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Press Release

CORRECTING and REPLACING FB Financial Corporation Reports 2018 Third Quarter Results

Company Release - 10/22/2018 4:50 PM ET

Reported diluted EPS of $0.68, up 17.2% over third quarter 2017 diluted adjusted EPS

Grew loans 14.3% annualized and customer deposits 17.9% annualized

ROAA of 1.72%; ROATCE of 17.4%; NIM of 4.71%

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Please replace the release with the following corrected version due to multiple revisions.

The corrected release reads:

FB Financial Corporation Reports 2018 Third Quarter Results

Reported diluted EPS of $0.68, up 17.2% over third quarter 2017 diluted adjusted EPS

Grew loans 14.3% annualized and customer deposits 17.9% annualized

ROAA of 1.72%; ROATCE of 17.4%; NIM of 4.71%

FB Financial Corporation (the “Company”) (NYSE: FBK), parent company of FirstBank, reported net income of $21.4 million, or $0.68 per diluted common share, for the third quarter of 2018, compared to net income of $8.4 million, or $0.27 per diluted common share, for the third quarter of 2017. On an adjusted basis, this is an increase of 17.2% over net income per diluted common share of $0.58 for the third quarter of 2017.

President and Chief Executive Officer, Christopher T. Holmes stated, “The Company continues to perform very well with organic growth rates and profitability ratios that are among the best of our peers. Our FirstBank team has been able to effectively balance between growth and profitability, delivering annualized loan growth of 14.3%, annualized customer deposit growth of 17.9% and a net interest margin of 4.71%. The team takes pride in being an elite financial performer.”

Performance Summary

       
    For the Three Months Ended September 30,
(dollars in thousands, except share data) 2018     2017

Results of operations

Net interest income $ 52,755 $ 43,610
NIM 4.71 % 4.61 %
Provision for loan losses $ 1,818 $ (784 )
Net charge-off (recovery) ratio 0.06 % (0.15 %)
Noninterest income $ 34,355 $ 37,820
Mortgage banking income $ 26,649 $ 31,334
Total revenue $ 87,110 $ 81,430
Noninterest expenses $ 57,213 $ 69,224
Merger-related expenses $ $ 15,711
Efficiency ratio 65.7 % 85.0 %
Core efficiency ratio(1) 63.7 % 64.4 %
Pre-tax income $ 28,079 $ 12,990
Total mortgage banking pre-tax contribution, adjusted(1) 5.2 % 18.2 %
Net income $ 21,377 $ 8,388
Diluted earnings per share $ 0.68 $ 0.27
Effective tax rate 23.9 % 35.4 %
Net income, adjusted(1) $ 21,377 $ 17,936
Diluted earnings per share, adjusted(1) $ 0.68 $ 0.58

Weighted average number of shares - diluted

31,339,628 30,604,537
Actual shares outstanding - period end 30,715,792 30,526,592

Returns on average:

Assets 1.72 % 0.80 %
Adjusted(1) 1.72 % 1.71 %
Equity 13.3 % 6.0 %
Tangible common equity (1) 17.4 % 7.7 %
Adjusted(1)       17.4 %       16.5 %
(1) Certain measures are considered non-GAAP financial measures. See “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued October 22, 2018, for a reconciliation and discussion of this non-GAAP measure.
 

Holmes continued, “Our total mortgage operations represented only 5% of the Company’s pre-tax income for the quarter. As rates have continued to increase, volumes have slowed and margins have compressed. The direct contribution from our total mortgage operations was $1.5 million, which was in the middle of the range estimated by the Company in late September.”

                         
    2018     2017     Annualized    
(dollars in thousands, except per share data) Third Quarter     Second Quarter Third Quarter

3Q18 / 2Q18
% Change

3Q18 / 3Q17
% Change

Balance Sheet Highlights

Investment securities $ 609,568 $ 611,435 $ 543,282 (1.2 %) 12.2 %
Loans - held for sale 323,486 374,916 466,369 (54.4 %) (30.6 %)
Loans - held for investment 3,538,531 3,415,575 3,114,562 14.3 % 13.6 %
Allowance for loan losses 27,608 26,347 23,482 19.0 % 17.6 %
Total assets 5,058,167 4,923,249 4,581,943 10.9 % 10.4 %
Customer deposits 4,017,391 3,844,009 3,614,220 17.9 % 11.2 %
Brokered and internet time deposits 112,082 65,854 104,318 278.5 % 7.4 %
Total deposits 4,129,473 3,909,863 3,718,538 22.3 % 11.1 %
Borrowings 210,968 342,893 210,855 (152.6 %) 0.1 %

Total shareholders’ equity

      648,731         630,959         572,528       11.2 %     13.3 %

Tangible book value per share(1)

$ 16.25 $ 15.66 $ 13.79

Tangible common equity to tangible assets (1)

      10.2 %       10.1 %       9.5 %            
(1) Certain measures are considered non-GAAP financial measures. See “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued October 22, 2018, for a reconciliation and discussion of this non-GAAP measure.
 

Continued Focus on Execution of Strategy Drives Growth and Profitability

The Company’s net interest margin (“NIM”) was 4.71% for the third quarter of 2018, compared to 4.81% and 4.61% for the second quarter of 2018 and the third quarter of 2017, respectively. Accretion related to purchased loans and collections of nonaccrual interest contributed 25 basis points to the Company’s NIM in the third quarter of 2018 compared to 20 and 28 basis points for the second quarter of 2018 and the third quarter of 2017, respectively.

The Company grew loans (HFI) by $123.0 million during the third quarter of 2018, or 14.3% annualized. The Company also increased its yield on that portfolio by 7 basis points to 6.19% during the third quarter of 2018 compared to the second quarter of 2018 and by 29 basis points compared to the third quarter of 2017.

During the third quarter of 2018, the Company also aggressively grew customer deposits by $173.4 million, or 17.9% annualized. The cost of total deposits increased to 80 basis points from 62 basis points in the second quarter of 2018. Total deposit growth during the third quarter of 2018 was $219.6 million, or 22.3% annualized, which included an incremental $53.9 million of brokered CDs.

Holmes stated, “While we have not utilized the brokered CD market in recent years, we took advantage of an opportunity to lower our funding costs by swapping short-term FHLB borrowings of $131.9 million in favor of the brokered CD balances due to lower rates available in the market. This opportunistic move to lower our borrowing costs does not reflect a change in our philosophy of growing customer loans funded by core customer deposits.”

Holmes continued, “Our annualized 14.3% loan and 17.9% customer deposit growth in the quarter was strong and slightly above our long-term targets, driven by demand throughout our markets. As we continue to deploy our balance sheet to meet the needs of our customers, combined with the positioning of our balance sheet, our expectation is that growth comes with higher deposit costs in light of current market conditions. We continue to believe these trends will still allow us to produce a core NIM in the range of 4.25% to 4.50% over the longer-term.”

Noninterest Income Remains Stable

Noninterest income was $34.4 million for the third quarter of 2018, compared to $35.8 million for the second quarter of 2018 and $37.8 million for the third quarter of 2017. Mortgage banking income was $26.6 million for the third quarter of 2018, compared to $28.5 million for the second quarter of 2018 and $31.3 million for the third quarter of 2017.

During the third quarter of 2018, the Company’s total mortgage direct contribution was $1.5 million, or 5.2% of the Company’s total pre-tax income. These results were in-line with the revised guidance released by the Company near the end of the third quarter, which anticipated total mortgage pre-tax contribution to be in the range of $1 million to $2 million.

Holmes commented, “This quarter, our mortgage business was negatively impacted by increasing rates and related market conditions, all of which challenged profitability and overall contribution. Our mortgage team has been reducing its expenses and repositioning its origination channels for lower projected volumes over the foreseeable future.”

Operating Efficiency Gains Maintained

Noninterest expense was $57.2 million for the third quarter of 2018, compared to $56.4 million for the second quarter of 2018 and $69.2 million for the third quarter of 2017, and compared to $55.7 million, excluding offering costs, for the second quarter of 2018 and $53.5 million, excluding merger-related expenses, for the third quarter of 2017.

Chief Financial Officer, James R. Gordon stated, “Overall, noninterest expenses remained on target. As anticipated, we saw a small increase due to the addition of revenue producers across our footprint in our Banking Segment this quarter. Our overall core efficiency ratio remained below 65%, driven by our Banking Segment core efficiency ratio of 52.4%. We expect continued improvement as we work to improve additional operating leverage across our banking operations.”

Asset Quality Remains Stable

During the third quarter of 2018, we recognized a provision for loan losses of $1.8 million, reflecting loan growth, renewals of previously acquired loans, stable credit metrics and net charge-offs of 0.06% of average loans. Our nonperforming assets improved to 0.51% of total assets compared to 0.52% at June 30, 2018. Nonperforming loans were 0.30% of loans held for investment at September 30, 2018, compared to 0.26% at June 30, 2018.

Capital Strength for Future Growth

“Our earnings power continues to drive strong capital accumulation, sustaining our organic growth and providing capital support for potential M&A opportunities. Our tangible common equity to tangible assets of 10.2% and per share growth in tangible book value of 17.8% year-over-year easily accommodate an increase in our quarterly cash dividend to eight cents per share. Additionally, we announced today a $50 million share repurchase plan to give us further flexibility to manage our capital levels,” commented Gordon.

Summary

“Overall, we delivered solid financial performance, with returns on average assets and tangible common equity of 1.72% and 17.4%. I am proud of our team’s continued ability to focus on serving the needs of our customers, meeting the challenges presented in the markets and continuing to deliver outstanding shareholder value,” Holmes concluded.

WEBCAST AND CONFERENCE CALL INFORMATION

The live broadcast of FB Financial Corporation’s earnings conference call will begin at 8:00 a.m. CT on Tuesday, October 23, 2018, and the conference call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1631/27772. An online replay will be available for twelve months approximately an hour following the conclusion of the live broadcast.

ABOUT FB FINANCIAL CORPORATION

FB Financial Corporation (NYSE: FBK) is a bank holding company headquartered in Nashville, Tennessee. FB Financial operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered community bank, with 56 full-service bank branches across Tennessee, North Alabama and North Georgia, and a national mortgage business with offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has approximately $5.0 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 October 22, 2018.

BUSINESS SEGMENT RESULTS

The Company has included its business segment financial tables as part of this Earnings Release. A detailed discussion of our business segments is included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2017, and investors are encouraged to review that discussion in conjunction with this Earnings Release.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Earnings Release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements relating to the Company’s assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, short and long-term performance goals, prospects, results of operations, strategic initiatives and the timing, benefits, costs and synergies of recently completed and future acquisition, disposition and other growth opportunities. These statements, which are based upon certain assumptions and estimates and describe the Company’s future plans, results, strategies and expectations, 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,” “projection” and other variations of such words and phrases and similar expressions. These forward-looking statements are not historical facts, and are based upon current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, 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 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 and that are beyond the Company’s control. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date of this Earnings Release, 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 in this Earnings Release including, without limitation, the risks and other factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 16, 2018, under the captions “Cautionary note regarding forward-looking statements” and “Risk factors” and periodic and current reports on Form 10-Q and 8-K. 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 Company’s underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, 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 does not undertake any 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.

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 include, without limitation, adjusted net income, adjusted diluted earnings per share, core net income, core diluted earnings per share, 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, core return on average assets and equity, adjusted return on average assets and equity and core total revenue. 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 refers to these non-GAAP measures as adjusted measures. This Earnings Release, and Supplemental Financial Information and Earnings Presentation also present tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on tangible common equity, return on average tangible common equity, core return on average tangible common equity and adjusted 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 “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued October 23, 2018, for a 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 %)
           
2018 2017
      Third Quarter     Second Quarter Third Quarter
Statement of Income Data
Total interest income $ 62,612 $ 59,043 $ 48,415
Total interest expense   9,857         7,526     4,805  
Net interest income 52,755 51,517 43,610
Provision for loan losses 1,818 1,063 (784 )
Total noninterest income 34,355 35,763 37,820
Total noninterest expense   57,213         56,358     69,224  
Net income before income taxes 28,079 29,859 12,990
Income tax expense   6,702         7,794     4,602  
Net income $ 21,377       $ 22,065   $ 8,388  
Net interest income (tax—equivalent basis) $ 53,161       $ 51,909   $ 44,281  
Net income, adjusted* $ 21,377       $ 22,736   $ 17,936  
Per Common Share
Diluted net income $ 0.68 $ 0.70 $ 0.27
Diluted net income, adjusted* 0.68 0.72 0.58
Book value 21.12 20.56 18.76
Tangible book value* 16.25 15.66 13.79
Weighted average number of shares-diluted 31,339,628 31,294,044 30,604,537
Period-end number of shares       30,715,792         30,683,353         30,526,592  
Selected Balance Sheet Data
Cash and cash equivalents $ 181,630 $ 104,417 $ 97,165
Loans held for investment (HFI) 3,538,531 3,415,575 3,114,562
Allowance for loan losses (27,608 ) (26,347 ) (23,482 )
Loans held for sale 323,486 374,916 466,369
Investment securities, at fair value 609,568 611,435 543,282
Other real estate owned, net 13,587 14,639 13,812
Total assets 5,058,167 4,923,249 4,581,943
Customer deposits 4,017,391 3,844,009 3,614,220
Brokered and internet time deposits 112,082 65,854 104,318
Total deposits 4,129,473 3,909,863 3,718,538
Borrowings 210,968 342,893 210,855

Total shareholders’ equity

      648,731         630,959         572,528  
Selected Ratios
Return on average:
Assets 1.72 % 1.86 % 0.80 %

Shareholders’ equity

13.3 % 14.4 % 6.0 %
Tangible common equity* 17.4 % 19.0 % 7.7 %

Average shareholders’ equity to average assets

12.9 % 12.9 % 13.2 %
Net interest margin (NIM) (tax-equivalent basis) 4.71 % 4.81 % 4.61 %
Efficiency ratio (GAAP) 65.7 % 64.6 % 85.0 %
Core efficiency ratio (tax-equivalent basis)* 63.7 % 62.1 % 64.4 %
Loans held for investment to deposit ratio 85.7 % 87.4 % 83.8 %
Total loans to deposit ratio 93.5 % 96.9 % 96.3 %
Yield on interest-earning assets 5.58 % 5.51 % 5.10 %
Cost of interest-bearing liabilities 1.20 % 0.96 % 0.71 %
Cost of total deposits       0.80 %       0.62 %       0.46 %
Credit Quality Ratios
Allowance for loan losses as a percentage of loans held for investment 0.78 % 0.77 % 0.75 %

Net charge-off’s (recoveries) as a percentage of average loans held for investment

0.06 % (0.11 )% (0.15 )%

Nonperforming loans held for investment as a percentage of total loans held for investments

0.30 % 0.26 % 0.29 %
Nonperforming assets as a percentage of total assets (a)       0.51 %       0.52 %       0.88 %
Preliminary capital ratios (Consolidated)

Shareholders’ equity to assets

12.8 % 12.8 % 12.5 %
Tangible common equity to tangible assets* 10.2 % 10.1 % 9.5 %
Tier 1 capital (to average assets) 11.3 % 10.9 % 11.4 %
Tier 1 capital (to risk-weighted assets) 12.2 % 11.3 % 11.6 %
Total capital (to risk-weighted assets) 12.8 % 11.9 % 12.2 %
Common Equity Tier 1 (to risk-weighted assets) (CET1)       11.5 %       10.6 %       10.8 %
 
*These measures are considered non-GAAP financial measures. See “GAAP Reconciliation and Use of Non-GAAP Financial Measures” and the corresponding financial tables below for reconciliations of these Non-GAAP measures. Investors are encouraged to refer to the discussion of non-GAAP measures included in the corresponding earnings release.
 
(a) For the three months ended September 30, 2017, GNMA loans subject to ability to repurchase were included in nonperforming assets. The Company derecognized these in the first quarter of 2018 as the perceived benefit has decreased with rising rates.
 

 
Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data and %)
           
2018 2017
Net income, adjusted     Third Quarter     Second Quarter Third Quarter
Pre-tax net income $ 28,079 $ 29,859 $ 12,990
Plus merger and offering-related expenses - 671 15,711

Less significant gains (losses) on securities, other real estate owned and other items

  -       -   -  
Pre-tax net income, adjusted $ 28,079 $ 30,530 $ 28,701
Income tax expense, adjusted   6,702       7,794   10,765  
Net income, adjusted $ 21,377     $ 22,736 $ 17,936  
Weighted average common shares outstanding fully diluted 31,339,628 31,294,044 30,604,537
 
Diluted earnings per share, adjusted
Diluted earnings per common share $ 0.68 $ 0.70 $ 0.27
Plus merger and offering-related expenses - 0.02 0.51

Less significant gains (losses) on securities, other real estate owned and other items

- - -
Less tax effect   -       -   (0.20 )
Diluted earnings per share, adjusted     $ 0.68     $ 0.72     $ 0.58  
 
Previously, the Company adjusted reported net income for the following items: (i) change in fair value in MSRs, net, and (ii) Gains (losses) from securities, OREO, MSRs, other assets, and other items. Beginning with the first quarter of 2018, the Company is only adjusting reported earnings for (i) merger and conversion costs and (ii) other significant items impacting comparability between quarterly and annual periods including costs related to the secondary stock offering completed by our primary shareholder during the second quarter of 2018. Prior periods have been adjusted to conform to this presentation, see below for previously reported amounts:
 
2017
Previously reported core results*                 Third Quarter
Core net income $ 18,516
Core diluted earnings per share                 $ 0.60  
 
* Non-GAAP reconciliations of previously reported core results are included in previously issued earnings release supplements.
 

 
Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data and %)
           
2018 2017
Core efficiency ratio (tax-equivalent basis)     Third Quarter     Second Quarter Third Quarter
Total noninterest expense $ 57,213 $ 56,358 $ 69,224
Less merger and offering-related expenses   -         671     15,711  
Core noninterest expense $ 57,213       $ 55,687   $ 53,513  
Net interest income (tax-equivalent basis) $ 53,161 $ 51,909 $ 44,281
Total noninterest income 34,355 35,763 37,820
Less change in fair value on mortgage servicing rights (2,701 ) (1,778 ) (893 )

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

446 (132 ) (314 )
Less (loss) gain from securities, net   (27 )       (42 )   254  
Core noninterest income   36,637         37,715     38,773  
Core revenue $ 89,798       $ 89,624   $ 83,054  
Efficiency ratio (GAAP)(1) 65.7 % 64.6 % 85.0 %
Core efficiency ratio (tax-equivalent basis)       63.7 %       62.1 %       64.4 %
 
(1) Efficiency ratio (GAAP) is calculated by dividing reported noninterest expense by reported total revenue.
 
2018 2017
Banking segment core efficiency ratio (tax equivalent)     Third Quarter     Second Quarter Third Quarter
Core consolidated noninterest expense $ 57,213 $ 55,687 $ 53,513
Less Mortgage segment noninterest expense   18,821         19,582     19,757  
Adjusted Banking segment noninterest expense   38,392         36,105     33,756  
Adjusted core revenue 89,798 89,624 83,054
Less Mortgage segment noninterest income 19,232 21,650 23,836
Less change in fair value on mortgage servicing rights   (2,701 )       (1,778 )   (893 )
Adjusted Banking segment total revenue $ 73,267 $ 69,752 $ 60,111
Banking segment core efficiency ratio (tax-equivalent basis) 52.4 % 51.8 % 56.2 %
 
Mortgage segment core efficiency ratio (tax equivalent)
Consolidated Noninterest expense $ 57,213 $ 56,358 $ 69,224
Less Banking segment noninterest expense   38,392         36,721     49,467  
(a) For the three months ended September 30, 2017, GNMA loans subject to ability to repurchase were included in nonperforming assets. The Company derecognized these in the first quarter of 2018 as the perceived benefit has decreased with rising rates. $ 18,821 $ 19,637 $ 19,757
Total noninterest income 34,355 35,763 37,820
Less Banking segment noninterest income 15,123 14,058 13,984
Less change in fair value on mortgage servicing rights   (2,701 )      

(1,778

)   (893 )
Adjusted Mortgage segment total revenue $ 21,933       $

23,483

  $ 24,729  
Mortgage segment core efficiency ratio (tax-equivalent basis)       85.8 %      

83.6

%       79.9 %
 
2018 2017
Mortgage contribution, adjusted     Third Quarter     Second Quarter Third Quarter
Mortgage segment pre-tax net contribution $ 433 $ 1,916 $ 3,948
Retail footprint:
Mortgage banking income 7,417 6,894 7,498
Mortgage banking expenses   6,383         5,649     6,216  
Retail footprint pre-tax net contribution   1,034         1,245     1,282  
Total mortgage banking pre-tax net contribution $ 1,467       $ 3,161   $ 5,230  
Pre-tax net income 28,079 29,859 12,990
% total mortgage banking pre-tax net contribution 5.2 % 10.6 % 40.3 %
Pre-tax net income, adjusted 28,079 30,530 28,701
% total mortgage banking pre-tax net contribution, adjusted       5.2 %       10.4 %       18.2 %
 
2018 2017
Tangible assets and equity     Third Quarter     Second Quarter Third Quarter
Tangible Assets
Total assets $ 5,058,167 $ 4,923,249 $ 4,581,943
Less goodwill 137,190 137,190 138,910
Less intangibles, net   12,403         13,203     12,550  
Tangible assets $ 4,908,574       $ 4,772,856   $ 4,430,483  
Tangible Common Equity

Total shareholders’ equity

$ 648,731 $ 630,959 $ 572,528
Less goodwill 137,190 137,190 138,910
Less intangibles, net   12,403         13,203     12,550  
Tangible common equity $ 499,138       $ 480,566   $ 421,068  
Common shares outstanding 30,715,792 30,683,353 30,526,592
Book value per common share $ 21.12 $ 20.56 $ 18.76
Tangible book value per common share $ 16.25 $ 15.66 $ 13.79

Total shareholders’ equity to total assets

12.8 % 12.8 % 12.5 %
Tangible common equity to tangible assets 10.2 % 10.1 % 9.5 %
Net income $ 21,377 $ 22,065 $ 8,388
Return on tangible common equity       17.0 %       18.4 %       7.9 %
 
 
2018 2017
Return on average tangible common equity     Third Quarter     Second Quarter Third Quarter

Total average shareholders’ equity

$ 638,388 $ 615,950 $ 550,409
Less average goodwill 137,190 137,190 108,220
Less average intangibles, net   12,803         13,615     9,983  
Average tangible common equity $ 488,395 $ 465,145 $ 432,206
Net income $ 21,377 $ 22,065 $ 8,388
Return on average tangible common equity       17.4 %       19.0 %       7.7 %
 

 
Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data and %)
                                             
2018 2017
Return on average tangible equity, adjusted                                       Third Quarter     Second Quarter Third Quarter
Average tangible common equity 488,395 465,145 432,206
Net income, adjusted $ 21,377 $ 22,736 $ 17,936
Return on average tangible equity, adjusted                                         17.4 %       19.6 %       16.5 %
 
2018 2017
Return on average assets and equity, adjusted                                       Third Quarter     Second Quarter Third Quarter
Net income $ 21,377 $ 22,065 $ 8,388
Average assets 4,932,197 4,763,991 4,162,478
Average equity 638,388 615,950 550,409
Return on average assets 1.72 % 1.86 % 0.80 %
Return on average equity 13.3 % 14.4 % 6.0 %
Net income, adjusted 21,377 22,736 17,936
Return on average assets, adjusted 1.72 % 1.91 % 1.71 %
Return on average equity, adjusted                                         13.3 %       14.8 %       12.9 %
 
2017
Previously reported core metrics*                                                   Third Quarter
Core return on average tangible common equity 17.0 %
Core return on average assets 1.76 %
Core return on average equity 13.3 %
Core total revenue                                                   $ 82,383  
* Non-GAAP reconciliations of previously reported core results are included in previously issued earnings release supplements.
 

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Source: FB Financial Corporation

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