2.19 billion in the fourth quarter of 2020.

Chief Financial Officer, Michael Mettee noted, “Our mortgage business had a good year with a pre-tax net contribution of $26.5 million. As anticipated the fourth quarter contribution was down due to seasonality in our purchase business, less refinance volume and lower margins.” Mettee continued, “We continue to liquidate the commercial loans held for sale portfolio primarily through pay downs and payoffs, with favorable results. We have been confident in our understanding and management of the portfolio since our merger and continue to have confidence in the valuation of the remaining $79.3 million.”

Expense Management

Noninterest expenses were $90.9 million for the fourth quarter of 2021, compared to $95.0 million for the third quarter of 2021 and $109.9 million for the fourth quarter of 2020. Core noninterest expense was $89.5 million for the fourth quarter of 2021, $95.0 million for the third quarter of 2021, and $95.8 million for the fourth quarter of 2020.

During the fourth quarter of 2021, the Company's core efficiency ratio was 67.0%, compared to 64.7% in the third quarter of 2021 and 58.5% for the fourth quarter of 2020. The Banking segment core efficiency ratio was 57.5% versus the previous quarter of 57.9% while the Mortgage segment core efficiency ratio increased to 97.8% for the fourth quarter of 2021 from 80.0% in the previous quarter.

Mettee noted, “The increase in our efficiency ratio was driven by expected seasonality in mortgage revenue. Core expenses in the Banking segment met expectations and total noninterest expenses were slightly elevated due to two charitable contributions totaling $1.4 million that are not run rate expenses but are important investments in the communities we serve.”

Credit Quality

The Company recorded a total net reversal in provisions for credit losses of $10.8 million in the fourth quarter of 2021, including an increase in provision for credit losses on unfunded commitments of $0.9 million. The Company continues to maintain a fortified balance sheet with an allowance for credit losses ("ACL") of $125.6 million as of December 31, 2021, representing 1.65% of loans HFI.

The Company's net charge-offs to average loans was 0.12% for the fourth quarter of 2021 compared to net charge-offs to average loans of 0.13% in the third quarter of 2021. The Company's nonperforming assets as a percentage of total assets remained constant at 0.50% as of December 31, 2021 and September 30, 2021. Nonperforming loans were 0.62% of loans HFI at December 31, 2021, compared to 0.59% at September 30, 2021. There were no deferrals resulting from the COVID-19 pandemic outstanding as of December 31, 2021, compared to $18.0 million outstanding at the end of the third quarter 2021.

Summary

Holmes summarized, “The Company has continued to deliver strong results and capitalize on the economic strength of our markets. As we close the books on a successful 2021, we look ahead into 2022, excited about the opportunities in front of us.”

WEBCAST AND CONFERENCE CALL INFORMATION

FB Financial Corporation will host a conference call to discuss the Company's financial results today, January 18, 2022, at 8:00 a.m. (Central Time). To listen to the call, participants should dial 1-888-317-6003 (confirmation code 7100213) approximately 10 minutes prior to the call. A telephonic replay will be available approximately two hours after the call on January 18, 2022, through January 25, 2022, by dialing 1-877-344-7529, confirmation code 5998304.

A live online broadcast of the Company’s quarterly conference call will be available online at https://services.choruscall.com/mediaframe/webcast.html?webcastid=0upLTSIz. The online replay will be available approximately an hour following the conclusion of the live broadcast.

ABOUT FB FINANCIAL CORPORATION

FB Financial Corporation (NYSE: FBK) is a financial holding company headquartered in Nashville, Tennessee. FB Financial Corporation operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered community bank, with 82 full-service bank branches across Tennessee, Kentucky, Alabama and North Georgia, and mortgage offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has approximately $12.6 billion in total assets.

SUPPLEMENTAL FINANCIAL INFORMATION AND EARNINGS PRESENTATION

Investors are encouraged to review this Earnings Release in conjunction with the Supplemental Financial Information and Earnings Presentation posted on the Company’s website, which can be found at https://investors.firstbankonline.com. This Earnings Release, the Supplemental Financial Information and the Earnings Presentation are also included with a Current Report on Form 8-K that the Company furnished to the U.S. Securities and Exchange Commission (“SEC”) on January 18, 2022.

BUSINESS SEGMENT RESULTS

The Company has included its business segment financial tables as part of the Supplemental Financial Information, which is available in connection with this Earnings Release. A detailed discussion of our historical business segments is included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2020. Further discussion on the revisions to segment reporting made in the first quarter of 2021 is included in the Company's Form 10-Q filed with the SEC for the period ended March 31, 2021, and investors are encouraged to review that discussion in conjunction with this Earnings Release.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release that are not historical in nature may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding the Company’s future plans, results, strategies, and expectations. These statements can generally be identified by the use of the words and phrases “may,” “will,” “should,” “could,” “would,” “goal,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “aim,” “predict,” “continue,” “seek,” “project,” and other variations of such words and phrases and similar expressions. These forward-looking statements are not historical facts, and are based upon management's current expectations, estimates, and projections, many of which, by their nature, are inherently uncertain and beyond the Company’s control. The inclusion of these forward-looking statements should not be regarded as a representation by the Company or any other person that such expectations, estimates, and projections will be achieved. Accordingly, the Company cautions shareholders and investors that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements including, without limitation, (1) current and future economic conditions, including the effects of inflation, interest rate fluctuations, changes in the economy or global supply chain, supply-demand imbalances affecting local real estate prices, and high unemployment rates in the local or regional economies in which the Company operates and/or the US economy generally, (2) the ongoing effects of the COVID-19 pandemic, including the magnitude and duration of the pandemic and the emergence of new variants, and its impact on general economic and financial market conditions and on the Company’s business and the Company’s customers' business, results of operations, asset quality and financial condition, (3) ongoing public response to the vaccines that were developed against the virus as well as the decisions of governmental agencies with respect to vaccines, including recommendations related to booster shots and requirements that seek to mandate that individuals receive or employers require that their employees receive the vaccine, (4) those vaccines' efficacy against the virus, including new variants, (5) changes in government interest rate policies and its impact on the Company’s business, net interest margin, and mortgage operations, (6) the Company’s ability to effectively manage problem credits, (7) the Company’s ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions, (8) difficulties and delays in integrating acquired businesses or fully realizing costs savings, revenue synergies and other benefits from future and prior acquisitions, (9) the Company’s ability to successfully execute its various business strategies, (10) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including legislative developments, (11) the potential impact of the proposed phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR, (12) the effectiveness of the Company’s cybersecurity controls and procedures to prevent and mitigate attempted intrusions, (13) the Company's dependence on information technology systems of third party service providers and the risk of systems failures, interruptions, or breaches of security, and (14) general competitive, economic, political, and market conditions. Further information regarding the Company and factors which could affect the forward-looking statements contained herein can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and in any of the Company’s subsequent filings with the SEC. Many of these factors are beyond the Company’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this Earnings Release, and the Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the company.

The Company qualifies all forward-looking statements by these cautionary statements.

GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL MEASURES

This Earnings Release contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures. These non-GAAP financial measures may include, without limitation, adjusted net income, adjusted diluted earnings per common share, adjusted and unadjusted pre-tax pre-provision earnings, core revenue, core noninterest expense and core noninterest income, core efficiency ratio (tax equivalent basis), Banking segment core efficiency ratio (tax equivalent basis), Mortgage segment core efficiency ratio (tax equivalent basis), adjusted mortgage contribution, adjusted mortgage pre-tax net contribution, adjusted mortgage pre-tax pre-provision net contribution, adjusted return on average assets and equity, and adjusted pre-tax pre-provision return on average assets and equity. Each of these non-GAAP metrics excludes certain income and expense items that the Company’s management considers to be non-core/adjusted in nature. The Company also includes an adjusted allowance for credit losses, adjusted loans held for investment, and adjusted allowance for credit losses to loans held for investment, which all exclude the impact of PPP loans. The Company refers to these non-GAAP measures as adjusted (or core) measures. Also, the Company presents tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, adjusted return on average tangible common equity, and adjusted pre-tax pre-provision return on average tangible common equity. Each of these non-GAAP metrics excludes the impact of goodwill and other intangibles.

The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations as management believes such measures facilitate period-to-period comparisons and provide meaningful indications of its operating performance as they eliminate both gains and charges that management views as non-recurring or not indicative of operating performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrate the effects of significant non-core gains and charges in the current and prior periods. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding the Company’s underlying operating performance and in the analysis of ongoing operating trends. In addition, because intangible assets such as goodwill and other intangibles, and the other items excluded each vary extensively from company to company, the Company believes that the presentation of this information allows investors to more easily compare the Company’s results to the results of other companies. However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the Company calculates the non-GAAP financial measures discussed herein may differ from that of other companies reporting measures with similar names. Investors should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures the Company has discussed herein when comparing such non-GAAP financial measures. See the corresponding non-GAAP reconciliation tables below in this Earnings Release for additional discussion and reconciliation of these measures to the most directly comparable GAAP financial measures.

 
 
 
 

Financial Summary and Key Metrics

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

2021

 

2020

 

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Statement of Income Data

 

 

 

 

 

 

Total interest income

 

$

97,219

 

 

$

96,665

 

 

$

98,236

 

Total interest expense

 

 

7,464

 

 

 

8,189

 

 

 

12,992

 

Net interest income

 

 

89,755

 

 

 

88,476

 

 

 

85,244

 

Total noninterest income

 

 

53,219

 

 

 

59,006

 

 

 

80,638

 

Total noninterest expense

 

 

90,902

 

 

 

95,007

 

 

 

109,855

 

Earnings before income taxes and provisions for credit losses

 

 

52,072

 

 

 

52,475

 

 

 

56,027

 

Provisions for credit losses

 

 

(10,769

)

 

 

(2,531

)

 

 

(2,920

)

Income tax expense

 

 

14,006

 

 

 

9,716

 

 

 

13,337

 

Net income applicable to noncontrolling interest

 

 

8

 

 

 

 

 

 

8

 

Net income applicable to FB Financial Corporation(c)

 

$

48,827

 

 

$

45,290

 

 

$

45,602

 

Net interest income (tax-equivalent basis)

 

$

90,537

 

 

$

89,230

 

 

$

86,111

 

Adjusted net income*

 

$

42,551

 

 

$

42,699

 

 

$

54,454

 

Adjusted pre-tax, pre-provision earnings*

 

$

43,573

 

 

$

51,240

 

 

$

67,988

 

Per Common Share

 

 

 

 

 

 

Diluted net income

 

$

1.02

 

 

$

0.94

 

 

$

0.95

 

Adjusted diluted net income*

 

 

0.89

 

 

 

0.89

 

 

 

1.14

 

Book value

 

 

30.13

 

 

 

29.36

 

 

 

27.35

 

Tangible book value*

 

 

24.67

 

 

 

23.90

 

 

 

21.73

 

Weighted average number of shares outstanding - fully diluted

 

 

47,896,715

 

 

 

48,007,147

 

 

 

47,791,659

 

Period-end number of shares

 

 

47,549,241

 

 

 

47,707,634

 

 

 

47,220,743

 

Selected Balance Sheet Data

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,797,740

 

 

$

1,324,564

 

 

$

1,317,898

 

Loans held for investment (HFI)

 

 

7,604,662

 

 

 

7,294,674

 

 

 

7,082,959

 

Allowance for credit losses(a)

 

 

(125,559

)

 

 

(139,446

)

 

 

(170,389

)

Mortgage loans held for sale, at fair value

 

 

672,924

 

 

 

755,210

 

 

 

683,770

 

Commercial loans held for sale, at fair value

 

 

79,299

 

 

 

100,496

 

 

 

215,403

 

Investment securities, at fair value

 

 

1,681,892

 

 

 

1,577,337

 

 

 

1,176,991

 

Other real estate owned, net

 

 

9,777

 

 

 

10,015

 

 

 

12,111

 

Total assets

 

 

12,597,686

 

 

 

11,810,290

 

 

 

11,207,330

 

Customer deposits

 

 

10,809,410

 

 

 

10,043,901

 

 

 

9,396,478

 

Brokered and internet time deposits

 

 

27,487

 

 

 

28,017

 

 

 

61,559

 

Total deposits

 

 

10,836,897

 

 

 

10,071,918

 

 

 

9,458,037

 

Borrowings

 

 

171,778

 

 

 

172,710

 

 

 

238,324

 

Total common shareholders' equity

 

 

1,432,602

 

 

 

1,400,913

 

 

 

1,291,289

 

Selected Ratios

 

 

 

 

 

 

Return on average:

 

 

 

 

 

 

Assets

 

 

1.60

%

 

 

1.51

%

 

 

1.63

%

Shareholders' equity

 

 

13.7

%

 

 

12.9

%

 

 

14.4

%

Tangible common equity*

 

 

16.8

%

 

 

15.9

%

 

 

18.2

%

Average shareholders' equity to average assets

 

 

11.7

%

 

 

11.7

%

 

 

11.3

%

Net interest margin (NIM) (tax-equivalent basis)

 

 

3.19

%

 

 

3.20

%

 

 

3.32

%

Efficiency ratio (GAAP)

 

 

63.6

%

 

 

64.4

%

 

 

66.2

%

Core efficiency ratio (tax-equivalent basis)*

 

 

67.0

%

 

 

64.7

%

 

 

58.5

%

Loans HFI to deposit ratio

 

 

70.2

%

 

 

72.4

%

 

 

74.9

%

Total loans to deposit ratio

 

 

77.1

%

 

 

80.9

%

 

 

84.4

%

Yield on interest-earning assets

 

 

3.45

%

 

 

3.49

%

 

 

3.82

%

Cost of interest-bearing liabilities

 

 

0.38

%

 

 

0.42

%

 

 

0.73

%

Cost of total deposits

 

 

0.22

%

 

 

0.26

%

 

 

0.46

%

Credit Quality Ratios

 

 

 

 

 

 

Allowance for credit losses as a percentage of loans HFI(a)

 

 

1.65

%

 

 

1.91

%

 

 

2.41

%

Adjusted allowance for credit losses as a percentage of loans HFI*(a)

 

 

1.65

%

 

 

1.91

%

 

 

2.48

%

Net charge-offs as a percentage of average loans HFI

 

 

0.12

%

 

 

0.13

%

 

 

0.58

%

Nonperforming loans HFI as a percentage of total loans HFI

 

 

0.62

%

 

 

0.59

%

 

 

0.91

%

Nonperforming assets as a percentage of total assets

 

 

0.50

%

 

 

0.50

%

 

 

0.75

%

Preliminary capital ratios (Consolidated)

 

 

 

 

 

 

Total common shareholders' equity to assets

 

 

11.4

%

 

 

11.9

%

 

 

11.5

%

Tangible common equity to tangible assets*

 

 

9.51

%

 

 

9.87

%

 

 

9.38

%

Tier 1 capital (to average assets)

 

 

10.5

%

 

 

10.4

%

 

 

10.0

%

Tier 1 capital (to risk-weighted assets)(b)

 

 

12.6

%

 

 

12.7

%

 

 

12.0

%

Total capital (to risk-weighted assets)(b)

 

 

14.4

%

 

 

14.6

%

 

 

15.0

%

Common equity Tier 1 (to risk-weighted assets) (CET1)(b)

 

 

12.3

%

 

 

12.4

%

 

 

11.7

%

(a) Excludes reserve for credit losses on unfunded commitments of $14,380, $13,503, and $16,378 recorded in accrued expenses and other liabilities at December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

(b) We calculate our risk-weighted assets using the standardized method of the Basel III Framework.

(c) Includes a dividend declared and paid by the Company's REIT subsidiary to minority interest preferred shareholders in fourth quarter of 2021 and fourth quarter of 2020.

*These measures are considered non-GAAP financial measures. For a reconciliation and discussion of this non-GAAP measure, see "GAAP Reconciliation and Use of non-GAAP Financial Measures" and the corresponding non-GAAP reconciliation tables in this Earnings Release dated January 18, 2022.

 
 
 

Non-GAAP Reconciliation

For the Periods Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

2021

 

2020

Adjusted net income

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Income before income taxes

 

$

               62,841

 

 

$

               55,006

 

 

$

               58,947

 

Plus merger and conversion expenses

 

 

                       —

 

 

 

                       —

 

 

 

                  9,513

 

Less other non-operating items(1)

 

 

                  8,499

 

 

 

                  1,235

 

 

 

                 (2,448

)  

Adjusted pre-tax net income

 

 

                 54,342

 

 

 

                 53,771

 

 

 

                 70,908

 

Income tax expense, adjusted(2)

 

 

                 11,791

 

 

 

                 11,072

 

 

 

                 16,454

 

Adjusted net income

 

$

               42,551

 

 

$

               42,699

 

 

$

               54,454

 

Weighted average common shares outstanding - fully diluted

 

 

          47,896,715

 

 

 

          48,007,147

 

 

 

          47,791,659

 

Adjusted diluted earnings per common share

 

 

 

 

 

 

Diluted earnings per common share

 

$

                  1.02

 

 

$

                  0.94

 

 

$

                  0.95

 

Plus merger and conversion  expenses

 

 

                       —

 

 

 

                       —

 

 

 

                    0.20

 

Less other non-operating items

 

 

                    0.18

 

 

 

                    0.02

 

 

 

                   (0.05

)  

Less tax effect

 

 

                   (0.05

)  

 

 

                    0.03

 

 

 

                    0.06

 

Adjusted diluted earnings per common share

 

$

                  0.89

 

 

$

                  0.89

 

 

$

                  1.14

 

(1) 4Q21 includes $9,921 gain from change in fair value of commercial loans held for sale acquired from Franklin and $1,422 related to certain nonrecurring charitable contributions; 3Q21 includes a $740 gain from change in fair value of commercial loans held for sale acquired from Franklin, a $1,510 loss on swap cancellation, and a gain of $2,005 from sales other real estate owned; 4Q20 includes $4,533 FHLB prepayment penalty offset by $715 cash life insurance benefit and $1,370 gain from change in fair value of commercial loans held for sale acquired from Franklin.

(2) 3Q21 includes a $1,678 tax benefit related to a change in the value of a net operating loss tax asset related to Franklin.

 

 

 

 

 

 

 

Adjusted net income

 

2021

 

2020

 

2019

Income before income taxes

 

$

             243,051

 

 

$

               82,461

 

 

$

             109,539

 

Plus merger, conversion and offering expenses

 

 

                     605

 

 

 

                 34,879

 

 

 

                  7,380

 

Plus initial provision for credit losses on acquired loans and unfunded commitments

 

 

                       —

 

 

 

                 66,136

 

 

 

                       —

 

Less other non-operating items(1)

 

 

                 11,032

 

 

 

                 (4,400

)  

 

 

                       —

 

Adjusted pre-tax net income

 

 

               232,624

 

 

 

               187,876

 

 

 

               116,919

 

Income tax expense, adjusted(2)

 

 

                 51,553

 

 

 

                 45,944

 

 

 

                 27,648

 

Adjusted net income

 

$

             181,071

 

 

$

             141,932

 

 

$

               89,271

 

Weighted average common shares outstanding - fully diluted

 

 

          47,955,880

 

 

 

          38,099,744

 

 

 

          31,402,897

 

Adjusted diluted earnings per share

 

 

 

 

 

 

Diluted earnings per common share

 

$

                  3.97

 

 

$

                  1.67

 

 

$

                  2.65

 

Plus merger, conversion and offering expenses

 

 

                    0.01

 

 

 

                    0.92

 

 

 

                    0.24

 

Plus initial provision for credit losses on acquired loans and unfunded commitments

 

 

                       —

 

 

 

                    1.74

 

 

 

                       —

 

Less other non-operating items

 

 

                    0.22

 

 

 

                   (0.11

)  

 

 

                       —

 

Less tax effect

 

 

                   (0.02

)  

 

 

                    0.71

 

 

 

                    0.06

 

Adjusted diluted earnings per common share

 

$

                  3.78

 

 

$

                  3.73

 

 

$

                  2.83

 

(1) 2021 includes a $11,172 gain from change in fair value on commercial loans held for sale acquired from Franklin, a loss on swap cancellation of $1,510, a $2,005 gain on other real estate owned, a $787 gain from lease terminations and $1,422 related to certain charitable contributions; 2020 includes $6,838 FHLB prepayment penalties, $1,505 losses on other real estate owned offset by $715 cash life insurance benefit and $3,228 gain from change in fair value on commercial loans held for sale acquired from Franklin.

(2) 2021 includes a $1,678 tax benefit related to a change in the value of a net operating loss tax asset related to Franklin.

 
 
 
 
 

Non-GAAP Reconciliation

For the Periods Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

 

 

2021

 

2020

Adjusted pre-tax pre-provision earnings

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Income before income taxes

 

$

               62,841

 

 

$

               55,006

 

 

$

               58,947

 

Plus provisions for credit losses

 

 

               (10,769

)  

 

 

                 (2,531

)  

 

 

                 (2,920

)  

Pre-tax pre-provision earnings

 

 

                 52,072

 

 

 

                 52,475

 

 

 

                 56,027

 

Plus merger and conversion expenses

 

 

                       —

 

 

 

                       —

 

 

 

                  9,513

 

Less other non-operating items

 

 

                  8,499

 

 

 

                  1,235

 

 

 

                 (2,448

)  

Adjusted pre-tax pre-provision earnings

 

$

               43,573

 

 

$

               51,240

 

 

$

               67,988

 

 

 

 

 

 

 

 

 

 

2021

 

2020

Core efficiency ratio (tax-equivalent basis)

 

Fourth Quarter

 

Third  Quarter

 

Fourth Quarter

Total noninterest expense

 

$

               90,902

 

 

$

               95,007

 

 

$

             109,855

 

Less merger and conversion expenses

 

 

                       —

 

 

 

                       —

 

 

 

                  9,513

 

Less FHLB prepayment penalties

 

 

                       —

 

 

 

                       —

 

 

 

                  4,533

 

Less certain charitable contributions

 

 

                  1,422

 

 

 

                       —

 

 

 

                       —

 

Core noninterest expense

 

$

               89,480

 

 

$

               95,007

 

 

$

               95,809

 

Net interest income (tax-equivalent basis)

 

$

               90,537

 

 

$

               89,230

 

 

$

               86,111

 

Total noninterest income

 

 

                 53,219

 

 

 

                 59,006

 

 

 

                 80,638

 

Less gain on change in fair value on commercial loans held for sale

 

 

                  9,921

 

 

 

                     740

 

 

 

                  1,370

 

Less cash life insurance benefit

 

 

                       —

 

 

 

                       —

 

 

 

                     715

 

Less loss on swap cancellation

 

 

                       —

 

 

 

                 (1,510

)  

 

 

                       —

 

Less gain (loss) on sales or write-downs of other real estate owned and other

      assets

 

 

                     187

 

 

 

                  2,182

 

 

 

                      (57

)  

Less gain from securities, net

 

 

                       46

 

 

 

                       51

 

 

 

                  1,013

 

Core noninterest income

 

 

                 43,065

 

 

 

                 57,543

 

 

 

                 77,597

 

Core revenue

 

$

             133,602

 

 

$

             146,773

 

 

$

             163,708

 

Efficiency ratio (GAAP)(a)

 

 

63.6

%

 

 

64.4

%

 

 

66.2

%

Core efficiency ratio (tax-equivalent basis)

 

 

67.0

%

 

 

64.7

%

 

 

58.5

%

(a) Efficiency ratio (GAAP) is calculated by dividing reported noninterest expense by reported total revenue

 
 
 
 
 

Non-GAAP Reconciliation (continued)

For the Periods Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

During the first quarter of 2021, the Company re-evaluated its reportable business segments to align all retail mortgage activities with the Mortgage segment. Prior to 2021, the Company chose to assign retail mortgage activities within the Banking geographical footprint to the Banking segment. The results of mortgage retail footprint have been assigned to the Mortgage segment for all periods presented. As such, 4Q20 historical segment efficiency ratios and mortgage contribution have been recast for consistency with these changes.

 

 

 

 

 

 

 

 

 

2021

 

2020

Banking segment core efficiency ratio (tax equivalent)

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Core noninterest expense

 

$

               89,480

 

 

$

               95,007

 

 

$

               95,809

Less Mortgage segment noninterest expense

 

 

                 30,798

 

 

 

                 36,230

 

 

 

                 42,884

 

Core Banking segment noninterest expense

 

$

               58,682

 

 

$

               58,777

 

 

$

               52,925

 

Core revenue

 

$

             133,602

 

 

$

             146,773

 

 

$

             163,708

Less Core Mortgage segment total revenue

 

 

                 31,489

 

 

 

                 45,284

 

 

 

                 65,766

 

Core Banking segment total revenue

 

$

             102,113

 

 

$

             101,489

 

 

$

               97,942

 

Banking segment core efficiency ratio (tax-equivalent basis)

 

 

57.5

%

 

 

57.9

%

 

 

54.0

%

 

 

 

 

 

 

 

Mortgage segment core efficiency ratio (tax equivalent)

 

 

 

 

 

 

Mortgage segment noninterest expense

 

$

               30,798

 

 

$

               36,230

 

 

$

               43,609

Less mortgage segment merger expense

 

 

                       —

 

 

 

                       —

 

 

 

                     725

 

Core Mortgage segment noninterest expense

 

$

               30,798

 

 

$

               36,230

 

 

$

               42,884

 

Mortgage segment total revenue

 

 

                 31,508

 

 

 

                 45,083

 

 

 

                 65,766

Less gain (loss) on sales or write-downs of other real estate owned

 

 

                       19

 

 

 

                    (201

)  

 

 

                       —

 

Core Mortgage segment total revenue

 

$

               31,489

 

 

$

               45,284

 

 

$

               65,766

 

Mortgage segment core efficiency ratio (tax-equivalent basis)

 

 

97.8

%

 

 

80.0

%

 

 

65.2

%

 

 

 

 

 

 

 

 

 

2021

 

2020

Adjusted Mortgage contribution

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Mortgage pre-tax net contribution

 

$

                   710

 

 

$

                 8,853

 

 

$

               22,157

Plus Mortgage merger expense

 

 

                       —

 

 

 

                       —

 

 

 

                     725

 

Adjusted Mortgage pre-tax net contribution

 

$

                   710

 

 

$

                 8,853

 

 

$

               22,882

 

Pre-tax pre-provision earnings

 

 

                 52,072

 

 

 

                 52,475

 

 

 

                 56,027

 

% total Mortgage pre-tax pre-provision net contribution

 

 

1.36

%

 

 

16.9

%

 

 

39.5

%

Adjusted pre-tax pre-provision earnings

 

$

               43,573

 

 

$

               51,240

 

 

$

               67,988

 

% total adjusted Mortgage pre-tax pre-provision net contribution

 

 

1.63

%

 

 

17.3

%

 

 

33.7

%

 

 

 

 

 

 

 

 

 

2021

 

2020

Tangible assets and equity

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Tangible assets

 

 

 

 

 

 

Total assets

 

$

         12,597,686

 

 

$

         11,810,290

 

 

$

         11,207,330

 

Less goodwill

 

 

               242,561

 

 

 

               242,561

 

 

 

               242,561

 

Less intangibles, net

 

 

                 16,953

 

 

 

                 18,248

 

 

 

                 22,426

 

Tangible assets

 

$

         12,338,172

 

 

$

         11,549,481

 

 

$

         10,942,343

 

Tangible common equity

 

 

 

 

 

 

Total common shareholders' equity

 

$

          1,432,602

 

 

$

          1,400,913

 

 

$

          1,291,289

 

Less goodwill

 

 

               242,561

 

 

 

               242,561

 

 

 

               242,561

 

Less intangibles, net

 

 

                 16,953

 

 

 

                 18,248

 

 

 

                 22,426

 

Tangible common equity

 

$

          1,173,088

 

 

$

          1,140,104

 

 

$

          1,026,302

 

Common shares outstanding

 

 

          47,549,241

 

 

 

          47,707,634

 

 

 

          47,220,743

 

Book value per common share

 

$

                 30.13

 

 

$

                 29.36

 

 

$

                 27.35

 

Tangible book value per common share

Tangible book value per common share

 

$

                 24.67

 

 

$

                 23.90

 

 

$

                 21.73

 

Total common shareholders' equity to total assets

 

 

11.4

%

 

 

11.9

%

 

 

11.5

%

Tangible common equity to tangible assets

 

 

9.51

%

 

 

9.87

%

 

 

9.38

%

 
 
 
 
 

Non-GAAP Reconciliation (continued)

For the Periods Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

 

 

2021

 

2020

Return on average tangible common equity

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Average common shareholders' equity

 

$

1,411,987

 

 

$

1,389,201

 

 

$

1,261,101

 

Less average goodwill

 

 

242,561

 

 

 

242,561

 

 

 

242,983

 

Less average intangibles, net

 

 

17,580

 

 

 

18,950

 

 

 

23,178

 

Average tangible common equity

 

$

1,151,846

 

 

$

1,127,690

 

 

$

994,940

 

Net income

 

$

48,827

 

 

$

45,290

 

 

$

45,602

 

Return on average common equity

 

 

13.7

%

 

 

12.9

%

 

 

14.4

%

Return on average tangible common equity

 

 

16.8

%

 

 

15.9

%

 

 

18.2

%

Adjusted net income

 

$

42,551

 

 

$

42,699

 

 

$

54,454

 

Adjusted return on average tangible common equity

 

 

14.7

%

 

 

15.0

%

 

 

21.8

%

Adjusted pre-tax pre-provision earnings

 

$

43,573

 

 

$

51,240

 

 

$

67,988

 

Adjusted pre-tax pre-provision return on average tangible common equity

 

 

15.0

%

 

 

18.0

%

 

 

27.2

%

 

 

 

 

 

 

 

 

 

2021

 

2020

Adjusted return on average assets and equity

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Net income

 

$

48,827

 

 

$

45,290

 

 

$

45,602

 

Average assets

 

 

12,085,817

 

 

 

11,915,062

 

 

 

11,111,163

 

Average equity

 

 

1,411,987

 

 

 

1,389,201

 

 

 

1,261,101

 

Return on average assets

 

 

1.60

%

 

 

1.51

%

 

 

1.63

%

Return on average equity

 

 

13.7

%

 

 

12.9

%

 

 

14.4

%

Adjusted net income

 

$

42,551

 

 

$

42,699

 

 

$

54,454

 

Adjusted return on average assets

 

 

1.40

%

 

 

1.42

%

 

 

1.95

%

Adjusted return on average equity

 

 

12.0

%

 

 

12.2

%

 

 

17.2

%

Adjusted pre-tax pre-provision earnings

 

$

43,573

 

 

$

51,240

 

 

$

67,988

 

Adjusted pre-tax pre-provision return on average assets

 

 

1.43

%

 

 

1.71

%

 

 

2.43

%

Adjusted pre-tax pre-provision return on average equity

 

 

12.2

%

 

 

14.6

%

 

 

21.4

%

 

 

 

 

 

 

 

 

 

2021

 

2020

Adjusted allowance for credit losses to loans held for investment

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Allowance for credit losses

 

$

125,559

 

 

$

139,446

 

 

$

170,389

 

Less allowance for credit losses attributed to PPP loans

 

 

 

 

 

2

 

 

 

34

 

Adjusted allowance for credit losses

 

$

125,559

 

 

$

139,444

 

 

$

170,355

 

Loans held for investment

 

$

7,604,662

 

 

$

7,294,674

 

 

$

7,082,959

 

Less PPP loans

 

 

3,990

 

 

 

9,415

 

 

 

212,645

 

Adjusted loans held for investment

 

$

7,600,672

 

 

$

7,285,259

 

 

$

6,870,314

 

Allowance for credit losses to loans held for investment

 

 

1.65

%

 

 

1.91

%

 

 

2.41

%

Adjusted allowance for credit losses to loans held for investment

 

 

1.65

%

 

 

1.91

%

 

 

2.48

%

 
 

FBK - ER

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