FB Financial (US:FBK)2019-03-12 19:46Financial Position - As of December 31, 2018, total assets were $5.14 billion, loans held for investment were $3.67 billion, total deposits were $4.17 billion, and total shareholders' equity was $671.9 million[13]. - As of December 31, 2018, the company had loans held for investment totaling $3.67 billion, with commercial and industrial loans representing $867.1 million or 24% of the loan portfolio[34]. - The total amount of commercial real estate loans outstanding as of December 31, 2018, was $1.19 billion, accounting for 32% of the loan portfolio[37]. - Residential real estate loans amounted to $821.8 million, or 23% of the loan portfolio, as of December 31, 2018[39]. - The company plans to continue making construction loans at a similar pace, with an outstanding balance of $556.1 million, representing 15% of the loan portfolio as of December 31, 2018[41]. - The company has $556.6 million in assets under management in its trust services as of December 31, 2018[55]. - The company has $148.8 million in goodwill and other identifiable intangible assets, with potential impairment risks if revenue targets are not met[179]. Market Presence and Growth - The Nashville metropolitan area experienced a deposit growth of 182.9% from June 30, 2012, to June 30, 2018, making it the largest market with 27% of total deposits[17]. - The merger with Clayton Bank and Trust and American City Bank was completed on July 31, 2017, with a purchase price of approximately $236.5 million, acquiring loans valued at $1,059.7 million and deposits of $979.5 million[18]. - The acquisition of 11 Tennessee and three Georgia branch locations from Atlantic Capital Bank is expected to add approximately $611.0 million in assets and liabilities[18]. - In Tennessee, FB Financial Corporation ranks 6th among the top 10 banks with total deposits of $4.1 billion and a deposit market share of 2.7%[23]. - The Nashville MSA has become the largest market for the company, achieving approximately 2.0% market share based on deposits as of June 30, 2018[28]. - The company has completed nine acquisitions under current ownership, including the recent acquisition of Atlantic Capital branches, aimed at enhancing market penetration and profitability[29]. Business Strategy - The overall business strategy focuses on profitable growth opportunities in high-growth metropolitan and stable community markets[13]. - The company aims to leverage technology and consolidate operations to improve efficiency and support future growth[31]. - The company intends to pursue acquisitions, but faces risks such as regulatory approvals, integration challenges, and competition from larger financial institutions[155]. - The company is expected to act as a source of financial strength to its bank subsidiaries, which may require additional capital contributions[89]. Risk Management - The company employs a rigorous credit risk management program, with ongoing monitoring of loan portfolio performance and a Chief Credit Officer overseeing the integrity of the portfolio[66]. - The bank's risk management framework includes oversight committees that meet at least quarterly to review lending activities and ensure credit quality standards[56]. - The company has a strong focus on risk management, with policies approved by the board of directors to define operational standards and risk limits[65]. - The company is exposed to credit risk from small-to-medium sized businesses, which may struggle during economic downturns, potentially leading to substantial credit losses[144]. - The company may need to tighten mortgage loan underwriting standards due to federal and state regulations, impacting loan origination capabilities[185]. Regulatory Environment - The company is subject to regulation by the Federal Reserve and the FDIC, with compliance requirements influenced by the Dodd-Frank Act[77][78]. - The company is subject to various regulations that impose minimum capital requirements and limit transactions with affiliates[83]. - The company must maintain a minimum leverage ratio of 4%, calculated as the ratio of Tier 1 Capital to average assets[94]. - The company is prohibited from acquiring control of a Tennessee-based financial institution until the target has been in operation for at least three years[88]. - The Dodd-Frank Act may impose increased capital requirements and regulatory changes that could impact the company's profitability and business practices[181]. Competition and Market Challenges - The company faces increased competition in the Tennessee market, particularly in metropolitan areas, which may impact loan and deposit growth[72]. - The Bank faces strong competition in the Nashville MSA, with many competitors offering similar or wider banking services, which may impact its market share and profitability[133]. - Future growth may be hindered by economic conditions, regulatory considerations, and competition, which could restrict market expansion opportunities[152]. Mortgage Banking and Noninterest Income - The mortgage banking business generated $7.12 billion in interest rate lock commitment volume for the year ended December 31, 2018, with 66% of these commitments being purchase money mortgage loans[47]. - The company has significantly expanded its mortgage business and noninterest income through strategic hiring and new delivery channels, enhancing customer acquisition opportunities[30]. - The company aims to grow its noninterest income streams, including mortgage business and cash management services, as part of its long-term growth strategy[151]. - The company generated $100.7 million in revenue from its mortgage banking business in 2018, which may decline significantly if interest rates continue to rise[164]. Shareholder and Stock Information - The company declared a dividend of $0.08 per share to shareholders of record as of February 1, 2019, payable on February 15, 2019[204]. - The company has a dividend policy that will depend on various factors, including financial condition, operating results, and regulatory restrictions[204]. - The company has approximately 739 stockholders of record as of March 5, 2019, with a significantly greater number of beneficial holders[200]. - The company completed its initial public offering on September 21, 2016, selling 6,764,704 shares at $19.00 per share, raising an aggregate of $128.5 million[208]. Operational Risks - The company is exposed to operational risks, including potential employee fraud and reliance on third-party information, which could lead to financial losses[172]. - The company relies on third-party service providers for mortgage loan servicing, and any failure by these providers could disrupt operations and negatively impact financial results[166]. - The company operates in regions susceptible to weather-related events, which could disrupt operations and negatively impact local economies[173]. Economic Sensitivity - The company's financial performance is vulnerable to economic conditions in Tennessee, which could lead to increased loan delinquencies and reduced demand for products[129]. - Changes in interest rates could adversely affect net interest income, which is crucial for the company's earnings and financial condition[147]. - The company's ability to assess creditworthiness may be impaired by economic conditions, affecting its loan portfolio and financial results[129]. - Approximately 71% of the loan portfolio consisted of loans secured by real estate, which are sensitive to economic conditions and real estate market downturns[138].