FB Financial (US:FBK)2019-08-08 21:07Company Operations - As of June 30, 2019, the company operates 65 full-service bank branches across Tennessee, North Alabama, and North Georgia[153]. - The company serves various Metropolitan Statistical Areas (MSAs) including Nashville, Chattanooga, Knoxville, Memphis, Jackson, and Huntsville[153]. - The company is the third largest bank headquartered in Tennessee based on total assets[153]. - The company operates through two segments: Banking and Mortgage, with a focus on aligning the Mortgage segment with its strategic plan[153]. Mortgage Operations - The company announced its intention to exit wholesale mortgage operations, completing the sale of the third-party origination channel on June 7, 2019, and the correspondent channel on August 1, 2019[153]. - The company’s mortgage segment revenue is derived from origination fees and gains on sales in the secondary market of mortgage loans[153]. - The company’s mortgage banking services are supported by a national internet delivery channel and strategically located mortgage banking offices[153]. - Mortgage banking income for the three months ended June 30, 2019, was $24.5 million, down from $28.5 million in the same period in 2018[224]. - Total mortgage banking income for the three months ended June 30, 2019, was $24.5 million, a decrease of 14.1% from $28.5 million in the same period of 2018[226]. - Mortgage banking income for the six months ended June 30, 2019, was $45.5 million, down 17.3% from $55.0 million for the same period in 2018[229]. Financial Performance - Net income for the three months ended June 30, 2019, was $18,688,000, compared to $22,065,000 for the same period in 2018, reflecting a decrease of 15.4%[155]. - Total interest income for the three months ended June 30, 2019, was $71,719,000, an increase from $59,043,000 for the same period in 2018, representing a growth of 21.5%[155]. - Net income for the six months ended June 30, 2019, was $38.3 million, a decrease from $41.8 million in the same period of 2018, representing a decline of 6.8%[172]. - Noninterest income for the three months ended June 30, 2019, was $33.0 million, a decrease of $2.8 million, or 7.8%, compared to $35.8 million for the same period in 2018[224]. - Noninterest income for the six months ended June 30, 2019, was $62.0 million, a decrease of 10.2% from $69.0 million in the same period of 2018[229]. Asset and Deposit Growth - Total assets as of June 30, 2019, reached $5,940,402,000, up from $4,923,249,000 a year earlier, indicating a growth of 20.6%[155]. - Customer deposits increased to $4,812,962,000 as of June 30, 2019, compared to $3,844,009,000 in the previous year, marking a rise of 25.2%[155]. - Total deposits rose by 16.1% to $4.84 billion as of June 30, 2019, compared to $4.17 billion at December 31, 2018, partly due to the acquisition of $588.9 million in deposits from branches[276]. - Noninterest-bearing deposits increased to $1,111.9 million at June 30, 2019, up from $949.1 million at December 31, 2018[276]. - Interest-bearing deposits grew to $3.73 billion as of June 30, 2019, compared to $3.22 billion at December 31, 2018[276]. Loan Portfolio - Total loans amounted to $4,289.5 million, a 17% increase from $3,667.5 million as of December 31, 2018[251]. - Loans held for investment increased by $622.0 million to $4.29 billion at June 30, 2019, compared to $3.67 billion at December 31, 2018, reflecting a growth of 16.9%[177]. - The commercial and industrial loans category had an allowance for loan losses of $4,923 thousand, representing 23% of loans in that category[271]. - The construction loans category had an allowance for loan losses of $9,655 thousand, representing 12% of loans in that category[271]. Interest Income and Expense - Net interest income before provision for loan losses increased to $57.0 million for the three months ended June 30, 2019, up from $51.5 million in the same period in 2018, an increase of approximately 10.7%[166]. - Interest income on loans held for sale decreased by $1.3 million to $3.1 million for the three months ended June 30, 2019, attributed to a decline in volume and yields[196]. - Interest expense rose to $14.7 million for the three months ended June 30, 2019, an increase of $7.2 million compared to $7.5 million in 2018, driven by higher interest on deposits[197]. - The cost of total deposits increased to 1.14% for the three months ended June 30, 2019, compared to 0.62% in the same period of 2018[199]. Efficiency and Ratios - The efficiency ratio for the three months ended June 30, 2019, was 71.2%, compared to 64.6% for the same period in 2018, indicating a decline in operational efficiency[157]. - The return on average tangible common equity (ROATE) for the three months ended June 30, 2019, was 14.4%, down from 19.0% in the same period in 2018[164]. - The net interest margin (NIM) decreased to 4.39% for the three months ended June 30, 2019, down from 4.81% in the same period of 2018, primarily due to increased cost of funds and decreased loan fees[195]. Nonperforming Assets - Nonperforming assets totaled $35.3 million as of June 30, 2019, compared to $31.4 million as of December 31, 2018, representing an increase of 6.1%[262]. - Total nonperforming loans held for investment increased to $18.2 million as of June 30, 2019, from $16.7 million as of December 31, 2018, a rise of 8.7%[264]. - The coverage ratio for loan losses was 165.3% as of June 30, 2019, down from 173.0% as of December 31, 2018[265]. Capital and Liquidity - The Common Equity Tier 1 (CET1) ratio for FB Financial Corporation was 10.4% as of June 30, 2019, exceeding the required minimum of 4.5%[296]. - Total capital to risk-weighted assets for FB Financial Corporation was 11.6% as of June 30, 2019, above the required minimum of 8.0%[296]. - The Company believes its current liquidity position is adequate to meet both short-term and long-term cash requirements[292]. Expenses - Noninterest expense increased to $64.1 million for the three months ended June 30, 2019, compared to $56.4 million in the same period in 2018, an increase of approximately 13.7%[171]. - Salaries, commissions, and employee benefits expense rose by $3.6 million, or 10.3%, to $37.9 million for the three months ended June 30, 2019, representing 59.1% of total noninterest expense[236]. - The efficiency ratio, which measures noninterest expense to the sum of net interest income plus noninterest income, is monitored to assess operational efficiency[235].