UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20212022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 001-37875

FB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

Tennessee62-1216058
( State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
211 Commerce Street, Suite 300
Nashville, Tennessee		37201
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (615) 564-1212
______________________________
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_____________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading SymbolSymbol(s)  Name of each exchange on which registered 
Common Stock, Par Value $1.00 Per Share FBK  New York Stock Exchange 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrantregistrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐☒  Accelerated filer ☒☐
Non-accelerated filer ☐  Small reporting company ☐
Emerging growth company ☒☐    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of registrant’s Common Stock outstanding as of October 29, 2021August 3, 2022 was 47,711,799.46,883,935.
1

Table of Contents
Page
PART I.
3
Item 1.
4
4
Consolidated Statements of Income (Unaudited) for the threethree and six monthsnine months ended September 30, 2021June 30, 2022 and 20202021
5
Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months
   ended September 30, 2021 and 2020six months ended June 30, 2022 and 2021
6
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) for the threethree and six mo nine nths endedJmonths ended une 30September 30, 2021, 2022 and 20202021
7
Consolidated Statements of Cash Flows (Unaudited) for theninesix months ended September 30, 2021June 30, 2022and 20202021
9
10
Item 2.
5449
Item 3.
10187
Item 4.
10288
Part II.
Item 1.
10389
Item 1A.
10389
Item 2.
10389
Item 6.
10491
10592















2

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

As used in this Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 20212022 (this "Report"), references to “we,” “our,” “us,” “FB Financial,” or “the Company” refer to FB Financial Corporation, a Tennessee corporation, and our wholly ownedwholly-owned banking subsidiary, FirstBank, a Tennessee state-chartered bank, unless otherwise indicated or the context otherwise requires. References to “Bank” or “FirstBank” refer to FirstBank, our wholly ownedwholly-owned banking subsidiary.

The acronyms and abbreviations identified below are used in the Notes to the Consolidated Financial Statements (Unaudited) as well as in the Management’s Discussiondiscussion and Analysisanalysis of Financial Conditionfinancial condition and Resultsresults of Operations.operations. You may find it helpful to refer to this page as you read this Report.

ACLAllowance For Credit Lossesfor credit lossesGAAPU.S. generally accepted accounting principles
AFSAvailable-for-SaleAvailable-for-saleGNMAGovernment National Mortgage Association
ALCOAsset Liability Management CommitteeIPOIRLCInitial Public OfferingInterest rate lock commitment
ASCAccounting Standard CodificationIRCLIBORInternal Revenue CodeLondon Interbank Offered Rate
ASUAccounting Standard UpdateMSRMortgage Servicing Rights
CAAConsolidated Appropriations ActJOBS ActJumpstart Our Business Startups Actservicing rights
CARESCoronavirus Aid, Relief, and Economic Security ActLIBORNIMLondon Interbank Offered RateNet interest margin
CECLCurrent Expected Credit Lossesexpected credit lossesLTIPOREOLong-Term Incentive PlanOther real estate owned
CEOChief Executive OfficerMSAPPPMetropolitan Statistical AreasPaycheck Protection Program
CET1Common Equity Tier 1MSRPSUMortgage Servicing RightsPerformance-based restricted stock units
CMACOVID-19Cash Management AdvancesCoronavirus pandemicNIMROAANet Interest MarginReturn on average total assets
CPRConditional Prepayment Rateprepayment rateOCCROAEOffice of the Comptroller of the Currency
CRECommercial Real EstateOREOOther Real Estate OwnedReturn on average shareholders' equity
EPSEarnings per SharesharePCDROATCEPurchased Credit DeterioratedReturn on average tangible common equity
ESPPEmployee Stock Purchase PlanPPPROUPaycheck Protection ProgramRight-of-use
EVEEconomic Valuevalue of EquityequityPSURSUPerformance-based Restricted Stock Unitsstock units
FASBFinancial Accounting Standards BoardREITSBAReal Estate Investment Trust
FBINFirstBank Investments of Nevada, Inc.ROAAReturn on Average Total Assets
FBITFirstBank Investments of Tennessee, Inc.ROAEReturn on Average Shareholders' Equity
FBPCFirstBank Preferred Capital, Inc.ROATCEReturn on Average Tangible Common Equity
FBRMFirstBank Risk ManagementROURight-of-useSmall Business Administration
FDICFederal Deposit Insurance CorporationRSUSDN ListRestricted Stock UnitsSpecially Designated Nationals and Blocked Persons
FHLBFederal ReserveBoard of Governors of the Federal Home Loan BankSBASmall Business Administration
FHLMCFederal Home Loan Mortgage CorporationReserve
   System		SECU.S. Securities and Exchange Commission
FNBFHLBFarmers NationalFederal Home Loan BankSOFRSecured overnight financing rate
FHLMCFederal Home Loan Mortgage CorporationTDFITennessee Department of Financial Institutions
FNMAFederal National Mortgage AssociationTDRTroubled Debt Restructuringdebt restructuring
FTEFull Time Equivalent
3

PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS

FB Financial Corporation and subsidiaries
Consolidated balance sheets
(Amounts are in thousands except share and per share amounts) 


September 30,December 31, June 30,December 31,
2021 (Unaudited)2020  2022 (Unaudited)2021 
ASSETSASSETS  ASSETS  
Cash and due from banksCash and due from banks$100,568 $110,991 Cash and due from banks$79,402 $91,333 
Federal funds sold and reverse repurchase agreementsFederal funds sold and reverse repurchase agreements145,333 121,153 Federal funds sold and reverse repurchase agreements233,588 128,087 
Interest-bearing deposits in financial institutionsInterest-bearing deposits in financial institutions1,078,663 1,085,754 Interest-bearing deposits in financial institutions559,871 1,578,320 
Cash and cash equivalentsCash and cash equivalents1,324,564 1,317,898 Cash and cash equivalents872,861 1,797,740 
Investments:Investments:Investments:
Available-for-sale debt securities, at fair valueAvailable-for-sale debt securities, at fair value1,572,558 1,172,400 Available-for-sale debt securities, at fair value1,618,241 1,678,525 
Equity securities, at fair valueEquity securities, at fair value4,779 4,591 Equity securities, at fair value3,103 3,367 
Federal Home Loan Bank stock, at costFederal Home Loan Bank stock, at cost27,601 31,232 Federal Home Loan Bank stock, at cost34,581 32,217 
Loans held for sale, at fair valueLoans held for sale, at fair value855,706 899,173 Loans held for sale, at fair value260,215 752,223 
LoansLoans7,294,674 7,082,959 Loans8,624,337 7,604,662 
Less: allowance for credit lossesLess: allowance for credit losses139,446 170,389 Less: allowance for credit losses126,272 125,559 
Net loansNet loans7,155,228 6,912,570 Net loans8,498,065 7,479,103 
Premises and equipment, netPremises and equipment, net144,737 145,115 Premises and equipment, net142,474 143,739 
Other real estate owned, netOther real estate owned, net10,015 12,111 Other real estate owned, net9,398 9,777 
Operating lease right-of-use assetsOperating lease right-of-use assets44,006 49,537 Operating lease right-of-use assets41,070 41,686 
Interest receivableInterest receivable41,393 43,603 Interest receivable40,393 38,528 
Mortgage servicing rights, at fair valueMortgage servicing rights, at fair value110,591 79,997 Mortgage servicing rights, at fair value158,678 115,512 
GoodwillGoodwill242,561 242,561 Goodwill242,561 242,561 
Core deposit and other intangibles, netCore deposit and other intangibles, net18,248 22,426 Core deposit and other intangibles, net14,515 16,953 
Bank-owned life insuranceBank-owned life insurance74,605 73,519 
Other assetsOther assets258,303 274,116 Other assets183,102 172,236 
Total assetsTotal assets$11,810,290 $11,207,330 Total assets$12,193,862 $12,597,686 
LIABILITIESLIABILITIESLIABILITIES
DepositsDepositsDeposits
Noninterest-bearingNoninterest-bearing$2,609,569 $2,274,103 Noninterest-bearing$2,895,520 $2,740,214 
Interest-bearing checkingInterest-bearing checking2,850,795 2,491,765 Interest-bearing checking3,338,561 3,418,666 
Money market and savingsMoney market and savings3,424,065 3,254,915 Money market and savings3,131,463 3,546,936 
Customer time depositsCustomer time deposits1,159,472 1,375,695 Customer time deposits1,171,941 1,103,594 
Brokered and internet time depositsBrokered and internet time deposits28,017 61,559 Brokered and internet time deposits5,817 27,487 
Total depositsTotal deposits10,071,918 9,458,037 Total deposits10,543,302 10,836,897 
BorrowingsBorrowings172,710 238,324 Borrowings160,400 171,778 
Operating lease liabilitiesOperating lease liabilities48,875 55,187 Operating lease liabilities45,917 46,367 
Accrued expenses and other liabilitiesAccrued expenses and other liabilities115,781 164,400 Accrued expenses and other liabilities124,298 109,949 
Total liabilitiesTotal liabilities10,409,284 9,915,948 Total liabilities10,873,917 11,164,991 
Commitments and contingencies (Note 9)00
Commitments and contingencies (Note 8)Commitments and contingencies (Note 8)00
SHAREHOLDERS' EQUITYSHAREHOLDERS' EQUITYSHAREHOLDERS' EQUITY
Common stock, $1 par value per share; 75,000,000 shares authorized;
47,707,634 and 47,220,743 shares issued and outstanding at
September 30, 2021 and December 31, 2020, respectively
47,708 47,222 
Common stock, $1 par value per share; 75,000,000 shares authorized;
46,881,896 and 47,549,241 shares issued and outstanding at
June 30, 2022 and December 31, 2021, respectively
Common stock, $1 par value per share; 75,000,000 shares authorized;
46,881,896 and 47,549,241 shares issued and outstanding at
June 30, 2022 and December 31, 2021, respectively
46,882 47,549 
Additional paid-in capitalAdditional paid-in capital897,428 898,847 Additional paid-in capital864,614 892,529 
Retained earningsRetained earnings443,140 317,625 Retained earnings528,851 486,666 
Accumulated other comprehensive income, net12,637 27,595 
Accumulated other comprehensive (loss) income, netAccumulated other comprehensive (loss) income, net(120,495)5,858 
Total FB Financial Corporation common shareholders' equityTotal FB Financial Corporation common shareholders' equity1,400,913 1,291,289 Total FB Financial Corporation common shareholders' equity1,319,852 1,432,602 
Noncontrolling interestNoncontrolling interest93 93 Noncontrolling interest93 93 
Total equityTotal equity1,401,006 1,291,382 Total equity1,319,945 1,432,695 
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$11,810,290 $11,207,330 Total liabilities and shareholders' equity$12,193,862 $12,597,686 
See the accompanying notes to the consolidated financial statements.
4

FB Financial Corporation and subsidiaries
Consolidated statements of income
(Unaudited)
(Amounts are in thousands except share and per share amounts)

5
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021 2020 2021 2020  202220212022 2021 
Interest income:Interest income:  Interest income:  
Interest and fees on loansInterest and fees on loans$89,993 $76,504 $269,266 $201,350 Interest and fees on loans$99,655 $89,861 $186,519 $179,273 
Interest on securitiesInterest on securitiesInterest on securities
TaxableTaxable3,989 2,286 10,652 7,961 Taxable6,499 3,844 11,919 6,663 
Tax-exemptTax-exempt1,883 1,933 5,772 4,956 Tax-exempt1,842 1,933 3,708 3,889 
OtherOther800 404 2,089 2,141 Other2,218 691 3,195 1,289 
Total interest incomeTotal interest income96,665 81,127 287,779 216,408 Total interest income110,214 96,329 205,341 191,114 
Interest expense:Interest expense:Interest expense:
DepositsDeposits6,596 10,573 24,341 32,050 Deposits6,591 7,919 12,053 17,745 
BorrowingsBorrowings1,593 1,726 5,823 3,944 Borrowings1,452 1,847 2,935 4,230 
Total interest expenseTotal interest expense8,189 12,299 30,164 35,994 Total interest expense8,043 9,766 14,988 21,975 
Net interest incomeNet interest income88,476 68,828 257,615 180,414 Net interest income102,171 86,563 190,353 169,139 
Provision for credit lossesProvision for credit losses(2,832)45,834 (27,349)97,837 Provision for credit losses8,181 (12,885)2,052 (24,517)
Provision for credit losses on unfunded commitmentsProvision for credit losses on unfunded commitments301 9,567 (2,875)13,050 Provision for credit losses on unfunded commitments4,137 (954)6,019 (3,176)
Net interest income after provisions for credit lossesNet interest income after provisions for credit losses91,007 13,427 287,839 69,527 Net interest income after provisions for credit losses89,853 100,402 182,282 196,832 
Noninterest income:Noninterest income:Noninterest income:
Mortgage banking incomeMortgage banking income45,384 84,686 136,215 189,599 Mortgage banking income22,559 35,499 52,090 90,831 
Service charges on deposit accountsService charges on deposit accounts2,612 2,162 7,217 6,583 Service charges on deposit accounts2,908 2,266 5,822 4,605 
ATM and interchange feesATM and interchange fees4,868 3,913 14,590 10,653 ATM and interchange fees5,353 5,381 10,440 9,722 
Investment services and trust incomeInvestment services and trust income2,511 1,828 7,518 4,893 Investment services and trust income2,275 2,999 4,407 5,007 
Gain from securities, net51 583 278 618 
Gain (loss) on sales or write-downs of other real estate owned2,005 (1,505)2,478 (1,368)
(Loss) gain from securities, net(Loss) gain from securities, net(109)144 (261)227 
(Loss) gain on sales or write-downs of other real estate owned(Loss) gain on sales or write-downs of other real estate owned(26)(23)(524)473 
Gain (loss) from other assetsGain (loss) from other assets177 226 162 (156) Gain (loss) from other assets18 (4)82 (15)
Other incomeOther income1,398 5,133 6,578 10,395 Other income236 3,038 2,550 5,180 
Total noninterest incomeTotal noninterest income59,006 97,026 175,036 221,217 Total noninterest income33,214 49,300 74,606 116,030 
Noninterest expenses:Noninterest expenses:Noninterest expenses:
Salaries, commissions and employee benefitsSalaries, commissions and employee benefits62,818 67,676 189,756 166,556 Salaries, commissions and employee benefits55,181 62,367 114,624 126,938 
Occupancy and equipment expenseOccupancy and equipment expense5,979 4,892 17,184 13,166 Occupancy and equipment expense5,853 5,356 11,256 11,205 
Legal and professional feesLegal and professional fees2,177 1,917 6,701 5,427 Legal and professional fees3,116 2,090 5,723 4,524 
Data processingData processing2,595 2,994 7,456 8,229 Data processing2,404 2,542 4,885 4,861 
Merger costs— 20,730 — 25,366 
Amortization of core deposit and other intangiblesAmortization of core deposit and other intangibles1,344 1,417 4,178 3,825 Amortization of core deposit and other intangibles1,194 1,394 2,438 2,834 
AdvertisingAdvertising4,200 2,256 10,012 7,236 Advertising2,031 3,559 6,064 5,812 
Mortgage restructuring expenseMortgage restructuring expense12,458 — 12,458 — 
Other expenseOther expense15,894 16,210 47,378 37,425 Other expense14,760 15,652 28,821 31,484 
Total noninterest expenseTotal noninterest expense95,007 118,092 282,665 267,230 Total noninterest expense96,997 92,960 186,269 187,658 
Income before income taxesIncome before income taxes26,070 56,742 70,619 125,204 
Income tax expenseIncome tax expense6,717 13,440 16,030 29,028 
Net income applicable to FB Financial Corporation
and noncontrolling interest		Net income applicable to FB Financial Corporation
and noncontrolling interest		19,353 43,302 54,589 96,176 
Net income applicable to noncontrolling interestNet income applicable to noncontrolling interest8 8 8 8 
Net income applicable to FB Financial CorporationNet income applicable to FB Financial Corporation$19,345 $43,294 $54,581 $96,168 
Income (loss) before income taxes55,006 (7,639)180,210 23,514 
Income tax expense (benefit)9,716 (2,040)38,744 5,495 
Net income (loss) applicable to FB Financial Corporation
and noncontrolling interest		45,290 (5,599)141,466 18,019 
Net income applicable to noncontrolling interest— — 8 — 
Net income (loss) applicable to FB Financial Corporation$45,290 $(5,599)$141,458 $18,019 
Earnings (loss) per common share
Earnings per common shareEarnings per common share
BasicBasic$0.96 $(0.14)$2.99 $0.52 Basic$0.41 $0.91 $1.15 $2.03 
DilutedDiluted0.94 (0.14)2.95 0.52 Diluted0.41 0.90 $1.15 $2.00 
See the accompanying notes to the consolidated financial statements.
5

FB Financial Corporation and subsidiaries
Consolidated statements of comprehensive (loss) income  
(Unaudited)
(Amounts are in thousands)

 Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Net income (loss)$45,290 $(5,599)$141,466 $18,019 
Other comprehensive income (loss), net of tax:
Net change in unrealized gain in available-for-sale
securities, net of tax (benefits) expenses of $(2,054), $521, $(4,708) and $5,225
(5,818)1,788 (15,380)15,091 
Reclassification adjustment for gain on sale of securities
included in net income, net of tax expenses of $19, $137, $23 and $137
(56)(387)(67)(387)
Net change in unrealized loss in hedging activities, net of tax
    expenses (benefits) of $38, $40, $173 and $(403)
106 112 489 (1,145)
Reclassification adjustment for gain on hedging activities,
net of tax expenses of $0, $41, $0 and $145
— (115)— (410)
Total other comprehensive (loss) income, net of tax(5,768)1,398 (14,958)13,149 
Comprehensive income (loss)39,522 (4,201)126,508 31,168 
Comprehensive income applicable to noncontrolling interests— — 8 — 
Comprehensive income (loss) applicable to FB Financial Corporation$39,522 $(4,201)$126,500 $31,168 
 Three Months Ended June 30,Six Months Ended June 30,
 2022 2021 2022 2021 
Net income$19,353 $43,302 $54,589 $96,176 
Other comprehensive (loss) income, net of tax:
Net change in unrealized (loss) gain in available-for-sale
securities, net of tax (benefits) expense of $(17,343), $798, $(44,826) and $(2,654)
(49,233)2,286 (127,408)(9,562)
Reclassification adjustment for gain on sale of securities
included in net income, net of tax expenses of $0, $2, $1 and $4
(1)(6)(2)(11)
Net change in unrealized gain in hedging activities, net of tax
    expenses of $99, $23, $372 and $135
283 67 1,057 383 
Total other comprehensive (loss) income, net of tax(48,951)2,347 (126,353)(9,190)
Comprehensive (loss) income applicable to FB Financial Corporation
    and noncontrolling interest		(29,598)45,649 (71,764)86,986 
Comprehensive income applicable to noncontrolling interest8 8 8 8 
Comprehensive (loss) income applicable to FB Financial Corporation$(29,606)$45,641 $(71,772)$86,978 
See the accompanying notes to the consolidated financial statements.
6

FB Financial Corporation and subsidiaries
Consolidated statements of changes in shareholders’ equity
(Unaudited)
(Amounts are in thousands except per share amounts)

Common
stock		Additional
paid-in
capital		Retained
earnings		Accumulated
other
comprehensive
income (loss), net		Total common
shareholders' equity		Noncontrolling interestTotal shareholders' equity
Balance at March 31, 2022$47,488 $888,168 $515,664 $(71,544)$1,379,776 $93 $1,379,869 
   Net income attributable to FB
Financial Corporation and
noncontrolling interest		— — 19,345 — 19,345 8 19,353 
   Other comprehensive income, net of
taxes		— — — (48,951)(48,951)— (48,951)
   Repurchase of common stock(650)(25,890)— — (26,540)— (26,540)
   Stock based compensation expense1 3,037 — — 3,038 — 3,038 
   Restricted stock units vested and
distributed, net of shares withheld		43 (701)— — (658)— (658)
   Dividends declared ($0.13 per share)— — (6,158)— (6,158)— (6,158)
   Noncontrolling interest distribution— — — — — (8)(8)
Balance at June 30, 2022$46,882 $864,614 $528,851 $(120,495)$1,319,852 $93 $1,319,945 
Balance at December 31, 2021$47,549 $892,529 $486,666 $5,858 $1,432,602 $93 $1,432,695 
   Net income attributable to FB
Financial Corporation and
noncontrolling interest		— — 54,581 — 54,581 8 54,589 
   Other comprehensive income, net of
taxes		— — — (126,353)(126,353)— (126,353)
   Repurchase of common stock(795)(31,948)— — (32,743)— (32,743)
   Stock based compensation expense2 5,618 — — 5,620 — 5,620 
   Restricted stock units vested and
distributed, net of shares withheld		111 (2,257)— — (2,146)— (2,146)
   Shares issued under employee stock
purchase program		15 672 — — 687 — 687 
   Dividends declared ($0.26 per share)— — (12,396)— (12,396)— (12,396)
   Noncontrolling interest distribution— — — — — (8)(8)
Balance at June 30, 2022$46,882 $864,614 $528,851 $(120,495)$1,319,852 $93 $1,319,945 
See the accompanying notes to the consolidated financial statements.

 Common
stock		Additional
paid-in
capital		Retained
earnings		Accumulated
other
comprehensive
income, net		Total common
shareholders' equity		Noncontrolling interestsTotal shareholders' equity
Balance at June 30, 2021$47,361 $902,782 $403,173 $18,405 $1,371,721 $93 $1,371,814 
Net income attributable to FB
Financial Corporation and
noncontrolling interest		— — 45,290 — 45,290 — 45,290 
Other comprehensive income, net
of taxes		— — — (5,768)(5,768)— (5,768)
Repurchase of common stock(11)(425)— — (436)— (436)
Stock based compensation expense1 2,883 — — 2,884 — 2,884 
Restricted stock units vested and
distributed, net of shares withheld		342 (8,444)— — (8,102)— (8,102)
Shares issued under employee
stock purchase program		15 632 — — 647 — 647 
Dividends declared ($0.11 per
   share)
— — (5,323)— (5,323)— (5,323)
Noncontrolling interest distribution— — — — — — — 
Balance at September 30, 2021$47,708 $897,428 $443,140 $12,637 $1,400,913 $93 $1,401,006 
Balance at December 31, 2020$47,222 $898,847 $317,625 $27,595 $1,291,289 $93 $1,291,382 
Net income attributable to FB
Financial Corporation and
noncontrolling interest		— — 141,458 — 141,458 8 141,466 
Other comprehensive income, net
of taxes		— — — (14,958)(14,958)— (14,958)
Repurchase of common stock(11)(425)— — (436)— (436)
Stock based compensation expense6 8,059 — — 8,065 — 8,065 
Restricted stock units vested and
distributed, net of shares withheld		454 (10,496)— — (10,042)— (10,042)
Shares issued under employee
stock purchase program		37 1,443 — — 1,480 — 1,480 
Dividends declared ($0.33 per
    share)
— — (15,943)— (15,943)— (15,943)
Noncontrolling interest distribution— — — — — (8)(8)
Balance at September 30, 2021$47,708 $897,428 $443,140 $12,637 $1,400,913 $93 $1,401,006 
7

FB Financial Corporation and subsidiaries
Consolidated statements of changes in shareholders’ equity
(Unaudited)
(Amounts are in thousands except per share amounts)

Common
stock		Additional
paid-in
capital		Retained
earnings		Accumulated
other
comprehensive
income, net		Total common
shareholders' equity		Noncontrolling interestsTotal shareholders' equity
Balance at June 30, 2020$32,101 $462,930 $286,296 $23,889 $805,216 $— $805,216 
Net (loss) income— — (5,599)— (5,599)— (5,599)
Other comprehensive income, net
of taxes		— — — 1,398 1,398 — 1,398 
Common stock issued in
connection with acquisition of
Franklin Financial Network,
Inc.,net of registration costs
(See Note 2)		15,058 429,815 — — 444,873 93 444,966 
Stock based compensation expense6 3,014 — — 3,020 — 3,020 
Restricted stock units vested and
distributed, net of shares withheld		9 (115)— — (106)— (106)
Shares issued under employee stock
   purchase program		18 514 — — 532 — 532 
Dividends declared ($0.09 per
   share)
— — (4,336)— (4,336)— (4,336)
Balance at September 30, 2020$47,192 $896,158 $276,361 $25,287 $1,244,998 $93 $1,245,091 
Balance at December 31, 2019$31,034 $425,633 $293,524 $12,138 $762,329 $— $762,329 
Cumulative effect of change in
   accounting principle		— — (25,018)— (25,018)— (25,018)
Balance at January 1, 202031,034 425,633 268,506 12,138 737,311 — 737,311 
Net income— — 18,019 — 18,019 — 18,019 
Other comprehensive income, net
of taxes		— — — 13,149 13,149 — 13,149 
     Common stock issued in
         connection with acquisition of the
         FNB Financial Corp., net of
         registration costs (See Note 2)		955 33,892 — — 34,847 — 34,847 
Common stock issued in
connection with acquisition of
Franklin Financial Network,
Inc.,net of registration costs
(See Note 2)		15,058 429,815 — — 444,873 93 444,966 
Stock based compensation expense17 7,236 — — 7,253 — 7,253 
Restricted stock units vested and
distributed, net of shares withheld		98 (1,366)— — (1,268)— (1,268)
Shares issued under employee
stock purchase program		30 948 — — 978 — 978 
Dividends declared ($0.27 per
   share)
— — (10,164)— (10,164)— (10,164)
Balance at September 30, 2020$47,192 $896,158 $276,361 $25,287 $1,244,998 $93 $1,245,091 
See the accompanying notes to the consolidated financial statements.
Common
stock		Additional
paid-in
capital		Retained
earnings		Accumulated
other
comprehensive
income, net		Total common
shareholders' equity		Noncontrolling interestTotal shareholders' equity
Balance at March 31, 2021$47,332 $900,521 $365,192 $16,058 $1,329,103 $93 $1,329,196 
   Net income attributable to FB
Financial Corporation and
noncontrolling interest		— — 43,294 — 43,294 8 43,302 
   Other comprehensive loss, net of
     taxes		— — — 2,347 2,347 — 2,347 
   Stock based compensation
expense		2 2,513 — — 2,515 — 2,515 
   Restricted stock units vested and
distributed net of shares withheld		27 (252)— — (225)— (225)
   Dividends declared ($0.11 per
     share)
— — (5,313)— (5,313)— (5,313)
   Noncontrolling interest distribution— — — — — (8)(8)
Balance at June 30, 2021$47,361 $902,782 $403,173 $18,405 $1,371,721 $93 $1,371,814 
Balance at December 31, 2020$47,222 $898,847 $317,625 $27,595 $1,291,289 $93 $1,291,382 
   Net income attributable to FB
Financial Corporation and
noncontrolling interest		— — 96,168 — 96,168 8 96,176 
   Other comprehensive loss, net of
     taxes		— — — (9,190)(9,190)— (9,190)
   Stock based compensation
expense		5 5,176 — — 5,181 — 5,181 
   Restricted stock units vested and
distributed net of shares withheld		112 (2,052)— — (1,940)— (1,940)
   Shares issued under employee
stock purchase program		22 811 — — 833 — 833 
   Dividends declared ($0.22 per
     share)
— — (10,620)— (10,620)— (10,620)
   Noncontrolling interest distribution— — — — — (8)(8)
Balance at June 30, 2021$47,361 $902,782 $403,173 $18,405 $1,371,721 $93 $1,371,814 
8
FB Financial Corporation and subsidiaries
Consolidated statements of cash flows
(Unaudited)
(Amounts are in thousands)
Nine Months Ended September 30,Six Months Ended June 30,
2021 2020 2022 2021 
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net income applicable to FB Financial Corporation and noncontrolling interestNet income applicable to FB Financial Corporation and noncontrolling interest$141,466 $18,019 Net income applicable to FB Financial Corporation and noncontrolling interest$54,589 $96,176 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed assets6,288 4,924 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of fixed assets and softwareDepreciation and amortization of fixed assets and software4,048 4,148 
Amortization of core deposit and other intangiblesAmortization of core deposit and other intangibles4,178 3,825 Amortization of core deposit and other intangibles2,438 2,834 
Capitalization of mortgage servicing rightsCapitalization of mortgage servicing rights(31,382)(33,415)Capitalization of mortgage servicing rights(15,070)(22,167)
Net change in fair value of mortgage servicing rightsNet change in fair value of mortgage servicing rights788 42,251 Net change in fair value of mortgage servicing rights(28,096)549 
Stock-based compensation expenseStock-based compensation expense8,065 7,253 Stock-based compensation expense5,620 5,181 
Provision for credit lossesProvision for credit losses(27,349)97,837 Provision for credit losses2,052 (24,517)
Provision for credit losses on unfunded commitmentsProvision for credit losses on unfunded commitments(2,875)13,050 Provision for credit losses on unfunded commitments6,019 (3,176)
Provision for mortgage loan repurchasesProvision for mortgage loan repurchases(266)2,128 Provision for mortgage loan repurchases(1,189)(266)
Amortization (accretion) of premiums and discounts on acquired loans, net127 (3,080)
Accretion of discounts and amortization of premiums on securities, net6,521 4,431 
Gain from securities, net(278)(618)
Amortization of premiums and accretion of discounts on acquired loans, netAmortization of premiums and accretion of discounts on acquired loans, net2,288 284 
Amortization of premiums and accretion of discounts on securities, netAmortization of premiums and accretion of discounts on securities, net3,692 4,390 
Loss (gain) from securities, netLoss (gain) from securities, net261 (227)
Originations of loans held for saleOriginations of loans held for sale(4,926,390)(4,739,497)Originations of loans held for sale(1,719,488)(3,308,882)
Repurchases of loans held for sale(384)— 
Proceeds from sale of loans held for saleProceeds from sale of loans held for sale4,939,323 4,690,135 Proceeds from sale of loans held for sale2,213,443 3,355,152 
Gain on sale and change in fair value of loans held for saleGain on sale and change in fair value of loans held for sale(126,983)(202,336)Gain on sale and change in fair value of loans held for sale(35,410)(86,031)
Net (gain) loss or write-downs of other real estate owned(2,478)1,368 
Net loss (gain) or write-downs of other real estate ownedNet loss (gain) or write-downs of other real estate owned524 (473)
(Gain) loss on other assets(Gain) loss on other assets(162)156 (Gain) loss on other assets(82)15 
Provision for deferred income taxesProvision for deferred income taxes20,904 (31,543)Provision for deferred income taxes12,461 13,538 
Earnings on bank-owned life insuranceEarnings on bank-owned life insurance(728)(792)
Changes in:Changes in:Changes in:
Operating leasesOperating leases(781)1,309 Operating leases166 (677)
Other assets and interest receivableOther assets and interest receivable(2,508)(77,566)Other assets and interest receivable13,566 (17,810)
Accrued expenses and other liabilitiesAccrued expenses and other liabilities(46,867)59,420 Accrued expenses and other liabilities7,279 (92,355)
Net cash used in operating activities(41,043)(141,949)
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities528,383 (75,106)
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Activity in available-for-sale securities:Activity in available-for-sale securities:Activity in available-for-sale securities:
SalesSales8,855 28,257 Sales1,218 — 
Maturities, prepayments and callsMaturities, prepayments and calls216,032 140,246 Maturities, prepayments and calls126,349 147,906 
PurchasesPurchases(645,658)(214,285)Purchases(243,209)(354,762)
Net change in loansNet change in loans(61,795)(133,893)Net change in loans(1,029,702)(95,938)
Net change in commercial loans held for saleNet change in commercial loans held for sale39,300 91,792 
Sales of FHLB stockSales of FHLB stock4,294 — Sales of FHLB stock— 2,346 
Purchases of FHLB stockPurchases of FHLB stock(2,364)(525)
Purchases of FHLB stock(663)(515)
Purchases of premises and equipmentPurchases of premises and equipment(5,193)(2,652)Purchases of premises and equipment(3,224)(1,168)
Proceeds from the sale of premises and equipmentProceeds from the sale of premises and equipment875 — 
Proceeds from the sale of other real estate ownedProceeds from the sale of other real estate owned8,834 5,561 Proceeds from the sale of other real estate owned418 4,661 
Net cash acquired in business combinations— 248,439 
Net cash used in investing activitiesNet cash used in investing activities(475,294)71,158 Net cash used in investing activities(1,110,339)(205,688)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Net increase in demand deposits863,646 1,043,928 
Net decrease in time deposits(249,765)(201,659)
Net increase in securities sold under agreements to repurchase9,531 5,532 
Payments on FHLB advances— (50,000)
Net (decrease) increase in demand depositsNet (decrease) increase in demand deposits(334,155)900,733 
Net increase (decrease) in time depositsNet increase (decrease) in time deposits46,677 (154,814)
Net (decrease) increase in securities sold under agreements to repurchaseNet (decrease) increase in securities sold under agreements to repurchase(9,010)857 
Issuance of subordinated debt, net of issuance costs— 98,190 
Payments on subordinated debtPayments on subordinated debt(60,000)— Payments on subordinated debt— (40,000)
Accretion of subordinated debt fair value premium and amortization of issuance costs, net(79)(175)
(Payments on) proceeds from other borrowings(15,000)15,000 
Amortization of issuance costs and (accretion) of subordinated debt fair value premium, netAmortization of issuance costs and (accretion) of subordinated debt fair value premium, net193 (176)
Payments on other borrowingsPayments on other borrowings— (15,000)
Share based compensation withholding paymentsShare based compensation withholding payments(10,042)(1,268)Share based compensation withholding payments(2,146)(1,940)
Net proceeds from sale of common stock under employee stock purchase programNet proceeds from sale of common stock under employee stock purchase program1,480 978 Net proceeds from sale of common stock under employee stock purchase program687 833 
Repurchase of common stockRepurchase of common stock(436)— Repurchase of common stock(32,743)— 
Dividends paidDividends paid(16,324)(10,025)Dividends paid(12,418)(10,492)
Noncontrolling interest distributionNoncontrolling interest distribution(8)— Noncontrolling interest distribution(8)(8)
Net cash provided by financing activities523,003 900,501 
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(342,923)679,993 
Net change in cash and cash equivalentsNet change in cash and cash equivalents6,666 829,710 Net change in cash and cash equivalents(924,879)399,199 
Cash and cash equivalents at beginning of the periodCash and cash equivalents at beginning of the period1,317,898 232,681 Cash and cash equivalents at beginning of the period1,797,740 1,317,898 
Cash and cash equivalents at end of the periodCash and cash equivalents at end of the period$1,324,564 $1,062,391 Cash and cash equivalents at end of the period$872,861 $1,717,097 
Supplemental cash flow information:Supplemental cash flow information:Supplemental cash flow information:
Interest paidInterest paid$34,542 $36,498 Interest paid$15,638 $24,611 
Taxes paidTaxes paid55,609 16,449 Taxes paid726 45,335 
Supplemental noncash disclosures:Supplemental noncash disclosures:Supplemental noncash disclosures:
Transfers from loans to other real estate ownedTransfers from loans to other real estate owned$4,945 $1,579 Transfers from loans to other real estate owned$563 $4,596 
Transfers from other real estate owned to premises and equipment— 841 
Loans provided for sales of other real estate ownedLoans provided for sales of other real estate owned685 — Loans provided for sales of other real estate owned— 533 
Transfers from loans to loans held for saleTransfers from loans to loans held for sale10,408 9,304 Transfers from loans to loans held for sale20,016 3,709 
Transfers from loans held for sale to loansTransfers from loans held for sale to loans52,151 49,508 Transfers from loans held for sale to loans14,179 29,322 
Stock consideration paid in business combination— 480,867 
Trade date payable - securitiesTrade date payable - securities5,996 1,214 Trade date payable - securities— 41,722 
Dividends declared not paid on restricted stock unitsDividends declared not paid on restricted stock units340 139 Dividends declared not paid on restricted stock units118 128 
Decrease to retained earnings for adoption of new accounting standard— 25,018 
Right-of-use assets obtained in exchange for operating lease liabilitiesRight-of-use assets obtained in exchange for operating lease liabilities839 806 Right-of-use assets obtained in exchange for operating lease liabilities2,317 670 
See the accompanying notes to the consolidated financial statements.

9
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)

Note (1)—Basis of presentation:
Overview and presentation
FB Financial Corporation (the “Company”) is a financial holding company headquartered in Nashville, Tennessee. The Company operates through its wholly owned subsidiary,wholly-owned subsidiaries, FirstBank (the "Bank"). and FirstBank Risk Management, Inc. As of SeptemberJune 30, 2021,2022, the Bank had 8281 full-service branches throughout Tennessee, Alabama, southern Kentucky and north Georgia, and a national mortgage business with office locations across the Southeast, which primarily originates loans to be sold in the secondary market.
The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with United States generally accepted accounting principlesU.S. GAAP interim reporting requirements and general banking industry guidelines, and therefore, do not include all information and notes included in the annual consolidated financial statements in conformity with GAAP. These interim consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K.
The unaudited consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.
In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheetfinancial statements and the reported results of operations for the reporting periods then ended.and the related disclosures. Although management's estimates contemplate current conditions and how they are expected to change in the future, it is reasonably possible that actual conditions could vary from those anticipated, which could affect the Company's financial condition and results of operations. Actual results could differ significantly from those estimates.
Certain prior period amounts have been reclassified to conform to the current period presentation without any impact on the reported amounts of net income or shareholders’ equity.
As of September 30, 2021, the Company continues to qualify as an emerging growth company as defined by the "Jumpstart Our Business Startups Act," however beginning on December 31, 2021, the Company will cease to qualify.
Risks and uncertainties
The COVID-19 health pandemic that arose in 2020 created a crisis resulting in volatility in financial markets, sudden, unprecedented job losses, and disruption in consumer and commercial behavior, resulting in governments in the United States and globally to intervene with varying levels of direct monetary support and fiscal stimulus packages. All industries, municipalities and consumers have been impacted by the health crisis to some degree, including the markets that we serve. In attempts to “flatten the curve,” businesses not deemed essential were closed or constrained to capacity limitations, individuals were asked to restrict their movements, observe social distancing and shelter in place. These actions resulted in rapid decreases in commercial and consumer activity, temporary closures of many businesses, leading to a loss of revenues and a rapid increase in unemployment, widening of credit spreads, dislocation of bond markets, disruption of global supply chains and changes in consumer spending behavior. Although most restrictions were lifted and vaccines became widely available during early 2021, during the nine months ended September 30, 2021, concern began building regarding the potential impact the new Delta variant of the virus may have on the global economy and the efficacy of available vaccines and booster vaccines to protect against widespread infection. Additionally, there continues to be concern regarding the potential downstream effects of vaccine mandates and supply chain disruptions and labor shortages continue to persist. As such, there continues to be uncertainty regarding the long term effects on the global economy, which could have a material adverse impact on the Company's business operations, asset valuations, financial condition, and results of operations.
Earnings per share
Basic EPS excludes dilution and is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS includes the dilutive effect of additional potential common shares issuable under the restricted stock units granted but not yet vested and distributable. Diluted EPS is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period, plus an incremental number of common-equivalent shares computed using the treasury stock method.
Unvested share-based payment awards, which include the right to receive non-forfeitable dividends or dividend equivalents, are considered to participate with common shareholders in undistributed earnings for purposes of computing
10
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
EPS. Companies that have such participating securities are required to calculate basic and diluted EPS using the two-class method. Certain restricted stock awards granted by the Company include non-forfeitable dividend equivalents and are considered participating securities. Calculations of EPS under the two-class method (i) exclude from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities and (ii) exclude from the denominator the dilutive impact of the participating securities.
10
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following is a summary of the basic and diluted earnings per common share calculation for each of the periods presented:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021202020212020 2022202120222021
Basic earnings (loss) per common share calculation:
Net income (loss) applicable to FB Financial Corporation$45,290 $(5,599)$141,458 $18,019 
Basic earnings per common share calculation:Basic earnings per common share calculation:
Net income applicable to FB Financial CorporationNet income applicable to FB Financial Corporation$19,345 $43,294 $54,581 $96,168 
Dividends paid on and undistributed earnings allocated to participating securitiesDividends paid on and undistributed earnings allocated to participating securities— — — — Dividends paid on and undistributed earnings allocated to participating securities— — — — 
Earnings (loss) available to common shareholders$45,290 $(5,599)$141,458 $18,019 
Earnings available to common shareholdersEarnings available to common shareholders$19,345 $43,294 $54,581 $96,168 
Weighted average basic shares outstandingWeighted average basic shares outstanding47,412,214 40,154,841 47,345,984 34,404,064 Weighted average basic shares outstanding47,111,055 47,351,969 47,320,784 47,312,312 
Basic earnings (loss) per common share$0.96 $(0.14)$2.99 $0.52 
Basic earnings per common shareBasic earnings per common share$0.41 $0.91 $1.15 $2.03 
Diluted earnings per common share:Diluted earnings per common share:Diluted earnings per common share:
Earnings (loss) available to common shareholders$45,290 $(5,599)$141,458 $18,019 
Earnings available to common shareholdersEarnings available to common shareholders$19,345 $43,294 $54,581 $96,168 
Weighted average basic shares outstandingWeighted average basic shares outstanding47,412,214 40,154,841 47,345,984 34,404,064 Weighted average basic shares outstanding47,111,055 47,351,969 47,320,784 47,312,312 
Weighted average diluted shares contingently issuable(1)
Weighted average diluted shares contingently issuable(1)
594,933 482,904 637,510 436,228 
Weighted average diluted shares contingently issuable(1)
100,595 641,804 145,507 664,221 
Weighted average diluted shares outstandingWeighted average diluted shares outstanding48,007,147 40,637,745 47,983,494 34,840,292 Weighted average diluted shares outstanding47,211,650 47,993,773 47,466,291 47,976,533 
Diluted earnings (loss) per common share$0.94 $(0.14)$2.95 $0.52 
Diluted earnings per common shareDiluted earnings per common share$0.41 $0.90 $1.15 $2.00 
(1)Excludes 15,974202,661 and 20,44810,678 restricted stock units outstanding considered to be antidilutive for the three and ninesix months ended SeptemberJune 30, 2021, respectively2022 and 332,347164,472 and 536,908250,776 restricted stock units outstanding considered to be antidilutive for three and ninesix months ended SeptemberJune 30, 2020.2021.
Recently adopted accounting policies:
The Company did not modify or adopt any new accounting policies during the three and ninesix months ended SeptemberJune 30, 20212022 that were not disclosed in the Company's 20202021 audited consolidated financial statements included on Form 10-K, other than as described below.
As previously disclosed, during the three months ended March 31, 2021,2022, the Company reevaluated its business segments to align all retail mortgage activities with the Mortgage segment. Previously, the Company assigned retail mortgage activities within the Banking geographical footprintadded to the Banking segment. Seeexisting accounting policy related to derivative financial instruments and hedging activities as described in Note 12, "Segment reporting" for additional information1 of the Company's 2021 Annual Report on this change.Form 10-K in accordance with ASC 815, "Derivatives and Hedging," as a result of entering into designated fair value hedges during the period.The Company enters into fair value hedge relationships to mitigate the effect of changing interest rates on the fair values of fixed rate securities and loans. The gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item.
Recently adopted accounting standards:
Except as set forth below, theThe Company did not adopt any new accounting standards that were not disclosed in the Company's 20202021 audited consolidated financial statements included on Form 10-K.
In January 2021, Financial Accounting Standards Board issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope". This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. The Company early adopted ASU 2021-01 upon issuance effective January 7, 2021. No contract modifications have been made under the new guidance, therefore the adoption of this update did not impact the Company's financial statements or disclosures.
Newly issued not yet effective accounting standards:
In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this update to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, to amend a related illustrative example, and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The ASU becomes effective January 1, 2024 and the Company is evaluating the potential impact of this standard on its consolidated financial statements and related disclosures.
In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method", to expand the current single-layer method of electing hedge accounting to allow multiple hedged layers of a single closed portfolio under the method. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of ASU No. 2022-01 for any entity that has adopted the amendments in ASU No.2017-12 for the corresponding period. Adoption of this update will not have an impact on the Company's consolidated financial statements or related disclosures.
11
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Additionally, in March 2022, the FASB issued ASU 2022-02, "'Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" related to troubled debt restructurings and vintage disclosures for financing receivables. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan modifications and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the effect that ASU 2022-02 will have on its consolidated financial statements and related disclosures.
In March 2022, the SEC released SAB 121 to add interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for clients. The new guidance requires reporting entities who allow clients to transact in crypto-assets and act as a custodian to record a liability with a corresponding asset regardless of whether they control the crypto-asset. The crypto-asset will need to be marked at fair value for each reporting period. The new guidance requires disclosures in the footnotes to address the amount of crypto-assets reported, and the safeguarding and recordkeeping of the assets. The guidance in this update requires that reporting companies implement SAB 121 no later than the financial statements covering the first interim or annual period ending after June 15, 2022, with retrospective application back to the beginning of the fiscal year. During the three months ended March 31, 2022, the Company became a founding member of the USDF Consortium ("the Consortium"), which plans to utilize blockchain and bank-issued digital dollars technology to streamline peer-to-peer financial transactions. While the Company does not currently hold or facilitate transactions with crypto-assets, the Company is evaluating the potential future financial statement and disclosure impact from adopting this guidance when it becomes applicable based on the Company's crypto-asset activities.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 is intended to provide relief for companies preparing for discontinuation of interest rates based on LIBOR. The ASU provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to be discontinued. ASU 2020-04 also provides for a onetime sale and/or transfer to AFS or trading to be made for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. ASU 2020-04 was effective for all entities as of March 12, 2020 and through December 31, 2022. Companies can apply the ASU as of the beginning of the interim period that includes March 12, 2020 or any date
11
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
thereafter. The guidance requires companies to apply the guidance prospectively to contract modifications and hedging relationships while the one-time election to sell and/or transfer debt securities classified as HTM may be made any time after March 12, 2020. We have
Our LIBOR Transition Committee was established a working group to transition from LIBOR and have begun efforts to transition to alternative rates and has continued its efforts consistent with industry timelines. We haveAs part of these efforts, during the fourth quarter of 2021, we ceased utilization of LIBOR as an index in newly originated loans or loans that are refinanced. Additionally, we identified existing products that utilize LIBOR and are implementing enhanced fallbackreviewing contractual language to facilitate the transition to alternative reference rates. ASU 2020-04 isand ASU 2021-01 are not expected to have a material impact on our consolidated financial statements.
Note (2)—Mergers and acquisitions:
The following mergers and acquisitions were accounted for pursuant to Accounting Standards Codification 805, "Business Combinations". Accordingly, the purchase price of each acquisition was allocated to the acquired assets and liabilities assumed based on estimated fair values as of the respective acquisition dates. The excess of the purchase price over the net assets acquired was recorded as goodwill.
Franklin Financial Network, Inc. merger
Effective August 15, 2020, the Company completed its previously announced merger with Franklin Financial Network, Inc. and its wholly owned subsidiaries (collectively, "Franklin"), with FB Financial Corporation continuing as the surviving entity. After consolidating duplicative locations the merger added 10 branches and expanded the Company's footprint in middle Tennessee and the Nashville metropolitan statistical area. Under the terms of the agreement, the Company acquired total assets of $3.63 billion, loans of $2.79 billion and assumed total deposits of $3.12 billion. Total loans acquired includes a non-strategic institutional portfolio with a fair value of $326,206 the Company classified as held for sale. Franklin common shareholders received 15,058,181 shares of the Company's common stock, net of the equivalent value of 44,311 shares withheld on certain Franklin employee equity awards that vested upon change in control, as consideration in connection with the merger, in addition to $31,330 in cash consideration. Also included in the purchase price, the Company issued replacement restricted stock units for awards initially granted by Franklin during 2020 that did not vest upon change in control, with a total fair value of $674 attributed to pre-combination service. Based on the closing price of the Company's common stock on the New York Stock Exchange of $29.52 on August 15, 2020, the merger consideration represented approximately $477,830 in aggregate consideration.
Goodwill of $67,191 recorded in connection with the transaction resulted from the ongoing business contribution, reputation, operating model and expertise of Franklin. The goodwill is not deductible for income tax purposes. Goodwill is included in the Banking segment as substantially all of the operations resulting from the acquisition of Franklin are in alignment with the Company's banking business.


12
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following table presents an allocation of the consideration to net assets acquired:
Purchase Price:
Equity consideration
Franklin shares outstanding(1)
15,588,337 
Franklin options converted to net shares62,906 
15,651,243 
Exchange ratio to FB Financial shares0.965 
FB Financial shares to be issued as merger consideration(2)
15,102,492 
Issuance price as of August 15, 2020$29.52 
Value of FB Financial stock to be issued as merger consideration$445,826 
Less: tax withholding on vested restricted stock awards, units and options(3)
(1,308)
Value of FB Financial stock issued$444,518 
FB Financial shares issued15,058,181 
Franklin restricted stock units that do not vest on change in control114,915 
Replacement awards issued to Franklin employees118,776 
Fair value of replacement awards$3,506 
Fair value of replacement awards attributable to pre-combination service$674 
Cash consideration
Total Franklin shares and net shares outstanding15,651,243 
Cash consideration per share$2.00 
Total cash to be paid to Franklin(4)
$31,330 
Total purchase price$477,830 
Fair value of net assets acquired410,639 
Goodwill resulting from merger$67,191 
(1)Franklin shares outstanding includes restricted stock awards and restricted stock units that vested upon change in control.
(2)Only factors in whole share issuance. Cash was paid in lieu of fractional shares.
(3)Represents the equivalent value of approximately 44,311 shares of FB Financial Corporation stock on August 15, 2020.
(4)Includes $28 of cash paid in lieu of fractional shares.
FNB Financial Corp. merger
Effective February 14, 2020, the Company completed its previously announced acquisition of FNB Financial Corp. and its wholly owned subsidiary, Farmers National Bank of Scottsville (collectively, "Farmers National"). Following the acquisition, Farmers National was merged into the Company with FB Financial Corporation continuing as the surviving entity. The transaction added 4 branches and expanded the Company's footprint into Kentucky. Under the terms of the agreement, the Company acquired total assets of $258,218, loans of $182,171 and assumed total deposits of $209,535. Farmers National shareholders received 954,797 shares of the Company's common stock as consideration in connection with the merger, in addition to $15,001 in cash consideration. Based on the closing price of the Company's common stock on the New York Stock Exchange of $36.70 on February 14, 2020, the merger consideration represented approximately $50,042 in aggregate consideration.
Goodwill of $6,319 recorded in connection with the transaction resulted from the ongoing business contribution of Farmers National and anticipated synergies arising from the combination of certain operational areas of the Company. Goodwill resulting from this transaction is not deductible for income tax purposes. Goodwill is included in the Banking segment as substantially all of the operations resulting from the acquisition of Farmers National are in alignment with the Company's core banking business.
13
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following table presents the total purchase price, fair value of net assets acquired, and the goodwill as of the acquisition date.
Consideration:
Net shares issued954,797 
Purchase price per share on February 14, 2020$36.70 
Value of stock consideration$35,041 
Cash consideration paid15,001 
Total purchase price$50,042 
Fair value of net assets acquired43,723 
Goodwill resulting from merger$6,319 
Net assets acquired
The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the respective acquisition dates:
As of August 15, 2020As of February 14, 2020
Franklin Financial Network, Inc.FNB Financial Corp.
ASSETS
Cash and cash equivalents$284,004 $10,774 
Investments373,462 50,594 
Mortgage loans held for sale, at fair value38,740 — 
Commercial loans held for sale, at fair value326,206 — 
Loans held for investment, net of fair value adjustments2,427,527 182,171 
Allowance for credit losses on purchased credit
   deteriorated loans		(24,831)(669)
Premises and equipment45,471 8,049 
Operating lease right-of-use assets23,958 14 
Mortgage servicing rights5,111 — 
Core deposit intangible7,670 2,490 
Other assets124,571 4,795 
Total assets$3,631,889 $258,218 
LIABILITIES
Deposits:
Noninterest-bearing$505,374 $63,531 
Interest-bearing checking1,783,379 26,451 
Money market and savings342,093 37,002 
Customer time deposits383,433 82,551 
Brokered and internet time deposits107,452 — 
Total deposits3,121,731 209,535 
Borrowings62,435 3,192 
Operating lease liabilities24,330 14 
Accrued expenses and other liabilities12,661 1,754 
Total liabilities assumed3,221,157 214,495 
Noncontrolling interests acquired93 — 
Net assets acquired$410,639 $43,723 

14
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Purchased credit-deteriorated loans
Under the CECL methodology, the Company is required to determine whether purchased loans held for investment have experienced more-than-insignificant deterioration in credit quality since origination. Loans that have experienced this level of deterioration in credit quality are subject to special accounting at initial recognition and measurement. The Company initially measures the amortized cost of a PCD loan by adding the acquisition date estimate of expected credit losses to the loan's purchase price (i.e. the "gross up" approach). There is no provision for credit loss recognized upon acquisition of a PCD loan because the initial allowance is established through gross-up of the loans' amortized cost.Subsequent events
The Company has evaluated, for consideration of recognition or disclosure, subsequent events that occurred through the date of issuance of these financial statements. The Company has determined that 27.9% of the Franklin loan portfolio had more-than-insignificant deterioration in credit quality since origination as of the acquisition date. This included deterioration in credit metrics, such as delinquency, nonaccrual status or risk ratings as well as certain loans within designated industries of concernthere were no subsequent events that have been negatively impacted by COVID-19. It was determined that 10.1% of the Farmers National loan portfolio had more-than-insignificant deterioration in credit quality since origination as of the February acquisition date. These were primarily delinquent loans or loans that Farmers National had classified as nonaccrual or troubled debt restructuringoccurred after June 30, 2022, but prior to the Company's acquisition.
As of August 15, 2020As of February 14, 2020
Franklin Financial Network, Inc.FNB Financial Corp.
Purchased credit-deteriorated loans
Principal balance$693,999 $18,964 
Allowance for credit losses at acquisition(24,831)(669)
Net premium attributable to other factors8,810 63 
Loans purchased credit-deteriorated fair value$677,978 $18,358 
Loans recognized through acquisitionissuance of these financial statements that would have not experienced more-than-insignificant credit deterioration since origination are initially recognized ata material impact on the purchase price. Expected credit losses are measured under CECL through the provision for credit losses. The Company recorded provisions for credit losses in the amounts of $52,822 and $2,885 as of August 15, 2020 and February 14, 2020, respectively, in the income statement related to estimated credit losses on non-PCD loans from Franklin and Farmers National, respectively. Additionally, the Company estimates expected credit losses on off-balance sheet loan commitments that are not accounted for as derivatives. The Company recorded an increase in provision for credit losses from unfunded commitments of $10,499 as of August 15, 2020 related to the Franklin acquisition.
Pro forma financial information (unaudited)
The results of operations of the acquisitions have been included in the Company'sCompany’s consolidated financial statements prospectively beginning on the date of each acquisition. The acquisitions have been fully integrated with the Company's existing operations. Accordingly, post-acquisition net interest income, total revenues, and net income are not discernible. The following unaudited pro forma condensed consolidated financial information presents the results of operations for the three and nine months ended September 30, 2020, as though the Franklin and Farmers National acquisitions had been completed as of January 1, 2019. The unaudited estimated pro forma information combines the historical results of the mergers with the Company’s historical consolidated results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the periods presented. Merger expenses are reflected in the period they were incurred. The pro forma information is not indicative of what would have occurred had the transactions taken place on January 1, 2019 and does not include the effect of cost-saving or revenue-enhancing strategies.statements.
Three Months Ended September 30,Nine Months Ended September 30,
2020 2020 
Net interest income$83,641 $252,849 
Total revenues$178,384 $488,493 
Net (loss) income applicable to FB Financial Corporation$(12,428)$19,526 





1512
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Note (3)(2)—Investment securities:
The following tables summarize the amortized cost, allowance for credit losses and fair value of the available-for-sale debt securities and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income at SeptemberJune 30, 20212022 and December 31, 2020:2021:  
September 30, 2021June 30, 2022
Amortized costGross unrealized gainsGross unrealized lossesAllowance for credit losses for investmentsFair Value Amortized costGross unrealized gainsGross unrealized lossesAllowance for credit losses for investmentsFair Value
Investment SecuritiesInvestment Securities    Investment Securities    
Available-for-sale debt securitiesAvailable-for-sale debt securities  Available-for-sale debt securities  
U.S. government agency securitiesU.S. government agency securities$10,598 $5 $(32)$— $10,571 U.S. government agency securities$45,154 $4 $(3,099)$— $42,059 
Mortgage-backed securities - residentialMortgage-backed securities - residential1,211,042 9,111 (9,650)— 1,210,503 Mortgage-backed securities - residential1,297,033 325 (132,426)— 1,164,932 
Mortgage-backed securities - commercialMortgage-backed securities - commercial15,374 368 (30)— 15,712 Mortgage-backed securities - commercial21,539 — (871)— 20,668 
Municipal securitiesMunicipal securities312,672 14,881 (314)— 327,239 Municipal securities301,175 810 (28,821)— 273,164 
U.S. Treasury securitiesU.S. Treasury securities5,998 8 — — 6,006 U.S. Treasury securities112,844 — (3,051)— 109,793 
Corporate securitiesCorporate securities2,500 35 (8)— 2,527 Corporate securities8,006 — (381)— 7,625 
TotalTotal$1,558,184 $24,408 $(10,034)$— $1,572,558 Total$1,785,751 $1,139 $(168,649)$— $1,618,241 
December 31, 2020December 31, 2021
Amortized costGross unrealized gainsGross unrealized lossesAllowance for credit losses for investmentsFair Value Amortized costGross unrealized gainsGross unrealized lossesAllowance for credit losses for investmentsFair Value
Investment SecuritiesInvestment Securities    Investment Securities    
Available-for-sale debt securitiesAvailable-for-sale debt securities    Available-for-sale debt securities    
U.S. government agency securitiesU.S. government agency securities$2,000 $3 $— $— $2,003 U.S. government agency securities$34,023 $18 $(171)$— $33,870 
Mortgage-backed securities - residentialMortgage-backed securities - residential760,099 14,040 (803)— 773,336 Mortgage-backed securities - residential1,281,285 6,072 (17,985)— 1,269,372 
Mortgage-backed securities - commercialMortgage-backed securities - commercial20,226 1,362 — — 21,588 Mortgage-backed securities - commercial15,024 272 (46)— 15,250 
Municipal securitiesMunicipal securities336,543 19,806 (20)— 356,329 Municipal securities322,052 16,718 (160)— 338,610 
U.S. Treasury securitiesU.S. Treasury securities16,480 148 — — 16,628 U.S. Treasury securities14,914 — (6)— 14,908 
Corporate securitiesCorporate securities2,500 17 (1)— 2,516 Corporate securities6,500 40 (25)— 6,515 
TotalTotal$1,137,848 $35,376 $(824)$— $1,172,400 Total$1,673,798 $23,120 $(18,393)$— $1,678,525 
The components of amortized cost for debt securities on the consolidated balance sheets excludes accrued interest receivable since the Company elected to present accrued interest receivable separately on the consolidated balance sheets. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, total accrued interest receivable on debt securities was $4,744$5,662 and $4,540,$5,051, respectively.
As of SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had $4,779$3,103 and $4,591,$3,367, in marketable equity securities recorded at fair value, respectively.
Securities pledged at SeptemberJune 30, 20212022 and December 31, 20202021 had carrying amounts of $1,154,797$1,312,460 and $804,821,$1,226,646, respectively, and were pledged to secure a Federal Reserve Bank line of credit, public deposits and repurchase agreements.
There were no holdings of securities of any one issuer, other than U.S. Government sponsored enterprises, in an amount greater than 10% of shareholders' equity during any period presented.
Investment securities transactions are recorded as of the trade date. At SeptemberJune 30, 20212022 and December 31, 2020,2021, there were no trade date receivables or payables that related to sales settled after period end. At September 30, 2021 and December 31, 2020, there were $5,996 and $0 respectively, in trade date payables that related toor purchases settled after period end.
 
1613
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The amortized cost and fair value of debt securities by contractual maturity at SeptemberJune 30, 20212022 and December 31, 20202021 are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgage underlying the security may be called or repaid without any penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.
September 30,December 31,June 30,December 31,
2021 2020  2022 2021 
Available-for-saleAvailable-for-sale Available-for-saleAvailable-for-sale
Amortized costFair valueAmortized costFair value Amortized costFair valueAmortized costFair value
Due in one year or lessDue in one year or less$16,713 $16,773 $35,486 $35,662 Due in one year or less$3,078 $3,077 $21,851 $21,884 
Due in one to five yearsDue in one to five years20,242 20,637 24,278 24,684 Due in one to five years157,083 152,339 54,847 55,307 
Due in five to ten yearsDue in five to ten years40,757 42,211 40,038 41,332 Due in five to ten years58,406 55,967 45,714 46,975 
Due in over ten yearsDue in over ten years254,056 266,722 257,721 275,798 Due in over ten years248,612 221,258 255,077 269,737 
331,768 346,343 357,523 377,476 467,179 432,641 377,489 393,903 
Mortgage-backed securities - residentialMortgage-backed securities - residential1,211,042 1,210,503 760,099 773,336 Mortgage-backed securities - residential1,297,033 1,164,932 1,281,285 1,269,372 
Mortgage-backed securities - commercialMortgage-backed securities - commercial15,374 15,712 20,226 21,588 Mortgage-backed securities - commercial21,539 20,668 15,024 15,250 
Total debt securitiesTotal debt securities$1,558,184 $1,572,558 $1,137,848 $1,172,400 Total debt securities$1,785,751 $1,618,241 $1,673,798 $1,678,525 
Sales and other dispositions of available-for-sale securities were as follows:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021 2020 2021 2020  2022 2021 2022 2021 
Proceeds from salesProceeds from sales$8,855 $28,257 $8,855 $28,257 Proceeds from sales$1,218 $— $1,218 $— 
Proceeds from maturities, prepayments and callsProceeds from maturities, prepayments and calls68,126 67,886 216,032 140,246 Proceeds from maturities, prepayments and calls126,349 86,866 126,349 147,906 
Gross realized gainsGross realized gains76 563 91 563 Gross realized gains1 8 3 15 
Gross realized lossesGross realized losses1 39 1 39 Gross realized losses— — — — 
Additionally, the change in the fair value of equity securities and sale of equity securities resulted in a net unrealized loss of $24$110 and a net unrealized gain of $188 during$136 for the three and nine months ended SeptemberJune 30, 2022 and 2021, respectively, and in a net unrealized gains on equity securitiesloss of $59$264 and $94 were recognized ina net gain of $212 for the three and ninesix months ended SeptemberJune 30, 2020,2022 and 2021, respectively.

The following tables show gross unrealized losses for which an allowance for credit losses has not been recorded at SeptemberJune 30, 20212022 and December 31, 2020,2021, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
September 30, 2021
 Less than 12 months12 months or moreTotal
 Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
U.S. government agency securities$7,639 $(32)$— $— $7,639 $(32)
Mortgage-backed securities - residential711,775 (9,377)24,341 (273)736,116 (9,650)
Mortgage-backed securities - commercial1,949 (30)— — 1,949 (30)
Municipal securities30,371 (314)— — 30,371 (314)
Corporate securities492 (8)— — 492 (8)
Total$752,226 $(9,761)$24,341 $(273)$776,567 $(10,034)

June 30, 2022
 Less than 12 months12 months or moreTotal
 Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
U.S. government agency securities$41,061 $(3,099)$— $— $41,061 $(3,099)
Mortgage-backed securities - residential928,511 (101,181)191,387 (31,245)1,119,898 (132,426)
Mortgage-backed securities - commercial20,668 (871)— — 20,668 (871)
Municipal securities216,587 (28,536)939 (285)217,526 (28,821)
U.S. Treasury securities108,125 (3,051)— — 108,125 (3,051)
Corporate securities7,743 (381)— — 7,743 (381)
Total$1,322,695 $(137,119)$192,326 $(31,530)$1,515,021 $(168,649)

 December 31, 2020
 Less than 12 months12 months or moreTotal
 Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized loss
Mortgage-backed securities - residential$182,012 $(803)$— $— $182,012 $(803)
Municipal securities3,184 (20)— — 3,184 (20)
Corporate Securities499 (1)00499 (1)
Total$185,695 $(824)$— $— $185,695 $(824)
As of September 30, 2021 and December 31, 2020, the Company’s securities portfolio consisted of 513 and 514 securities, 61 and 16 of which were in an unrealized loss position, respectively.
1714
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
 December 31, 2021
 Less than 12 months12 months or moreTotal
 Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized loss
U.S. government agency securities$18,360 $(171)$— $— $18,360 $(171)
Mortgage-backed securities - residential$871,368 $(14,295)$102,799 $(3,690)$974,167 $(17,985)
Mortgage-backed securities - commercial7,946 (46)— — 7,946 (46)
Municipal securities11,414 (160)— — 11,414 (160)
U.S. Treasury securities14,908 (6)— — 14,908 (6)
Corporate securities4,119 (25)— — 4,119 (25)
Total$928,115 $(14,703)$102,799 $(3,690)$1,030,914 $(18,393)
As of SeptemberJune 30, 2022 and December 31, 2021, the Company’s securities portfolio consisted of 509 and 2020,511 securities, 416 and 80 of which were in an unrealized loss position, respectively.
During the Company evaluatedthree months ended June 30, 2022, the Company's available-for-sale debt securities withportfolio unrealized losses for expected creditvalue declined $66,577 to an unrealized loss and recorded no allowance for creditposition of $167,510 as of June 30, 2022 from an unrealized loss position of $100,933 as of March 31, 2022. During the six months ended June 30, 2022, the Company's available-for-sale debt securities portfolio unrealized value declined $172,237 from an unrealized gain position of $4,727 as of December 31, 2021.
During the three months ended June 30, 2021, the Company's available-for-sale debt securities portfolio unrealized value increased $3,076 to an unrealized gain position of $22,321 as of June 30, 2021 from an unrealized gain position of $19,245 as of March 31, 2021. During the six months ended June 30, 2021, the Company's available-for-sale debt securities portfolio unrealized value declined $12,231 from an unrealized gain position of $34,552 as of December 31, 2020.
The majority of the investment portfolio was either government guaranteed or an issuance of a government sponsored entity wasor highly rated by major credit rating agencies and havethe Company has historically not recorded any losses associated with these investments. As such, as of June 30, 2022 and December 31, 2021, it was determined that all available-for-sale debt securities that experienced a long history of zero losses. As such,decline in fair value below amortized cost basis were due to noncredit-related factors. Therefore, there was no provision for credit losses was recordedrecognized on available-for-sale debt securities during the three and ninesix months ended SeptemberJune 30, 2021 and 2020.2022 or 2021.
Note (4)(3)—Loans and allowance for credit losses:
Loans outstanding at Septemberas of June 30, 20212022 and December 31, 2020,2021, by class of financing receivable are as follows:
September 30,December 31, June 30,December 31,
2021 2020  2022 2021 
Commercial and industrial (1)
Commercial and industrial (1)
$1,252,425 $1,346,122 
Commercial and industrial (1)
$1,479,424 $1,290,565 
ConstructionConstruction1,190,623 1,222,220 Construction1,575,331 1,327,659 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage1,175,155 1,089,270 1-to-4 family mortgage1,457,452 1,270,467 
Residential line of creditResidential line of credit392,440 408,211 Residential line of credit425,485 383,039 
Multi-family mortgageMulti-family mortgage324,662 175,676 Multi-family mortgage391,970 326,551 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied938,241 924,841 Owner occupied1,053,872 951,582 
Non-owner occupiedNon-owner occupied1,695,573 1,598,979 Non-owner occupied1,885,122 1,730,165 
Consumer and otherConsumer and other325,555 317,640 Consumer and other355,681 324,634 
Gross loansGross loans7,294,674 7,082,959 Gross loans8,624,337 7,604,662 
Less: Allowance for credit lossesLess: Allowance for credit losses(139,446)(170,389)Less: Allowance for credit losses(126,272)(125,559)
Net loansNet loans$7,155,228 $6,912,570 Net loans$8,498,065 $7,479,103 
(1)Includes $9,415$1,289 and $212,645$3,990 of loans originated as part of the Paycheck Protection Program as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. PPP loans are federally guaranteed as part of the CARES Act, provided PPP loan recipients receive loan forgiveness under the SBA regulations. As such, there is minimal credit risk associated with these loans.
15
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
As of SeptemberJune 30, 20212022 and December 31, 2020, $1,220,4512021, $980,762 and $1,248,857,$1,136,294, respectively, of qualifying residential mortgage loans (including loans held for sale) and $1,571,007$1,570,759 and $1,532,749,$1,581,673, respectively, of qualifying commercial mortgage loans were pledged to the Federal Home Loan Bank of Cincinnati securing advances against the Bank’s line of credit. Additionally, as of SeptemberJune 30, 20212022 and December 31, 2020, $2,345,4312021, qualifying loans of $2,892,283 and $2,463,281,$2,440,097, respectively, of qualifying loans were pledged to the Federal Reserve Bank under the Borrower-in-Custody program.
The components of amortized cost for loans on the consolidated balance sheet excludessheets exclude accrued interest receivable as the Company elected to presentpresents accrued interest receivable separately on the balance sheet. As of SeptemberJune 30, 20212022 and December 31, 2020, total2021, accrued interest receivable on loans held for investment was $34,915$33,209 and $38,316,$31,676, respectively.
Allowance for Credit Losses
The Company estimated the allowance for credit losses under a currentcalculates its expected credit loss model as of September 30, 2021 and December 31, 2020.using a lifetime loss rate methodology. The Company utilizes probability-weighted forecasts, which consider multiple macroeconomic variables from a third-party vendor that are applicable to the type of loan. Each of the Company's loss rate models incorporate forward-looking macroeconomic projections throughout the reasonable and supportable forecast period and the subsequent historical reversion at the macroeconomic variable input level. In order to estimate the life of a loan, the contractual term of the loan is adjusted for estimated prepayments based on market information and the Company’s prepayment history.
The Company's loss rate models estimate the lifetime loss rate for pools of loans by combining the calculated loss rate based on each variable within the model (including the macroeconomic variables). The lifetime loss rate for the pool is then multiplied by the loan balances to determine the expected credit losses on the pool.
The Company considers the need to qualitatively adjust its modeled quantitative expected credit loss estimate for information not already captured in the model loss estimation process. These qualitative factor adjustments may increase or decrease the Company’s estimate of expected credit losses. The Company reviews the qualitative adjustments so as to validate that information that has already been considered and included in the modeled quantitative loss estimation process is not also included in the qualitative adjustment. The Company considers the qualitative factors that are relevant to the institution as of the reporting date, which may include, but are not limited to: levels of and trends in delinquencies
18
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
and performance of loans; levels of and trends in write-offs and recoveries collected; trends in volume and terms of loans; effects of any changes in reasonable and supportable economic forecasts; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and expertise; available relevant information sources that contradict the Company’s own forecast; effects of changes in prepayment expectations or other factors affecting assessments of loan contractual terms; industry conditions; and effects of changes in credit concentrations.
The quantitative models require loan data and macroeconomic variables based on the inherent credit risks in each portfolio to more accurately measure the credit risks associated with each. Each of the quantitative models pools loans with similar risk characteristics and collectively assesses the lifetime loss rate for each pool to estimate its expected credit loss.
When a loan no longer shares similar risk characteristics with other loans in any given pool, the loan is individually assessed. The Company has determined the following circumstances in which a loan may require an individual evaluation: collateral dependent loans; loans for which foreclosure is probable; TDRs and reasonably expected TDRs.loans with other unique risk characteristics. A loan is deemed collateral dependent when 1) the borrower is experiencing financial difficulty and 2) the repayment is expected to be primarily through sale or operation of the collateral. The allowance for credit losses for collateral dependent loans as well as loans where foreclosure is probable is calculated as the amount for which the loan’s amortized cost basis exceeds fair value. Fair value is determined based on appraisals performed by qualified appraisers and reviewed by qualified personnel. In cases where repayment is to be provided substantially through the sale of collateral, the Company reduces the fair value by the estimated costs to sell. Loans experiencing financial difficulty for which a concession has not yet been provided may be identified as reasonably expected TDRs.
Reasonably expected TDRs and TDRs use the same methodology as TDRs.methodology. In cases where the expected credit loss can only be captured through a discounted cash flow analysis (such as an interest rate modification for a TDR loan), the allowance is measured by the amount which the loan’s amortized cost exceeds the discounted cash flow analysis. The allowance for credit losses on a TDR or a reasonably expected TDR is calculated individually using a discounted cash flow methodology, unless the loan is deemed to be collateral dependent or foreclosure is probable.
The Company performed qualitative evaluations within the Company's established qualitative framework, weighting the impact of the current economic outlook, status of federal government stimulus programs, and other considerations, in order to identify specific industries or borrowers seeing credit improvement or deterioration specific to the COVID-19 pandemic. The decrease in estimated required reserve during the three and nine months ended September 30, 2021 was a result of improving macroeconomic variables incorporated into the Company's reasonable and supportable forecasts when compared to both September 30, 2021 and December 31, 2020.

1916
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The Company performed qualitative evaluations within the Company's established qualitative framework, weighting the impact of the current economic outlook (including uncertainty due to inflation, negative economic forecasts, predicted Federal Reserve rate increases) status of federal government stimulus programs, and other considerations. The increase in estimated required reserve during the three and six months ended June 30, 2022 was a result of increased loan growth and a tightening monetary policy environment both of which were incorporated into the Company's reasonable and supportable forecasts when compared to June 30, 2022 and December 31, 2021. Qualitative adjustments included projected slower GDP growth over the next two to three fiscal years, expected elevated unemployment levels, and expected interest rate increases in the short-term from Federal Reserve. The qualitative evaluations above include weighted projections that the economy may be nearing a recession. These considerations were slightly offset as the Company removed the impact of COVID troubled industries from its calculation.
The following tables provide the changes in the allowance for credit losses by class of financing receivable for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner
occupied		Consumer
and other		Total
Three months ended September 30, 2021
Beginning balance -
June 30, 2021
$13,791 $32,838 $19,672 $6,716 $13,475 $4,707 $42,856 $10,608 $144,663 
Provision for credit losses3,203 (3,080)(2,677)(952)(1,462)7,665 (6,450)921 (2,832)
Recoveries of loans
previously charged-off
19 3 33 1 — 4 — 169 229 
Loans charged off(2,175)(1)— — — — — (438)(2,614)
Ending balance -
September 30, 2021
$14,838 $29,760 $17,028 $5,765 $12,013 $12,376 $36,406 $11,260 $139,446 
Nine Months Ended September 30, 2021
Beginning balance -
December 31, 2020
$14,748 $58,477 $19,220 $10,534 $7,174 $4,849 $44,147 $11,240 $170,389 
Provision for credit losses2,667 (28,690)(2,141)(4,767)4,839 7,384 (7,741)1,100 (27,349)
Recoveries of loans
previously charged-off
235 3 98 16 — 143 — 554 1,049 
Loans charged off(2,812)(30)(149)(18)— — — (1,634)(4,643)
Ending balance -
September 30, 2021
$14,838 $29,760 $17,028 $5,765 $12,013 $12,376 $36,406 $11,260 $139,446 
 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner
occupied		Consumer
and other		Total
Three months ended September 30, 2020
Beginning balance -
June 30, 2020
$8,878 $35,599 $12,463 $6,811 $4,499 $7,420 $30,444 $7,015 $113,129 
Provision for loan losses(1,520)22,383 4,194 4,053 1,908 (1,276)12,364 3,728 45,834 
Recoveries of loans
previously charged-off
757 51 116 22 — 51 — 175 1,172 
Loans charged off(249)— (8)— — (95)(166)(475)(993)
Initial allowance on loans
purchased with deteriorated credit quality
$743 $5,596 $1,533 $569 $784 $605 $14,998 $3 $24,831 
Ending balance -
September 30, 2020
$8,609 $63,629 $18,298 $11,455 $7,191 $6,705 $57,640 $10,446 $183,973 
Nine Months Ended September 30, 2020 
Beginning balance -
December 31, 2019
$4,805 $10,194 $3,112 $752 $544 $4,109 $4,621 $3,002 $31,139 
Impact of adopting ASC
326 on non-purchased credit deteriorated loans
5,300 1,533 7,920 3,461 340 1,879 6,822 3,633 30,888 
Impact of adopted ASC
326 on purchased credit deteriorated loans
82 150 421 (3)— 162 184 (438)558 
Provision for loan losses(2,354)45,962 5,412 6,633 5,523 132 31,282 5,247 97,837 
Recoveries of loans
previously charged-off
1,652 202 166 61 — 68 — 471 2,620 
Loans charged off(1,630)(18)(373)(21)— (304)(711)(1,512)(4,569)
Initial allowance on loans
purchased with deteriorated credit quality
754 5,606 1,640 572 784 659 15,442 43 25,500 
Ending balance -
   September 30, 2020		$8,609 $63,629 $18,298 $11,455 $7,191 $6,705 $57,640 $10,446 $183,973 
 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner
occupied		Consumer
and other		Total
Three months ended June 30, 2022
Beginning balance -
March 31, 2022
$12,699 $31,782 $21,024 $6,545 $6,398 $8,416 $21,290 $11,895 $120,049 
Provision for credit losses(783)6,590 383 314 105 (1,102)1,246 1,428 8,181 
Recoveries of loans
previously charged-off
26 11 14 16 — 15 — 348 430 
Loans charged off(1,751)— (23)— — — — (614)(2,388)
Ending balance -
June 30, 2022
$10,191 $38,383 $21,398 $6,875 $6,503 $7,329 $22,536 $13,057 $126,272 
Six Months Ended June 30, 2022
Beginning balance -
December 31, 2021
$15,751 $28,576 $19,104 $5,903 $6,976 $12,593 $25,768 $10,888 $125,559 
Provision for credit losses(4,789)9,796 2,291 955 (473)(5,289)(3,232)2,793 2,052 
Recoveries of loans
previously charged-off
984 11 26 17 — 25 — 565 1,628 
Loans charged off(1,755)— (23)— — — — (1,189)(2,967)
Ending balance -
June 30, 2022
$10,191 $38,383 $21,398 $6,875 $6,503 $7,329 $22,536 $13,057 $126,272 


 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner
occupied		Consumer
and other		Total
Three Months Ended June 30, 2021
Beginning balance -
March 31, 2021
$14,643 $38,622 $19,572 $9,268 $11,657 $3,609 $50,179 $10,404 $157,954 
Provision for loan losses(579)(5,784)75 (2,558)1,818 972 (7,323)494 (12,885)
Recoveries of loans
previously charged-off
87 — 41 9 — 126 — 190 453 
Loans charged off(360)— (16)(3)— — — (480)(859)
Ending balance -
June 30, 2021
$13,791 $32,838 $19,672 $6,716 $13,475 $4,707 $42,856 $10,608 $144,663 
Six Months Ended June 30, 2021 
Beginning balance -
December 31, 2020
$14,748 $58,477 $19,220 $10,534 $7,174 $4,849 $44,147 $11,240 $170,389 
Provision for credit losses(536)(25,610)536 (3,815)6,301 (281)(1,291)179 (24,517)
Recoveries of loans
previously charged-off
216 — 65 15 — 139 — 385 820 
Loans charged off(637)(29)(149)(18)— — — (1,196)(2,029)
Ending balance -
  June 30, 2021		$13,791 $32,838 $19,672 $6,716 $13,475 $4,707 $42,856 $10,608 $144,663 
20
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following tables provide the amount of the allowance for credit losses by class of financing receivable disaggregated by measurement methodology as of September 30, 2021 and December 31, 2020:

 September 30, 2021
 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner occupied		Consumer
and other		Total
Amount of allowance allocated to:         
Individually evaluated for credit loss$123 $112 $— $7 $— $167 $624 $2 $1,035 
Collectively evaluated for
credit loss
14,148 28,244 16,056 5,597 11,561 11,244 26,676 10,657 124,183 
Purchased credit
deteriorated
567 1,404 972 161 452 965 9,106 601 14,228 
Ending balance -
September 30, 2021
$14,838 $29,760 $17,028 $5,765 $12,013 $12,376 $36,406 $11,260 $139,446 
 December 31, 2020
 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner occupied		Consumer
and other		Total
Amount of allowance allocated to:         
Individually evaluated for credit loss$373 $95 $— $9 $— $30 $1,531 $1 $2,039 
Collectively evaluated for
credit loss
13,493 54,065 17,206 10,031 6,326 4,062 33,706 10,516 149,405 
Purchased credit
deteriorated
882 4,317 2,014 494 848 757 8,910 723 18,945 
Ending balance -
December 31, 2020
$14,748 $58,477 $19,220 $10,534 $7,174 $4,849 $44,147 $11,240 $170,389 

21
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following tables provide the amount of loans by class of financing receivable disaggregated by measurement methodology as of September 30, 2021, and December 31, 2020:

 September 30, 2021
 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner
occupied		Consumer
and other		Total
Loans, net of unearned
income
         
Individually evaluated for credit loss$2,802 $4,597 $375 $1,123 $— $7,808 $11,430 $26 $28,161 
Collectively evaluated for
credit loss
1,206,783 1,148,604 1,112,578 380,272 315,140 857,865 1,419,981 313,079 6,754,302 
Purchased credit
deteriorated
42,840 37,422 62,202 11,045 9,522 72,568 264,162 12,450 512,211 
Ending balance -
September 30, 2021
$1,252,425 $1,190,623 $1,175,155 $392,440 $324,662 $938,241 $1,695,573 $325,555 $7,294,674 
 December 31, 2020
 Commercial
and industrial		Construction1-to-4
family
residential
mortgage		Residential
line of credit		Multi-family
residential
mortgage		Commercial
real estate
owner
occupied		Commercial
real estate
non-owner
occupied		Consumer
and other		Total
Loans, net of unearned
income
         
Individually evaluated for credit loss$15,578 $4,851 $848 $412 $— $7,846 $8,631 $39 $38,205 
Collectively evaluated for
credit loss
1,270,058 1,140,634 987,142 387,250 156,447 813,151 1,272,203 302,983 6,329,868 
Purchased credit
deteriorated
60,486 76,735 101,280 20,549 19,229 103,844 318,145 14,618 714,886 
Ending balance -
December 31, 2020
$1,346,122 $1,222,220 $1,089,270 $408,211 $175,676 $924,841 $1,598,979 $317,640 $7,082,959 

2217
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Credit Quality - Commercial Loans
The Company categorizes loanscommercial loan types into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans that share similar risk characteristics collectively. Loans that do not share similar risk characteristics are evaluated individually.
The Company uses the following definitions for risk ratings:
Pass.Loans rated Pass include those that are adequately collateralized performing loans which management believes do not have conditions that have occurred or may occur that would result in the loan being downgraded into an inferior category. The Pass category also includes commercial loans rated as Watch, which include those that management believes have conditions that have occurred, or may occur, which could result in the loan being downgraded to an inferior category.

Special Mention.Loans rated Special Mention are those that have potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Management does not believe there will be a loss of principal or interest. These loans require intensive servicing and may possess more than normal credit risk.
Classified.Loans included in the Classified category include loans rated as Substandard and Doubtful. Loans rated as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Also included in this category are loans classified as Doubtful, which have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weakness or weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable. The total amortized cost of loans rated as Doubtful were insignificant for all periods presented.
Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes.
2318
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
During the six months ended June 30, 2022, the Company revised the presentation of the below credit quality vintage tables without change to accounting or credit policies. The updated presentation disaggregates between commercial and consumer loan types with consumer loans reported as either performing or nonperforming based on their delinquency and accrual status. As such, the tables presented below as of December 31, 2021 have been revised to align with current period presentation.
The following tables present the credit quality of our commercial loan portfolio by year of origination as of SeptemberJune 30, 20212022 and December 31, 2020.2021. Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
As of September 30, 2021
As of June 30, 2022As of June 30, 2022
Term LoansCommercial Term Loans
Amortized Cost Basis by Origination YearAmortized Cost Basis by Origination Year
20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal20222021202020192018PriorRevolving Loans Amortized Cost BasisTotal
Commercial and industrialCommercial and industrialCommercial and industrial
PassPass$194,285 $105,301 $151,572 $60,459 $44,334 $61,502 $591,465 $1,208,918 Pass$172,954 $258,774 $81,540 $108,279 $45,779 $69,018 $713,271 $1,449,615 
Special MentionSpecial Mention68 246 414 19 5 2,051 12,987 15,790 Special Mention27 48 — 949 617 1 2,892 4,534 
ClassifiedClassified893 2,601 2,678 3,527 3,618 6,711 7,689 27,717 Classified— 957 2,197 450 2,808 9,375 9,488 25,275 
Total Total195,246 108,148 154,664 64,005 47,957 70,264 612,141 1,252,425 Total172,981 259,779 83,737 109,678 49,204 78,394 725,651 1,479,424 
ConstructionConstructionConstruction
PassPass455,443 337,263 145,945 47,026 19,507 67,697 106,294 1,179,175 Pass363,575 655,142 244,421 85,768 20,128 51,482 150,348 1,570,864 
Special MentionSpecial Mention— — — — 1,209 1,441 — 2,650 Special Mention332 1,348 9 — — 2,587 — 4,276 
ClassifiedClassified— — 3,035 2,879 4 2,698 182 8,798 Classified— — — — — — 191 191 
Total Total455,443 337,263 148,980 49,905 20,720 71,836 106,476 1,190,623 Total363,907 656,490 244,430 85,768 20,128 54,069 150,539 1,575,331 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage
Pass360,638 217,308 128,286 115,183 116,907 211,215 — 1,149,537 
Special Mention201 1,346 525 389 99 1,648 — 4,208 
Classified901 2,884 1,962 3,086 4,549 8,028 — 21,410 
Total361,740 221,538 130,773 118,658 121,555 220,891 — 1,175,155 
Residential line of credit
Pass— — — — — — 387,472 387,472 
Special Mention— — — — — — 407 407 
Classified— — — — — — 4,561 4,561 
Total— — — — — — 392,440 392,440 
Multi-family mortgageMulti-family mortgageMulti-family mortgage
PassPass144,982 32,463 68,421 7,050 20,528 39,546 10,408 323,398 Pass65,674 171,158 33,338 72,098 4,245 37,339 6,911 390,763 
Special MentionSpecial Mention— — — — — — — — Special Mention— — — — — — — — 
ClassifiedClassified— — — — — 1,264 — 1,264 Classified— — — — — 1,207 — 1,207 
TotalTotal144,982 32,463 68,421 7,050 20,528 40,810 10,408 324,662 Total65,674 171,158 33,338 72,098 4,245 38,546 6,911 391,970 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupiedOwner occupied
PassPass117,740 140,281 177,960 86,488 83,352 247,941 52,732 906,494 Pass148,727 181,856 124,643 159,095 73,107 273,556 66,424 1,027,408 
Special MentionSpecial Mention— — 1,328 3,595 112 2,948 220 8,203 Special Mention107 — — 1,483 3,144 1,533 197 6,464 
ClassifiedClassified— — 3,118 779 4,122 13,770 1,755 23,544 Classified— — 242 6,030 1,401 11,629 698 20,000 
TotalTotal117,740 140,281 182,406 90,862 87,586 264,659 54,707 938,241 Total148,834 181,856 124,885 166,608 77,652 286,718 67,319 1,053,872 
Non-owner occupiedNon-owner occupiedNon-owner occupied
PassPass304,279 163,471 180,893 282,221 203,813 460,088 46,599 1,641,364 Pass297,437 431,172 133,593 162,956 258,273 530,258 54,403 1,868,092 
Special MentionSpecial Mention— — 3,812 3,452 — 8,041 — 15,305 Special Mention— — — — 241 551 — 792 
ClassifiedClassified— — 2,082 24,173 1,524 11,125 — 38,904 Classified— — — 582 3,402 12,254 — 16,238 
TotalTotal304,279 163,471 186,787 309,846 205,337 479,254 46,599 1,695,573 Total297,437 431,172 133,593 163,538 261,916 543,063 54,403 1,885,122 
Total commercial loansTotal commercial loans
PassPass1,048,367 1,698,102 617,535 588,196 401,532 961,653 991,357 6,306,742 
Special MentionSpecial Mention466 1,396 9 2,432 4,002 4,672 3,089 16,066 
ClassifiedClassified— 957 2,439 7,062 7,611 34,465 10,377 62,911 
Total commercial loans Total commercial loans$1,048,833 $1,700,455 $619,983 $597,690 $413,145 $1,000,790 $1,004,823 $6,385,719 
24
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
As of September 30, 2021
Term Loans
Amortized Cost Basis by Origination Year
20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
Consumer and other loans
Pass72,706 59,182 40,851 34,539 22,783 74,776 14,827 319,664 
Special Mention75 — 10 — 1 383 — 469 
Classified43 129 341 1,015 897 2,561 436 5,422 
        Total72,824 59,311 41,202 35,554 23,681 77,720 15,263 325,555 
Total Loans
Pass1,650,073 1,055,269 893,928 632,966 511,224 1,162,765 1,209,797 7,116,022 
        Special Mention344 1,592 6,089 7,455 1,426 16,512 13,614 47,032 
Classified1,837 5,614 13,216 35,459 14,714 46,157 14,623 131,620 
        Total$1,652,254 $1,062,475 $913,233 $675,880 $527,364 $1,225,434 $1,238,034 $7,294,674 
2519
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)

As of December 31, 2020
As of December 31, 2021As of December 31, 2021
Term LoansCommercial Term Loans
Amortized Cost Basis by Origination YearAmortized Cost Basis by Origination Year
20202019201820172016PriorRevolving Loans Amortized Cost BasisTotal20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
Commercial and industrialCommercial and industrialCommercial and industrial
PassPass$339,074 $185,636 $70,549 $59,917 $37,573 $42,685 $540,960 $1,276,394 Pass$273,232 $95,279 $140,938 $52,162 $33,997 $57,020 $596,667 $1,249,295 
Special MentionSpecial Mention231 824 561 445 915 2,580 24,826 30,382 Special Mention79 9 949 632 3 1,519 12,367 15,558 
ClassifiedClassified2,501 2,688 11,227 4,425 6,582 1,277 10,646 39,346 Classified918 2,391 2,376 3,089 3,370 6,425 7,143 25,712 
Total Total341,806 189,148 82,337 64,787 45,070 46,542 576,432 1,346,122 Total274,229 97,679 144,263 55,883 37,370 64,964 616,177 1,290,565 
ConstructionConstructionConstruction
PassPass461,715 390,443 86,490 52,942 40,907 62,890 112,004 1,207,391 Pass677,258 280,828 135,768 23,916 15,313 67,818 117,176 1,318,077 
Special MentionSpecial Mention469 1,485 2,197 1,221 729 13 — 6,114 Special Mention62 184 — — 1,208 1,384 — 2,838 
ClassifiedClassified573 1,755 3,178 141 — 3,068 — 8,715 Classified— — 2,922 2,882 3 737 200 6,744 
Total Total462,757 393,683 91,865 54,304 41,636 65,971 112,004 1,222,220 Total677,320 281,012 138,690 26,798 16,524 69,939 117,376 1,327,659 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage
Pass283,107 176,711 164,499 157,731 111,194 162,051 — 1,055,293 
Special Mention1,423 1,829 1,209 753 721 3,865 — 9,800 
Classified448 1,428 3,806 5,473 3,622 9,400 — 24,177 
Total284,978 179,968 169,514 163,957 115,537 175,316 — 1,089,270 
Residential line of credit
Pass— — — — — — 400,206 400,206 
Special Mention— — — — — — 2,653 2,653 
Classified— — — — — — 5,352 5,352 
Total— — — — — — 408,211 408,211 
Multi-family mortgageMulti-family mortgageMulti-family mortgage
PassPass29,006 13,446 11,843 46,561 28,330 35,339 11,094 175,619 Pass166,576 32,242 64,345 7,124 5,602 38,526 10,891 325,306 
Special MentionSpecial Mention— — — — — — — — Special Mention— — — — — — — — 
ClassifiedClassified— — — — — 57 — 57 Classified— — — — — 1,245 — 1,245 
TotalTotal29,006 13,446 11,843 46,561 28,330 35,396 11,094 175,676 Total166,576 32,242 64,345 7,124 5,602 39,771 10,891 326,551 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupiedOwner occupied
PassPass140,904 179,500 97,577 94,659 76,539 224,108 53,451 866,738 Pass170,773 131,471 174,257 83,698 69,939 236,998 57,123 924,259 
Special MentionSpecial Mention967 1,356 4,251 16,173 6,101 2,466 230 31,544 Special Mention— — 1,502 3,541 885 2,555 213 8,696 
ClassifiedClassified44 1,785 2,423 6,074 274 11,226 4,733 26,559 Classified— — 3,102 768 3,295 9,616 1,846 18,627 
TotalTotal141,915 182,641 104,251 116,906 82,914 237,800 58,414 924,841 Total170,773 131,471 178,861 88,007 74,119 249,169 59,182 951,582 
Non-owner occupiedNon-owner occupiedNon-owner occupied
PassPass166,962 229,442 342,640 221,149 290,163 272,18438,820 1,561,360 Pass462,478 154,048 165,917 264,855 170,602 414,85946,541 1,679,300 
Special MentionSpecial Mention— 1,500 6,672 — 207 8,445— 16,824 Special Mention— — 3,747 3,388 — 969— 8,104 
ClassifiedClassified— 2,210 1,502 — — 17,083— 20,795 Classified— — 1,898 23,849 1,506 15,508— 42,761 
TotalTotal166,962 233,152 350,814 221,149 290,370 297,712 38,820 1,598,979 Total462,478 154,048 171,562 292,092 172,108 431,336 46,541 1,730,165 
Consumer and other loans
Total commercial loansTotal commercial loans
PassPass89,625 52,839 39,725 27,201 43,503 37,67314,817 305,383 Pass1,750,317 693,868 681,225 431,755 295,453 815,221 828,398 5,496,237 
Special MentionSpecial Mention281 797 1,588 468 526 1,36411 5,035 Special Mention141 193 6,198 7,561 2,096 6,427 12,580 35,196 
ClassifiedClassified151 565 1,434 1,161 935 2,308668 7,222 Classified918 2,391 10,298 30,588 8,174 33,531 9,189 95,089 
Total90,057 54,201 42,747 28,830 44,964 41,345 15,496 317,640 
Total commercial loans Total commercial loans$1,751,376 $696,452 $697,721 $469,904 $305,723 $855,179 $850,167 $5,626,522 







2620
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
As of December 31, 2020
Term Loans
Amortized Cost Basis by Origination Year
20202019201820172016PriorRevolving Loans Amortized Cost BasisTotal
Total Loans
   Pass1,510,393 1,228,017 813,323 660,160 628,209 836,930 1,171,352 6,848,384 
   Special Mention3,371 7,791 16,478 19,060 9,199 18,733 27,720 102,352 
   Classified3,717 10,431 23,570 17,274 11,413 44,419 21,399 132,223 
   Total$1,517,481 $1,246,239 $853,371 $696,494 $648,821 $900,082 $1,220,471 $7,082,959 
Credit Quality - Consumer Loans
For consumer and residential loan classes, the company primarily evaluates credit quality based on delinquency and accrual status of the loan, credit documentation and by payment activity. The performing or nonperforming status is updated on an on-going basis dependent upon improvement and deterioration in credit quality.
The following tables present the credit quality by classification (performing or nonperforming) of our consumer loan portfolio by year of origination as of June 30, 2022 and December 31, 2021. Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination. Generally, current period renewals of credit are reunderwritten at the point of renewal and considered current period originations for the purposes of the tables below.
As of June 30, 2022
Consumer Term Loans
Amortized Cost Basis by Origination Year
20222021202020192018PriorRevolving Loans Amortized Cost BasisTotal
Residential real estate:
1-to-4 family mortgage
Performing360,922 471,972 171,459 102,401 81,481 253,220 — 1,441,455 
Nonperforming— 3,019 3,699 1,353 1,368 6,558 — 15,997 
Total360,922 474,991 175,158 103,754 82,849 259,778 — 1,457,452 
Residential line of credit
Performing— — — — — — 423,980 423,980 
Nonperforming— — — — — — 1,505 1,505 
Total— — — — — — 425,485 425,485 
Consumer and other
Performing72,176 65,356 47,669 34,779 29,873 90,011 10,104 349,968 
Nonperforming— 347 991 641 1,421 2,313 — 5,713 
       Total72,176 65,703 48,660 35,420 31,294 92,324 10,104 355,681 
Total consumer loans
Performing433,098 537,328 219,128 137,180 111,354 343,231 434,084 2,215,403 
Nonperforming— 3,366 4,690 1,994 2,789 8,871 1,505 23,215 
Total consumer loans$433,098 $540,694 $223,818 $139,174 $114,143 $352,102 $435,589 $2,238,618 


21
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
As of December 31, 2021
Consumer Term Loans
Amortized Cost Basis by Origination Year
20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
Residential real estate:
1-to-4 family mortgage
Performing521,533 204,690 121,775 100,164 109,087 199,262 — 1,256,511 
Nonperforming1,232 3,734 977 2,429 1,765 3,819 — 13,956 
Total522,765 208,424 122,752 102,593 110,852 203,081 — 1,270,467 
Residential line of credit
Performing— — — — — — 381,303 381,303 
Nonperforming— — — — — — 1,736 1,736 
Total— — — — — — 383,039 383,039 
Consumer and other
Performing82,910 55,123 38,281 32,893 21,856 74,248 14,478 319,789 
Nonperforming199 345 545 1,352 861 1,496 47 4,845 
       Total83,109 55,468 38,826 34,245 22,717 75,744 14,525 324,634 
Total consumer loans
Performing604,443 259,813 160,056 133,057 130,943 273,510 395,781 1,957,603 
Nonperforming1,431 4,079 1,522 3,781 2,626 5,315 1,783 20,537 
Total consumer loans$605,874 $263,892 $161,578 $136,838 $133,569 $278,825 $397,564 $1,978,140 
Nonaccrual and Past Due Loans
Nonperforming loans include loans that are no longer accruing interest (nonaccrual loans) and loans past due ninety or more days and still accruing interest.
The following tables represent an analysis of the aging by class of financing receivable as of SeptemberJune 30, 20212022 and December 31, 2020:2021:
September 30, 202130-89 days
past due		90 days or 
more and accruing
interest		Non-accrual
loans		Loans current
on payments
and accruing
interest		Total
June 30, 2022June 30, 202230-89 days
past due		90 days or 
more and accruing
interest		Non-accrual
loans		Loans current
on payments
and accruing
interest		Total
Commercial and industrialCommercial and industrial$1,400 $126 $2,896 $1,248,003 $1,252,425 Commercial and industrial$1,929 $55 $3,414 $1,474,026 $1,479,424 
ConstructionConstruction2,078 1,057 3,851 1,183,637 1,190,623 Construction2,654 2,675 — 1,570,002 1,575,331 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage5,233 6,989 4,936 1,157,997 1,175,155 1-to-4 family mortgage13,989 9,675 6,322 1,427,466 1,457,452 
Residential line of creditResidential line of credit1,132 — 1,269 390,039 392,440 Residential line of credit912 48 1,457 423,068 425,485 
Multi-family mortgageMulti-family mortgage— — 50 324,612 324,662 Multi-family mortgage— 329 46 391,595 391,970 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied565 — 6,239 931,437 938,241 Owner occupied323 707 6,416 1,046,426 1,053,872 
Non-owner occupiedNon-owner occupied452 — 11,666 1,683,455 1,695,573 Non-owner occupied282 — 7,263 1,877,577 1,885,122 
Consumer and otherConsumer and other4,542 729 3,219 317,065 325,555 Consumer and other8,397 1,096 4,617 341,571 355,681 
TotalTotal$15,402 $8,901 $34,126 $7,236,245 $7,294,674 Total$28,486 $14,585 $29,535 $8,551,731 $8,624,337 
 
December 31, 202030-89 days
past due		90 days or 
more and accruing
interest		Non-accrual
loans		Loans current on payments and accruing interestTotal
Commercial and industrial$3,297 $330 $16,005 $1,326,490 $1,346,122 
Construction7,607 573 4,053 1,209,987 1,222,220 
Residential real estate:
1-to-4 family mortgage7,058 10,470 5,923 1,065,819 1,089,270 
Residential line of credit3,551 239 1,757 402,664 408,211 
Multi-family mortgage— 57 — 175,619 175,676 
Commercial real estate:
Owner occupied98 — 7,948 916,795 924,841 
Non-owner occupied915 — 12,471 1,585,593 1,598,979 
Consumer and other4,469 2,027 2,603 308,541 317,640 
Total$26,995 $13,696 $50,760 $6,991,508 $7,082,959 
22
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
December 31, 202130-89 days
past due		90 days or 
more and accruing
interest		Non-accrual
loans		Loans current on payments and accruing interestTotal
Commercial and industrial$1,030 $63 $1,520 $1,287,952 $1,290,565 
Construction4,852 718 3,622 1,318,467 1,327,659 
Residential real estate:
1-to-4 family mortgage11,007 9,363 4,593 1,245,504 1,270,467 
Residential line of credit319 — 1,736 380,984 383,039 
Multi-family mortgage— — 49 326,502 326,551 
Commercial real estate:
Owner occupied1,417 — 6,710 943,455 951,582 
Non-owner occupied427 — 14,084 1,715,654 1,730,165 
Consumer and other7,398 1,591 3,254 312,391 324,634 
Total$26,450 $11,735 $35,568 $7,530,909 $7,604,662 

The following tables provide the amortized cost basis of loans on non-accrual status, as well as any related allowance as of June 30, 2022 and December 31, 2021 by class of financing receivable.
June 30, 2022Non-accrual
with no
related
allowance		Non-accrual
with
related
allowance		Related
allowance
Commercial and industrial$2,829 $585 $4 
Residential real estate:
1-to-4 family mortgage2,672 3,650 67 
Residential line of credit1,086 371 6 
Multi-family mortgage— 46 1 
Commercial real estate:
Owner occupied3,933 2,483 48 
Non-owner occupied6,854 409 33 
Consumer and other— 4,617 233 
Total$17,374 $12,161 $392 
December 31, 2021Non-accrual
with no
related
allowance		Non-accrual
with
related
allowance		Related
allowance
Commercial and industrial$1,085 $435 $6 
Construction2,882 740 99 
Residential real estate:
1-to-4 family mortgage378 4,215 60 
Residential line of credit797 939 11 
Multi-family mortgage— 49 2 
Commercial real estate:
Owner occupied5,346 1,364 206 
Non-owner occupied13,898 186 7 
Consumer and other— 3,254 164 
Total$24,386 $11,182 $555 





2723
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following tables provide the amortized cost basis of loans on non-accrual status, as well as any related allowance as of September 30, 2021 and December 31, 2020 by class of financing receivable.
September 30, 2021Non-accrual
with no
related
allowance		Non-accrual
with
related
allowance		Related
allowance
Commercial and industrial$1,777 $1,119 $135 
Construction2,879 972 121 
Residential real estate:
1-to-4 family mortgage772 4,164 66 
Residential line of credit804 465 9 
Multi-family mortgage— 50 8 
Commercial real estate:
Owner occupied5,408 831 171 
Non-owner occupied6,279 5,387 641 
Consumer and other— 3,219 163 
Total$17,919 $16,207 $1,314 

December 31, 2020Non-accrual
with no
related
allowance		Non-accrual
with
related
allowance		Related
allowance
Commercial and industrial$13,960 $2,045 $383 
Construction3,061 992 131 
Residential real estate:
1-to-4 family mortgage3,048 2,875 84 
Residential line of credit854 903 31 
Multi-family mortgage— — — 
Commercial real estate:
Owner occupied7,172 776 63 
Non-owner occupied4,566 7,905 1,711 
Consumer and other— 2,603 147 
Total$32,661 $18,099 $2,550 

The following presents interest income recognized on nonaccrual loans duringfor the three and nine months ended SeptemberJune 30, 20212022 and 2020:2021:

Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212020202120202022202120222021
Commercial and industrialCommercial and industrial$190 $287 $523 $304 Commercial and industrial$83 $219 $137 $333 
ConstructionConstruction75 42 105 48Construction7 16 26 30 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage114 15 199 21 1-to-4 family mortgage55 67 107 85 
Residential line of creditResidential line of credit197 72 242 72 Residential line of credit21 27 61 45 
Multi-family mortgageMulti-family mortgage— — 2 — Multi-family mortgage2 1 2 2 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied187 32 419 75Owner occupied63 101 88 232 
Non-owner occupiedNon-owner occupied123 76 353 185 Non-owner occupied76 141 146 230 
Consumer and otherConsumer and other75 — 130 24 Consumer and other54 55 69 55 
TotalTotal$961 $524 $1,973 $729 Total$361 $627 $636 $1,012 
Accrued interest receivable written off as an adjustment to interest income amounted to $63$123 and $177$132 for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, and $660$307 and $459$597 for the ninesix months ended SeptemberJune 30, 2022 and 2021, and 2020, respectively.
28
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Troubled debt restructurings
As of SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had a recorded investment in TDRs of $29,645$17,054 and $15,988,$32,435, respectively. The modifications included extensions of the maturity date and/or a stated rate of interest to one lower than the current market rate to borrowers experiencing financial difficulty. Of these loans, $10,628$10,286 and $8,279$11,084 were classified as non-accrual loans as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. The Company has calculated $1,007$78 and $310$1,245 in allowances for credit losses on TDRs as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. Unfunded loan commitments related to these loans totaled $422 as of September 30, 2021. There were no significant unfunded loan commitments to extend any additional funds on troubled debt restructurings as of June 30, 2022 or December 31, 2020.2021.
The following tables present the financial effect of TDRs recorded during the periods indicated.indicated:
Three Months Ended September 30, 2021Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Three Months Ended June 30, 2022Three Months Ended June 30, 2022Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrialCommercial and industrial1 $55 $55 $— 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1$134 $134 $— 
Residential line of creditResidential line of credit1 49 49 — 
TotalTotal1$134 $134 $— Total2 $104 $104 $— 
Nine Months Ended September 30, 2021Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Six Months Ended June 30, 2022Six Months Ended June 30, 2022Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrialCommercial and industrial5 $13,162 $13,162 $— Commercial and industrial1 $55 $55 $— 
Commercial real estate:
Owner occupied4 3,550 3,550 — 
Non-owner occupied1 11,997 11,997 — 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage3 945 945 — 1-to-4 family mortgage1 80 80 — 
Residential line of creditResidential line of credit1 11 11 — Residential line of credit1 49 49 — 
Consumer and otherConsumer and other1 22 22 — 
TotalTotal14 $29,665 $29,665 $— Total4 $206 $206 $— 
Three Months Ended September 30, 2020Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial2 $420 $420 $— 
Total2 $420 $420 $— 
24
FB Financial Corporation and subsidiaries
Nine Months Ended September 30, 2020Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial3 $1,573 $1,573 $— 
Commercial real estate:
Owner occupied1788 788 0
Non-owner occupied23,752 3,752 — 
Residential real estate:
1-4 family mortgage277 77 — 
Total8$6,190 $6,190 $— 
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Three Months Ended June 30, 2021Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial4 $13,055 $13,055 $— 
Commercial real estate:
Owner occupied4 3,550 3,550 — 
Residential real estate:
1-to-4 family mortgage2 811 811 — 
Residential line of credit1 11 11 — 
Total11 $17,427 $17,427 $— 
Six Months Ended June 30, 2021Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial5 $13,162 $13,162 $— 
Commercial real estate:
Owner occupied43,550 3,550 — 
Non-owner occupied111,997 11,997 — 
Residential real estate:
1-4 family mortgage2811 811 — 
   Residential line of credit111 11 — 
Total13$29,531 $29,531 $— 
Troubled debt restructurings for which there was a payment default within twelve months following the modification totaled $305$304 during the six months ended June 30, 2022. There were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three and nine months ended SeptemberJune 30, 2021. There were no such defaults during2022 nor the three and ninesix months ended SeptemberJune 30, 2020.2021. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The terms of certain other loans were modified during the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 that did not meet the definition of a TDR. The
29
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
modification of these loans usually involve either a modification of the terms of a loan to borrowers who are not experiencing financial difficulties or an insignificant delay in payments.
25
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Collateral Dependent Loans
For loans for which the repayment (based on the Company's assessment) is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, the following table presentstables present the loans and the corresponding individually assessed allowance for credit losses by class of financing receivable. Significant changes in individually assessed reserves are due to changes in the valuation of the underlying collateral in addition to changes in accrual and past due status.
September 30, 2021June 30, 2022
Type of CollateralType of Collateral
Real EstateFinancial Assets and EquipmentIndividually assessed allowance for credit lossReal EstateFinancial Assets and EquipmentTotalIndividually assessed allowance for credit loss
Commercial and industrialCommercial and industrial$635 $2,166 $123 Commercial and industrial$1,396 $2,235 $3,631 $— 
Construction4,597 — 112 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage375 — — 1-to-4 family mortgage883 — 883 — 
Residential line of creditResidential line of credit1,123 — 7 Residential line of credit1,401 — 1,401 1 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied7,808 — 167 Owner occupied8,015 — 8,015 45 
Non-owner occupiedNon-owner occupied11,430 — 624 Non-owner occupied6,855 — 6,855 — 
Consumer and otherConsumer and other26 — 2 Consumer and other24 — 24 1 
TotalTotal$25,994 $2,166 $1,035 Total$18,574 $2,235 $20,809 $47 
December 31, 2020
Type of Collateral
Real EstateFinancial Assets and EquipmentIndividually assessed allowance for credit loss
Commercial and industrial$— $1,728 $117 
Construction3,877 — — 
Residential real estate:
1-to-4 family mortgage226 — — 
Residential line of credit1,174 — 9 
Commercial real estate:
Owner occupied3,391 — 30 
Non-owner occupied8,164 — 1,531 
Total$16,832 $1,728 $1,687 
Deferrals Program included in COVID-19 Relief
The following table outlines the Company's recorded investment and percentage of loans held for investment by class of financing receivable for executed deferrals remaining on deferral status as of September 30, 2021 or December 31, 2020, in connection with Company's COVID-19 relief programs. These deferrals typically ranged from sixty to ninety days per deferral and the majority were not considered TDRs under the interagency regulatory guidance or CARES Act, issued in March 2020. Section 541 of the Consolidated Appropriations Act extended this relief to the earlier of January 1, 2022 or 60 days after the national emergency termination date. As of September 30, 2021 and December 31, 2020, the Company had a recorded investment in loans totaling $1,331,538 and $1,399,088 previously deferred that were no longer in deferral status.
December 31, 2021
Type of Collateral
Real EstateFinancial Assets and EquipmentTotalIndividually assessed allowance for credit loss
Commercial and industrial$799 $1,090 $1,889 $— 
Construction3,580 — 3,580 92 
Residential real estate:
1-to-4 family mortgage338 — 338 — 
Residential line of credit1,400 — 1,400 10 
Commercial real estate:
Owner occupied8,117 71 8,188 200 
Non-owner occupied13,899 — 13,899 — 
Consumer and other25 — 25 1 
Total$28,158 $1,161 $29,319 $303 
3026
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
September 30, 2021December 31, 2020
% of Loans% of Loans
Commercial and industrial$— — %$7,118 0.5 %
Construction— — %1,918 0.2 %
Residential real estate:
1-to-4 family mortgage— — %19,201 1.8 %
Residential line of credit— — %204 — %
Multi-family mortgage— — %3,305 1.9 %
Commercial real estate:
Owner occupied— — %19,815 2.1 %
Non-owner occupied17,953 1.1 %139,590 8.7 %
Consumer and other— — %11,366 3.6 %
Total$17,953 0.2 %$202,517 2.9 %
Note (5)(4)—Other real estate owned
The amount reported as other real estate owned includes property acquired through foreclosure in addition to excess facilities held for sale and is carried at fair value less estimated cost to sell the property. The following table summarizes the other real estate owned for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021: 
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
September 30,September 30,June 30,June 30,
2021202020212020 2022202120222021
Balance at beginning of periodBalance at beginning of period$11,986 $15,091 $12,111 $18,939 Balance at beginning of period$9,721 $11,177 $9,777 $12,111 
Transfers from loansTransfers from loans349 573 4,945 1,579 Transfers from loans— 3,201 563 4,596 
Transfers to premises and equipment— — — (841)
Proceeds from sale of other real estate
owned		Proceeds from sale of other real estate
owned		(4,173)(1,411)(8,834)(5,561)Proceeds from sale of other real estate
owned		(297)(2,166)(418)(4,661)
Gain on sale of other real estate owned2,090 119 3,190 464 
(Loss) gain on sale of other real estate owned(Loss) gain on sale of other real estate owned(26)272 (130)1,100 
Loans provided for sales of other real
estate owned		Loans provided for sales of other real
estate owned		(152)— (685)— Loans provided for sales of other real
estate owned		— (203)— (533)
Write-downs and partial liquidationsWrite-downs and partial liquidations(85)(1,624)(712)(1,832)Write-downs and partial liquidations— (295)(394)(627)
Balance at end of periodBalance at end of period$10,015 $12,748 $10,015 $12,748 Balance at end of period$9,398 $11,986 $9,398 $11,986 
Foreclosed residential real estate properties totaled $676$970 and $1,890$775 as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. The recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $129 and $167$419 at SeptemberJune 30, 2021 and2022. As of December 31, 2020, respectively.2021, there were no such residential foreclosure proceedings in process.
Excess land and facilities held for sale resulting from branch consolidations totaled $3,501$2,980 and $5,703$3,348 as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively.
Note (6)(5)—Leases:
As of SeptemberJune 30, 2021,2022, the Company was the lessee in 5556 operating leases and 1 finance lease of certain branch, mortgage and operations locations, of which 4445 operating leases and 1 finance lease currently have remaining terms varying from greater than one year to 3433 years. Leases with initial terms of less than one year are not recorded on the consolidated balance sheets. The Company also does not include equipment leases and leases in which the Company is the lessor on the consolidated balance sheets as these are insignificant.
Many leases include 1 or more options to renew, with renewal terms that can extend the lease up to an additional 20 years or more. Certain lease agreements contain provisions to periodically adjust rental payments for inflation. Renewal options that management is reasonably certain to renew and fixed rent escalations are included in the right-of-use asset and lease liability.
During the year ended December 31, 2020, the Company entered into a lease for a new corporate headquarters building located in downtown Nashville. The building is currently under construction and anticipated commencement is in the third quarter of 2022. Upon commencement, the Company anticipates recording an ROU asset and operating lease liability of approximately $23,000 and $26,000, respectively, in connection with the initial term of this lease based on current information available, subject to be completed in late 2022.changes based on borrowing rate changes and the Company's evaluation of renewal options and other terms.
3127
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Upon commencement, the Company estimates recording a ROU asset and operating lease liability of approximately $29,000 and $30,000, respectively, in connection with this lease.

Information related to the Company's leases is presented below as of SeptemberJune 30, 20212022 and December 31, 2020:2021:
September 30,December 31,
Classification20212020
Right-of-use assets:
Operating leasesOperating lease right-of-use assets$44,006$49,537
Finance leasesPremises and equipment, net1,5051,588
Total right-of-use assets$45,511$51,125
Lease liabilities:
Operating leasesOperating lease liabilities$48,875$55,187
Finance leasesBorrowings1,5321,598
Total lease liabilities$50,407$56,785
Weighted average remaining lease term (in years) -
   operating
12.412.2
Weighted average remaining lease term (in years) - finance13.614.4
Weighted average discount rate - operating2.72 %2.65 %
Weighted average discount rate - finance1.76 %1.76 %

June 30,December 31,
Classification20222021
Right-of-use assets:
Operating leasesOperating lease right-of-use assets$41,070$41,686
Finance leasesPremises and equipment, net1,4221,487
Total right-of-use assets$42,492$43,173
Lease liabilities:
Operating leasesOperating lease liabilities$45,917$46,367
Finance leasesBorrowings1,4661,518
Total lease liabilities$47,383$47,885
Weighted average remaining lease term (in years) -
    operating		11.912.4
Weighted average remaining lease term (in years) -
    finance		12.913.4
Weighted average discount rate - operating2.74 %2.73 %
Weighted average discount rate - finance1.76 %1.76 %
The components of total lease expense included in the consolidated statements of income were as follows:
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
September 30,September 30,June 30,June 30,
Classification2021 2020 2021 2020 Classification2022 2021 2022 2021 
Operating lease costs:Operating lease costs:Operating lease costs:
Amortization of right-of-use assetAmortization of right-of-use assetOccupancy and equipment$1,838 $1,663 $5,948 $4,341 Amortization of right-of-use assetOccupancy and equipment$1,851 $2,171 $3,561 $4,110 
Short-term lease costShort-term lease costOccupancy and equipment107 95 296 261 Short-term lease costOccupancy and equipment144 102 255 189 
Variable lease costVariable lease costOccupancy and equipment284 78 760 376 Variable lease costOccupancy and equipment293 241 549 476 
Lease impairmentLease impairmentMortgage restructuring expense364 — 364 — 
Gain on lease modifications and
terminations		Gain on lease modifications and
terminations		Occupancy and equipment(14)— (801)— Gain on lease modifications and
terminations		Occupancy and equipment— (787)(18)(787)
Finance lease costs:Finance lease costs:Finance lease costs:
Interest on lease liabilitiesInterest on lease liabilitiesInterest expense on borrowings7 — 21 — Interest on lease liabilitiesInterest expense on borrowings6 8 15 14 
Amortization of right-of-use assetAmortization of right-of-use assetOccupancy and equipment28 — 83 — Amortization of right-of-use assetOccupancy and equipment28 27 65 55 
Total lease costTotal lease cost$2,250 $1,836 $6,307 $4,978 Total lease cost$2,686 $1,762 $4,791 $4,057 

During the three months and ninesix months ended SeptemberJune 30, 2022, the Company recorded $364 of lease impairment related to vacating two locations associated with the Mortgage restructuring. Additionally, during the six months ended June 30, 2022 and 2021, the Company recorded $14gains of $18 and $801 in gains$787, respectively, related to early lease terminations and modifications on lease modifications and terminations on certainother vacated locations that were consolidated as a result of previous acquisitions. There was no such activity during the three and nine months ended September 30, 2021 and 2020.locations.
The Company does not separate lease and non-lease components and instead elects to account for them as a single lease component. Variable lease cost primarily represents variable payments such as common area maintenance, utilities, and property taxes.
3228
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
A maturity analysis of operating and finance lease liabilities and a reconciliation of undiscounted cash flows to the total lease liability as of SeptemberJune 30, 20212022 is as follows:
OperatingFinance
LeasesLease
Lease payments due:
September 30, 2022$7,434 $116 
September 30, 20236,110 117 
September 30, 20245,180 119 
September 30, 20254,765 121 
September 30, 20264,637 123 
Thereafter29,784 1,133 
     Total undiscounted future minimum lease payments57,910 1,729 
Less: imputed interest(9,035)(197)
     Lease liability$48,875 $1,532 

OperatingFinance
LeasesLease
Lease payments due:
June 30, 2023$3,886 $58 
June 30, 20246,735 118 
June 30, 20255,447 120 
June 30, 20265,125 121 
June 30, 20275,039 123 
Thereafter28,877 1,102 
     Total undiscounted future minimum lease payments55,109 1,642 
Less: imputed interest(9,192)(176)
     Lease liability$45,917 $1,466 
Note (7)(6)—Mortgage servicing rights:
Changes in the Company’s mortgage servicing rights were as follows for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Carrying value at beginning of period$101,615 $60,508 $79,997 $75,521 
Capitalization9,215 18,202 31,382 33,415 
Mortgage servicing rights acquired from Franklin, at fair
    value		— 4,850 — 4,850 
Change in fair value:
    Due to pay-offs/pay-downs(7,302)(7,756)(24,488)(19,676)
    Due to change in valuation inputs or assumptions7,063 581 23,700 (22,575)
        Carrying value at end of period$110,591 $71,535 $110,591 $71,535 

 Three Months Ended June 30,Six Months Ended June 30,
 202220212022 2021 
Carrying value at beginning of period$144,675 $104,192 $115,512 $79,997 
Capitalization5,258 10,573 15,070 22,167 
Change in fair value:
    Due to pay-offs/pay-downs(5,024)(7,865)(9,495)(17,186)
    Due to change in valuation inputs or assumptions13,769 (5,285)37,591 16,637 
        Carrying value at end of period$158,678 $101,615 $158,678 $101,615 
The following table summarizes servicing income and expense, which are included in 'Mortgage banking income' and 'Other noninterest expense', respectively, within the Mortgage segment operating results for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021: 
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021 2020 2021 2020  202220212022 2021 
Servicing income:Servicing income:Servicing income:
Servicing income Servicing income$7,539 $5,536 $21,258 $15,667  Servicing income$7,966 $6,788 $15,395 $13,719 
Change in fair value of mortgage servicing rights Change in fair value of mortgage servicing rights(239)(7,175)(788)(42,251) Change in fair value of mortgage servicing rights8,745 (13,150)28,096 (549)
Change in fair value of derivative hedging instruments Change in fair value of derivative hedging instruments(2,128)(265)(9,987)15,705  Change in fair value of derivative hedging instruments(9,897)10,005 (28,995)(7,859)
Servicing income (loss)5,172 (1,904)10,483 (10,879)
Servicing incomeServicing income6,814 3,643 14,496 5,311 
Servicing expensesServicing expenses2,156 1,999 7,381 5,392 Servicing expenses3,377 2,693 5,925 5,225 
Net servicing income (loss)(1)
$3,016 $(3,903)$3,102 $(16,271)
Net servicing income(1)
Net servicing income(1)
$3,437 $950 $8,571 $86 
(1) Excludes benefit of custodial servicing related noninterest-bearing deposits held by the Bank.
3329
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Data and key economic assumptions related to the Company’s mortgage servicing rights as of SeptemberJune 30, 20212022 and December 31, 20202021 are as follows: 
September 30,December 31, June 30,December 31,
20212020 20222021
Unpaid principal balanceUnpaid principal balance$10,633,805 $9,787,657 Unpaid principal balance$11,160,382 $10,759,286 
Weighted-average prepayment speed (CPR)Weighted-average prepayment speed (CPR)9.46 %14.07 %Weighted-average prepayment speed (CPR)5.13 %9.31 %
Estimated impact on fair value of a 10% increaseEstimated impact on fair value of a 10% increase$(4,737)$(4,493)Estimated impact on fair value of a 10% increase$(4,617)$(4,905)
Estimated impact on fair value of a 20% increaseEstimated impact on fair value of a 20% increase$(9,107)$(8,599)Estimated impact on fair value of a 20% increase$(8,901)$(9,429)
Discount rateDiscount rate11.56 %11.49 %Discount rate10.5 %9.81 %
Estimated impact on fair value of a 100 bp increaseEstimated impact on fair value of a 100 bp increase$(4,454)$(2,942)Estimated impact on fair value of a 100 bp increase$(7,274)$(4,785)
Estimated impact on fair value of a 200 bp increaseEstimated impact on fair value of a 200 bp increase$(8,571)$(5,674)Estimated impact on fair value of a 200 bp increase$(13,943)$(9,198)
Weighted-average coupon interest rateWeighted-average coupon interest rate3.29 %3.58 %Weighted-average coupon interest rate3.23 %3.23 %
Weighted-average servicing fee (basis points)Weighted-average servicing fee (basis points)2728Weighted-average servicing fee (basis points)2727
Weighted-average remaining maturity (in months)Weighted-average remaining maturity (in months)330328Weighted-average remaining maturity (in months)330330
The Company economically hedges the mortgage servicing rights portfolio with various derivative instruments to offset changes in the fair value of the related mortgage servicing rights. See Note 10,9, "Derivatives" for additional information on these hedging instruments.
As of SeptemberJune 30, 20212022 and December 31, 2020,2021, mortgage escrow deposits totaled to $190,631$133,180 and $147,957,$127,617, respectively.
Note (7)—Income taxes:
An allocation of federal and state income taxes between current and deferred portions is presented below:
 Three Months Ended June 30,
 2022 2021 
Current$3,569 $9,541 
Deferred3,148 3,899 
Total$6,717 $13,440 
Six Months Ended June 30,
2022 2021 
Current$3,569 $15,490 
Deferred12,461 13,538 
Total$16,030 $29,028 
3430
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Note (8)—Income taxes:
An allocation of federal and state income taxes between current and deferred portions is presented below:
 Three Months Ended September 30,
 2021 2020 
Current$2,350 $13,123 
Deferred7,366 (15,163)
Total$9,716 $(2,040)
Nine Months Ended September 30,
2021 2020 
Current$17,840 $37,038 
Deferred20,904 (31,543)
Total$38,744 $5,495 
The following table presents a reconciliation of federal income taxes at the statutory federal rate of 21% to the Company's effective tax rates for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
 Three Months Ended September 30,
 2021 2020 
Federal taxes calculated at statutory rate$11,551 21.0 %$(1,604)21.0 %
Increase (decrease) resulting from:
State taxes, net of federal benefit3,279 6.0 %100 (1.3)%
(Benefit) expense from equity based compensation(1,784)(3.2)%(7)0.1 %
Municipal interest income, net of interest disallowance(416)(0.8)%(422)5.5 %
Bank owned life insurance(74)(0.1)%(55)0.7 %
NOL Carryback provision under CARES Act(3,424)(6.2)%00
Merger and offering costs— — %126 (1.6)%
Section 162(m) limitation1,065 1.9 %— — %
Other(481)(0.9)%(178)2.3 %
Income tax expense, as reported$9,716 17.7 %$(2,040)26.7 %
Nine Months Ended September 30,
2021 2020 
Federal taxes calculated at statutory rate$37,844 21.0 %$4,938 21.0 %
Increase (decrease) resulting from:
State taxes, net of federal benefit6,908 3.8 %1,266 5.4 %
(Benefit) expense from equity based compensation(2,129)(1.2)%154 0.7 %
Municipal interest income, net of interest disallowance(1,259)(0.7)%(996)(4.2)%
Bank owned life insurance(240)(0.1)%(90)(0.4)%
NOL Carryback provision under CARES Act(3,424)(1.9)%00
Merger and offering costs127 0.1 %289 1.2 %
Section 162(m) limitation1,313 0.7 %0— %
Other(396)(0.2)%(66)(0.3)%
Income tax expense, as reported$38,744 21.5 %$5,495 23.4 %

 Three Months Ended June 30,
 2022 2021 
Federal taxes calculated at statutory rate$5,475 21.0 %$11,916 21.0 %
Increase (decrease) resulting from:
State taxes, net of federal benefit1,582 6.1 %1,879 3.3 %
Benefit from equity based compensation(15)(0.1)%(124)(0.2)%
Municipal interest income, net of interest disallowance(444)(1.7)%(419)(0.7)%
Bank-owned life insurance(79)(0.3)%(82)(0.1)%
Offering costs— — %127 0.2 %
Section 162(m) limitation40 0.2 %21 — %
Other158 0.6 %121 0.2 %
Income tax expense, as reported$6,717 25.8 %$13,440 23.7 %
Six Months Ended June 30,
2022 2021 
Federal taxes calculated at statutory rate$14,830 21.0 %$26,293 21.0 %
Increase (decrease) resulting from:
State taxes, net of federal benefit2,533 3.6 %3,629 2.9 %
Benefit from equity based compensation(306)(0.4)%(345)(0.3)%
 Municipal interest income, net of interest disallowance(888)(1.3)%(843)(0.7)%
Bank-owned life insurance(153)(0.2)%(166)(0.1)%
Offering costs— — %127 0.1 %
Section 162(m) limitation162 0.1 %248 0.2 %
Other(148)(0.1)%85 0.1 %
Income tax expense, as reported$16,030 22.7 %$29,028 23.2 %
The Company is subject to Internal Revenue Code Section 162(m), which limits the deductibility of compensation paid to certain individuals. The restricted stock unit plans that existed prior to the corporation being public vested after the reliance period as defined in the underlying Treasury Regulations. It is the Company’s policy to apply the Section 162(m) limitations to stock-based compensation first and then followed by cash compensation. As a result of the vesting of these units and cash compensation paid to date, the Company has disallowed a portion of its compensation paid to the applicable individuals.
3531
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The components of the net deferred tax (liabilities) assets at SeptemberJune 30, 20212022 and December 31, 2020,2021, are as follows: 
September 30,December 31June 30,December 31,
2021 2020  2022 2021 
Deferred tax assets:Deferred tax assets:  Deferred tax assets:  
Allowance for credit lossesAllowance for credit losses$38,751 $48,409 Allowance for credit losses$36,547 $35,233 
Operating lease liabilitiesOperating lease liabilities13,134 14,496 Operating lease liabilities12,346 12,478 
Federal net operating loss1,541 1,753 
Net operating lossNet operating loss1,392 1,370 
Amortization of core deposit intangiblesAmortization of core deposit intangibles115 — 
Deferred compensationDeferred compensation6,798 8,872 Deferred compensation4,794 5,484 
Unrealized loss on debt securitiesUnrealized loss on debt securities43,504 — 
Unrealized loss on cash flow hedgesUnrealized loss on cash flow hedges326 499 Unrealized loss on cash flow hedges— 205 
Other13,886 19,101 
Other assetsOther assets7,150 8,301 
SubtotalSubtotal74,436 93,130 Subtotal105,848 63,071 
Deferred tax liabilities:Deferred tax liabilities:  Deferred tax liabilities:  
FHLB stock dividendsFHLB stock dividends$(484)$(561)FHLB stock dividends$(484)$(484)
Operating leases - right of use assetsOperating leases - right of use assets(11,726)(13,197)Operating leases - right of use assets(11,117)(11,287)
DepreciationDepreciation(7,276)(7,491)Depreciation(7,915)(7,938)
Amortization of core deposit intangiblesAmortization of core deposit intangibles(200)(684)Amortization of core deposit intangibles— (116)
Unrealized gain on equity securitiesUnrealized gain on equity securities(3,879)(17)Unrealized gain on equity securities(2,333)(2,407)
Unrealized gain on cash flow hedgesUnrealized gain on cash flow hedges(168)— 
Unrealized gain on debt securitiesUnrealized gain on debt securities(3,913)(13,027)Unrealized gain on debt securities— (1,324)
Mortgage servicing rightsMortgage servicing rights(28,774)(20,803)Mortgage servicing rights(41,345)(30,098)
GoodwillGoodwill(13,133)(11,301)Goodwill(14,806)(13,743)
Other(4,407)(9,653)
Other liabilitiesOther liabilities(2,507)(2,494)
SubtotalSubtotal(73,792)(76,734)Subtotal(80,675)(69,891)
Net deferred tax assets$644 $16,396 
Net deferred tax assets (liabilities)Net deferred tax assets (liabilities)$25,173 $(6,820)
The Company hashad a net operating loss carryforward acquired from Franklingenerated as a result of $7,338a previous acquisition amounting to $5,851 and $6,523 as of SeptemberJune 30, 2021.2022 and December 31, 2021, respectively. The net operating loss carryforward can be used to offset taxable income in future periods and reduce income tax liabilities in those future periods. While net operating losses are subject to certain annual utilization limits under Section 382, the Company believes the net operating loss carryforwardcarryforwards will be realized based on the projected annual limitation and the length of the net operating loss carryover period. The Company's determination of the realization of the net deferred tax asset is based on its assessment of all available positive and negative evidence. The net operating loss carryforward expires on December 31, 2029.

During the six months ended June 30, 2022, the Company generated a state net operating loss carryforward of $3,227, which may have varying expiration periods. No such loss was generated during the three months ended June 30, 2022 or the three and six months ended June 30, 2021. The Company expects to generate sufficient taxable income to utilize the loss generated.
Note (9)(8)—Commitments and contingencies:
Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates.
Commitments may expire without being used. Off-balance sheet risk of credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.
September 30,December 31,June 30,December 31,
2021 2020  2022 2021 
Commitments to extend credit, excluding interest rate lock commitmentsCommitments to extend credit, excluding interest rate lock commitments$2,826,186 $2,719,996 Commitments to extend credit, excluding interest rate lock commitments$3,356,089 $3,106,594 
Letters of creditLetters of credit63,698 67,598 Letters of credit66,265 77,427 
Balance at end of periodBalance at end of period$2,889,884 $2,787,594 Balance at end of period$3,422,354 $3,184,021 
As of SeptemberJune 30, 20212022 and December 31, 2020,2021, loan commitments included above with floating interest rates totaled $2.03$2.58 billion and $1.65$2.26 billion, respectively.
32
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The Company estimates expected credit losses on off-balance sheet loan commitments that are not accounted for as derivatives.derivatives under the CECL methodology. When applying the CECLthis methodology, to estimate expected credit loss, the Company considers the likelihood that funding will occur, the contractual period of exposure to credit loss, the risk of loss, historical loss experience, and current conditions along with expectations of future economic conditions.
36
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The table below presents activity within the allowance for credit losses on unfunded commitments included in accrued expenses and other liabilities on the Company's consolidated balance sheets for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
2021 20202021 2020 2022 20212022 2021 
Balance at beginning of periodBalance at beginning of period$13,202 $6,500 $16,378 $— Balance at beginning of period$16,262 $14,156 $14,380 $16,378 
Impact of CECL adoption on provision for credit losses
on unfunded commitments		— — — 2,947 
Increase in provision for credit losses from unfunded commitments acquired in business combination— 10,429 — 10,499 
Provision for credit losses on unfunded commitmentsProvision for credit losses on unfunded commitments301 (862)(2,875)2,621 Provision for credit losses on unfunded commitments4,137 (954)6,019 (3,176)
Balance at end of periodBalance at end of period$13,503 $16,067 $13,503 $16,067 Balance at end of period$20,399 $13,202 $20,399 $13,202 
In connection with the sale of mortgage loans to third party investors, the Company makes usual and customary representations and warranties as to the propriety of its origination activities. Occasionally, the investors require the Company to repurchase loans sold to them under the terms of the warranties. When this happens, the loans are recorded at fair value with a corresponding charge to a valuation reserve. The total principal amount of loans repurchased (or indemnified for) was $2,917$198 and $4,386$1,546 for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, and $1,329$761 and $5,696$1,469 for the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively. The Company has established a reserve associated with loan repurchases.
The following table summarizes the activity in the repurchase reserve included in accrued expenses and other liabilities on the Company's consolidated balance sheets:
Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Balance at beginning of period$5,489 $4,601 $5,928 $3,529 
Provision for loan repurchases or indemnifications— 901 (266)2,128 
Losses on loans repurchased or indemnified(120)(44)(293)(199)
Balance at end of period$5,369 $5,458 $5,369 $5,458 

37
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)

Three Months Ended June 30,Six Months Ended June 30,
 2022 2021 2022 2021 
Balance at beginning of period$4,317 $6,284 $4,802 $5,928 
Provision for loan repurchases or indemnifications(800)(706)(1,189)(266)
Losses on loans repurchased or indemnified(72)(89)(168)(173)
Balance at end of period$3,445 $5,489 $3,445 $5,489 
Note (10)(9)—Derivatives:
The Company utilizes derivative financial instruments as part of its ongoing efforts to manage its interest rate risk exposure as well as the exposure for its customers. Derivative financial instruments are included in the consolidated balance sheets line itemitems “Other assets” or “Other liabilities” at fair value in accordance with ASC 815, “Derivatives and Hedging.”
Derivatives not designated as hedging instruments
The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate-lock commitments). Under such commitments, interest rates for mortgage loans are typically locked in for between 45 to 90 days with the customer. These interest rate lock commitments are recorded at fair value in the Company’s consolidated balance sheets. The Company also enters into best effort or mandatory delivery forward commitments to sell residential mortgage loans to secondary market investors. Gains and losses arising from changes in the valuation of the rate-lock commitments and forward commitments are recognized currently in earnings and are reflected under the line item “Mortgage banking income” on the consolidated statements of income.
The Company enters into forward commitments, futures and options contracts that are not designated as hedging instruments as economic hedges to offset the changes in fair value of Mortgage servicing rights. Gains and losses associated with these instruments are included in earnings and are reflected under the line item “Mortgage banking income” on the consolidated statements of income.
Additionally, the Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with customer contracts, the Company enters into an offsetting derivative contract. The Company manages its credit risk, or potential risk of default by its commercial customers through credit limit approval and monitoring procedures.

33
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following tables provide details on the Company’s non-designated derivative financial instruments as of the dates presented:
June 30, 2022
Notional AmountAssetLiability
  Interest rate contracts$533,633 $29,701 $29,683 
  Forward commitments492,000 1,915 — 
  Interest rate-lock commitments292,716 3,758 — 
  Futures contracts318,000 952 — 
    Total$1,636,349 $36,326 $29,683 
 December 31, 2021
 Notional AmountAssetLiability
  Interest rate contracts$600,048 $19,265 $19,138 
  Forward commitments1,180,000 — 1,077 
  Interest rate-lock commitments487,396 7,197 — 
  Futures contracts429,000 922 — 
    Total$2,696,444 $27,384 $20,215 
Gains (losses) included in the consolidated statements of income related to the Company’s non-designated derivative financial instruments were as follows:
Three Months Ended June 30,Six Months Ended June 30,
 2022 2021 2022 2021 
Included in mortgage banking income:
  Interest rate lock commitments$2,007 $171 $(3,439)$(21,271)
  Forward commitments14,432 (19,200)52,335 24,058 
  Futures contracts(9,165)9,104 (25,700)(7,228)
  Option contracts— — 36 — 
    Total$7,274 $(9,925)$23,232 $(4,441)
Derivatives designated as cash flow hedges
The Company also maintains 2 interest rate swap agreements with notional amounts totaling $30,000 used to hedge interest rate exposure on outstanding subordinated debentures included in long-term debt totaling $30,930. Under these agreements, the Company receives a variable rate of interest equal to 3-month LIBOR and pays a weighted average fixed rate of interest of 2.08%. Upon the cessation of LIBOR in June 2023, the rate will convert to SOFR plus an adjustment in accordance with market standards. The interest rate swap contracts, which mature in June of 2024, are designated as cash flow hedges with the objective of reducing the variability in cash flows resulting from changes in interest rates. As
The following presents a summary of Septemberthe Company's designated cash flow hedges as of the dates presented:
 June 30, 2022December 31, 2021
 Notional AmountEstimated fair valueBalance sheet locationEstimated fair valueBalance sheet location
Interest rate swap agreements-
   subordinated debt		$30,000 $644 Other assets$(785)Accrued expenses and other liabilities
The Company's consolidated statements of income included losses of $101 and $240 for the three and six months ended June 30, 2022, respectively, and $143 and $280 for the three and six months ended June 30, 2021, and December 31, 2020, the fair value ofrespectively, in interest expense on borrowings related to these contracts resulted in liability balances of $1,247 and $1,909, respectively.
In July 2017, the Company entered into three interest rate swap contracts to hedge the variability of cash flows associated with the Company’s FHLB borrowings. These swapsflow hedges. The cash flow hedges were canceledeffective during the year ended December 31, 2018, locking inperiods presented and as a tax-adjusted gain of $1,564 in other comprehensive income to be accreted over the terms of the underlying contracts. The advances associated with the legacy cash flowresult qualified for hedge matured during the year ended December 31, 2020, and the Company elected not to renew them.accounting treatment. As such, during the fourth quarter of 2020, the remaining unamortized gain wasno amounts were reclassified from accumulated other comprehensive (loss) income to earnings.into earnings during either period presented.
38
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following tables provide details on the Company’s derivative financial instruments as of the dates presented:
September 30, 2021
Notional AmountAssetLiability
Not designated as hedging:
  Interest rate contracts$611,188 $22,456 $22,301 
  Forward commitments1,404,819 6,526 — 
  Interest rate-lock commitments738,201 9,804 — 
  Futures contracts491,800 — 4,758 
    Total$3,246,008 $38,786 $27,059 

 December 31, 2020
 Notional AmountAssetLiability
Not designated as hedging:   
  Interest rate contracts$606,878 $34,547 $34,317 
  Forward commitments1,358,328 — 11,633 
  Interest rate-lock commitments1,191,621 34,391 — 
  Futures contracts375,400 — 383 
    Total$3,532,227 $68,938 $46,333 
 September 30, 2021
 Notional AmountAssetLiability
Designated as hedging:   
  Interest rate swaps$30,000 $— $1,247 
December 31, 2020
Notional AmountAssetLiability
Designated as hedging:
   Interest rate swaps$30,000 $— $1,909 
Gains (losses) included in the consolidated statements of income related to the Company’s derivative financial instruments were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Not designated as hedging instruments (included in mortgage banking income):
  Interest rate lock commitments$(3,316)$5,994 $(24,587)$35,997 
  Forward commitments(806)(16,548)23,252 (56,998)
  Futures contracts(2,152)(587)(9,380)10,955 
    Total$(6,274)$(11,141)$(10,715)$(10,046)
Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Designated as hedging:
   Amount of gain reclassified from other comprehensive
      income and recognized in interest expense on
      borrowings, net of taxes of $0, $41, $0, and $145
$— $115 $— $410 
   Loss included in interest expense on borrowings(148)(137)(428)(211)
     Total$(148)$(22)$(428)$199 
3934
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following discloses the amount included in other comprehensive (loss) income, net of tax, for derivative instruments designated as cash flow hedges for the periods presented: 
Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Designated as hedging:
   Amount of gain (loss) recognized in other comprehensive
     income, net of tax $38, $40, $173, and $(403)
$106 $112 $489 $(1,145)
Three Months Ended June 30,Six Months Ended June 30,
 2022 2021 2022 2021 
Amount of gain recognized in other comprehensive
   income, net of tax expense of $99, $23, $372 and $135
$283 $67 $1,057 $383 
Derivatives designated as fair value hedges
During the first quarter of 2022, the Company entered into 3 designated fair value hedges to mitigate the effect of changing rates on the fair value of various fixed rate liabilities, including certain money market deposits and subordinated debt. The hedging strategy converts the fixed interest rates of the hedged items to the daily compounded SOFR in arrears paid monthly. For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item.As of June 30, 2022, the fair value hedges were deemed effective.
 June 30, 2022
 Notional AmountRemaining Maturity (In Years)Receive Fixed RatePay Floating RateEstimated fair value
Derivatives included in other liabilities:   
  Interest rate swap
    agreement- subordinated
    debt		$100,000 1.671.45625%SOFR$(2,509)
  Interest rate swap
    agreement- fixed rate
    money market deposits		75,000 2.141.49500%SOFR(2,294)
  Interest rate swap
    agreement- fixed rate
    money market deposits		125,000 2.141.49500%SOFR(3,823)
     Total$300,000 1.981.48208%$(8,626)
The following discloses the amount of income included in interest expense on borrowings and deposits, related to these fair value hedging instruments:
Three Months Ended June 30,Six Months Ended June 30,
 2022 2022 
Designated fair value hedge:
     Interest expense on deposits$395 $708 
     Interest expense on borrowings186 348 
        Total$581 $1,056 
The following amounts were recorded on the balance sheet related to cumulative adjustments for fair value hedges as of June 30, 2022:
Line item on the balance sheetCarrying Amount of the Hedged ItemCumulative Decrease in Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Item
Borrowings$96,298 (1)$(2,509)
Money market and savings deposits202,114 (2)(6,117)
(1) The carrying value also includes unamortized subordinated debt issuance costs of $1,193.
(2) The carrying value also includes and purchase accounting fair value premium of $8,231.
35
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheets when the “right of offset” exists or when the instruments are subject to an enforceable master netting agreement, which includes the right of the non-defaulting party or non-affected party to offset recognized amounts, including collateral posted with the counterparty, to determine a net receivable or net payable upon early termination of the agreement. Certain of the Company’s derivative instruments are subject to master netting agreements, however the Company has not elected to offset such financial instruments in the consolidated balance sheets. The following table presents the Company's gross derivative positions as recognized in the consolidated balance sheets as well as the net derivative positions, including collateral pledged to the extent the application of such collateral did not reduce the net derivative liability position below zero, had the Company elected to offset those instruments subject to an enforceable master netting agreement:
Offsetting Derivative AssetsOffsetting Derivative LiabilitiesOffsetting Derivative AssetsOffsetting Derivative Liabilities
September 30, 2021December 31, 2020September 30, 2021December 31, 2020June 30, 2022December 31, 2021June 30, 2022December 31, 2021
Gross amounts recognizedGross amounts recognized$4,813 $3,863 $19,467 $34,051 Gross amounts recognized$28,850 $4,990 $13,726 $15,733 
Gross amounts offset in the consolidated balance sheetsGross amounts offset in the consolidated balance sheets— — — — Gross amounts offset in the consolidated balance sheets— — — — 
Net amounts presented in the consolidated balance sheetsNet amounts presented in the consolidated balance sheets4,813 3,863 19,467 34,051 Net amounts presented in the consolidated balance sheets28,850 4,990 13,726 15,733 
Gross amounts not offset in the consolidated balance sheetsGross amounts not offset in the consolidated balance sheetsGross amounts not offset in the consolidated balance sheets
Less: financial instrumentsLess: financial instruments3,816 857 3,816 857 Less: financial instruments9,724 4,297 9,724 4,297 
Less: financial collateral pledgedLess: financial collateral pledged— — 15,651 33,194 Less: financial collateral pledged— — 4,002 11,436 
Net amountsNet amounts$997 $3,006 $— $— Net amounts$19,126 $693 $— $— 
Most derivative contracts with clients are secured by collateral. Additionally, in accordance with the interest rate agreements with derivatives dealers, the Company may be required to post margin to these counterparties. At SeptemberAs of June 30, 20212022 and December 31, 2020,2021, the Company had minimum collateral posting thresholds with certain derivative counterparties and had collateral posted of $68,910$35,391 and $57,985,$57,868, respectively, against its obligations under these agreements. Cash pledged as collateral related toon derivative contracts is recorded in other assets inon the consolidated balance sheets.
Note (11)(10)—Fair value of financial instruments:
FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a framework for measuring the fair value of assets and liabilities according to a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances.
40
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The hierarchy is broken down into the following three levels, based on the reliability of inputs:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs for assets or liabilities that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.

36
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The Company records the fair values of financial assets and liabilities on a recurring and non-recurring basis using the following methods and assumptions:
Investment SecuritiesInvestment securities are recorded at fair value on a recurring basis. Fair values for securities are based on quoted market prices, where available. If quoted prices are not available, fair values are based on quoted market prices of similar instruments or are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the pricing relationship or correlation among other benchmark quoted securities. Investment securities valued using quoted market prices of similar instruments or that are valued using matrix pricing are classified as Level 2. When significant inputs to the valuation are unobservable, the available-for-sale securities are classified within Level 3 of the fair value hierarchy. Where no active market exists for a security or other benchmark securities, fair value is estimated by the Company with reference to discount margins for other high-risk securities.
Loans held for saleLoans held for sale are carried at fair value. Fair value is determined using current secondary market prices for loans with similar characteristics for the mortgage portfolio, that is, using Level 2 inputs. Commercial loans held for sale's fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, credit metrics and collateral value when appropriate. As such, these are considered Level 3.
DerivativesThe fair value of the Company's interest rate swapsswap agreements to facilitate customer transactions are based upon fair values provided from entities that engage in interest rate swap activity and is based upon projected future cash flows and interest rates. FairThe fair value of interest rate lock commitments associated with the mortgage pipeline is based on fees currently charged to enter into similar agreements, and for fixed-rate commitments, the difference between current levels of interest rates and the committed rates is also considered. The fair values of the Company's designated cash flow and fair value hedges are determined by calculating the difference between the discounted fixed rate cash flows and the discounted variable rate cash flows. The fair values of both the Company's hedges, including designated cash flow hedges and designated fair value hedges are based on pricing models that utilize observable market inputs. These financial instruments are classified as Level 2.
OREOOREO is comprised of commercial and residential real estate obtained in partial or total satisfaction of loan obligations and excess land and facilities held for sale. OREO acquired in settlement of indebtedness is recorded at the lower of the carrying amount of the loan or the fair value of the real estate less costs to sell. Fair value is determined on a nonrecurring basis based on appraisals by qualified licensed appraisers and is adjusted for management’s estimates of costs to sell and holding period discounts. The valuations are classified as Level 3.
Mortgage servicing rightsMSRs are carried at fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. As such, MSRs are considered Level 3.
37
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Collateral dependent loans
Collateral dependent loans are loans for which, based on current information and events, the Company has determined foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral and it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Collateral dependent loans are classified as Level 3.




41
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following table contains the estimated fair values and the related carrying values of the Company's financial instruments. Items which are not financial instruments are not included.
 Fair Value
 Fair Value
September 30, 2021Carrying amountLevel 1Level 2Level 3Total
June 30, 2022June 30, 2022Carrying amountLevel 1Level 2Level 3Total
Financial assets:Financial assets:     Financial assets:     
Cash and cash equivalentsCash and cash equivalents$1,324,564 $1,324,564 $— $— $1,324,564 Cash and cash equivalents$872,861 $872,861 $— $— $872,861 
Investment securitiesInvestment securities1,577,337 — 1,577,337 — 1,577,337 Investment securities1,621,344 — 1,621,344 — 1,621,344 
Loans, netLoans, net7,155,228 — — 7,255,887 7,255,887 Loans, net8,498,065 — — 8,438,565 8,438,565 
Loans held for saleLoans held for sale855,706 — 755,210 100,496 855,706 Loans held for sale260,215 — 222,400 37,815 260,215 
Interest receivableInterest receivable41,393 30 6,448 34,915 41,393 Interest receivable40,393 77 7,037 33,279 40,393 
Mortgage servicing rightsMortgage servicing rights110,591 — — 110,591 110,591 Mortgage servicing rights158,678 — — 158,678 158,678 
DerivativesDerivatives38,786 — 38,786 — 38,786 Derivatives36,970 — 36,970 — 36,970 
Financial liabilities:Financial liabilities: Financial liabilities: 
Deposits:Deposits: Deposits: 
Without stated maturitiesWithout stated maturities$8,884,429 $8,884,429 $— $— $8,884,429 Without stated maturities$9,365,544 $9,365,544 $— $— $9,365,544 
With stated maturitiesWith stated maturities1,187,489 — 1,196,141 — 1,196,141 With stated maturities1,177,758 — 1,185,639 — 1,185,639 
Securities sold under agreement to
repurchase and federal funds sold
Securities sold under agreement to
repurchase and federal funds sold
41,730 41,730 — — 41,730 
Securities sold under agreement to
repurchase and federal funds sold
31,706 31,706 — — 31,706 
Subordinated debtSubordinated debt129,448 — — 134,668 134,668 Subordinated debt127,228 — — 123,714 123,714 
Other borrowings1,532 — 1,532 — 1,532 
Interest payableInterest payable2,394 138 1,873 383 2,394 Interest payable2,512 45 954 1,513 2,512 
DerivativesDerivatives28,306 — 28,306 — 28,306 Derivatives38,309 — 38,309 — 38,309 

 Fair Value
 Fair Value
December 31, 2020Carrying amountLevel 1Level 2Level 3Total
December 31, 2021December 31, 2021Carrying amountLevel 1Level 2Level 3Total
Financial assets:Financial assets:     Financial assets:     
Cash and cash equivalentsCash and cash equivalents$1,317,898 $1,317,898 $— $— $1,317,898 Cash and cash equivalents$1,797,740 $1,797,740 $— $— $1,797,740 
Investment securitiesInvestment securities1,176,991 — 1,176,991 — 1,176,991 Investment securities1,681,892 — 1,681,892 — 1,681,892 
Loans, netLoans, net6,912,570 — — 7,058,693 7,058,693 Loans, net7,479,103 — — 7,566,717 7,566,717 
Loans held for saleLoans held for sale899,173 — 683,770 215,403 899,173 Loans held for sale752,223 — 672,924 79,299 752,223 
Interest receivableInterest receivable43,603 33 5,254 38,316 43,603 Interest receivable38,528 36 6,461 32,031 38,528 
Mortgage servicing rightsMortgage servicing rights79,997 — — 79,997 79,997 Mortgage servicing rights115,512 — — 115,512 115,512 
DerivativesDerivatives68,938 — 68,938 — 68,938 Derivatives27,384 — 27,384 — 27,384 
Financial liabilities:Financial liabilities: Financial liabilities: 
Deposits:Deposits: Deposits: 
Without stated maturitiesWithout stated maturities$8,020,783 $8,020,783 $— $— $8,020,783 Without stated maturities$9,705,816 $9,705,816 $— $— $9,705,816 
With stated maturitiesWith stated maturities1,437,254 — 1,446,605 — 1,446,605 With stated maturities1,131,081 — 1,137,647 — 1,137,647 
Securities sold under agreement to
repurchase and federal funds sold
Securities sold under agreement to
repurchase and federal funds sold
32,199 32,199 — — 32,199 
Securities sold under agreement to
repurchase and federal funds sold
40,716 40,716 — — 40,716 
Subordinated debtSubordinated debt189,527 — — 192,149 192,149 Subordinated debt129,544 — — 133,021 133,021 
Other borrowings16,598 — 16,598 — 16,598 
Interest payableInterest payable6,772 327 4,210 2,235 6,772 Interest payable3,162 140 1,510 1,512 3,162 
DerivativesDerivatives48,242 — 48,242 — 48,242 Derivatives21,000 — 21,000 — 21,000 
4238
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The balances and levels of the assets measured at fair value on a recurring basis at SeptemberJune 30, 20212022 are presented in the following table:
At September 30, 2021Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Recurring valuations:    
Financial assets:    
Available-for-sale securities:    
U.S. government agency securities$— $10,571 $— $10,571 
Mortgage-backed securities - residential— 1,210,503 — 1,210,503 
Mortgage-backed securities - commercial— 15,712 — 15,712 
Municipal securities— 327,239 — 327,239 
Treasury securities— 6,006 — 6,006 
Corporate securities— 2,527 — 2,527 
Equity securities— 4,779 — 4,779 
Total securities$— $1,577,337 $— $1,577,337 
Loans held for sale— 755,210 100,496 855,706 
Mortgage servicing rights— — 110,591 110,591 
Derivatives— 38,786 — 38,786 
Financial Liabilities:
Derivatives— 28,306 — 28,306 

At June 30, 2022Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Recurring valuations:    
Financial assets:    
Available-for-sale securities:    
U.S. government agency securities$— $42,059 $— $42,059 
Mortgage-backed securities - residential— 1,164,932 — 1,164,932 
Mortgage-backed securities - commercial— 20,668 — 20,668 
Municipal securities— 273,164 — 273,164 
Treasury securities— 109,793 — 109,793 
Corporate securities— 7,625 — 7,625 
Equity securities— 3,103 — 3,103 
Total securities$— $1,621,344 $— $1,621,344 
Loans held for sale$— $222,400 $37,815 $260,215 
Mortgage servicing rights— — 158,678 158,678 
Derivatives— 36,970 — 36,970 
Financial Liabilities:
Derivatives— 38,309 — 38,309 
The balances and levels of the assets measured at fair value on a non-recurring basis at SeptemberJune 30, 20212022 are presented in the following table: 
At September 30, 2021Quoted prices
in active
markets for
identical assets
(liabilities
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
At June 30, 2022At June 30, 2022Quoted prices
in active
markets for
identical assets
(liabilities
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Non-recurring valuations:Non-recurring valuations:    Non-recurring valuations:    
Financial assets:Financial assets:    Financial assets:    
Other real estate ownedOther real estate owned$— $— $6,192 $6,192 Other real estate owned$— $— $1,836 $1,836 
Collateral dependent loans:Collateral dependent loans:Collateral dependent loans:
Commercial and industrial$— $— $101 $101 
Construction— — 606 606 
Residential real estate:Residential real estate:Residential real estate:
Residential line of creditResidential line of credit— — 311 311 Residential line of credit— — 315 315 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied— — 315 315 Owner occupied— — 2,151 2,151 
Non-owner occupied— — 4,527 4,527 
Consumer and otherConsumer and other— — 24 24 Consumer and other— — 24 24 
Total collateral dependent loansTotal collateral dependent loans$— $— $5,884 $5,884 Total collateral dependent loans$— $— $2,502 $2,502 
4339
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)

The balances and levels of the assets measured at fair value on a recurring basis at December 31, 20202021 are presented in the following table: 
At December 31, 2020Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
At December 31, 2021At December 31, 2021Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Recurring valuations:Recurring valuations:    Recurring valuations:    
Financial assets:Financial assets:    Financial assets:    
Available-for-sale securities:Available-for-sale securities:    Available-for-sale securities:    
U.S. government agency securitiesU.S. government agency securities$— $2,003 $— $2,003 U.S. government agency securities$— $33,870 $— $33,870 
Mortgage-backed securities - residentialMortgage-backed securities - residential— 773,336 — 773,336 Mortgage-backed securities - residential— 1,269,372 — 1,269,372 
Mortgage-backed securities - commercialMortgage-backed securities - commercial— 21,588 — 21,588 Mortgage-backed securities - commercial— 15,250 — 15,250 
Municipals, tax-exempt— 356,329 — 356,329 
Municipal securitiesMunicipal securities— 338,610 — 338,610 
Treasury securitiesTreasury securities— 16,628 — 16,628 Treasury securities— 14,908 — 14,908 
Corporate securitiesCorporate securities— 2,516 — 2,516 Corporate securities— 6,515 — 6,515 
Equity securitiesEquity securities— 4,591 — 4,591 Equity securities— 3,367 — 3,367 
Total securitiesTotal securities$— $1,176,991 $— $1,176,991 Total securities$— $1,681,892 $— $1,681,892 
Loans held for saleLoans held for sale$— $683,770 $215,403 $899,173 Loans held for sale$— $672,924 $79,299 $752,223 
Mortgage servicing rightsMortgage servicing rights— — 79,997 79,997 Mortgage servicing rights— — 115,512 115,512 
DerivativesDerivatives— 68,938 — 68,938 Derivatives— 27,384 — 27,384 
Financial Liabilities:Financial Liabilities:Financial Liabilities:
DerivativesDerivatives— 48,242 — 48,242 Derivatives— 21,000 — 21,000 
The balances and levels of the assets measured at fair value on a non-recurring basis at December 31, 20202021 are presented in the following table: 
At December 31, 2020Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other observable inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Non-recurring valuations:    
Financial assets:    
Other real estate owned$— $— $6,662 $6,662 
Collateral dependent loans:
Commercial and industrial$— $— $684 $684 
Residential real estate:
Residential line of credit— — 311 311 
Commercial real estate: 
Owner occupied— — 136 136 
Non-owner occupied— — 5,022 5,022 
Total collateral dependent loans$— $— $6,153 $6,153 

At December 31, 2021Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Non-recurring valuations:    
Financial assets:    
Other real estate owned$— $— $6,308 $6,308 
Collateral dependent loans:
Construction— — 606 606 
Residential real estate:
Residential line of credit— — 592 592 
Commercial real estate: 
Owner occupied— — 729 729 
Non-owner occupied— — 3,526 3,526 
Consumer and other— — 24 24 
Total collateral dependent loans$— $— $5,477 $5,477 
The following tables present information as of SeptemberJune 30, 20212022 and December 31, 20202021 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
As of SeptemberJune 30, 20212022
Financial instrumentFair ValueValuation techniqueSignificant 
unobservable inputs		Range of
inputs
Collateral dependent loans$5,8842,502 Valuation of collateralDiscount for comparable sales0%-30%10%-35%
Other real estate owned$6,1921,836 Appraised value of property less costs to sellDiscount for costs to sell0%-15%
4440
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
As of December 31, 20202021
Financial instrumentFair ValueValuation techniqueSignificant 
unobservable inputs		Range of
inputs
Collateral dependent loans$6,1535,477 Valuation of collateralDiscount for comparable sales0%-30%10%-35%
Other real estate owned$6,6626,308 Appraised value of property less costs to sellDiscount for costs to sell0%-15%
For collateral dependent loans, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. Fair value of the loan's collateral is determined by third-party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of the collateral. Collateral dependent loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on changes in market conditions from the time of valuation and management's knowledge of the clientborrower and client'sborrower's business. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, total amortized cost of collateral dependent loans measured on a non-recurring basis amounted to $6,918$2,537 and $7,839,$5,781, respectively.

Other real estate owned acquired in settlement of indebtedness is recorded at fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Any write-downs based on the asset's fair value at the date of foreclosure are charged to the allowance for credit losses. Appraisals for both collateral dependent loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the lending administrative department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry wide statistics. Collateral dependent loans that are dependent on recovery through sale of equipment, such as farm equipment, automobiles and aircrafts are generally valued based on public source pricing or subscription services while more complex assets are valued through leveraging brokers who have expertise in the collateral involved.

Fair value option
The following table summarizes the Company's loans held for sale, at fair value, as of the dates presented:
September 30,December 31,June 30,December 31,
2021202020222021
Commercial and industrialCommercial and industrial$100,496 $215,403Commercial and industrial$37,815 $79,299 
Residential real estate:Residential real estate:Residential real estate:
1-4 family mortgage1-4 family mortgage755,210 683,770 1-4 family mortgage222,400 672,924 
Total loans held for saleTotal loans held for sale$855,706 $899,173 Total loans held for sale$260,215 $752,223 
Mortgage loans held for sale
The Company measures mortgage loans originated for sale at fair value under the fair value option as permitted under ASC 825, "Financial Instruments" ("ASC 825"). Electing to measure these assets at fair value reduces certain timing differences and more accurately matches the changes in fair value of the loans with changes in the fair value of derivative instruments used to economically hedge them.
Net lossesgains (losses) of $3,908$4,671 and $14,894$(12,203) resulting from fair value changes of mortgage loans were recorded in income during the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, compared to net gains (losses) of $20,378$9,730 and $6,512$(10,986) during the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both loans held for sale and the related derivative instruments are recorded in Mortgage Banking Income in the consolidated statements of income. Election of the fair value option allows the Company to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value.
Government National Mortgage Association optional repurchase programs allow financial institutions to buy back
individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution provides servicing and was the original transferor. At the servicer’s option and without GNMA’s prior authorization, the servicer may repurchase such a delinquent loan for an amount equal to 100 percent of the remaining principal balance of the loan. Under FASB ASC Topic 860, “Transfers and Servicing,” this buy-back option is considered a conditional option
4541
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
the loan. Under FASB ASC Topic 860, “Transfers and Servicing,” this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When the Company is deemed to have regained effective control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be brought back onto the balance sheet, regardless of whether the Company intends to exercise the buy-back option if the buyback option provides the transferor a more-than-trivial benefit. As of SeptemberJune 30, 2021,2022, and December 31, 2020,2021, there were $105,094$24,480 and $151,184,$94,648, respectively, of delinquent GNMA loans previously sold that the Company did not record on its consolidated balance sheets as the Company determined there not to be a more-than-trivial benefit based on an analysis of interest rates and an assessment of potential reputational risk associated with these loans.
The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these mortgage loans held for sale, valuation adjustments attributable to instrument-specific credit risk is nominal.
Commercial loans held for sale
The Company also has a portfolio of shared national credits and institutional healthcare loans that were acquired during 2020 in the acquisition of Franklin. These commercial loans are also being measured under the fair value option. As such, these loans are excluded from the allowance for credit losses. The following tabletables sets forth the changes in fair value associated with this portfolio.portfolio for the three and six months ended June 30, 2022 and 2021.
Three Months Ended September 30, 2021Three Months Ended June 30, 2022
Principal BalanceFair Value DiscountFair ValuePrincipal BalanceFair Value DiscountFair Value
Carrying value at beginning of periodCarrying value at beginning of period$135,972 $(11,850)$124,122 Carrying value at beginning of period$85,816 $(7,637)$78,179 
Change in fair value:Change in fair value:Change in fair value:
Pay-downs and pay-offs Pay-downs and pay-offs(24,366)— (24,366) Pay-downs and pay-offs(38,354)— (38,354)
Write-offs to discount Write-offs to discount— — — 
Changes in valuation included in other noninterest income Changes in valuation included in other noninterest income— 740 740  Changes in valuation included in other noninterest income— (2,010)(2,010)
Carrying value at end of period Carrying value at end of period$111,606 $(11,110)$100,496  Carrying value at end of period$47,462 $(9,647)$37,815 
Nine Months Ended September 30, 2021Six Months Ended June 30, 2022
Principal BalanceFair Value DiscountFair ValuePrincipal BalanceFair Value DiscountFair Value
Carrying value at beginning of periodCarrying value at beginning of period$239,063 $(23,660)$215,403 Carrying value at beginning of period$86,762 $(7,463)$79,299 
Change in fair value:Change in fair value:Change in fair value:
Pay-downs and pay-offsPay-downs and pay-offs(116,158)— (116,158)Pay-downs and pay-offs(39,300)— (39,300)
Write-offs to discountWrite-offs to discount(11,299)11,299 — Write-offs to discount— — — 
Changes in valuation included in other noninterest incomeChanges in valuation included in other noninterest income— 1,251 1,251 Changes in valuation included in other noninterest income— (2,184)(2,184)
Carrying value at end of period Carrying value at end of period$111,606 $(11,110)$100,496  Carrying value at end of period$47,462 $(9,647)$37,815 
Three Months Ended September 30, 2020
Principal balanceFair Value discountFair Value
Carrying value at beginning of period$— $— $— 
Commercial loans held for sale acquired from Franklin350,269 (24,063)326,206 
Change in fair value:
Pay-downs and pay-offs(86,808)— (86,808)
Changes in valuation included in other noninterest income01,858 1,858 
Carrying value at end of period$263,461 $(22,205)$241,256 
Nine Months ended September 30, 2020Three Months Ended June 30, 2021
Principal balanceFair Value discountFair ValuePrincipal balanceFair Value discountFair Value
Carrying value at beginning of periodCarrying value at beginning of period$— $— $— Carrying value at beginning of period$197,490 $(22,506)$174,984 
Commercial loans held for sale acquired from Franklin350,269 (24,063)326,206 
Change in fair value:Change in fair value:Change in fair value:
Pay-downs and pay-offs Pay-downs and pay-offs(86,808)— (86,808)Pay-downs and pay-offs(52,226)— (52,226)
Write-offs to discountWrite-offs to discount(9,292)9,292 — 
Changes in valuation included in other noninterest income Changes in valuation included in other noninterest income— 1,858 1,858 Changes in valuation included in other noninterest income— 1,364 1,364 
Carrying value at end of period Carrying value at end of period$263,461 $(22,205)$241,256 Carrying value at end of period$135,972 $(11,850)$124,122 
Six Months Ended June 30, 2021
Principal balanceFair Value discountFair Value
Carrying value at beginning of periodCarrying value at beginning of period$239,063 $(23,660)$215,403 
Change in fair value:Change in fair value:
Pay-downs and pay-offs Pay-downs and pay-offs(91,792)— (91,792)
Write-offs to discount Write-offs to discount(11,299)11,299 — 
Changes in valuation included in other noninterest income Changes in valuation included in other noninterest income— 511 511 
Carrying value at end of period Carrying value at end of period$135,972 $(11,850)$124,122 
Interest income on loans held for sale measured at fair value is accrued as it is earned based on contractual rates and is reflected in loan interest income in the consolidated statements of income.
4642
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following table summarizes the differences between the fair value and the principal balance for loans held for sale and nonaccrual loans measured at fair value as of SeptemberJune 30, 20212022 and December 31, 2020:2021: 
September 30, 2021Aggregate
fair value		Aggregate Unpaid Principal BalanceDifference
Mortgage loans held for sale measured at fair value$755,210 $738,221 $16,989 
Commercial loans held for sale measured at fair value94,871 100,914 (6,043)
Nonaccrual loans5,625 10,692 (5,067)
December 31, 2020 
Mortgage loans held for sale measured at fair value$683,770 $651,887 $31,883 
Commercial loans held for sale measured at fair value208,914 226,867 (17,953)
Past due loans of 90 days or more83 163 (80)
Nonaccrual loans6,406 12,033 (5,627)


June 30, 2022Aggregate
fair value		Aggregate Unpaid Principal BalanceDifference
Mortgage loans held for sale measured at fair value$222,400 $219,696 $2,704 
Commercial loans held for sale measured at fair value36,356 37,733 (1,377)
Nonaccrual commercial loans held for sale1,459 9,729 (8,270)
December 31, 2021Aggregate
fair value		Aggregate Unpaid Principal BalanceDifference
Mortgage loans held for sale measured at fair value$672,924 $658,017 $14,907 
Commercial loans held for sale measured at fair value74,082 76,863 (2,781)
Nonaccrual commercial loans held for sale5,217 9,899 (4,682)
Note (12)(11)—Segment reporting:
The Company and the Bank are engaged in the business of banking and provide a full range of financial services. The Company determines reportable segments based on the significance of the segment’s operating results to the overall Company, the products and services offered, customer characteristics, processes and service delivery of the segments and the regular financial performance review and allocation of resources by the Chief Executive Officer, the Company’s chief operating decision maker. The Company has identified 2 distinct reportable segments—Banking and Mortgage. The Company’s primary segment is Banking, which provides a full range of deposit and lending products and services to corporate, commercial and consumer customers. TheFor the periods prior to and for the six months ended June 30, 2022, the Company offers full-serviceoffered conforming residential mortgage products, including conforming residential loans and services through 2 distinct delivery channels: retail and ConsumerDirect.our national direct-to-consumer internet delivery channel. Additionally, the Mortgage segment includesactivities include the servicing of residential mortgage loans and the packaging and securitization of loans to governmental agencies. The Company’s mortgage division represents a distinct reportable segment which differs from the Company’s primary business of commercial and retail banking.
As previously reported, on March 31, 2021, the Company re-evaluated its business segments and revised to align all mortgage activities with the Mortgage segment. Previously, the Company had attributed retail mortgage activities originating from geographical locations within the footprint of the Company's branches to the Banking segment. Results for the comparable prior period have been revised to reflect this realignment. The impact of this change on previously reported segment results was the reclassification of mortgage retail footprint total net contribution of $9,508 and $18,382 from the Banking segment to the Mortgage segment for the three and nine months ended September 30, 2020, respectively.
The financial performance of the Mortgage segment is assessed based on results of operations reflecting direct revenues and expenses and allocated expenses. This approach gives management a better indication of the operating performance of the segment. When assessing the Banking segment’s financial performance, the CEO utilizes reports with indirect revenues and expenses including but not limited to the investment portfolio, electronic delivery channels and areas that primarily support the banking segment operations. Therefore, these are included in the results of the Banking segment. Other indirect revenue and expenses related to general administrative areas are also included in the internal financial results reports of the Banking segment utilized by the CEO for analysis and are thus included for Banking segment reporting. Additionally, the Banking segment includes the results of the Company's specialty lending group, which is concentrated in manufactured housing lending. The Mortgage segment utilizes funding sources from the Banking segment in order to fund mortgage loans that are ultimately sold on the secondary market. The Mortgage segmentmarket and uses the proceeds from loan sales to repay obligations due to the Banking segment.


On May 10, 2022, the Company announced the restructuring of its Mortgage segment, including the exit from the direct-to-consumer delivery channel, which is 1 of 2 delivery channels in the Mortgage segment. For the three and six months ended June 30, 2022, the direct-to-consumer channel comprised 13.7% and 33.0%, respectively, of the Company's total interest rate lock volume compared to 51.5% and 50.9% for the three and six months ended June 30, 2021, respectively. For the three and six months ended June 30, 2022, the direct-to-consumer channel comprised 37.4% and 45.3% of the Company's sales volume, and 54.9% and 53.9% for the three and six months ended June 30, 2021, respectively. As a result of exiting this channel, the Company incurred $12,458 of restructuring expenses during the three and six months ended June 30, 2022. The current repositioning of our Mortgage segment does not qualify to be reported as discontinued operations. The Company plans to continue originating and selling residential mortgage loans within its Mortgage segment through its traditional mortgage retail channel, retain mortgage servicing rights and continue holding residential 1-4 family mortgage loans in the loan portfolio.



4743
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following tables provide segment financial information for three and nine months ended September 30, 2021 and 2020 as follows:the periods indicated:
Three Months Ended September 30, 2021BankingMortgageConsolidated
Three Months Ended June 30, 2022Three Months Ended June 30, 2022
Banking(4)
MortgageConsolidated
Net interest incomeNet interest income$88,576 $(100)$88,476 Net interest income$102,171 $— $102,171 
Provisions for credit losses(1)
Provisions for credit losses(1)
(2,531)— (2,531)
Provisions for credit losses(1)
12,318 — 12,318 
Mortgage banking income(2)
Mortgage banking income(2)
— 47,751 47,751 
Mortgage banking income(2)
— 23,711 23,711 
Change in fair value of mortgage servicing rights, net of hedging(2)
Change in fair value of mortgage servicing rights, net of hedging(2)
— (2,367)(2,367)
Change in fair value of mortgage servicing rights, net of hedging(2)
— (1,152)(1,152)
Other noninterest incomeOther noninterest income13,823 (201)13,622 Other noninterest income10,699 (44)10,655 
Depreciation and amortizationDepreciation and amortization1,791 349 2,140 Depreciation and amortization1,731 281 2,012 
Amortization of intangiblesAmortization of intangibles1,344 — 1,344 Amortization of intangibles1,194 — 1,194 
Other noninterest expense(3)Other noninterest expense(3)55,642 35,881 91,523 Other noninterest expense(3)56,395 37,396 93,791 
Income before income taxes$46,153 $8,853 $55,006 
Income (loss) before income taxesIncome (loss) before income taxes$41,232 $(15,162)$26,070 
Income tax expenseIncome tax expense9,716 Income tax expense6,717 
Net income applicable to FB Financial Corporation and noncontrolling
interest
Net income applicable to FB Financial Corporation and noncontrolling
interest
45,290 
Net income applicable to FB Financial Corporation and noncontrolling
interest
19,353 
Net income applicable to noncontrolling interest(3)(4)
Net income applicable to noncontrolling interest(3)(4)
— 
Net income applicable to noncontrolling interest(3)(4)
8 
Net income applicable to FB Financial CorporationNet income applicable to FB Financial Corporation$45,290 Net income applicable to FB Financial Corporation$19,345 
Total assetsTotal assets$10,712,281 $1,098,009 $11,810,290 Total assets$11,469,762 $724,100 $12,193,862 
GoodwillGoodwill242,561 — 242,561 Goodwill242,561 — 242,561 
(1)Included $301Includes $4,137 in provision for credit losses on unfunded commitments.
(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.
(3)Includes $12,458 in Mortgage restructuring expenses in the Mortgage segment related to the exit from the direct-to-consumer delivery channel.
(4)Banking segment includes noncontrolling interest.

Three Months Ended June 30, 2021
Banking(3)
MortgageConsolidated
Net interest income$86,553 $10 $86,563 
Provisions for credit losses(1)
(13,839)— (13,839)
Mortgage banking income(2)
— 38,644 38,644 
Change in fair value of mortgage servicing rights, net of hedging(2)
— (3,145)(3,145)
Other noninterest income14,002 (201)13,801 
Depreciation and amortization1,618 344 1,962 
Amortization of intangibles1,394 — 1,394 
Other noninterest expense55,182 34,422 89,604 
Income before income taxes$56,200 $542 $56,742 
Income tax expense13,440 
Net income applicable to FB Financial Corporation and noncontrolling
 interest		43,302 
Net income applicable to noncontrolling interest(3)
8 
Net income applicable to FB Financial Corporation$43,294 
Total assets$10,908,107 $1,010,260 $11,918,367 
Goodwill242,561 — 242,561 
(1) Includes $(954) in provision for credit losses on unfunded commitments.
(2) Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.
(3) Banking segment includes noncontrolling interest.

44
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
45
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Six Months Ended June 30, 2022
Banking(4)
MortgageConsolidated
Net interest income$190,355 $(2)$190,353 
Provisions for credit losses(1)
8,071 — 8,071 
Mortgage banking income(2)
— 52,989 52,989 
Change in fair value of mortgage servicing rights, net of hedging(2)
— (899)(899)
Other noninterest income22,682 (166)22,516 
Depreciation and amortization3,441 607 4,048 
Amortization of intangibles2,438 — 2,438 
Other noninterest expense(3)
113,025 66,758 179,783 
Income (loss) before income taxes$86,062 $(15,443)$70,619 
Income tax expense16,030 
Net income applicable to FB Financial Corporation and noncontrolling
interest
54,589 
Net income applicable to noncontrolling interest(4)
8 
Net income applicable to FB Financial Corporation$54,581 
Total assets$11,469,762 $724,100 $12,193,862 
Goodwill242,561 — 242,561 
(1) Includes $6,019 in provision for credit losses on unfunded commitments.
(2) Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.
(3) Includes $12,458 in Mortgage restructuring expenses in the Mortgage segment related to the exit from the direct-to-consumer delivery channel.
(4) Banking segment includes noncontrolling interest.

Six Months Ended June 30, 2021
Banking(3)
MortgageConsolidated
Net interest income$169,150 $(11)$169,139 
Provisions for credit losses(1)
(27,693)— (27,693)
Mortgage banking income(2)
— 99,239 99,239 
Change in fair value of mortgage servicing rights, net of hedging(2)
— (8,408)(8,408)
Other noninterest income25,400 (201)25,199 
Depreciation and amortization3,476 672 4,148 
Amortization of intangibles2,834 — 2,834 
Other noninterest expense(3)
107,619 73,057 180,676 
Income before income taxes$108,314 $16,890 $125,204 
Income tax expense29,028 
Net income applicable to FB Financial Corporation and noncontrolling
interest
96,176 
Net income applicable to noncontrolling interest(3)
8 
Net income applicable to FB Financial Corporation$96,168 
Total assets$10,908,107 $1,010,260 $11,918,367 
Goodwill242,561 — 242,561 
(1)Includes $(3,176) in provision for credit losses on unfunded commitments.
(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.
(3)Banking segment includes noncontrolling interest.
Three Months Ended September 30, 2020BankingMortgageConsolidated
Net interest income$68,791 $37 $68,828 
Provisions for credit losses(1)
55,401 — 55,401 
Mortgage banking income(2)
— 92,126 92,126 
Change in fair value of mortgage servicing rights, net of hedging(2)
— (7,440)(7,440)
Other noninterest income12,340 — 12,340 
Depreciation and amortization1,550 273 1,823 
Amortization of intangibles1,417 — 1,417 
Other noninterest expense(3)
69,568 45,284 114,852 
(Loss) income before income taxes$(46,805)$39,166 $(7,639)
Income tax benefit(2,040)
Net loss applicable to FB Financial Corporation and noncontrolling
interest
(5,599)
Net income applicable to noncontrolling interest(4)
— 
Net loss applicable to FB Financial Corporation$(5,599)
Total assets$10,143,956 $866,482 $11,010,438 
Goodwill236,086 — 236,086 
(1)Included $9,567 in provision for credit losses on unfunded commitments.
(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.
(3)Included $20,400 of merger costs in the Banking Segment primarily related to the acquisition and integration of Franklin and $330 of merger costs in the Mortgage segment related to the Franklin merger.
(4)Banking segment includes noncontrolling interest.

48
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Nine Months Ended September 30, 2021BankingMortgageConsolidated
Net interest income$257,726 $(111)$257,615 
Provisions for credit losses(1)
(30,224)— (30,224)
Mortgage banking income(2)
— 146,990 146,990 
Change in fair value of mortgage servicing rights, net of hedging(2)
— (10,775)(10,775)
Other noninterest income39,223 (402)38,821 
Depreciation and amortization5,267 1,021 6,288 
Amortization of intangibles4,178 — 4,178 
Other noninterest expense163,261 108,938 272,199 
Income before income taxes$154,467 $25,743 $180,210 
Income tax expense38,744 
Net income applicable to FB Financial Corporation and noncontrolling
interest
141,466 
Net income applicable to noncontrolling interest(3)
8 
Net income applicable to FB Financial Corporation$141,458 
Total assets$10,712,281 $1,098,009 $11,810,290 
Goodwill242,561 — 242,561 
(1)Included $(2,875) in provision for credit losses on unfunded commitments.
(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.
(3)Banking segment includes noncontrolling interest.

Nine Months Ended September 30, 2020BankingMortgageConsolidated
Net interest income$180,374 $40 $180,414 
Provisions for credit losses(1)
110,887 — 110,887 
Mortgage banking income(2)
— 216,145 216,145 
Change in fair value of mortgage servicing rights, net of hedging(2)
— (26,546)(26,546)
Other noninterest income31,618 — 31,618 
Depreciation and amortization4,545 770 5,315 
Amortization of intangibles3,825 — 3,825 
Other noninterest expense(3)
150,022 108,068 258,090 
(Loss) income before income taxes$(57,287)$80,801 $23,514 
Income tax expense5,495 
Net income applicable to FB Financial Corporation and noncontrolling
interest
18,019 
Net income applicable to noncontrolling interest(4)
— 
Net income applicable to FB Financial Corporation$18,019 
Total assets$10,143,956 $866,482 $11,010,438 
Goodwill236,086 — 236,086 
(1)Includes $13,050 in provision for credit losses on unfunded commitments.
(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.
(3)Includes $25,036 of merger costs in the Banking segment related to the Farmers National acquisition and the Franklin merger and $330 of merger costs in the Mortgage segment related to the Franklin merger.
(4)Banking segment includes noncontrolling interest.

Our Banking segment provides our Mortgage segment with a warehouse line of credit that is used to fund mortgage loans held for sale. The warehouse line of credit, which is eliminated in consolidation, is limited based on interest income earned by the Mortgage segment. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit is recorded as interest income to our Banking segment and as interest expense to our Mortgage segment, both of which are included in the calculation of net interest income for each segment. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit was $6,075$4,850 and $3,940$10,516 for the three and six months ended SeptemberJune 30, 2022, respectively, and $6,110 and $11,510 for the three and six months ended June 30, 2021, and 2020, respectively, and $17,585 and $9,650 for the nine months ended September 30, 2021 and 2020, respectively.

49
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Note (13)(12)—Minimum capital requirements:
Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.
46
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Under regulatory guidance for non-advanced approaches institutions, the Bank and Company are required to maintain minimum capital ratios as outlined in the table below. Additionally, under U.S. Basel III Capital Rules, the decision was made to opt out of including accumulated other comprehensive income in regulatory capital. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, the Bank and Company met all capital adequacy requirements to which they are subject.
In March 2020, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC announced a final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The final rule maintainsmaintained the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Company adopted the capital transition relief over the permissible five-year period.period and delayed the initial impact of CECL adoption plus 25% of the quarterly increases in ACL through December 31, 2021. As of January 1, 2022, the cumulative amount of the transition adjustments became fixed and are being phased out of regulatory capital calculations evenly over a three year period, with 75% of the transition provision’s impact being recognized in 2022, 50% recognized in 2023, and 25% recognized in 2024.
Actual and required capital amounts and ratios are included below as of the dates indicated.

As oAs of June 30, 2022 As oAs of June 30, 2022ActualMinimum Capital
adequacy with
capital buffer		To be well capitalized
under prompt corrective
action provisions
AmountRatioAmountRatioAmountRatio
ActualMinimum Capital
adequacy with
capital buffer		To be well capitalized
under prompt corrective
action provisions
AmountRatioAmountRatioAmountRatio
September 30, 2021
Total Capital (to risk-weighted assets)Total Capital (to risk-weighted assets)      Total Capital (to risk-weighted assets)      
FB Financial CorporationFB Financial Corporation$1,400,521 14.6 %$1,005,220 10.5 %N/AN/AFB Financial Corporation$1,460,110 13.6 %$1,123,435 10.5 %N/AN/A
FirstBankFirstBank1,352,956 14.2 %1,003,252 10.5 %$955,478 10.0 %FirstBank1,432,889 13.4 %1,122,420 10.5 %$1,068,971 10.0 %
Tier 1 Capital (to risk-weighted assets)Tier 1 Capital (to risk-weighted assets)Tier 1 Capital (to risk-weighted assets)
FB Financial CorporationFB Financial Corporation$1,213,432 12.7 %$813,750 8.5 %N/AN/AFB Financial Corporation$1,257,361 11.8 %$909,448 8.5 %N/AN/A
FirstBankFirstBank1,165,867 12.2 %812,156 8.5 %$764,382 8.0 %FirstBank1,230,140 11.5 %908,625 8.5 %$855,177 8.0 %
Tier 1 Capital (to average assets)Tier 1 Capital (to average assets)Tier 1 Capital (to average assets)
FB Financial CorporationFB Financial Corporation$1,213,432 10.4 %$467,369 4.0 %N/AN/AFB Financial Corporation$1,257,361 10.2 %$494,009 4.0 %N/AN/A
FirstBankFirstBank1,165,867 10.0 %465,817 4.0 %$582,271 5.0 %FirstBank1,230,140 10.0 %494,191 4.0 %$617,738 5.0 %
Common Equity Tier 1 Capital
(to risk-weighted assets)
Common Equity Tier 1 Capital
(to risk-weighted assets)
Common Equity Tier 1 Capital
(to risk-weighted assets)
FB Financial CorporationFB Financial Corporation$1,183,432 12.4 %$670,147 7.0 %N/AN/AFB Financial Corporation$1,227,361 11.5 %$748,957 7.0 %N/AN/A
FirstBankFirstBank1,165,867 12.2 %668,835 7.0 %$621,061 6.5 %FirstBank1,230,140 11.5 %748,280 7.0 %$694,831 6.5 %
As of December 31, 2021As of December 31, 2021ActualMinimum Capital
adequacy with
capital buffer		To be well capitalized
under prompt corrective
action provisions
AmountRatioAmountRatioAmountRatio
ActualMinimum Capital
adequacy with
capital buffer		To be well capitalized
under prompt corrective
action provisions
AmountRatioAmountRatioAmountRatio
December 31, 2020
Total Capital (to risk-weighted assets)Total Capital (to risk-weighted assets)      Total Capital (to risk-weighted assets)      
FB Financial CorporationFB Financial Corporation$1,358,897 15.0 %$952,736 10.5 %N/AN/AFB Financial Corporation$1,434,581 14.5 %$1,039,984 10.5 %N/AN/A
FirstBankFirstBank1,353,279 14.9 %951,327 10.5 %$906,026 10.0 %FirstBank1,396,407 14.1 %1,038,760 10.5 %$989,295 10.0 %
Tier 1 Capital (to risk-weighted assets)Tier 1 Capital (to risk-weighted assets)Tier 1 Capital (to risk-weighted assets)
FB Financial CorporationFB Financial Corporation$1,090,364 12.0 %$771,262 8.5 %N/AN/AFB Financial Corporation$1,251,874 12.6 %$841,892 8.5 %N/AN/A
FirstBankFirstBank1,142,548 12.6 %770,122 8.5 %$724,820 8.0 %FirstBank1,213,700 12.3 %840,901 8.5 %$791,436 8.0 %
Tier 1 Capital (to average assets)Tier 1 Capital (to average assets)Tier 1 Capital (to average assets)
FB Financial CorporationFB Financial Corporation$1,090,364 10.0 %$435,064 4.0 %N/AN/AFB Financial Corporation$1,251,874 10.5 %$474,831 4.0 %N/AN/A
FirstBankFirstBank1,142,548 10.5 %435,279 4.0 %$544,098 5.0 %FirstBank1,213,700 10.2 %474,044 4.0 %$592,555 5.0 %
Common Equity Tier 1 Capital
(to risk-weighted assets)
Common Equity Tier 1 Capital
(to risk-weighted assets)
Common Equity Tier 1 Capital
(to risk-weighted assets)
FB Financial CorporationFB Financial Corporation$1,060,364 11.7 %$635,157 7.0 %N/AN/AFB Financial Corporation$1,221,874 12.3 %$693,322 7.0 %N/AN/A
FirstBankFirstBank1,142,548 12.6 %634,218 7.0 %$588,917 6.5 %FirstBank1,213,700 12.3 %692,507 7.0 %$643,042 6.5 %
5047
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Note (14)(13)—Stock-Based CompensationCompensation:

Restricted Stock Units
The Company grants restricted stock unitsRSUs under compensation arrangements for the benefit of employees, executive officers, and directors. Restricted stock unitRSU grants are subject to time-based vesting. The total number of restricted stock units granted represents the maximum number of restricted stock units eligible to vest based upon the service conditions set forth in the grant agreements.
The following table summarizes information about the changes in restricted stock units as offor the dates indicated:six months ended June 30, 2022:
Nine Months Ended September 30,
20212020
 Restricted Stock
Units
Outstanding		Weighted
Average Grant
Date
Fair Value		Restricted Stock
Units
Outstanding		Weighted
Average Grant
Date
Fair Value
Balance at beginning of period1,047,071 $26.06 826,263 $23.76 
Granted(1)
194,388 43.06 353,891 31.12 
Vested(699,156)22.80 (145,157)31.67 
Forfeited(34,298)28.06 (19,269)33.19 
Balance at end of period508,005 $36.01 1,015,728 $25.83 
(1) 2020 includes 118,776 restricted stock units issued in replacement of those initially granted by Franklin. See Note 2 for additional information.

 Restricted Stock
Units
Outstanding		Weighted
Average Grant
Date
Fair Value
Balance at beginning of period (unvested)492,320 $36.06 
Granted139,785 43.82 
Vested(159,385)36.68 
Forfeited(37,917)33.15 
Balance at end of period (unvested)434,803 $38.48 
The total fair value of restricted stock units vested and released was $10,749$2,449 and $15,941$5,846 for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, and $3,549$828 and $4,597$5,192 for the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively.
The compensation cost related to stock grants and vesting of restricted stock units was $2,3652,196 and $7,024$4,052 for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, and $4,651$2,193 and $6,666$4,659 for the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively. This included$168 and $467 amounts paid to Company directors during the three and nine months ended September 30, 2021, respectively, and $237 and $615 during the three and nine months ended September 30, 2020, related to director grants and compensation elected to be settled in stock.stock amounting to$148 and $314 during the three and six months ended June 30, 2022, respectively, and $142 and $299 during the three and six months ended June 30, 2021, respectively.
As of SeptemberJune 30, 2021 and December 31, 2020,2022, there was $13,616 and $13,436$13,122 of total unrecognized compensation cost related to unvested restricted stock units which is expected to be recognized over a weighted-average period of 2.7 years and 2.5 years, respectively. Asyears. Additionally, as of SeptemberJune 30, 2021 and December 31, 2020,2022, there were 1,822,506 and 2,240,4341,770,128 shares available for issuance under the 2016-LTIP plan, respectively. At SeptemberCompany's stock compensation plans. As of June 30, 20212022 and December 31, 2020,2021, there was $232were $252 and $613,$274, respectively, accrued in other liabilities related to dividendsdividend equivalent units declared to be paid upon vesting and distribution of the underlying restricted stock units.
Performance Based Restricted Stock Units
The following table summarizes information about the changes in performance stock unitsPSUs as of and for the ninesix months ended SeptemberJune 30, 2021 and 2020.2022.
Nine Months Ended September 30,
20212020
Performance Stock
Units
Outstanding		Weighted
Average Grant
Date
Fair Value		Performance Stock
Units
Outstanding		Weighted
Average Grant
Date
Fair Value
Balance at beginning of period (unvested)53,147 $36.21 — $— 
Granted65,304 43.20 53,147 36.21 
Vested— — — — 
Forfeited or expired(2,319)36.73 — — 
Balance at end of period (unvested)116,132 $40.13 53,147 $36.21 
51
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Performance Stock
Units
Outstanding		Weighted
Average Grant
Date
Fair Value
Balance at beginning of period (unvested)115,750 $40.13 
Granted69,010 44.44 
Vested— — 
Forfeited or expired(9,501)43.16 
Balance at end of period (unvested)175,259 $41.67 
The Company awards performance-based restricted stock units to executives and other officers and employees. Under the terms of the award,awards, the number of units that will vest and convert to shares of common stock will be based on the Company's performance relative to a predefined peer group over a fixed three-year performance period. The number of shares issued upon vesting will range from 0% to 200% of the PSUs granted. The PSUs vest atCompany's performance relative to the end of a three-year periodpeer group will be measured based on averagecalculated non-GAAP adjusted return on average tangible common equity, as reported, adjusted for unusual gains/losses, merger expenses, and other items as approved by the compensation committee of the Company's board of directors. Compensation expense for the PSUs will beis estimated each period based on the fair value of the Company's stock at the grant date and the most probable outcome of the performance condition, adjusted for the passage of time within the vesting period of the awards.
The Company recorded compensation cost of $551
48
FB Financial Corporation and $1,041 during the threesubsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and nine months ended September 30, 2021 respectively, and $171 and $587 for the three and nine months ended September 30, 2020, respectively. per share amounts)
As of SeptemberJune 30, 2021,2022, the Company determined the probability of meeting the performance criteria for each grant and recorded compensation cost associated with a 150.0% (related to shares granted in 2020) and 100.0% (related to shares granted in 2021) vesting, when factoring in the conversion of PSUs to shares of common stock.
Grant YearVest YearShares Outstanding
2020202349,964
2021202460,654
2022202564,641
The Company recorded compensation cost of $842 and $1,568 during the three and six months ended June 30, 2022 respectively, and $322 and $522 for the three and six months ended June 30, 2021, respectively. As of SeptemberJune 30, 2021,2022, maximum unrecognized compensation cost at 200% payout related to the unvested PSUs was $7,279,$11,502, and the remaining performance period over which the cost could be recognized was 2.1 years.
Employee Stock Purchase Plan:
The Company maintains an employee stock purchase plan under which employees, through payroll deductions, are able to purchase shares of Company common stock. The employee purchase price is 95% of the lower of the market price on the first or last day of the offering period. The maximum number of shares issuable during any offering period is 200,000 shares and a participant may not purchase more than 725 shares during any offering period (and, in any event, no more than $25$200,000 worth of common stock in any calendar year). There were 15,744 and 37,310no shares issued under ESPP during the three and nine months ended SeptemberJune 30, 2022 and June 30, 2021, respectively,respectively. There were 15,152 and 18,034 and 30,17921,566 shares of common stock issued under the ESPP with proceeds from employee payroll withholdings of $588 and $811, during the three and ninesix months ended SeptemberJune 30, 2020,2022 and 2021, respectively. As of SeptemberJune 30, 2021 and December 31, 2020,2022, there were 2,341,696 and 2,379,0062,326,544 shares available for issuance under the ESPP, respectively.
Note (15)(14)—Related party transactions:
(A) Loans:
The Bank has made and expects to continue to make loans to the directors, certain management and executive officers of the Company and their affiliates in the ordinary course of business, in compliance with regulatory requirements.
An analysis of loans to executive officers, certain management, and directors of the Bank and their affiliates is presented below:
Loans outstanding at January 1, 20212022$24,67529,010 
New loans and advances12,11652,577 
Change in related party status(108)(9,939)
Repayments(5,939)(868)
Loans outstanding at SeptemberJune 30, 20212022$30,74470,780 
Unfunded commitments to certain executive officers, certain management and directors and their associates totaled $13,678$38,832 and $23,059$10,994 at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively.
(B) Deposits:
The Bank held deposits from related parties totaling $320,207 and $245,084totaling $323,089 and $312,956 as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively.
(C) Leases:
The Bank leases various office spaces from entities owned by certain directors of the Company under varying terms. The Company had $13$2 and $53$6 in unamortized leasehold improvements related to these leases at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. These improvements are being amortized over a term not to exceed the length of the lease. Lease expense for these properties totaled $128$100 and $388$201 for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, and $125$132 and $381$260 for the three and ninesix months ended SeptemberJune 30, 2020.
52
FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
2021.
(D) Aviation time sharing agreement:agreements:
TheDuring the year ended December 31, 2021, the Bank formed a subsidiary, FBK Aviation, LLC and purchased an aircraft under this entity. FBK Aviation, LLC also established a non-exclusive aircraft lease agreement with an entity owned by one
49

of the Company's directors. During the three and six months ended June 30, 2022, the Company recognized income amounting to $8 and $19, respectively, under this agreement. No such income was recognized during the three and six months ended June 30, 2021. Additionally, the Company is a participant to an aviation time sharing agreement with an entity owned by a certain director of the Company. During the three and ninesix months ended SeptemberJune 30, 2021, the Company made payments of $0$21 and $32, respectively, and $17 and $108under this agreement. No such payments were made during the three and ninesix months ended SeptemberJune 30, 2020, respectively, under this agreement.2022.
(E) Registration rights agreement:
The Company is party to a registration rights agreement with its former majority shareholder entered into in connection with the 2016 IPO, under which the Company is responsible for payment of expenses (other than underwriting discounts and commissions) relating to sales to the public by the shareholder of shares of the Company’s common stock beneficially owned by him. Such expenses include registration fees, legal and accounting fees, and printing costs payable by the Company and expensed when incurred. During the three and ninesix months ended SeptemberJune 30, 2021, the Company paid $0 and $605 respectively, under this agreement related to the secondary offering completed during the second quarter of 2021. No such expenses were incurred during the three and ninesix months ended SeptemberJune 30, 2020.2022.



























5350

ITEM 2 – Management’s discussion and analysis of financial condition and results of operations
The following is a discussion of our financial condition at SeptemberJune 30, 20212022 and December 31, 2020,2021, and our results of operations for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, and should be read in conjunction with our audited consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2020,2021, that was filed with the SEC on March 12, 2021,February 25, 2022, and with the accompanying unaudited notes to the consolidated financial statements set forth in this Report.
Forward-looking statements
Certain statements contained in this Report 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 ongoing impact of the COVID-19 global pandemic and new virus variants on the Company’s business operations, assets, valuations, financial conditions, and results of operations, future plans, strategies, and expectations, including statements regarding the Company’s future plans, results, strategies, and expectations.Mortgage segment restructuring. 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 itsthe 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)(4) changes in government interest rate policies and its impact on the Company’s business, NIM, and mortgage operations, (6)(5) the Company’s ability to effectively manage problem credits, (7)(6) the Company’s ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions, (8)(7) difficulties and delays in integrating acquired businesses or fully realizing costs savings, revenue synergies and other benefits from future and prior acquisitions, (9)(8) the Company’s ability to successfully execute its various business strategies, (10)(9) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including legislative developments, (11)(10) the potential impact of the proposed phase-out of LIBOR or other changes involving LIBOR, (12)(11) the effectiveness of the Company’s cybersecurity controls and procedures to prevent and mitigate attempted intrusions, (13)(12) 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)(13) general competitive, economic, political, and market conditions, including global economic and political 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, 2020,2021, 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 Report, 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.
54

Critical accounting policies
Our financial statements are prepared in accordance with U.S. GAAP and general practices within the banking industry. Within our financial statements, certain financial information contains approximate measurements of financial effects of transactions and impacts at the consolidated balance sheet dates and our results of operations for the reporting periods.
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We monitor the status of proposed and newly issued accounting standards to evaluate the impact on our financial condition and results of operations. Our accounting policies, including the impact of any newly issued accounting standards if applicable, are discussed in further detail in Note 1, "Basis of presentation," in the notes to our consolidated financial statements in thisour Annual Report.
Selected historical consolidated financial data

Financial highlights
The following table presents certain selected historical consolidated financialincome statement data and key performance indicators as of the dates or for the periods indicated:indicated. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period.
As of or for the three months endedAs of or for the nine months endedAs of or for the year ended
September 30,September 30,December 31,
(dollars in thousands, except per share data
     and %)		2021 2020 2021 2020 2020 
Statement of Income Data
Total interest income$96,665 $81,127 $287,779 $216,408 $314,644 
Total interest expense8,189 12,299 30,164 35,994 48,986 
Net interest income88,476 68,828 257,615 180,414 265,658 
Provisions for credit losses(2,531)55,401 (30,224)110,887 107,967 
Total noninterest income59,006 97,026 175,036 221,217 301,855 
Total noninterest expense95,007 118,092 282,665 267,230 377,085 
Income (loss) before income taxes55,006 (7,639)180,210 23,514 82,461 
Income tax expense (benefit)9,716 (2,040)38,744 5,495 18,832 
   Net income (loss) applicable to FB
      Financial Corporation and
      noncontrolling interest		45,290 (5,599)141,466 18,019 63,629 
Net income applicable to noncontrolling
       interest		— — 8 — 8 
   Net income (loss) applicable to FB
      Financial Corporation		$45,290 $(5,599)$141,458 $18,019 $63,621 
Net interest income (tax-equivalent basis)$89,230 $69,625 $259,919 $182,386 $268,497 
Per Common Share
Basic net income (loss)$0.96 $(0.14)$2.99 $0.52 $1.69 
Diluted net income (loss)0.94 (0.14)2.95 0.52 1.67 
Book value (1)
29.36 26.38 29.36 26.38 27.35 
Tangible book value (4)
23.90 20.87 23.90 20.87 21.73 
Cash dividends declared0.11 0.09 0.33 0.27 0.36 
Selected Balance Sheet Data
Cash and cash equivalents$1,324,564 $1,062,391 $1,324,564 $1,062,391 $1,317,898 
Loans held for investment7,294,674 7,213,538 7,294,674 7,213,538 7,082,959 
Allowance for credit losses (5)
(139,446)(183,973)(139,446)(183,973)(170,389)
Loans held for sale, at fair value855,706 851,951 855,706 851,951 899,173 
Investment securities, at fair value1,577,337 1,164,910 1,577,337 1,164,910 1,176,991 
Other real estate owned, net10,015 12,748 10,015 12,748 12,111 
Total assets11,810,290 11,010,438 11,810,290 11,010,438 11,207,330 
Customer deposits10,043,901 9,001,673 10,043,901 9,001,673 9,396,478 
Brokered and internet time deposits28,017 92,074 28,017 92,074 61,559 
Total deposits10,071,918 9,093,747 10,071,918 9,093,747 9,458,037 
Borrowings172,710 438,838 172,710 438,838 238,324 
Total common shareholders' equity1,400,913 1,244,998 1,400,913 1,244,998 1,291,289 
As of or for the three months endedAs of or for the six months ended,As of or for the year-ended
June 30,June 30,December 31,
(dollars in thousands, except per share data and %)2022 2021 2022 2021 2021 
Statement of Income Data
Net interest income102,171 86,563 $190,353 $169,139 $347,370 
Provisions for credit losses12,318 (13,839)8,071 (27,693)(40,993)
Total noninterest income33,214 49,300 74,606 116,030 228,255 
Total noninterest expense96,997 92,960 186,269 187,658 373,567 
Income before income taxes26,070 56,742 70,619 125,204 243,051 
Income tax expense6,717 13,440 16,030 29,028 52,750 
Net income applicable to noncontrolling interest8 8 8 8 16 
Net income applicable to FB Financial Corporation$19,345 $43,294 $54,581 $96,168 $190,285 
Net income applicable to FB Financial Corporation and
     noncontrolling interest		19,353 43,302 54,589 96,176 190,301 
Net interest income (tax-equivalent basis)$102,926 $87,321 $191,858 $170,689 $350,456 
Per Common Share
Basic net income$0.41 $0.91 $1.15 $2.03 $4.01 
Diluted net income0.41 0.90 1.15 2.00 3.97 
Book value (1)
28.15 28.96 28.15 28.96 30.13 
Tangible book value (4)
22.67 23.43 22.67 23.43 24.67 
Cash dividends declared0.13 0.11 0.26 0.22 0.44 
Selected Ratios
Return on average:
Assets (2)
0.62 %1.46 %0.88 %1.66 %1.61 %
Common shareholders' equity (2)
5.74 %13.0 %7.95 %14.7 %14.0 %
Tangible common equity (4)
7.09 %16.1 %9.78 %18.3 %17.3 %
Average shareholders' equity to average assets10.9 %11.3 %11.0 %11.3 %11.5 %
Net interest margin (tax-equivalent basis)3.52 %3.18 %3.28 %3.18 %3.19 %
Efficiency ratio71.6 %68.4 %70.3 %65.8 %64.9 %
Adjusted efficiency ratio (tax-equivalent basis) (4)
61.1 %68.9 %64.5 %65.8 %65.8 %
Loans held for investment to deposit ratio81.8 %70.6 %81.8 %70.6 %70.2 %
Yield on interest-earning assets3.80 %3.53 %3.54 %3.59 %3.53 %
Cost of interest-bearing liabilities0.40 %0.49 %0.37 %0.57 %0.48 %
Cost of total deposits0.25 %0.31 %0.22 %0.36 %0.30 %
Credit Quality Ratios
Allowance for credit losses to loans, net of unearned
   income (5)
1.46 %2.01 %1.46 %2.01 %1.65 %
Total nonperforming assets as a percentage of total assets0.46 %0.66 %0.46 %0.66 %0.50 %
Net charge-offs as a percentage of average loans HFI(0.09)%(0.02)%(0.03)%(0.03)%(0.08)%
Nonperforming loans HFI to loans HFI, net of unearned
  income		0.51 %0.83 %0.51 %0.83 %0.62 %


5552

As of or for the three months endedAs of or for the nine months endedAs of or for the year ended
September 30,September 30,December 31,
(dollars in thousands, except per share data
     and %)		2021 2020 2021 2020 2020 
Selected Ratios
Return on average:
Assets (2)
1.51 %(0.24)%1.61 %0.32 %0.75 %
Common shareholders' equity (2)
12.9 %(2.13)%14.1 %2.61 %6.58 %
Tangible common equity (4)
15.9 %(2.72)%17.5 %3.34 %8.54 %
Average shareholders' equity to average
    assets		11.7 %11.4 %11.4 %12.1 %11.5 %
Net interest margin (tax-equivalent basis)3.20 %3.28 %3.19 %3.53 %3.46 %
Efficiency ratio64.4 %71.2 %65.3 %66.5 %66.4 %
Adjusted efficiency ratio (tax-equivalent
    basis) (4)
64.7 %57.4 %65.4 %59.5 %59.2 %
Loans held for investment to deposit ratio72.4 %79.3 %72.4 %79.3 %74.9 %
Yield on interest-earning assets3.49 %3.86 %3.56 %4.22 %4.09 %
Cost of interest-bearing liabilities0.42 %0.83 %0.52 %0.99 %0.94 %
Cost of total deposits0.26 %0.56 %0.32 %0.69 %0.62 %
Credit Quality Ratios
Allowance for credit losses to loans, net of
   unearned income (5)
1.91 %2.55 %1.91 %2.55 %2.41 %
Allowance for credit losses to nonperforming
   loans (5)
324.1 %421.5 %324.1 %421.5 %264.3 %
Nonperforming loans HFI to loans HFI, net of
  unearned income		0.59 %0.61 %0.59 %0.61 %0.91 %
Capital Ratios (Company)
Total common shareholders' equity to assets11.9 %11.3 %11.9 %11.3 %11.5 %
Tier 1 capital (to average assets)10.4 %11.8 %10.4 %11.8 %10.0 %
Tier 1 capital (to risk-weighted assets (3)
12.7 %12.1 %12.7 %12.1 %12.0 %
Total capital (to risk-weighted assets) (3)
14.6 %15.3 %14.6 %15.3 %15.0 %
Tangible common equity to tangible assets (4)
9.87 %9.16 %9.87 %9.16 %9.38 %
Common Equity Tier 1 (to risk-weighted assets)
(CET1) (3)
12.4 %11.8 %12.4 %11.8 %11.7 %
Capital Ratios (Bank)
Total common Shareholders' equity to assets11.7 %12.1 %11.7 %12.1 %12.3 %
Tier 1 capital (to average assets)10.0 %12.4 %10.0 %12.4 %10.5 %
Tier 1 capital (to risk-weighted assets) (3)
12.2 %12.7 %12.2 %12.7 %12.6 %
Total capital to (risk-weighted assets) (3)
14.2 %15.0 %14.2 %15.0 %14.9 %
Common Equity Tier 1 (to risk-weighted assets)
(CET1) (3)
12.2 %12.7 %12.2 %12.7 %12.6 %
As of or for the three months endedAs of or for the six months ended,As of or for the year ended
June 30,June 30,December 31,
2022 2021 2022 2021 2021 
Capital Ratios (Company)
Total common shareholders' equity to assets10.8 %11.5 %10.8 %11.5 %11.4 %
Tier 1 capital (to average assets)10.2 %10.1 %10.2 %10.1 %10.5 %
Tier 1 capital (to risk-weighted assets (3)
11.8 %12.7 %11.8 %12.7 %12.6 %
Total capital (to risk-weighted assets) (3)
13.6 %14.9 %13.6 %14.9 %14.5 %
Tangible common equity to tangible assets (4)
8.90 %9.52 %8.90 %9.52 %9.51 %
Common Equity Tier 1 (to risk-weighted
    assets) (CET1) (3)
11.5 %12.4 %11.5 %12.4 %12.3 %
Capital Ratios (Bank)
Total common Shareholders' equity to assets10.9 %11.4 %10.9 %11.4 %11.3 %
Tier 1 capital (to average assets)10.0 %9.72 %10.0 %9.72 %10.2 %
Tier 1 capital (to risk-weighted assets) (3)
11.5 %12.2 %11.5 %12.2 %12.3 %
Total capital to (risk-weighted assets) (3)
13.4 %14.2 %13.4 %14.2 %14.1 %
Common Equity Tier 1 (to risk-weighted
     assets) (CET1) (3)
11.5 %12.2 %11.5 %12.2 %12.3 %
(1)Book value per share equals our total common shareholders’ equity as of the date presented divided by the number of shares of our common stock outstanding as of the date presented. The number of shares of our common stock outstanding was 47,707,634; 47,191,67746,881,896, 47,360,950 and 47,220,74347,549,241 as of SeptemberJune 30, 2021, September2022, June 30, 20202021 and December 31, 2020,2021, respectively.
(2)We have calculated our return on average assets and return on average common equity for a period by dividing annualized net income or loss for that period by our average assets and average equity, as the case may be, for that period. We calculate our average assets and average common equity for a period by dividing the sum of our total asset balance or total common shareholders' equity balance, as the case may be, as of the close of business on each day in the relevant period and dividing by the number of days in the period.
(3)We calculate our risk-weighted assets using the standardized method of the Basel III Framework.
(4)These measures are not measures recognized under generally accepted accounting principles (United States), and are therefore considered to be non-GAAP financial measures. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a reconciliation of these measures to their most comparable GAAP measures.
(5)Excludes reserve for credit losses on unfunded commitments.
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GAAP reconciliation and management explanation of non-GAAP financial measures
We identify certain financial measures discussed in this Report as being "non-GAAP financial measures." The non-GAAP financial measures presented in this Report are adjusted efficiency ratio (tax equivalent basis), tangible book value per common share, tangible common equity, tangible common equity to tangible assets and return on average tangible common equity.
In accordance with the SEC's rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows.
The non-GAAP financial measures that we discuss in this Report 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 we calculate the non-GAAP financial measures that we discuss in our selected historical consolidated financial datahighlights may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures we have discussed in our selected historical consolidated financial datahighlights when comparing such non-GAAP financial measures. The following reconciliation tables provide a more detailed analysis of, and reconciliations for, each of these non-GAAP financial measures.
Adjusted Efficiency ratio (tax-equivalent basis)
The adjusted efficiency ratio (tax-equivalent basis) is a non-GAAP measure that excludes certain gains (losses), merger and conversion,Mortgage restructuring expenses, offering and mortgage restructuring expenses, and other selected items. Our management uses this measure in its analysis of our performance. Our management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains or losses and changes. The most directly comparable financial measure calculated in accordance with GAAP is the efficiency ratio.
5753

The following table presents, as of the dates set forth below, a reconciliation of our adjusted efficiency ratio (tax-equivalent basis) to our efficiency ratio:
(In Thousands, Except Share Data and %)(In Thousands, Except Share Data and %)Three Months Ended September 30,Nine Months Ended September 30,Year Ended December 31,(In Thousands, Except Share Data and %)Three Months Ended June 30,Six Months Ended June 30,Year Ended December 31,
2021 2020 2021 2020 2020 (In Thousands, Except Share Data and %)2022 2021 2022 2021 2021 
Adjusted efficiency ratio (tax-equivalent
basis)		Adjusted efficiency ratio (tax-equivalent
basis)
Total noninterest expenseTotal noninterest expense$95,007 $118,092 $282,665 $267,230 $377,085 Total noninterest expense$96,997 $92,960 $186,269 $187,658 $373,567 
Less merger, conversion and
offering expenses
— 20,730 605 25,366 34,879 
Less mortgage restructuring expensesLess mortgage restructuring expenses12,458 — 12,458 — — 
Less offering expensesLess offering expenses— 605 — 605 605 
Less gain on lease terminationsLess gain on lease terminations— — (787)— — Less gain on lease terminations— (787)— (787)(787)
Less FHLB prepayment penalties— 2,305 — 2,305 6,838 
Less certain charitable contributionsLess certain charitable contributions— — — — 1,422 
Adjusted noninterest expenseAdjusted noninterest expense$95,007 $95,057 $282,847 $239,559 $335,368 Adjusted noninterest expense$84,539 $93,142 $173,811 $187,840 $372,327 
Net interest income (tax-equivalent basis)Net interest income (tax-equivalent basis)$89,230 $69,625 $259,919 $182,386 $268,497 Net interest income (tax-equivalent basis)$102,926 $87,321 $191,858 $170,689 $350,456 
Total noninterest incomeTotal noninterest income59,006 97,026 175,036 221,217 301,855 Total noninterest income33,214 49,300 74,606 116,030 228,255 
Less gain on change in fair value on
commercial loans held for sale		740 1,858 1,251 1,858 3,228 
Less (loss) gain on change in fair value on
commercial loans held for sale		Less (loss) gain on change in fair value on
commercial loans held for sale		(2,010)1,364 (2,184)511 11,172 
Less loss on swap cancellationLess loss on swap cancellation(1,510)— (1,510)— — Less loss on swap cancellation— — — — (1,510)
Less cash life insurance benefit— — — — 715 
Less gain (loss) on sales or write-downs of
other real estate owned and other assets		2,005 (1,505)2,478 (1,368)(1,491)
Less (loss) gain on sales or write-downs of
other real estate owned		Less (loss) gain on sales or write-downs of
other real estate owned		(26)(23)(524)473 2,504 
Less gain (loss) on other assetsLess gain (loss) on other assets177 226 162 (156)(90)Less gain (loss) on other assets18 (4)82 (15)323 
Less gain from securities, net51 583 278 618 1,631 
Less (loss) gain from securities, netLess (loss) gain from securities, net(109)144 (261)227 324 
Adjusted noninterest incomeAdjusted noninterest income$57,543 $95,864 $172,377 $220,265 $297,862 Adjusted noninterest income$35,341 $47,819 $77,493 $114,834 $215,442 
Adjusted operating revenueAdjusted operating revenue$146,773 $165,489 $432,296 $402,651 $566,359 Adjusted operating revenue$138,267 $135,140 $269,351 $285,523 $565,898 
Efficiency ratio (GAAP)Efficiency ratio (GAAP)64.4 %71.2 %65.3 %66.5 %66.4 %Efficiency ratio (GAAP)71.6 %68.4 %70.3 %65.8 %64.9 %
Adjusted efficiency ratio (tax-equivalent
basis)		Adjusted efficiency ratio (tax-equivalent
basis)		64.7 %57.4 %65.4 %59.5 %59.2 %Adjusted efficiency ratio (tax-equivalent
basis)		61.1 %68.9 %64.5 %65.8 %65.8 %

















54

Tangible book value per common share and tangible common equity to tangible assets
Tangible book value per common share and tangible common equity to tangible assets are non-GAAP measures that exclude the impact of goodwill and other intangibles used by the Company's management to evaluate capital adequacy. Because intangible assets such as goodwill and other intangibles vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare the Company's capital position to other companies. The most directly comparable financial measure calculated in accordance with GAAP is book value per common share and our total common shareholders' equity to total assets.
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The following table presents, as of the dates set forth below, tangible common equity compared with total common shareholders' equity, tangible book value per common share compared with our book value per common share and common equity to tangible assets compared to total common shareholders' equity to total assets:
As of September 30,As of December 31,As of June 30,As of December 31,
(In Thousands, Except Share Data and %)(In Thousands, Except Share Data and %)2021 2020 2020 (In Thousands, Except Share Data and %)2022 2021 2021 
Tangible AssetsTangible AssetsTangible Assets
Total assetsTotal assets$11,810,290 $11,010,438 $11,207,330 Total assets$12,193,862 $11,918,367 $12,597,686 
Adjustments:Adjustments:Adjustments:
GoodwillGoodwill(242,561)(236,086)(242,561)Goodwill(242,561)(242,561)(242,561)
Core deposit and other intangiblesCore deposit and other intangibles(18,248)(23,924)(22,426)Core deposit and other intangibles(14,515)(19,592)(16,953)
Tangible assetsTangible assets$11,549,481 $10,750,428 $10,942,343 Tangible assets$11,936,786 $11,656,214 $12,338,172 
Tangible Common EquityTangible Common EquityTangible Common Equity
Total common shareholders' equityTotal common shareholders' equity$1,400,913 $1,244,998 $1,291,289 Total common shareholders' equity$1,319,852 $1,371,721 $1,432,602 
Adjustments:Adjustments:Adjustments:
GoodwillGoodwill(242,561)(236,086)(242,561)Goodwill(242,561)(242,561)(242,561)
Core deposit and other intangiblesCore deposit and other intangibles(18,248)(23,924)(22,426)Core deposit and other intangibles(14,515)(19,592)(16,953)
Tangible common equityTangible common equity$1,140,104 $984,988 $1,026,302 Tangible common equity$1,062,776 $1,109,568 $1,173,088 
Common shares outstandingCommon shares outstanding47,707,634 47,191,677 47,220,743 Common shares outstanding46,881,896 47,360,950 47,549,241 
Book value per common shareBook value per common share$29.36 $26.38 $27.35 Book value per common share$28.15 $28.96 $30.13 
Tangible book value per common shareTangible book value per common share$23.90 $20.87 $21.73 Tangible book value per common share$22.67 $23.43 $24.67 
Total common shareholders' equity to total assetsTotal common shareholders' equity to total assets11.9 %11.3 %11.5 %Total common shareholders' equity to total assets10.8 %11.5 %11.4 %
Tangible common equity to tangible assetsTangible common equity to tangible assets9.87 %9.16 %9.38 %Tangible common equity to tangible assets8.90 %9.52 %9.51 %
Return on average tangible common equity
Return on average tangible common equity is a non-GAAP measure that uses average shareholders' equity and excludes the impact of goodwill and other intangibles. This measurement is also used by the Company's management to evaluate capital adequacy. The following table presents, as of the dates set forth below, reconciliations of total average tangible common equity to average shareholders' equity and return on average tangible common equity to return on average shareholders' equity:
Three Months Ended September 30,Nine Months Ended September 30,Year Ended December 31,
(In Thousands, Except %)2021 2020 2021 2020 2020 
Return on average tangible common equity
Total average common shareholders' equity$1,389,201 $1,044,913 $1,344,613 $923,456 $966,336 
Adjustments:
Average goodwill(242,561)(205,473)(242,561)(184,548)(199,104)
Average intangibles, net(18,950)(20,973)(22,289)(19,146)(22,659)
Average tangible common equity$1,127,690 $818,467 $1,079,763 $719,762 $744,573 
Net income (loss) applicable to FB Financial
    Corporation		$45,290 $(5,599)$141,458 $18,019 $63,621 
Return on average common shareholders'
    equity		12.9 %(2.13)%14.1 %2.61 %6.58 %
Return on average tangible common equity15.9 %(2.72)%17.5 %3.34 %8.54 %

Three Months Ended June 30,Six Months Ended June 30,Year Ended December 31,
(In Thousands, Except %)2022 2021 2022 2021 2021 
Return on average tangible common equity
Total average common shareholders' equity$1,352,701 $1,339,938 $1,384,269 $1,321,947 $1,361,637 
Adjustments:
Average goodwill(242,561)(242,561)(242,561)(242,561)(242,561)
Average intangibles, net(15,144)(20,253)(15,757)(20,970)(19,606)
Average tangible common equity$1,094,996 $1,077,124 $1,125,951 $1,058,416 $1,099,470 
Net income applicable to FB Financial
    Corporation		$19,345 $43,294 $54,581 $96,168 $190,285 
Return on average common shareholders'
    equity		5.74 %13.0 %7.95 %14.7 %14.0 %
Return on average tangible common equity7.09 %16.1 %9.78 %18.3 %17.3 %
5955

OverviewCompany overview
We are a financial holding company headquartered in Nashville, Tennessee. We operate primarily through our wholly ownedwholly-owned bank subsidiary, FirstBank, the third largest bank headquartered in Tennessee, based on total assets. FirstBank provides a comprehensive suite of commercial and consumer banking services to clients in select markets in Tennessee, Kentucky, Alabama and North Georgia, and mortgage offices across the Southeast. As of SeptemberJune 30, 2021,2022, our footprint included 8281 full-service branches serving the following Tennessee Metropolitan Statistical Areas: Nashville, Chattanooga (including North Georgia), Knoxville, Memphis, and Jackson in addition to Bowling Green, Kentucky and Birmingham, Florence and Huntsville, Alabama. We also provide banking services to 16 community markets throughout Tennessee and North Georgia. FirstBank also provides mortgage banking services utilizing its bank branch network and mortgage banking offices strategically located throughout the southeastern United States in addition to a national internet delivery channel.States.
We operate through two segments, Banking and Mortgage. We generate most of our revenue in our Banking segment from interest on loans and investments, loan-related fees, trust and investment services and deposit-related fees. Our primary source of funding for our loans is customer deposits, and, to a lesser extent, unsecured credit lines, brokered and internet deposits, and other borrowings. We generate most of our revenue in our Mortgage segment from origination fees and gains on sales in the secondary market of mortgage loans, that we originate through our retail and online ConsumerDirect channels, as well as from mortgage servicing revenues.
Pandemic UpdateRecent developments
During 2020,Mortgage restructuring
On May 10, 2022, we announced the COVID-19 health pandemic created a crisis resulting in volatility in financial markets, sudden, unprecedented job losses, and disruption in consumer and commercial behavior, resulting in governmentsrestructuring of our Mortgage segment (referred to herein as "Mortgage restructuring"), including the exit from our direct-to-consumer channel, which is one of two delivery channels in the United StatesMortgage segment. For the three months ended June 30, 2022 and globally intervene with varying levels of direct monetary support2021, our direct-to-consumer delivery channel comprised 13.7% and fiscal stimulus packages. All industries, municipalities and consumers have been impacted by the health crisis to some degree, including the markets that we serve. In attempts to “flatten the curve”, businesses not deemed essential were closed or constrained to capacity limitations, individuals were asked to restrict their movements, observe social distancing and shelter in place. These actions resulted in rapid decreases in commercial and consumer activity, temporary closures of many businesses, leading to a loss of revenues and a rapid increase in unemployment, widening of credit spreads, dislocation of bond markets, disruption of global supply chains and changes in consumer spending behavior. As certain restrictions began lifting and more businesses were allowed to open their doors in late 2020, we began to experience a slow improvement in commerce through much of our footprint, which continued into the first half of 2021 with further easing of restrictions and increasing availability of vaccinations. Despite the pickup in economic activity, commercial and consumer activity has not returned to pre-pandemic levels. Although most restrictions were lifted and vaccines became widely available during the first half of 2021, concern remains regarding the potential impact that resurgences and new virus variants may have on the global economy and the efficacy of available vaccines and boosters to protect against widespread infection. As such, there continues to be uncertainty regarding the long term effects on the global economy, which could have a material adverse impact on the Company's business operations, asset valuations, financial condition, and results of operations.
We have taken several actions to offer various forms of support to our customers and communities impacted by the virus, including through offering loan payment deferrals and through our participation in the Paycheck Protection Program. In addition, the Company continues to take deliberate actions to ensure the continued health and strength of its balance sheet, including increases in liquidity and managing assets and liabilities in order to maintain a strong capital position.
Mergers and acquisitions
Franklin Financial Network, Inc.
On August 15, 2020, the Company completed its previously announced merger with Franklin Financial Network, Inc, and its wholly owned subsidiaries, with FB Financial Corporation continuing as the surviving entity. Under the terms of the agreement, the Company acquired total assets of $3.63 billion, loans of $2.79 billion and assumed total deposits of $3.12 billion. Total loans acquired included a non-strategic institutional portfolio with a fair value of $326.2 million the Company classified as held for sale. Franklin common shareholders received 15,058,181 shares51.5% of the Company's common stock, net of the equivalent value of 44,311 shares withheld on certain Franklin employee equity awards that vested upon change in control, as consideration in connection with the merger, in addition to $31.3 million in cash consideration. The Company also issued replacement restricted stock units to replace those initially granted by Franklin in 2020 that did not vest upon change in control, with a total fair value of $0.7 million attributed to pre-combination service. Based on the
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closing priceinterest rate lock volume and 37.4% and 54.9% of the Company's common stock onsales volume, respectively. For the New York Stock Exchange of $29.52 on August 15, 2020, the merger consideration represented approximately $477.8 million in aggregate consideration.
The merger resulted in goodwill of $67.2 million being recorded based on the fair value of total assets acquiredsix months ended June 30, 2022 and liabilities assumed in the transaction.
The transaction added a new subsidiary to the Company, FirstBank Risk Management, which provides risk management services to the Company in the form of enhanced insurance coverages. It also added a new subsidiary to the Bank, FirstBank Investments of Tennessee, Inc., which provides investment services to the Bank. FBIT has a wholly owned subsidiary, FirstBank Investments of Nevada, Inc. to provide investment services to FBIT. FBIN has a controlling interest in a subsidiary, FirstBank Preferred Capital, Inc., which serves as a real estate investment trust, to allow the Bank to sell real estate loans to the REIT to obtain a tax benefit.
FNB Financial Corp. merger
On February 14, 2020, the Company completed its previously announced acquisition of FNB Financial Corp.2021, our direct-to-consumer delivery channel comprised 33.0% and its wholly owned subsidiary, Farmers National Bank of Scottsville (collectively, "Farmers National"). Following the acquisition, Farmers National was merged into the Company with FB Financial Corporation continuing as the surviving entity. The Company acquired total assets of $258.2 million, loans of $182.2 million and deposits of $209.5 million. The consideration is valued at approximately $50.0 million based on 954,797 shares50.9% of the Company's common stock (utilizingtotal interest rate lock volume and 45.3% and 53.9% of the Company's market pricesales volume, respectively. As a result of $36.70 on February 14, 2020)exiting this channel, we recorded restructuring expenses of $12.5 million during the three and $15.0 millionsix months ended June 30, 2022 and expect to complete the wind-down of the channel in cash consideration.the third quarter of 2022. The acquisition resultedcurrent repositioning of our Mortgage segment will not be reported as discontinued operations. We plan to continue originating and selling residential mortgage loans within our Mortgage segment through our traditional consumer-facing mortgage retail channel, retain mortgage servicing rights and continue holding residential 1-4 family mortgage loans in $6.3 million of goodwill.our loan portfolio.
Overview of recent financial performance
Results of operations
Three months ended SeptemberJune 30, 20212022 compared to the three months ended SeptemberJune 30, 20202021
Our net income increaseddecreased during the three months ended SeptemberJune 30, 20212022 to $45.3$19.4 million, updown from a net loss of $5.6$43.3 million for the three months ended SeptemberJune 30, 2020.2021. Diluted earnings per common share represented earnings of $0.94were $0.41 and a loss of $0.14$0.90 for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. Our net income (loss) represented a return on average assets, or ROAA, of 1.51%0.62% and (0.24)%1.46% for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively and a return on average shareholders’ equity, or ROAE, of 12.9%5.74% and (2.13)%13.0% for the same periods. Our ratio of return on average tangible common equity, or ROATCE for the three months ended SeptemberJune 30, 2022 and 2021 was 7.09% and 2020 was 15.9% and (2.72)%16.1%, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.
During the three months ended SeptemberJune 30, 2021,2022, our net interest income before the provision for credit losses increased to $88.5$102.2 million compared with $68.8$86.6 million for the three months ended SeptemberJune 30, 2020.2021. Our net interest margin, on a tax-equivalent basis, decreasedincreased to 3.20%3.52% for the three months ended SeptemberJune 30, 2021,2022, compared with 3.28%3.18% for the three months ended SeptemberJune 30, 2020.2021. The decreaseincrease was the combined result of sustained lowerprimarily driven by our loan growth, increased interest rates on newly issued loans and pay-offs on higher yielding loansa shift in balance sheet composition during the three months ended SeptemberJune 30, 2021 and a change in balance sheet composition. The contractual yield on our loan portfolio for three months ended September 30, 2021 was 4.23% down from 4.36% for2022 compared to the three months ended SeptemberJune 30, 2020.2021. The change in our balance sheet composition was illustrated by an increasea decrease in excess liquidity, which we estimate to be interest-bearing deposits with other financial institutions in excess of 5% of average tangible assets. Excess liquidity is estimated to have negatively impacted our NIM by approximately 2814 basis points for the three months ended SeptemberJune 30, 2021.2022. This compares to excess liquidity representing 15an estimated 37 basis points of negative impact to NIM during the three months ended SeptemberJune 30, 2020.2021.
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We incurredexperienced a decrease in noninterest income of $38.0$16.1 million to $59.0$33.2 million for the three months ended SeptemberJune 30, 2021,2022, compared with $97.0$49.3 million for the same period in the prior year. The decrease of $39.3$12.9 million in mortgage banking income was the primary driver for the downward movement in noninterest income, which was a result of a 16.8%60.5% decrease in interest rate lock volume in addition to margin compression during the three months ended SeptemberJune 30, 20212022 when compared with the three months ended SeptemberJune 30, 2020. This decrease was partially offset by an increase of $3.5 million in net gains on sale or write-downs of OREO to $2.0 million during the three months ended September 30, 2021 compared to a $1.5 million net loss on sale or write-downs of OREO during the three months ended September 30, 2020.
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2021.
Noninterest expense decreasedincreased to $95.0$97.0 million for the three months ended SeptemberJune 30, 2021,2022, compared with $118.1$93.0 million for the three months ended SeptemberJune 30, 2020.2021. The decreaseincrease in noninterest expense is reflective of a decrease in mergerreflects costs associated withrelated to our merger with Franklin duringMortgage restructuring amounting to three months ended September 30, 2020$12.5 million. During for the three months ended SeptemberJune 30, 2020, we incurred $20.7 million2022 partially offset by decreases in merger costs associated with this transaction. There were no suchsalaries, commissions and employee benefit expenses during the due to a decrease in mortgage production volume.three
Six months ended SeptemberJune 30, 2021.
Nine months ended September 30, 20212022 compared to the ninesix months ended SeptemberJune 30, 20202021
Our net income increaseddecreased during the ninesix months ended SeptemberJune 30, 20212022 to $141.5$54.6 million from $18.0$96.2 million for the ninesix months ended SeptemberJune 30, 2020.2021. Diluted earnings per common share was $2.95were $1.15 and $0.52$2.00 for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. Our net income represented a return on average assets of 1.61%0.88% and 0.32%1.66% for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, and a return on average equity of 14.1%7.95% and 2.61%14.7% for the same periods. Our ratio of return on average tangible common equity for the ninesix months ended SeptemberJune 30, 2022 and 2021 were 9.78% and 2020 was 17.5% and 3.34%18.3%, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.
These results were significantly impacted byDuring the improvement in economic forecasts incorporated in our current expected credit losses loss rate model, leading to a reversal in our provisions for credit losses and unfunded commitments amounting to $30.2 million for the ninesix months ended SeptemberJune 30, 2021 compared with provision expenses of $110.9 million for the nine months ended September 30, 2020, reflecting both the onset of the COVID-19 pandemic and the impact of2022, our acquisitions during the period. Our results were also impacted by our acquisitions during the nine months ended September 30, 2020, resulting in merger expenses of $25.4 million for the period. There were no such business combinations during the nine months ended September 30, 2021.
During the nine months ended September 30, 2021, net interest income before provisions for credit losses increased to $257.6$190.4 million compared with $180.4$169.1 million in the ninesix months ended SeptemberJune 30, 2020.2021. The increase was primarily driven by an increase in our average loans held for investment portfolioloan production volume and increased interest rates, offset primarily by 39.1% to $7.11 billion for the nine months ended September 30, 2021, as compared to $5.11 billion for the nine months ended September 30, 2020. decreased excess liquidity, which was reinvested in available-for-sale securities.
Our net interest margin, on a tax-equivalent basis, decreasedincreased to 3.19%3.28% for the ninesix months ended SeptemberJune 30, 20212022 as compared to 3.53%3.18% for the ninesix months ended SeptemberJune 30, 2020, influenced b2021. In addition to y a sustainedan increase in a low interest rate environmenaverage loans HFI of $1.00 billion for the t.
Oursix months ended June 30, 2022 compared to the six months ended June 30, 2021, our NIM was also influenced by a change in balance sheet composition which was illustrated by an increasereduction in excess liquidity carried on the balance sheet, which we estimate negatively impacted our NIM by approximately 3222 basis points for the ninesix months ended SeptemberJune 30, 20212022 compared to 935 basis points for the ninesix months ended SeptemberJune 30, 2020. In addition, the yield on our interest-earning assets decreased to 3.56% for the nine months ended September 30, 2021 compared to 4.22% for the nine months ended September 30, 2020.2021.
Noninterest income for the ninesix months ended SeptemberJune 30, 20212022 decreased by $46.2$41.4 million to $175.0$74.6 million, down from $221.2$116.0 million forin the same period in the prior year period.year. The decrease in noninterest income was primarily driven bymade up of a $38.7 million decrease in mortgage banking income of $53.4 millionfor the six months ended June 30, 2022 compared to $136.2 million. The decrease in mortgage banking income was partially offsetthe six months ended June 30, 2021. These results were impacted by increases in ATMlower interest rate lock volumes and interchange fee income and investment services and trust income, reflecting the increase of commercecompressing margins in our footprint driven by improved economic conditionsMortgage segment during the period and the contribution from the Franklin merger. In addition, the decrease in mortgage banking income was offset by a $2.5 million gain on sale of OREO during the ninesix months ended SeptemberJune 30, 20212022 compared to a $1.4 million loss on sale of OREO duringwith the ninesix months ended SeptemberJune 30, 2020.2021.
Noninterest expense increaseddecreased to $282.7$186.3 million for the ninesix months ended SeptemberJune 30, 2021,2022, compared with $267.2$187.7 million for the ninesix months ended SeptemberJune 30, 2020.2021. The increasedecrease in noninterest expense is reflective of the increases$17.3 million decrease in salaries, commissions and personnel-relatedemployee-related costs fromin the incremental head count increase associated with our growth and volume of transactions, includingMortgage segment related to the impact of our business combination with Franklin during the nine months ended September 30, 2020. As detailed above, the increasereduction in our noninterest expensemortgage production, which was partially offset by a decrease in mergermortgage restructuring expenses of $25.4 million forincurred during the ninesix months ended SeptemberJune 30, 2021 compared with the nine months ended September 30, 2020 as there were no business combinations during the nine months ended September 30, 2021.
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Financial condition
Our total assets increased by 5.38% to $11.81 billion as of September 30, 2021, as2022 compared to $11.21 billion as of December 31, 2020. This increase is largely due to an increase of available-for-sale debt securities of $400.2 million to $1.57 billion as of September 30, 2021 from $1.17 billion as of December 31, 2020 as we invested additional excess liquidity.the same period in the prior year.
Business segment highlights
We operate our business in two business segments: Banking and Mortgage. As previously reported, on March 31, 2021, the Company re-evaluated its business segments and revised to align all mortgage activities with the Mortgage segment. Previously, the Company had attributed retail mortgage activities originating from geographical locations within the footprint of the Company's branches to the Banking segment. Previously disclosed results for the three and nine months ended September 30, 2020 have been revised to reflect this realignment. See Note 12,11, “Segment reporting” in the notes to our consolidated financial statements for a description of these business segments.
Banking
Income before taxes from the Banking segment increaseddecreased for the three months ended SeptemberJune 30, 20212022 to $46.2$41.2 million, compared to a loss of $46.8$56.2 million for the three months ended SeptemberJune 30, 2020.2021. These results were primarily driven by a net reversalan increase in provisions for credit losses of $2.5$26.2 million to $12.3 million (including a provision for credit losses on unfunded commitments of $0.3$4.1 million) for the three months ended SeptemberJune 30, 20212022 compared to a net reversal in provisions for credit losses expense of $55.4$13.8 million (including a provision for credit losses on unfunded commitments of $9.6 million) for the three months ended SeptemberJune 30, 2020,2021, reflecting the impact of our acquisitions completedgrowth in 2020 and improvement in economic outlook experienced in 2021.loans held for investment. Noninterest income increaseddecreased to $13.8$10.7 million in the three months ended SeptemberJune 30, 20212022 as compared to $12.3$14.0 million in the three months ended SeptemberJune 30, 2020. Noninterest expense decreased $13.8 million to $58.8 million for three months ended September 30, 2021, primarily due a $20.4 million2021. The decrease in merger expenses that were incurredour noninterest income during the three months ended SeptemberJune 30, 2020. There were no merger expenses2022 is partially attributable to a $2.0 million loss on the change in the fair value of our commercial loans held for sale which is a decrease of $3.4 million from the $1.4 gain recognized during the three months ended SeptemberJune 30, 2021. The decrease in merger costs were partially offset by increases in salaries, commissions and personnel-related costs from
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Noninterest expense during the incremental head count increase associated with our growth, including the impactthree months ended June 30, 2022 was $59.3 million, which remained relatively steady compared to $58.2 million of our business combination with Franklin on August 15, 2020.noninterest expense for three months ended June 30, 2021.
Income before taxes from the Banking segment increaseddecreased for the ninesix months ended SeptemberJune 30, 20212022 to $154.5$86.1 million, compared to a loss of $57.3$108.3 million for the ninesix months ended SeptemberJune 30, 2020.2021. Net interest income increased by $77.4$21.2 million to $257.7$190.4 million during the ninesix months ended SeptemberJune 30, 20212022 compared to $180.4$169.2 million during the ninesix months ended SeptemberJune 30, 2020.2021. Our net provisions for credit losses on loans held for investment and unfunded loan commitments resulted in a reversal of $30.2$8.1 million of provision expense during the ninesix months ended SeptemberJune 30, 20212022 compared to expense$27.7 million reversal of $110.9 millionprovision expense in the same period in the previous year. Noninterest income increaseddecreased to $39.2$22.7 million in the ninesix months ended SeptemberJune 30, 20212022 as compared to $31.6$25.4 million in the ninesix months ended SeptemberJune 30, 2020.2021. Similar to the discussion above, the change in the fair value of our commercial loans held for sale was one of the main drivers in the decrease in our noninterest income period-over-period. During the six months ended June 30, 2022, we recognized $2.2 loss on the change in the in the fair value of our commercial loans held for sale compared to a $0.5 million gain for the six months ended June 30, 2021. Noninterest expense increased $14.3 million to $172.7was $118.9 million for ninesix months ended SeptemberJune 30, 2021 due2022 which is a 4.37% increase compared to increasesthe same period in salaries, commissions and employee benefits associated with our growth, including the impact of additional headcount resulting from our acquisition of Franklin and investment in additional revenue producers in our markets.previous year.
Mortgage
Income before taxes from theThe Mortgage segment decreased to $8.9reported a pre-tax loss of $15.2 million for the three months ended SeptemberJune 30, 2021,2022, compared with $39.2to income of $0.5 million for the three months ended SeptemberJune 30, 2020;2021. The loss includes $12.5 million in Mortgage restructuring expenses associated with the resultwind-down of lower interest rate lock volumes and refinancing activity coupled with compressing sales margins. In addition,our direct-to-consumer internet delivery channel incurred during the housing market continues to face supply shortages which affected overall purchasing volume.three months ended June 30, 2022. Noninterest income decreased $39.5by $12.8 million to $45.2$22.5 million for the three months ended SeptemberJune 30, 2021,2022, compared with $84.7$35.3 million for the three months ended SeptemberJune 30, 2020. 2021, primarily related to a decrease in mortgage banking income and slowdown in production volume.
Noninterest expense for the three months ended SeptemberJune 30, 2022 and 2021 and 2020 was $36.2$37.7 million and $45.6$34.8 million, respectively. Lowerrespectively, and total noninterest expense excluding mortgage restructuring expenses were mainly attributable to decreased mortgage commissions and other costs associated with the lower volume duringfor the three months ended SeptemberJune 30, 2021 compared with2022 was $25.2 million. This reflects a decrease in salaries, commissions and employee benefits due to a reduction in production volume is the three months ended September 30, 2020.result of lower volumes impacted by the rising interest rate environment and a decrease in refinancing activity.
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Income before taxes from theActivity in our Mortgage segment decreased to $25.7resulted in a pre-tax net loss of $15.4 million for the ninesix months ended SeptemberJune 30, 20212022 as compared to $80.8income of $16.9 million for the ninesix months ended SeptemberJune 30, 2020.2021. There was a decrease in mortgage banking income of $53.4$38.7 million to $136.2$52.1 million during the ninesix months ended SeptemberJune 30, 20212022 compared to $189.6$90.8 million for the ninesix months ended SeptemberJune 30, 2020.2021. This decrease was driven by a lossresult of $20.8 million related to the change in fair value of loans held for sale and derivatives for the nine months ended September 30, 2021, compared to a gain of $48.1 million for the nine months ended September 30, 2020. In addition, mortgage banking income for the nine months ended September 30, 2021 was affected by a 15.9%45.1% decrease in interest rate lock volume during the ninesix months ended SeptemberJune 30, 20212022 compared with the same period in the prior year. Generally, mortgage volume increases in lower interest rate environmentsNoninterest expense for the six months ended June 30, 2022 and robust housing markets2021 was $67.4 million and $73.7 million, respectively, reflecting decreases in rising interest rate environmentscommissions and slower housing markets. This slowdownincentive costs associated with the decrease in interest rate lockproduction volume partially offset by mortgage restructuring expenses of $12.5 million during the nine months ended September 30, 2021 reflects the slow down experienced across the industrycurrent period compared with the same period in the prior year, which benefited from historically low interest rates pre-empted by the COVID-19 Pandemic. Noninterest expense for the nine months ended September 30, 2021 and 2020 was $110.0 million and $108.8 million, respectively, reflecting the scalability of our mortgage business.

previous year.
Further discussion on the components of mortgage banking income isand additional details related to the Mortgage restructuring are included under the subheadingsubheadings 'Noninterest income' and 'Noninterest expense', respectively, included within this management's discussion and analysis.
Results of operations
Throughout the following discussion of our operating results, we present our net interest income, net interest margin and efficiency ratio on a fully tax-equivalent basis. The fully tax-equivalent basis adjusts for the tax-favored status of net interest income from certain loans and investments. We believe this measure to be the preferred industry measurement of net interest income, which enhances comparability of net interest income arising from taxable and tax-exempt sources.
The adjustment to convert certain income to a tax-equivalent basis consists of dividing tax exempt income by one minus the combined federal and blended state statutory income tax rate of 26.06% for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020.2021.




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Net interest income
Net interest income is the most significant component of our earnings, generally comprising over 50% of our total revenues in a given period. Net interest income and margin are shaped by many factors, primarily the volume, term structure and mix of earning assets, funding mechanisms, and interest rate fluctuations. Other factors include accretion incomeor amortization of discounts or premiums on purchased loans, prepayment risk on mortgage and investment–related assets, and the composition and maturity of earning assets and interest-bearing liabilities. Loans typically generate more interest income than investment securities with similar maturities. Funding from client deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding, net interest income, and margin.
In response to economic uncertainty relatedDuring the three and six months ended June 30, 2022, the US Treasury yield curve inverted as long-term rates increased at a slower pace than short-term rates. This compares to the COVID-19 pandemic, short term interest rates have been at historic lows. The Federal Funds Target Rate range was 0% - 0.25% as of September 30, 2020three and maintained this rate as of September 30, 2021. According to the Chair of the Board of Governors of the Federal Reserve, the Federal Funds Target Rate is not likely to drop below this range. However, the Federal Reserve does have other tools available that it can employ and has expressed an intention to do so in order to maintain a targeted level of liquidity. At its most recent meeting, the Federal Reserve decided to keep the target range for the federal funds rate at 0% to 0.25% and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time. Additionally, the Federal Reserve maintained their commitment to open-ended purchases of Treasury securities and agency mortgage-backed securities, but noted that as the economy makes progress towards its maximum employment and price stability goals, the decision could be made to adjust the pace of purchases in coming meetings. During the ninesix months ended SeptemberJune 30, 2021, when the US Treasury yield curve steepened as long-term rates rose and short-term rates remained constant. This comparesThe Federal Funds Target Rate range was 0% - 0.25% and 1.50% - 1.75% as of December 31, 2021 and June 30, 2022, respectively. Effective July 28, 2022, the Federal Reserve increased the target range for the federal funds rate to 2.25% to 2.50% and additional increases in the nine months ended September 30, 2020, as the US Treasury curve flattened as long-term and short-term decreased significantly.target range are anticipated to slow inflation.



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Three months ended SeptemberJune 30, 20212022 compared to three months ended SeptemberJune 30, 20202021
Net interest income increased 28.6% to $88.5 million for the three months ended September 30, 2021 compared to $68.8 million in the three months ended September 30, 2020. On a tax-equivalent basis, net interest income increased by $19.6$15.6 million to $89.2$102.9 million for the three months ended SeptemberJune 30, 20212022 as compared to $69.6$87.3 million for the three months ended SeptemberJune 30, 2020.2021. The increase in tax-equivalent net interest income for the three months ended SeptemberJune 30, 20212022 was primarily driven by an increase in the volume inof loans held for investment which accounted for $13.7 million of the increase combined with a decrease in our cost of funding, specifically our borrowinginterest rate on customer timemoney market deposits, which decreased to 0.61%0.20% for the three months ended SeptemberJune 30, 20212022 compared to 1.44%0.38% for the three months ended SeptemberJune 30, 2020. The decrease in the average rate on our customer deposits attributed to a $2.8 million decrease in our interest expense for the three months ended September 30, 2021 compared to three months ended September 30, 2020.2021.
Interest income, on a tax-equivalent basis, was $97.4$111.0 million for the three months ended SeptemberJune 30, 2021,2022, compared to $81.9$97.1 million for the three months ended SeptemberJune 30, 2020,2021, an increase of $15.5$13.9 million. This increase was largely driven by growth in our loans HFI portfolio. Interest income on loans held for investment,HFI, on a tax-equivalent basis, increased $12.4$13.3 million to $84.1$96.7 million for the three months ended SeptemberJune 30, 20212022 from $71.7$83.4 million for the three months ended SeptemberJune 30, 20202021 primarily due to an increase in average balancesloans HFI of loans held for investment of $1.18$1.24 billion. The increased volume attributed $14.4 million to the total increase in the average loan balances period over period reflects the full quarter impact of $2.43 billion loan portfolio acquired in the Franklin merger offset by a decrease of $278.0 million in average PPPinterest income from loans during the three months ended September 30, 2021 from an average balance of $311.0 million for the three months ended September 30, 2020.                 HFI.
The tax-equivalent yield on loans held for investment was 4.61%4.66% for the three months ended SeptemberJune 30, 2021,2022, down 96 basis points from the three months ended SeptemberJune 30, 2020.2021. The decrease in yield was primarily due to sustained low contractual interest rates during the three months ended September 30, 2021 comparedloans with thehigher contractual rates ofmaturing and loans paid off or refinanced after September 30, 2020.originated at lower interest rates. Contractual loan interest rates yielded 4.23%4.24% in the three months ended SeptemberJune 30, 20212022 compared with 4.36%4.31% in the three months ended SeptemberJune 30, 2020.2021. Excluding PPP loans, which have a 1.00% contractual loan yield, our contractual loan yield would have been 186 basis points higher for three months ended SeptemberJune 30, 2020.2021. PPP loans had a less than a 1 basis pointdid not impact on our contractual loan yield for the three months ended SeptemberJune 30, 2021.2022.
Our NIM, on a tax-equivalent basis, decreasedincreased to 3.20%3.52% during the three months ended SeptemberJune 30, 20212022 from 3.28%3.18% in the three months ended SeptemberJune 30, 2020,2021, driven by loans issued in a declining interest rate environment and a change in balance sheet mix. mix which is reflected in our average interest-bearing deposits with other financial institutions to average earning assets ratio which decreased to 9.23% for the three months ended June 30, 2022 compared to 14.7% for the three months ended June 30, 2021.
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The components of our loan yield, a key driver to our NIM for the three months ended SeptemberJune 30, 20212022 and 2020,2021, were as follows:
Three Months Ended September 30,
20212020
(dollars in thousands)Interest
income		Average
yield		Interest
income		Average
yield
Loan yield components:
Contractual interest rate on loans held for
   investment(1)(2)
$77,150 4.23 %$66,441 4.36 %
Origination and other loan fee income(2)
6,377 0.35 %4,029 0.26 %
Accretion on purchased loans157 0.01 %526 0.04 %
Nonaccrual interest collections431 0.02 %664 0.04 %
Total loan yield$84,115 4.61 %$71,660 4.70 %
Three Months Ended June 30,
20222021
(dollars in thousands)Interest
income		Average
yield		Interest
income		Average
yield
Loans HFI yield components:
Contractual interest rate on loans held for investment(1)(2)
$88,005 4.24 %$76,127 4.31 %
Origination and other loan fee income(2)
6,927 0.33 %6,928 0.39 %
Accretion (amortization) on purchased loans64 — %(226)(0.01)%
Nonaccrual interest collections546 0.03 %535 0.03 %
Syndicated fee income1,150 0.06 %— — %
Total loans HFI yield$96,692 4.66 %$83,364 4.72 %
(1)1.Includes tax equivalent adjustment using combined marginal tax rate of 26.06%.
(2)2.Includes $0.1 million and $0.8$0.3 million of loan contractual interest and $0.4 million and $0.9$1.1 million of loan fees related to PPP loans for three months ended SeptemberJune 30, 20212021. Amounts in the current period are not meaningful.
Origination and 2020, respectively.
Accretion on purchased loansother loan fees including syndication fee income increased the NIM by 128 basis point and 2 basis points for the three months ended SeptemberJune 30, 2021 and 2020, respectively. As of September2022 compared to a 25 basis point increase for the three months ended June 30, 2021, we anticipate recognizing an estimated $0.4 million in deferred origination fees, net of third party costs and deferred salaries, over the remaining life of the PPP loan portfolio.2021.
Interest expense was $8.2$8.0 million for the three months ended SeptemberJune 30, 2021,2022, a decrease of $4.1$1.7 million as compared to the three months ended SeptemberJune 30, 2020.2021. The primary driver was a decrease in interest expense on customer timemoney market deposits of $3.0$1.4 million to $1.8$1.4 million for the three months ended SeptemberJune 30, 2021,2022, compared to $4.8$2.8 million for the three months ended SeptemberJune 30, 20202021 which was partially offset by an increase in interest expense on
65

subordinated debt interest-bearing checking deposits of $0.3$0.6 for the same period. Further, during the decrease infirst quarter of 2022, we entered into three designated fair value hedges to mitigate the effect of changing rates on various fixed rate liabilities, including certain money market deposits and subordinated debt. The fair value hedge on money market deposits lowered interest expense on customer time deposits was partially offset due to the Company having a full quarter impact from the liabilities assumed from Franklin merger forby $0.4 million during the three months ended SeptemberJune 30, 2021 compared to a half quarter impact for the three months ended September 30, 2020. The average rate on customer time deposits decreased 83 basis points from 1.44% for the three months ended September 30, 2020 to 0.61% for the three months ended September 30, 2021 as more costly deposits with higher interest rates matured or renewed and repriced at lower interest rates. The decrease in rates on customer deposits accounted for $2.8 million of the $3.0 million decrease in interest expense on customer deposits. Total cost of deposits was 0.26% for the three months ended September 30, 2021 compared to 0.56% for the three months ended September 30, 2020. Average subordinated debt outstanding increased to $129.4 million for the three months ended September 30, 2021 from $95.0 million for the three months ended September 30, 2020 as a result of our $100.0 million issuance in the last half of 2020.2022.


6660

Average balance sheet amounts, interest earned and yield analysis
The table below shows the average balances, income and expense and yield and rates of each of our interest-earning assets and interest-bearing liabilities on a tax equivalent basis, if applicable, for the periods indicated.
Three Months Ended September 30,Three Months Ended June 30,
2021202020222021
(dollars in thousands on tax-equivalent basis)(dollars in thousands on tax-equivalent basis)
Average
balances (1)
Interest
income/
expense		Average
yield/
rate
Average
balances (1)
Interest
income/
expense		Average
yield/
rate		(dollars in thousands on tax-equivalent basis)
Average
balances (1)
Interest
income/
expense		Average
yield/
rate
Average
balances (1)
Interest
income/
expense		Average
yield/
rate
Interest-earning assets:Interest-earning assets:Interest-earning assets:
Loans(2)(4)
Loans(2)(4)
$7,245,313 $84,115 4.61 %$6,062,785 $71,660 4.70 %
Loans(2)(4)
$8,323,778 $96,692 4.66 %$7,085,300 $83,364 4.72 %
Loans held for sale- mortgage(8)
Loans held for sale- mortgage(8)
709,654 4,687 2.62 %486,899 3,624 2.96 %
Loans held for sale- mortgage(8)
215,779 2,350 4.37 %726,782 4,948 2.73 %
Loans held for sale-commercialLoans held for sale-commercial108,863 1,282 4.67 %99,745 1,336 5.33 %Loans held for sale-commercial56,460 718 5.10 %152,699 1,626 4.27 %
Securities:(8)
Securities:(8)
Securities:(8)
TaxableTaxable1,117,647 3,989 1.42 %604,557 2,286 1.50 %Taxable1,474,999 6,499 1.77 %976,170 3,844 1.58 %
Tax-exempt(4)
Tax-exempt(4)
311,151 2,546 3.25 %309,352 2,614 3.36 %
Tax-exempt(4)
307,719 2,492 3.25 %323,902 2,614 3.24 %
Total Securities(4)
Total Securities(4)
1,428,798 6,535 1.81 %913,909 4,900 2.13 %
Total Securities(4)
1,782,718 8,991 2.02 %1,300,072 6,458 1.99 %
Federal funds sold and reverse repurchase agreements’Federal funds sold and reverse repurchase agreements’145,315 135 0.37 %88,626 19 0.09 %Federal funds sold and reverse repurchase agreements’221,929 421 0.76 %106,257 41 0.15 %
Interest-bearing deposits with other financial institutionsInterest-bearing deposits with other financial institutions1,404,772 508 0.14 %763,251 309 0.16 %Interest-bearing deposits with other financial institutions1,081,474 1,551 0.58 %1,614,106 494 0.12 %
FHLB stockFHLB stock28,422 157 2.19 %22,517 76 1.34 %FHLB stock34,536 246 2.86 %31,731 156 1.97 %
Total interest earning assets(4)
Total interest earning assets(4)
11,071,137 97,419 3.49 %8,437,732 81,924 3.86 %
Total interest earning assets(4)
11,716,674 110,969 3.80 %11,016,947 97,087 3.53 %
Noninterest Earning Assets:Noninterest Earning Assets:Noninterest Earning Assets:
Cash and due from banksCash and due from banks107,263 69,788 Cash and due from banks91,230 134,501 
Allowance for credit lossesAllowance for credit losses(144,652)(144,991)Allowance for credit losses(120,297)(157,990)
Other assets(3)
Other assets(3)
881,314 816,759 
Other assets(3)
739,872 906,992 
Total noninterest earning assetsTotal noninterest earning assets843,925 741,556 Total noninterest earning assets710,805 883,503 
Total assetsTotal assets$11,915,062 $9,179,288 Total assets$12,427,479 $11,900,450 
Interest-bearing liabilities:Interest-bearing liabilities:Interest-bearing liabilities:
Interest bearing deposits:Interest bearing deposits:Interest bearing deposits:
Interest-bearing checkingInterest-bearing checking$2,937,273 $2,298 0.31 %$1,626,067 $2,194 0.54 %Interest-bearing checking$3,415,135 $3,285 0.39 %$3,027,435 $2,689 0.36 %
Money market(5)
Money market(5)
2,997,595 2,322 0.31 %2,179,128 3,589 0.66 %
Money market(5)
2,842,026 1,416 0.20 %2,960,264 2,816 0.38 %
Savings depositsSavings deposits439,470 60 0.05 %309,689 58 0.07 %Savings deposits508,511 68 0.05 %411,711 57 0.06 %
Customer time deposits(5)
Customer time deposits(5)
1,200,760 1,840 0.61 %1,334,829 4,817 1.44 %
Customer time deposits(5)
1,129,668 1,798 0.64 %1,291,125 2,016 0.63 %
Brokered and internet time deposits(5)
Brokered and internet time deposits(5)
32,009 76 0.94 %60,327 (85)(0.56)%
Brokered and internet time deposits(5)
6,387 24 1.51 %39,860 341 3.43 %
Time depositsTime deposits1,232,769 1,916 0.62 %1,395,156 4,732 1.35 %Time deposits1,136,055 1,822 0.64 %1,330,985 2,357 0.71 %
Total interest-bearing depositsTotal interest-bearing deposits7,607,107 6,596 0.34 %5,510,040 10,573 0.76 %Total interest-bearing deposits7,901,727 6,591 0.33 %7,730,395 7,919 0.41 %
Other interest-bearing liabilities:Other interest-bearing liabilities:Other interest-bearing liabilities:
Securities sold under agreements to repurchase and federal
funds purchased		Securities sold under agreements to repurchase and federal
funds purchased		40,437 20 0.20 %37,309 51 0.54 %Securities sold under agreements to repurchase and federal funds
purchased		27,233 12 0.18 %32,543 21 0.26 %
Federal Home Loan Bank advances— — — %249,457 406 0.65 %
Subordinated debt(6)
Subordinated debt(6)
129,395 1,565 4.80 %95,048 1,222 5.11 %
Subordinated debt(6)
129,691 1,434 4.43 %149,155 1,819 4.89 %
Other borrowingsOther borrowings1,547 8 2.05 %15,015 47 1.25 %Other borrowings1,480 6 1.63 %1,569 7 1.79 %
Total other interest-bearing liabilitiesTotal other interest-bearing liabilities171,379 1,593 3.69 %396,829 1,726 1.73 %Total other interest-bearing liabilities158,404 1,452 3.68 %183,267 1,847 4.04 %
Total Interest-bearing liabilitiesTotal Interest-bearing liabilities7,778,486 8,189 0.42 %5,906,869 12,299 0.83 %Total Interest-bearing liabilities8,060,131 8,043 0.40 %7,913,662 9,766 0.49 %
Noninterest bearing liabilities:Noninterest bearing liabilities:Noninterest bearing liabilities:
Demand depositsDemand deposits2,596,650 2,050,084 Demand deposits2,879,662 2,484,176 
Other liabilitiesOther liabilities150,632 177,329 Other liabilities134,892 162,581 
Total noninterest-bearing liabilitiesTotal noninterest-bearing liabilities2,747,282 2,227,413 Total noninterest-bearing liabilities3,014,554 2,646,757 
Total liabilitiesTotal liabilities10,525,768 8,134,282 Total liabilities11,074,685 10,560,419 
FB Financial Corporation common shareholders' equityFB Financial Corporation common shareholders' equity1,389,201 1,044,913 FB Financial Corporation common shareholders' equity1,352,701 1,339,938 
Noncontrolling interestNoncontrolling interest93 93 Noncontrolling interest93 93 
Shareholders' equity Shareholders' equity1,389,294 1,045,006  Shareholders' equity1,352,794 1,340,031 
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$11,915,062 $9,179,288 Total liabilities and shareholders' equity$12,427,479 $11,900,450 
Net interest income (tax-equivalent basis)Net interest income (tax-equivalent basis)$89,230 $69,625 Net interest income (tax-equivalent basis)$102,926 $87,321 
Interest rate spread (tax-equivalent basis)Interest rate spread (tax-equivalent basis)3.07 %3.03 %Interest rate spread (tax-equivalent basis)3.40 %3.04 %
Net interest margin (tax-equivalent basis)(7)
Net interest margin (tax-equivalent basis)(7)
3.20 %3.28 %
Net interest margin (tax-equivalent basis)(7)
3.52 %3.18 %
Cost of total depositsCost of total deposits0.26 %0.56 %Cost of total deposits0.25 %0.31 %
Average interest-earning assets to average interesting-bearing
liabilities		Average interest-earning assets to average interesting-bearing
liabilities		142.3 %142.8 %Average interest-earning assets to average interesting-bearing liabilities145.4 %139.2 %
(1)Calculated using daily averages.
(2)Average balances of nonaccrual loans are included in average loan balances. Loan feesSyndicated loan fee income of $6.4$1.2 million and $4.0$0 million, origination and other loan fee income of $6.9 million and $6.9 million, net accretion (amortization) of $0.2$0.1 million and $0.5$(0.2) million, and nonaccrual interest collections of $0.4$0.5 million and $0.7$0.5 million are included in interest income in the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
(3)Includes investments in premises and equipment, other real estate owned, interest receivable, MSRs, core deposit and other intangibles, goodwill and other miscellaneous assets.
(4)Interest income includes the effects of taxable-equivalent adjustments using a U.S. federal income tax rate and, where applicable, state income tax to increase tax-exempt interest income to a tax-equivalent basis. The net taxable-equivalent adjustment amounts included were $0.8 million and $0.8 million for both the three months ended SeptemberJune 30, 20212022 and 2020, respectively.2021.
(5)Includes $0.9 million and $0.9 million of interest rate premium accretion on money market deposits, $0.4 million$207 thousand and $625 thousand of interest rate premium accretion on customer time deposits and $0.1 million$11 thousand and $127 thousand of interest rate premium accretion on brokered and internet deposits for the three months ended SeptemberJune 30, 2021. Amounts in the prior year comparable period are not significant.2022 and 2021, respectively.
(6)Includes $0 and $174$114 thousand of interest rate premium accretion on subordinated debt for the three months ended SeptemberJune 30, 2021 and 2020, respectively.2021. There was no such accretion for three months ended June 30, 2022.
(7)The NIM is calculated by dividing annualized net interest income, on a tax-equivalent basis, by average total earning assets.
(8)Excludes the average balance for unrealized gains (losses) for mortgage loans held for sale and investments carried at fair value.
6761

NineSix months ended SeptemberJune 30, 20212022 compared to ninesix months ended SeptemberJune 30, 20202021
On a tax-equivalent basis, net interest income increased $77.5$21.2 million to $259.9$191.9 million for the ninesix months ended SeptemberJune 30, 20212022 as compared to $182.4$170.7 million for the ninesix months ended SeptemberJune 30, 2020.2021. The increase in tax-equivalent net interest income for the ninesix months ended SeptemberJune 30, 20212022 was primarily driven by an increase in the average volume of loans held for investment outstanding, as a result of the Franklin merger, coupled with a decrease in overall cost of deposits, which declined to 0.32%0.22% for the ninesix months ended SeptemberJune 30, 2021,2022, a 3714 basis point reduction from the same period in 2020.six months ended June 30, 2021.
Interest income, on a tax-equivalent basis, was $290.1$206.8 million for the ninesix months ended SeptemberJune 30, 2021,2022, compared to $218.4$192.7 million for the ninesix months ended SeptemberJune 30, 2020,2021, an increase of $71.7$14.1 million. Interest income on loans held for investment, on a tax-equivalent basis, increased $58.8$12.8 million to $250.5$179.2 million for the ninesix months ended SeptemberJune 30, 20212022 from $191.7$166.4 million for the ninesix months ended SeptemberJune 30, 2020 primarily2021. This is due to increased loan volume driven by growthan increase in the average loan held for investment balances of $2.00 billion.                 
The tax-equivalent yield on loans held for investment was 4.71%, down 30 basis points frombalance outstanding which increased to $8.04 billion for the ninesix months ended SeptemberJune 30, 2020.2022 compared to $7.04 billion for the six months ended June 30, 2021. The increase in average loan balance is due to the increased economic activity in our primary markets and combined with lower than expected payoffs during the period. The effect of the increase in the average loans held for investment balance outstanding was partially offset by a 28 basis point decrease in the average yield on loans HFI period-over-period to 4.49% for the six months ended June 30, 2022. The decrease in yield was primarily due to the addition of new loans which were originated in a lower interest rate environment while higher yielding loans were paid off and refinanced at lower rates. Contractual loan interest rates yielded 4.31%4.18% in the ninesix months ended SeptemberJune 30, 20212022 compared with 4.65%4.35% in the ninesix months ended SeptemberJune 30, 2020.2021. Excluding PPP loans, which have a 1% contractual loan yield, our contractual loan yield would have been 5 basis7 points higher for the ninesix months ended SeptemberJune 30, 2021 compared to 13 points higher2021. PPP loans did not impact our contractual loan yield for the same period in the prior year. six months ended June 30, 2022.
Our yield on interest-earning assets decreased to 3.56%3.54% for the ninesix months ended SeptemberJune 30, 2022 from 3.59% for the six months ended June 30, 2021 from 4.22%largely due to the decrease in the average yield on loans HFI period-over-period detailed above. The decrease was further amplified by a $345.4 million decrease in our average mortgage loans held for sale portfolio for the nine months ninesix months ended SeptemberJune 30, 2020.2022 compared to the same balance for the six months ended June 30, 2021. This balance decreased due to lower mortgage origination volumes which resulted from an increasing interest rate environment, continued housing inventory shortages, and compressed margins.
Interest expense was $15.0 million for the six months ended June 30, 2022, a decrease of $7.0 million as compared to the six months ended June 30, 2021. The decrease was largely attributed to a reduction of interest rates on money market deposits. Interest expense on money market deposits decreased to $3.0 million for the six months ended June 30, 2022 from $6.4 million for the six months ended June 30, 2021. The average rate on money market deposits decreased 23 basis points from 0.44% for the six months ended June 30, 2021 to 0.21% for the six months ended June 30, 2022. Further, the decrease in interest expense during the period was attributable to $1.9 million decrease in interest expense on customer time deposits period-over-period. During the six months ended June 30, 2022, we entered into three designated fair value hedges to mitigate the effect of changing rates on various fixed rate liabilities, including certain money market deposits and subordinated debt. The fair value hedge on money market deposits lowered interest expense by $0.7 million during the six months ended June 30, 2022.
The average balance on our subordinated debt decreased to $129.6 million for the six months ended June 30, 2022 compared to $169.0 million for the six months ended June 30, 2021. As a result, interest expense on subordinated debt decreased to $2.9 million for the six months ended June 30, 2022 compared to $4.2 million for the six months ended June 30, 2021. The fair value hedge on subordinated debt lowered interest expense by $0.3 million during the six months ended June 30, 2022.
62

Overall, our NIM, on a tax-equivalent basis, decreasedincreased to 3.19%3.28% for the ninesix months ended SeptemberJune 30, 2022 from 3.18% for the six months ended June 30, 2021, from 3.53% for the nine months ended September 30, 2020, driven by the sustained low interest rate environment and change in balance sheet mix, partially attributablecomposition. Our average interest-earning assets to average interest-bearing liabilities increased to 143.9% for the six months ended June 30, 2022 from 138.7% for the six months ended June 30, 2021. The change in our balance sheet composition was further illustrated by an decrease in excess liquidity, which we estimate to be interest-bearing deposits with other financial institutions in excess of 5% of average tangible assets. Excess liquidity is estimated to have negatively impacted our NIM by approximately 22 basis points for the six months ended June 30, 2022. This compares to excess liquidity representing 35 basis points of negative impact to our acquisition of Franklin and impact of excess liquidity carriedNIM during the six months ended June 30, 2021. Our NIM for the six months ended June 30, 2022 was negatively affected by 4 basis points from a $2.2 million in accelerated purchase accounting premium on our balance sheet. purchased loans which was primarily driven by two purchased credit deteriorated loans with balances totaling $21.4 million paying off early.
The components of our loan yield, a key driver to our net interest margin for the ninesix months ended SeptemberJune 30, 20212022 and 20202021 were as follows:
Nine Months Ended September 30,Six Months Ended June 30,
2021 2020 2022 2021 
(dollars in thousands)(dollars in thousands)Interest
income		Average
yield		Interest
income		Average
yield		(dollars in thousands)Interest
income		Average
yield		Interest
income		Average
yield
Loan yield components:
Loans HFI yield components:Loans HFI yield components:
Contractual interest rate on loans held for
investment (1)(2)
Contractual interest rate on loans held for
investment (1)(2)
$229,105 4.31 %$178,056 4.65 %
Contractual interest rate on loans held for
investment (1)(2)
$166,794 4.18 %$151,955 4.35 %
Origination and other loan fee income (2)
Origination and other loan fee income (2)
19,945 0.37 %9,441 0.25 %
Origination and other loan fee income (2)
11,909 0.30 %13,568 0.39 %
(Amortization) accretion on purchased loans(127)— %3,080 0.08 %
Amortization on purchased loansAmortization on purchased loans(2,288)(0.06)%(284)(0.01)%
Nonaccrual interest collectionsNonaccrual interest collections1,623 0.03 %1,101 0.03 %Nonaccrual interest collections1,590 0.04 %1,192 0.04 %
Total loan yield$250,546 4.71 %$191,678 5.01 %
Syndicated loan fee incomeSyndicated loan fee income1,150 0.03 %— — %
Total loans HFI yieldTotal loans HFI yield$179,155 4.49 %$166,431 4.77 %
(1)Includes tax equivalent adjustment using combined marginal tax rate of 26.06%.
(2)Includes $0.8 million and $1.4$0.7 million of loan contractual interest and $3.1 million and $1.5$2.7 million of loan feesfee income related to PPP loans for the ninesix months ended SeptemberJune 30, 2021, and 2020, respectively. Amounts in the current year period are not significant.
AccretionNet amortization on purchased loans lowered the NIM by less than4 basis points for the six months ended June 30, 2022. For the six months ended June 30, 2021, amortization on purchased loans lowered the NIM by 1 basis point and contributed 6 basis points to the NIM for the nine months ended September 30, 2021 and 2020, respectively.point. The decreaseincrease in accretionnet amortization is due to the continued impact of purchase accounting resulting from our mergers, which can fluctuate based on volume of early pay-offs.pay-offs as discussed above. As a result of the Franklin merger, a $11.3 million premium was recorded on August 15, 2020 which is being amortized as a reduction to loan interest income. As of June 30, 2022 and December 31, 2021, the remaining net discount on all acquired loans amounted to $4.6 million and $2.3 million, respectively. Excluding PPP loans, our NIM would have been 5 and 6 basis points higher for the ninesix months ended SeptemberJune 30, 2021 and 2020, respectively.
Interest expense was $30.2 million2021. PPP loans did not impact our NIM for the ninesix months ended SeptemberJune 30, 2021,2022. In addition, our NIM was positively impacted by a decrease in our total cost of $5.8 million as compareddeposits of 14 basis points to 0.22% for the ninesix months ended SeptemberJune 30, 2020. The decrease was largely attributed to a reduction of interest rates on customer time deposits partially offset by an increase in volume on interest-bearing checking deposits and subordinated debt. Interest expense on customer time deposits decreased to $6.9 million2022 from 0.36% for the ninesix months ended SeptemberJune 30, 2021 from $16.0 million for the nine months ended September 30, 2020. The primary driver of decrease was due to the average rate on customer time deposits, which decreased 99 basis points from 1.71% for the nine months ended September 30, 2020 to 0.72% for the nine months ended September 30, 2021. The decrease in interest expense from customer deposits was partially offset by an increase in interest expense on interest-bearing checking of $1.9 million

6863

and subordinated debt of $3.8 million associated with the increase in volume from our $100.0 million subordinated note offering and additional subordinated notes acquired from Franklin.
Average balance sheet amounts, interest earned and yield analysis
The table below shows the average balances, income and expense and yield and rates of each of our interest-earning assets and interest-bearing liabilities on a tax equivalent basis, if applicable, for the periods indicated.
Nine Months Ended September 30,Six Months Ended June 30,
2021 2020 2022 2021 
(dollars in thousands on tax-equivalent basis)(dollars in thousands on tax-equivalent basis)
Average
balances(1)
Interest
income/
expense		Average
yield/
rate
Average
balances(1)
Interest
income/
expense		Average
yield/
rate		(dollars in thousands on tax-equivalent basis)
Average
balances(1)
Interest
income/
expense		Average
yield/
rate
Average
balances(1)
Interest
income/
expense		Average
yield/
rate
Interest-earning assets:Interest-earning assets:Interest-earning assets:
Loans (2)(4)
Loans (2)(4)
$7,111,240 $250,546 4.71 %$5,112,130 $191,678 5.01 %
Loans (2)(4)
$8,044,722 $179,155 4.49 %$7,043,092 $166,431 4.77 %
Loans held for sale-mortgage(8)
Loans held for sale-mortgage(8)
695,056 13,925 2.68 %353,540 8,561 3.23 %
Loans held for sale-mortgage(8)
342,190 5,916 3.49 %687,635 9,238 2.71 %
Loans held for sale-commercialLoans held for sale-commercial152,802 5,065 4.43 %33,491 1,336 5.33 %Loans held for sale-commercial67,452 1,646 4.92 %175,135 3,783 4.36 %
Securities:(8)
Securities:(8)
Securities:(8)
TaxableTaxable975,886 10,652 1.46 %537,427 7,961 1.98 %Taxable1,428,342 11,919 1.68 %903,830 6,663 1.49 %
Tax-exempt (4)
Tax-exempt (4)
323,034 7,806 3.23 %247,674 6,703 3.62 %
Tax-exempt (4)
313,254 5,015 3.23 %329,074 5,260 3.22 %
Total Securities (4)
Total Securities (4)
1,298,920 18,458 1.90 %785,101 14,664 2.49 %
Total Securities (4)
1,741,596 16,934 1.96 %1,232,904 11,923 1.95 %
Federal funds sold and reverse repurchase agreementsFederal funds sold and reverse repurchase agreements128,504 196 0.20 %82,089 274 0.45 %Federal funds sold and reverse repurchase agreements214,421 613 0.58 %119,959 61 0.10 %
Interest-bearing deposits with other financial institutionsInterest-bearing deposits with other financial institutions1,481,939 1,423 0.13 %520,858 1,585 0.41 %Interest-bearing deposits with other financial institutions1,342,639 2,189 0.33 %1,521,162 915 0.12 %
FHLB stockFHLB stock30,527 470 2.06 %18,547 282 2.03 %FHLB stock33,719 393 2.35 %31,597 313 2.00 %
Total interest earning assets (4)
Total interest earning assets (4)
10,898,988 290,083 3.56 %6,905,756 218,380 4.22 %
Total interest earning assets (4)
11,786,739 206,846 3.54 %10,811,484 192,664 3.59 %
Noninterest Earning Assets:Noninterest Earning Assets:Noninterest Earning Assets:
Cash and due from banksCash and due from banks137,934 64,150 Cash and due from banks92,318 153,523 
Allowance for credit lossesAllowance for credit losses(157,910)(101,005)Allowance for credit losses(123,072)(164,648)
Other assets (3)
Other assets (3)
896,042 738,866 
Other assets (3)
777,475 900,592 
Total noninterest earning assetsTotal noninterest earning assets876,066 702,011 Total noninterest earning assets746,721 889,467 
Total assetsTotal assets$11,775,054 $7,607,767 Total assets$12,533,460 $11,700,951 
Interest-bearing liabilities:Interest-bearing liabilities:Interest-bearing liabilities:
Interest bearing deposits:Interest bearing deposits:Interest bearing deposits:
Interest bearing checkingInterest bearing checking$2,904,387 $8,005 0.37 %$1,287,684 $6,090 0.63 %Interest bearing checking$3,487,046 $5,742 0.33 %$2,887,671 $5,707 0.40 %
Money market deposits(7)
Money market deposits(7)
2,958,864 8,753 0.40 %1,661,867 9,739 0.78 %
Money market deposits(7)
2,929,401 2,988 0.21 %2,939,177 6,431 0.44 %
Savings depositsSavings deposits407,183 170 0.06 %261,058 178 0.09 %Savings deposits498,285 132 0.05 %390,772 110 0.06 %
Customer time deposits(7)
Customer time deposits(7)
1,288,348 6,892 0.72 %1,245,324 15,952 1.71 %
Customer time deposits(7)
1,103,672 3,118 0.57 %1,332,868 5,052 0.76 %
Brokered and internet time deposits(7)
Brokered and internet time deposits(7)
37,347 521 1.87 %32,610 91 0.37 %
Brokered and internet time deposits(7)
11,200 73 1.31 %40,060 445 2.24 %
Time depositsTime deposits1,325,695 7,413 0.75 %1,277,934 16,043 1.68 %Time deposits1,114,872 3,191 0.58 %1,372,928 5,497 0.81 %
Total interest bearing depositsTotal interest bearing deposits7,596,129 24,341 0.43 %4,488,543 32,050 0.95 %Total interest bearing deposits8,029,604 12,053 0.30 %7,590,548 17,745 0.47 %
Other interest-bearing liabilities:Other interest-bearing liabilities:Other interest-bearing liabilities:
Securities sold under agreements to repurchase and federal funds
purchased
Securities sold under agreements to repurchase and federal funds
purchased
34,807 77 0.30 %32,215 158 0.66 %Securities sold under agreements to repurchase and federal funds purchased28,637 26 0.18 %31,946 57 0.36 %
Federal Home Loan Bank advances— — — %249,818 1,525 0.82 %
Subordinated debt(6)
Subordinated debt(6)
155,704 5,725 4.92 %52,459 2,042 5.20 %
Subordinated debt(6)
129,642 2,894 4.50 %168,965 4,160 4.96 %
Other borrowingsOther borrowings2,997 21 0.94 %12,671 219 2.31 %Other borrowings1,491 15 2.03 %3,734 13 0.70 %
Total other interest-bearing liabilitiesTotal other interest-bearing liabilities193,508 5,823 4.02 %347,163 3,944 1.52 %Total other interest-bearing liabilities159,770 2,935 3.70 %204,645 4,230 4.17 %
Total interest-bearing liabilitiesTotal interest-bearing liabilities7,789,637 30,164 0.52 %4,835,706 35,994 0.99 %Total interest-bearing liabilities8,189,374 14,988 0.37 %7,795,193 21,975 0.57 %
Noninterest bearing liabilities:Noninterest bearing liabilities:Noninterest bearing liabilities:
Demand depositsDemand deposits2,477,454 1,698,618 Demand deposits2,823,685 2,416,869 
Other liabilitiesOther liabilities163,257 149,987 Other liabilities136,039 166,849 
Total noninterest-bearing liabilitiesTotal noninterest-bearing liabilities2,640,711 1,848,605 Total noninterest-bearing liabilities2,959,724 2,583,718 
Total liabilitiesTotal liabilities10,430,348 6,684,311 Total liabilities11,149,098 10,378,911 
FB Financial Corporation common shareholders' equityFB Financial Corporation common shareholders' equity1,344,613 923,456 FB Financial Corporation common shareholders' equity1,384,269 1,321,947 
Noncontrolling interestNoncontrolling interest93 — Noncontrolling interest93 93 
Shareholders' equity Shareholders' equity1,344,706 923,456  Shareholders' equity1,384,362 1,322,040 
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$11,775,054 $7,607,767 Total liabilities and shareholders' equity$12,533,460 $11,700,951 
Net interest income (tax-equivalent basis)Net interest income (tax-equivalent basis)$259,919 $182,386 Net interest income (tax-equivalent basis)$191,858 $170,689 
Interest rate spread (tax-equivalent basis)Interest rate spread (tax-equivalent basis)3.04 %3.23 %Interest rate spread (tax-equivalent basis)3.17 %3.02 %
Net interest margin (tax-equivalent basis) (5)
Net interest margin (tax-equivalent basis) (5)
3.19 %3.53 %
Net interest margin (tax-equivalent basis) (5)
3.28 %3.18 %
Cost of total depositsCost of total deposits0.32 %0.69 %Cost of total deposits0.22 %0.36 %
Average interest-earning assets to average interest-bearing liabilitiesAverage interest-earning assets to average interest-bearing liabilities139.9 %142.8 %Average interest-earning assets to average interest-bearing liabilities143.9 %138.7 %
(1)Calculated using daily averages.
(2)Average balances of nonaccrual loans and overdrafts (before deduction of ACL) are included in average loan balances. Loan fees of $19.9Syndication fee income $1.2 million and $9.4$0, origination and other loan fee income of $11.9 million and $13.6 million, net (amortization) accretionamortization of $(0.1)$2.3 million and $3.1$0.3 million, and nonaccrual interest collections of $1.6 million and $1.1$1.2 million are included in interest income for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
(3)Includes investments in premises and equipment, OREO,, interest receivable, mortgage servicing rights, core deposit and other intangibles, goodwill and other miscellaneous assets.
(4)Interest income includes the effects of taxable-equivalent adjustments using a U.S. federal income tax rate and, where applicable, state income tax to increase tax-exempt interest income to a tax-equivalent basis. TheFor the six months ended June 30, 2022 and 2021, the net taxable-equivalent adjustment amounts included were $2.3was $1.5 million and $2.0$1.6 million for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
(5)The NIM is calculated by dividing annualized net interest income, on a tax-equivalent basis, by average total earning assets.
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(6)Includes $0.4 million and $0.2 million of accretion on subordinated debt fair value markpremium for the ninesix months ended SeptemberJune 30, 2021 and 2020, respectively.2021. There was no such accretion for six months ended June 30, 2022.
(7)Includes $2.8$1.9 million and $0$1.9 million of interest rate premium accretion on money market deposits, $1.9$0.5 million and $0.9$1.4 million on customer time deposits and $0.4$0.1 million and $0.3 million on brokered and internet time deposits for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
(8)Excludes the average balance for unrealized gains (losses) for mortgage loans held for sale and investments carried at fair value.
64

Rate/volume analysis

The tables below present the components of the changes in net interest income for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020.2021. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volumes and changes due to rates, with the changes in both volumes and rates allocated to these two categories based on the proportionate absolute changes in each category.

Three months ended SeptemberJune 30, 20212022 compared to three months ended SeptemberJune 30, 20202021
Three months ended September 30, 2021 compared to three months ended September 30, 2020 due to changes inThree months ended June 30, 2022 compared to three months ended June 30, 2021 due to changes in
(in thousands on a tax-equivalent basis)(in thousands on a tax-equivalent basis)VolumeRateNet increase
(decrease)		(in thousands on a tax-equivalent basis)VolumeYield/ rateNet increase
(decrease)
Interest-earning assets:Interest-earning assets:Interest-earning assets:
Loans(1)(2)
Loans(1)(2)
$13,729 $(1,274)$12,455 
Loans(1)(2)
$14,387 $(1,059)$13,328 
Loans held for sale - residentialLoans held for sale - residential1,471 (408)1,063 Loans held for sale - residential(5,565)2,967 (2,598)
Loans held for sale - commercialLoans held for sale - commercial107 (161)(54)Loans held for sale - commercial(1,224)316 (908)
Securities available-for-sale and other securities:Securities available-for-sale and other securities:Securities available-for-sale and other securities:
TaxableTaxable1,831 (128)1,703 Taxable2,198 457 2,655 
Tax Exempt(2)
Tax Exempt(2)
15 (83)(68)
Tax Exempt(2)
(131)9 (122)
Federal funds sold and reverse repurchase agreementsFederal funds sold and reverse repurchase agreements53 63 116 Federal funds sold and reverse repurchase agreements219 161 380 
Time deposits in other financial institutionsTime deposits in other financial institutions232 (33)199 Time deposits in other financial institutions(764)1,821 1,057 
FHLB stockFHLB stock33 48 81 FHLB stock20 70 90 
Total interest income(2)
Total interest income(2)
17,471 (1,976)15,495 
Total interest income(2)
9,140 4,742 13,882 
Interest-bearing liabilities:Interest-bearing liabilities:Interest-bearing liabilities:
Interest-bearing checkingInterest-bearing checking1,026 (922)104 Interest-bearing checking373 223 596 
Money market(3)
Money market(3)
634 (1,901)(1,267)
Money market(3)
(59)(1,341)(1,400)
Savings depositsSavings deposits18 (16)2 Savings deposits13 (2)11 
Customer time deposits(3)
Customer time deposits(3)
(205)(2,772)(2,977)
Customer time deposits(3)
(257)39 (218)
Brokered and internet time deposits(3)
Brokered and internet time deposits(3)
(67)228 161 
Brokered and internet time deposits(3)
(126)(191)(317)
Securities sold under agreements to repurchase and federal funds
purchased		Securities sold under agreements to repurchase and federal funds
purchased		2 (33)(31)Securities sold under agreements to repurchase and federal funds
purchased		(2)(7)(9)
Federal Home Loan Bank advances(406)— (406)
Subordinated debt(4)
Subordinated debt(4)
415 (72)343 
Subordinated debt(4)
(215)(170)(385)
Other borrowingsOther borrowings(70)31 (39)Other borrowings— (1)(1)
Total interest expenseTotal interest expense1,347 (5,457)(4,110)Total interest expense(273)(1,450)(1,723)
Change in net interest income(2)
Change in net interest income(2)
$16,124 $3,481 $19,605 
Change in net interest income(2)
$9,413 $6,192 $15,605 
(1)Average loans are gross, including nonaccrual loans and overdrafts (before deduction of allowance for credit losses). Loan feesSyndicated loan fee income of $6.4$1.2 million and $4.0$0 million, accretionorigination and other loan fee income of $0.2$6.9 million and $0.5$6.9 million, net accretion (amortization) of $0.1 million and $(0.2) million, and nonaccrual interest collections of $0.4$0.5 million and $0.7$0.5 million are included in interest income forin the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
(2)Interest income includes the effects of the tax-equivalent adjustments to increase tax-exempt interest income to a tax-equivalent basis.
(3)Includes $0.9 million and $0.9 million of interest rate premium accretion on money market deposits, $0.4 million$207 thousand and $625 thousand of interest rate premium accretion on customer time deposits and $0.1 million$11 thousand and $127 thousand of interest rate premium accretion on brokered and internet deposits for the three months ended SeptemberJune 30, 2022 and 2021,. Amounts in the prior year comparable period are not significant. respectively.
(4)Includes $0 and $0.2 million$114 thousand of interest rate premium accretion on subordinated debt for the three months ended SeptemberJune 30, 2021 and 2020, respectively.2021. There was no such accretion for three months ended June 30, 2022.






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Nine Months Ended SeptemberSix months ended June 30, 20212022 compared to Nine Months Ended Septembersix months ended June 30, 20202021
Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 due to changes inSix months ended June 30, 2022 compared to six months ended June 30, 2021 due to changes in
(dollars in thousands on a tax-equivalent basis)(dollars in thousands on a tax-equivalent basis)VolumeRateNet increase
(decrease)		(dollars in thousands on a tax-equivalent basis)VolumeYield/ rateNet increase
(decrease)
Interest-earning assets:Interest-earning assets:Interest-earning assets:
Loans(1)
Loans(1)
$70,433 $(11,565)$58,868 
Loans(1)
$22,306 $(9,582)$12,724 
Loans held for sale - residentialLoans held for sale - residential6,842 (1,478)5,364 Loans held for sale - residential(5,972)2,650 (3,322)
Loans held for sale - commercialLoans held for sale - commercial3,955 (226)3,729 Loans held for sale - commercial(2,628)491 (2,137)
Securities available-for-sale and other securities:Securities available-for-sale and other securities:Securities available-for-sale and other securities:
TaxableTaxable4,786 (2,095)2,691 Taxable4,377 879 5,256 
Tax Exempt(2)
Tax Exempt(2)
1,821 (718)1,103 
Tax Exempt(2)
(253)8 (245)
Federal funds sold and reverse repurchase agreementsFederal funds sold and reverse repurchase agreements71 (149)(78)Federal funds sold and reverse repurchase agreements270 282 552 
Time deposits in other financial institutionsTime deposits in other financial institutions923 (1,085)(162)Time deposits in other financial institutions(291)1,565 1,274 
FHLB stockFHLB stock184 4 188 FHLB stock25 55 80 
Total interest income(2)
Total interest income(2)
89,015 (17,312)71,703 
Total interest income(2)
17,834 (3,652)14,182 
Interest-bearing liabilities:Interest-bearing liabilities:Interest-bearing liabilities:
Interest bearing checkingInterest bearing checking4,456 (2,541)1,915 Interest bearing checking987 (952)35 
Money market deposits(4)
Money market deposits(4)
3,837 (4,823)(986)
Money market deposits(4)
(10)(3,433)(3,443)
Savings depositsSavings deposits61 (69)(8)Savings deposits28 (6)22 
Customer time deposits(4)
Customer time deposits(4)
230 (9,290)(9,060)
Customer time deposits(4)
(648)(1,286)(1,934)
Brokered and internet time deposits(4)
Brokered and internet time deposits(4)
66 364 430 
Brokered and internet time deposits(4)
(188)(184)(372)
Securities sold under agreements to repurchase and federal funds
purchased		Securities sold under agreements to repurchase and federal funds
purchased		6 (87)(81)Securities sold under agreements to repurchase and federal funds
purchased		(3)(28)(31)
Federal Home Loan Bank advances(1,525)— (1,525)
Subordinated debt(3)
Subordinated debt(3)
3,796 (113)3,683 
Subordinated debt(3)
(878)(388)(1,266)
Other borrowingsOther borrowings(68)(130)(198)Other borrowings(23)25 2 
Total interest expenseTotal interest expense10,859 (16,689)(5,830)Total interest expense(735)(6,252)(6,987)
Change in net interest income(2)
Change in net interest income(2)
$78,156 $(623)$77,533 
Change in net interest income(2)
$18,569 $2,600 $21,169 
(1)Average loans are gross, including nonaccrual loans and overdrafts (before deduction of allowance for loan losses)ACL). Loan fees of $19.9Syndication fee income $1.2 million and $9.4 million, (amortization) accretion$0, origination and other loan fee income of $(0.1)$11.9 million and $3.1$13.6 million, net amortization of $2.3 million and $0.3 million, and nonaccrual interest collections of $1.6 million and $1.1$1.2 million are included in interest income for the ninesix months ended SeptemberJune 30, 2022 and 2021, and 2020, respectively.
(2)Interest income includes the effects of the tax-equivalent adjustments to increase tax-exempt interest income to a tax-equivalent basis.
(3)Includes $0.4 million and $0.2 million of accretion on subordinated debt fair value markpremium for the ninesix months ended SeptemberJune 30, 2021 and 2020, respectively.2021. There was no such accretion for six months ended June 30, 2022.
(4)Includes $2.8$1.9 million and $0$1.9 million of interest rate premium accretion on money market deposits, $1.9$0.5 million and $0.9$1.4 million on customer time deposits and $0.4$0.1 million and $0.3 million on brokered and internet time deposits for the ninesix months ended SeptemberJune 30, 2022 and 2021, and 2020, respectively.
7166

Provision for credit losses
The provision for credit losses charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for credit losses at an appropriate level under the current expected credit loss model. The provision for credit losses recorded representsdetermination of the amount needed to maintain the appropriate level of the allowance is complex and involves a high degree of judgment and subjectivity. Refer to Note 1, "Basis of presentation" in the notes to our consolidated financial statements in our Annual Report on Form 10-K for credit losses based on management’s quarterly estimates.the year ended December 31, 2021 for a detailed discussion regarding ACL methodology.
Three months ended SeptemberJune 30, 20212022 compared to three months ended SeptemberJune 30, 20202021
We recognized a reversal of provision for credit losses on loans held for investment for the three months ended September 30, 2021 of $2.8$8.2 million as compared to an expensea reversal of $45.8provision for credit losses of $12.9 million for the three months ended SeptemberJune 30, 2020, which included $53.2 million of expense related to our acquisition of Franklin during2022 and 2021, respectively. The provision for the previous period partially offset by improved forecasts associated with our legacy loan HFI portfolio contributing to a $7.3 million reversal in required credit reserve. The current period reversalthree months ended June 30, 2022 resulted from management’s best estimate of losses over the life of loans in our portfolio in accordance with the CECL approach, given an improvement in economic outlook and forecasts. Although the portfolio benefited from improving economic forecasts during the three months ended September 30, 2021, there is much uncertainty surrounding the impact of the COVID-19 pandemic and the Delta variant, which may continue to lead to increased volatility in forecasted macroeconomic variables, a key input to our calculated level of allowance for credit losses.approach. These evaluations weighed the impact of the current economic outlook, status of federal government stimulus programs, and geographical and demographic considerations, among other factors. We increased our required reserve due to projected slower GDP growth over the next two to three fiscal years, expected elevated unemployment levels, and expected Federal Reserve interest rate increases in the short term. These considerations were slightly offset as we removed the impact of COVID troubled industries from our calculation. See further discussion under the subheading "Allowance for credit losses."
The Company estimatesWe estimate expected credit losses on off-balance sheet loan commitments that are not accounted for as derivatives. When applying the CECL methodology to estimate expected credit loss, the Company considerswe consider the likelihood that funding will occur, the contractual period of exposure to credit loss, the risk of loss, historical loss experience, and current conditions along with expectations of future economic conditions. As such, the CompanyWe recorded a provision for credit lossesexpense on unfunded commitments of $0.3$4.1 million for the three months ended SeptemberJune 30, 20212022 compared to $9.6a release in the provision for credit losses of $1.0 million for the three months ended SeptemberJune 30, 2020.
Nine2021. The increase in provision expense on unfunded commitments period-over-period is due to a $141.9 million increase in our unfunded commitment balance during the three months ended SeptemberJune 30, 2022, and more specifically in our construction category, which inherently carry a higher risk and associated reserve than the bulk of our portfolio (see "Loan Portfolio" section below for further information about our commitment categories). This compares to a $64.5 million decrease in our unfunded commitments for the three months ended June 30, 2021. This shift in concentration in our unfunded commitments combined with the updated economic variables in our forward looking model compared to improving economic variables used for the three months ended June 30, 2021 compared to nine months ended September 30, 2020
We recognized a reversalare the primary drivers of provision for credit losses on loans held for investment for the nine months ended September 30, 2021 of $27.3 million as compared to a expense of $97.8 million for the nine months ended September 30, 2020. The reversalincrease in total provision for credit losses was primarily the result of improving economic forecasts allowing for a reduction of our reserves, as discussed above. The sharp decrease in the current period when compared with the nine months ended September 30, 2020 is primarily the result of our acquisition activity, namely Farmers National and Franklin, and the impact of applying CECL on the acquired loan portfolios on their respective acquisition dates.
Additionally, the Company recorded a release to the provision for credit losses on unfunded commitments of $2.9 million forduring the ninethree months ended SeptemberJune 30, 2022.
During the three months ended June 30, 2022, our available-for-sale debt securities portfolio unrealized value declined $66.6 million to an unrealized loss position of $167.5 million as of June 30, 2022 from an unrealized loss position of $100.9 million as of March 31, 2022. During the three months ended June 30, 2021, comparedour available-for-sale debt securities portfolio unrealized value increased $3.1 million to a provisionan unrealized gain position of $13.1$22.3 million for the nine months ended September 30, 2020.
Asas of SeptemberJune 30, 2021 from an unrealized gain position of $19.2 million as of March 31, 2021. The majority of the investment portfolio was either government guaranteed or an issuance of a government sponsored entity or highly rated by major credit rating agencies and 2020, we historically have not recorded any losses associated with these investments. As such, as of June 30, 2022 and December 31, 2021, it was determined that all available-for-sale debt securities that experienced a decline in fair value below amortized cost basis were due to noncredit-related factors. Therefore, there was no provision for credit losses recognized on available-for-sale debt securities during the three and nine months ended SeptemberJune 30, 2022 or 2021.
Six months ended June 30, 2022 compared to six months ended June 30, 2021
We recognized a provision for credit losses on loans held for investment for the six months ended June 30, 2022 of $2.1 million. For the six months ended June 30, 2021, we recorded a release in the provision for credit losses on loans held for investment of $24.5 million. The current period provision resulted from management’s best estimate of losses over the life of loans in our portfolio in accordance with the CECL approach driven by an $1.00 billion increase in average loans held for investments outstanding period-over-period and 2020.

the increased possibility of a future recession. In addition, there continues to be uncertainty surrounding the increasing inflation. Further, there continues to be a shortfall in the labor market, inflation has become elevated and interest rates are continuing to rise. Our customers are impacted by all these factors. The conflict between Russia and Ukraine has also led to uncertainty surrounding its potential impact and hardship on the U.S. economy. These factors may continue to lead to increased volatility in forecasted macroeconomic variables, a key input to our calculated level of allowance for credit losses. These evaluations weighed the impact of the current economic outlook and geographical and demographic considerations, among other factors.
7267

For the six months ended June 30, 2022, the Company recorded a provision for credit losses on unfunded commitments of $6.0 million compared to a release in provision of $3.2 million for the six months ended June 30, 2021. The increase in the provision for credit losses on unfunded commitments is primarily due to the increase in the total loan commitment balance and the macroeconomic factors discussed above. During the six months ended June 30, 2022, our unfunded commitment balance increased by $238.3 million compared to a decrease of $189.1 million for the six months ended June 30, 2021.
During the six months ended June 30, 2022, the unrealized value in our available-for-sale debt securities portfolio declined $172.2 million from an unrealized gain position of $4.7 million as of December 31, 2021. During the six months ended June 30, 2021, the Company's available-for-sale debt securities portfolio unrealized value declined $12.2 million from an unrealized gain position of $34.6 million as of December 31, 2020. Based on our evaluation of potential credit risk in the portfolio, no provision for credit losses on available-for-sale debt securities was required during the six months ended June 30, 2022 or 2021.
Noninterest income
Our noninterest income includes gains on sales of mortgage loans, unrealized change in fair value of loans held for sale and derivatives, fees on mortgage loan originations, loan servicing fees, hedging results, fees generated from deposit services, investment services and trust income, gains and losses on securities, other real estate owned and other assets and other miscellaneous noninterest income.
The following table sets forth the components of noninterest income for the periods indicated:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)(dollars in thousands)2021 2020 2021 2020 (dollars in thousands)2022 2021 2022 2021 
Mortgage banking incomeMortgage banking income$45,384 $84,686 $136,215 $189,599 Mortgage banking income$22,559 $35,499 $52,090 $90,831 
Service charges on deposit accountsService charges on deposit accounts2,612 2,162 7,217 6,583 Service charges on deposit accounts2,908 2,266 5,822 4,605 
ATM and interchange feesATM and interchange fees4,868 3,913 14,590 10,653 ATM and interchange fees5,353 5,381 10,440 9,722 
Investment services and trust incomeInvestment services and trust income2,511 1,828 7,518 4,893 Investment services and trust income2,275 2,999 4,407 5,007 
Gain from securities, net51 583 278 618 
Gain (loss) on sales or write-downs of other real estate owned2,005 (1,505)2,478 (1,368)
(Loss) gain from securities, net(Loss) gain from securities, net(109)144 (261)227 
(Loss) gain on sales or write-downs of other real estate owned(Loss) gain on sales or write-downs of other real estate owned(26)(23)(524)473 
Gain (loss) from other assetsGain (loss) from other assets177 226 162 (156)Gain (loss) from other assets18 (4)82 (15)
Other1,398 5,133 6,578 10,395 
Other incomeOther income236 3,038 2,550 5,180 
Total noninterest incomeTotal noninterest income$59,006 $97,026 $175,036 $221,217 Total noninterest income$33,214 $49,300 $74,606 $116,030 
Three months ended SeptemberJune 30, 20212022 compared to three months ended SeptemberJune 30, 20202021
Noninterest income amounted to $59.0$33.2 million for the three months ended SeptemberJune 30, 2021,2022, a decrease of $38.0$16.1 million, or 39.2%32.6%, as compared to $97.0$49.3 million for the three months ended SeptemberJune 30, 2020.2021. Changes in selected components of noninterest income in the above table are discussed below.
Mortgage banking income primarily includes origination fees and realized gains and losses on the sale of mortgage loans, unrealized change in fair value of mortgage loans and derivatives, and mortgage servicing fees, which includes net change in fair value of MSRs and related derivatives. Mortgage banking income is initially driven by the recognition of interest rate lock commitments (IRLCs) at fair value at inception of the IRLCs. This is subsequently adjusted for changes in the overall interest rate environment offset by derivative contracts entered into to mitigate the interest rate exposure. Upon sale of the loan, the net fair value gain is reclassified as a realized gain on sale. Mortgage banking income was $45.4$22.6 million and $84.7$35.5 million for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
During the three months ended SeptemberJune 30, 2021,2022, the Bank’s mortgage operations had sales of $1,535.9$869.7 million which generated a sales margin of 2.55%2.43%. This compares to $1,770.0$1,681.5 million and 4.32%2.94% for the three months ended SeptemberJune 30, 2020.2021. The industry benefited greatly from declining interest rates during the three months ended SeptemberJune 30, 2020,2021, causing an increase in interest rate lock commitment volume, which has slowed dramatically in the three months ended SeptemberJune 30, 20212022 across the industry. Mortgage banking income from gains on sale and related fair value changes decreased to $40.2$15.7 million during the three months ended SeptemberJune 30, 20212022 compared to $86.6$31.9 million for the three months ended SeptemberJune 30, 2020.2021. Total interest rate lock volume decreased $406.8$1,073.7 million, or 16.8%60.5%, during the three months ended SeptemberJune 30, 20212022 over the same period in the previous year.
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Our mortgage banking business is directly impacted by the interest rate environment, increased regulations, consumer demand, economic conditions, and investor demand for mortgage production. Mortgage production, especially refinance activity, declines in rising interest rate environments. Our interest rate lock volume during three months ended SeptemberJune 30, 20212022 was composed of 66.1%16.0% refinancing activity compared with 76.1%58.2% during the same period in the previous year. We continue to see margin compression and reduced volumes due to excess capacity in the industry, refinance fatigue and a shortage of housing inventory in our markets. Our interest rate lock volume is expected tocan be materially and adversely impacted by rising interest rates and housing shortage,overcapacity in the market, and we expect to see further declines in interest rate lock volume and consequently, mortgage banking income in the current environment. Our direct-to-consumer channel is particularly dependent on the support of a strong refinance activitymarket and the current lack of demand and interest rate environment is unfavorable for future profitability in this delivery channel. As a result of poor performance and declining profitability projections, we announced on May 10, 2022 that we are exiting the direct-to-consumer internet delivery channel within our Mortgage segment. For the three months ended June 30, 2022 and 2021, direct-to-consumer comprised 13.7% and 51.5% of the Company's total interest rate lock volume and 37.4% and 54.9% of the Company's sales volume, respectively. As a result of exiting this channel, we incurred restructuring charges of $12.5 million during the three months ended June 30, 2022 and anticipate being fully exited in the third quarter of 2022. This realignment of our Mortgage segment will allow us to direct resources to our traditional consumer mortgage industry when rates rise.retail channel, which has historically yielded more predictable and consistent results. Additionally, we plan to retain mortgage servicing rights and continue holding residential 1-4 family mortgage loans in our loan portfolio. The exit of this channel is expected to provide regulatory capital relief resulting from MSRs and also produce lower interest rate lock volume and consequently, mortgage banking income going forward.
Income from mortgage servicing of $7.5$8.0 million and $5.5$6.8 million for three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, was partially offset by losses on changes in fair value of MSRs and related hedging activity of $2.4$1.2 million and $7.4$3.1 million in the three months ended SeptemberJune 30, 2022 and 2021, and 2020, respectively.
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The components of mortgage banking income for three months ended SeptemberJune 30, 20212022 and 20202021 were as follows:
Three Months Ended September 30,
(in thousands)20212020
Mortgage banking income:
Origination and sales of mortgage loans$39,210 $76,506 
Net change in fair value of loans held for sale and derivatives1,002 10,084 
Change in fair value on MSRs(2,367)(7,440)
Mortgage servicing income7,539 5,536 
Total mortgage banking income$45,384 $84,686 
Interest rate lock commitment volume by line of business:
Consumer direct$1,085,180 $1,453,238 
Retail926,723 965,434 
Total$2,011,903 $2,418,672 
Interest rate lock commitment volume by purpose (%):
Purchase33.9 %23.9 %
Refinance66.1 %76.1 %
Mortgage sales$1,535,897 $1,770,043 
Mortgage sale margin2.55 %4.32 %
Closing volume$1,617,508 $1,932,450 
Outstanding principal balance of mortgage loans serviced$10,633,805 $9,101,007 
Net gains from sales or write-downs of other real estate owned during the three months ended September 30, 2021 amounted to $2.0 million compared with a loss during the three months ended September 30, 2020 amounting to $1.5 million. This change was a result of specific sales and valuation transactions of other real estate. The gain in the current period was primarily the result of sale of one of our branch locations, which had been vacated as a result of consolidating locations following our acquisitions.
Three Months Ended June 30,
(in thousands)20222021
Mortgage banking income:
Origination and sales of mortgage loans$21,099 $49,435 
Net change in fair value of loans held for sale and derivatives(5,354)(17,579)
Change in fair value on MSRs(1,152)(3,145)
Mortgage servicing income7,966 6,788 
Total mortgage banking income$22,559 $35,499 
Interest rate lock commitment volume by line of business:
Direct-to-consumer$95,756 $914,163 
Retail605,114 860,370 
Total$700,870 $1,774,533 
Interest rate lock commitment volume by purpose (%):
Purchase84.0 %41.9 %
Refinance16.0 %58.2 %
Mortgage sales$869,688 $1,681,509 
Mortgage sale margin2.43 %2.94 %
Closing volume$725,755 $1,550,950 
Outstanding principal balance of mortgage loans serviced$11,160,382 $10,527,708 
Other noninterest income for the three months ended SeptemberJune 30, 20212022 decreased $3.7$2.8 million to $1.4$0.2 million compared with $5.1$3.0 million for the three months ended SeptemberJune 30, 2020.2021. This includes gains and lossesa $2.0 million loss associated with our commercial loans held for sale portfolio of $0.7 million for the three months ended SeptemberJune 30, 20212022 compared with $1.9$1.4 million gain for the three months ended SeptemberJune 30, 2020. Other noninterest income during the three2021.
Six months ended SeptemberJune 30, 2021 also included a $1.5 million loss on the cancellation of an interest rate swap associated with a loan HFI that was resolved during the period.
Nine2022 compared to six months ended SeptemberJune 30, 2021 compared to nine months ended September 30, 2020
Noninterest income amounted to $175.0$74.6 million for the ninesix months ended SeptemberJune 30, 2021,2022, a decrease of $46.2$41.4 million, or 20.9%35.7%, as compared to $221.2$116.0 million for the ninesix months ended SeptemberJune 30, 2020.2021. Changes in selected components of noninterest income in the above table are discussed below.
Mortgage banking income was $136.2$52.1 million and $189.6$90.8 million for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, representing a 28.2%$38.7 million, or 42.7% decrease year-over-year.
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During the ninesix months ended SeptemberJune 30, 2021,2022, our mortgage operations had sales of $4,789.5 million$2.15 billion which generated a gain on sales margin of 3.06%2.34%. This compares to $4,406.9 million$3.25 billion and 3.46%3.30% for the ninesix months ended SeptemberJune 30, 2020.2021. The decrease in gain on sales margin is a result of capacityover-capacity in the industry and compressing margins. The industry benefited greatly from decliningSales of mortgage loans HFS continue to slow with the rise of interest rates in 2020, causing a sharp increase in interest rate lock commitment volume. It is anticipated that sales will slow inand the last quarter of 2021 with seasonal decline in activity as housing inventory remainsremaining low in many of our markets. Mortgage banking income from gains on sale and related fair value changes increaseddecreased to $125.7$37.6 million during the ninesix months ended SeptemberJune 30, 20212022 compared to $200.5$85.5 million for the ninesix months ended SeptemberJune 30, 2020.2021. Total interest rate lock volume decreased $1,076.1$1,653.6 million, or 15.9%45.1%, during the ninesix months ended SeptemberJune 30, 20212022 compared to the same period in the previous year. The volumeMarket conditions during the six months ended June 30, 2022, including declining consumer demand for mortgages and increased interest rates have also shifted the mix of refinances and purchases also shifted during nine months ended September 30, 2021interest rate lock commitments by purpose to 63.7%34.0% refinance volume to compared with 78.1%62.4% during the same period in the previous year.
As previously discussed, during the second quarter of 2022, we began the process of winding down our direct-to-consumer internet delivery channel within our Mortgage segment. For the six months ended June 30, 2022 and 2021, direct-to-consumer comprised 33.0% and 50.9% of the Company's total interest rate lock volume and 45.3% and 53.9% of the Company's sales volume, respectively. As a result of exiting this channel, we incurred restructuring charges of $12.5 million during the six months ended June 30, 2022.
Income from mortgage servicing of $21.3was $15.4 million and $15.7$13.7 million for ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, was partially offset by declineslosses on changes in fair value of MSRs and related hedging activity of $10.8 million$0.9 million. This compares to a decline in fair value of MSRs and $26.5 millionrelated hedging activity for the ninesix months ended SeptemberJune 30, 2021 and 2020, respectively.
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amounting to $8.4 million.
The components of mortgage banking income for the ninesix months ended SeptemberJune 30, 20212022 and 20202021 were as follows:
Nine Months Ended September 30,
(dollars in thousands)2021 2020 
Mortgage banking income  
Origination and sales of mortgage loans$146,538 $152,411 
Net change in fair value of loans held for sale and derivatives(20,806)48,067 
Change in fair value on MSRs(10,775)(26,546)
Mortgage servicing income21,258 15,667 
Total mortgage banking income$136,215 $189,599 
Interest rate lock commitment volume by line of business:
Consumer direct$2,948,530 $4,248,741 
Retail2,726,956 2,502,817 
Total$5,675,486 $6,751,558 
Interest rate lock commitment volume by purpose (%):
Purchase36.3 %21.9 %
Refinance63.7 %78.1 %
Mortgage sales$4,789,476 $4,406,932 
Mortgage sale margin3.06 %3.46 %
Closing volume$4,926,390 $4,739,497 
Outstanding principal balance of mortgage loans serviced$10,633,805 $9,101,007 

Six Months Ended June 30,
(dollars in thousands)2022 2021 
Mortgage banking income  
Origination and sales of mortgage loans$50,496 $107,328 
Net change in fair value of loans held for sale and derivatives(12,902)(21,808)
Change in fair value on MSRs(899)(8,408)
Mortgage servicing income15,395 13,719 
Total mortgage banking income$52,090 $90,831 
Interest rate lock commitment volume by line of business:
Direct-to-consumer$663,848 $1,863,350 
Retail1,346,129 1,800,233 
Total$2,009,977 $3,663,583 
Interest rate lock commitment volume by purpose (%):
Purchase66.0 %37.6 %
Refinance34.0 %62.4 %
Mortgage sales$2,154,170 $3,253,579 
Mortgage sale margin2.34 %3.30 %
Closing volume$1,719,488 $3,308,882 
Outstanding principal balance of mortgage loans serviced$11,160,382 $10,527,708 
ATM and interchange fees increased $3.9$0.7 million to $14.6$10.4 million during the ninesix months ended SeptemberJune 30, 20212022 as compared to $10.7$9.7 million for the ninesix months ended SeptemberJune 30, 2020.2021. This increase is attributable to our growth in deposits and increased volume of transactions, which is partially attributed to our acquisitions completed in 2020.transactions. Though we have not yet experienced a decline, our interchange fee income is expected to decline beginning the second half of 2022 as a result of the Durbin amendment, which limits interchange fees banking institutions with asset sizes greater than $10 billion are permitted to charge.
Net gains from sales or write-downs of other real estate ownedOther income decreased $2.6 million to $2.6 million during the ninesix months ended SeptemberJune 30, 2021 amounted2022 as compared to $2.5$5.2 million compared with a loss during the ninesix months ended SeptemberJune 30, 2020 amounting2021. This decrease is primarily related to $1.4 million. This$2.2 million loss from change was a resultin fair value of specific sales and valuation transactions of other real estate during the respective periods. The gain in the current period was primarily the result of sale of one of our branch locations, which had been vacated as a result of consolidating locations following our acquisitions.
Other noninterest income for the nine months ended September 30, 2021 decreased $3.8 million to $6.6 million compared with $10.4 million for the nine months ended September 30, 2020. This includes gains associated with our commercial loans held for sale portfolio of $1.3 million for the nine months ended September 30, 2021 compared with $1.9 million for the million for the nine months ended September 30, 2020. Other noninterest income during the nine months ended September 30, 2021 also included a $1.5 million loss on the cancellation of an interest rate swap associated with a loan HFI that was resolved during the period.were acquired through business combination.
Noninterest expense
Our noninterest expense includes primarily salaries and employee benefits expense, occupancy expense, legal and professional fees, data processing expense, regulatory fees and deposit insurance assessments, advertising and
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promotion and other real estate owned expense, among others. We monitor the ratio of noninterest expense to the sum of net interest income plus noninterest income, which is commonly known as the efficiency ratio.
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The following table sets forth the components of noninterest expense for the periods indicated:
 Three Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2021 2020 2021 2020 
Salaries, commissions and employee benefits$62,818 $67,676 $189,756 $166,556 
Occupancy and equipment expense5,979 4,892 17,184 13,166 
Legal and professional fees2,177 1,917 6,701 5,427 
Data processing2,595 2,994 7,456 8,229 
Merger costs— 20,730 — 25,366 
Amortization of core deposit and other intangibles1,344 1,417 4,178 3,825 
Advertising4,200 2,256 10,012 7,236 
Other expense15,894 16,210 47,378 37,425 
Total noninterest expense$95,007 $118,092 $282,665 $267,230 

 Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2022 2021 2022 2021 
Salaries, commissions and employee benefits$55,181 $62,367 $114,624 $126,938 
Occupancy and equipment expense5,853 5,356 11,256 11,205 
Legal and professional fees3,116 2,090 5,723 4,524 
Data processing2,404 2,542 4,885 4,861 
Amortization of core deposit and other intangibles1,194 1,394 2,438 2,834 
Advertising2,031 3,559 6,064 5,812 
Mortgage restructuring expense12,458—12,458 — 
Other expense14,760 15,652 28,821 31,484 
Total noninterest expense$96,997 $92,960 $186,269 $187,658 
Three months ended SeptemberJune 30, 20212022 compared to three months ended SeptemberJune 30, 2020

2021
Noninterest expense decreasedincreased by $23.1$4.0 million during the three months ended SeptemberJune 30, 20212022 to $95.0$97.0 million as compared to $118.1$93.0 million in the three months ended SeptemberJune 30, 2020.2021. Changes in selected components of noninterest expense in the above table are discussed below.
Salaries, commissions and employee benefits expense was the largest component of noninterest expenses representing 66.1%56.9% and 57.3%67.1% of total noninterest expense in the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. During the three months ended SeptemberJune 30, 2021,2022, salaries and employee benefits expense decreased $4.9$7.2 million, or 7.2%11.5%, to $62.8$55.2 million as compared to $67.7$62.4 million for the three months ended SeptemberJune 30, 2020.2021. This decrease was mainly driven by a decrease of $16.9$7.8 million in salaries and commissions in the Mortgage segment during the three months ended SeptemberJune 30, 20212022 from the same period in 2020,2021, reflective of the slowdown in production and restructuring during the current period. This decrease was partially offset by increases in salaries and employee benefits expenses in our Banking segment from the addition of Franklin half-way through the third quarter of 2020 in addition to investment in additional revenue producers in our markets during the three months ended September 30, 2021.
Costs resulting from our equity compensation grants during the three months ended SeptemberJune 30, 2022 and 2021 and 2020 amounted $2.9$3.0 million and $3.0$2.5 million, respectively. These grants comprise one-time restricted stock unit grants that were granted in conjunction with our 2016 IPO in addition
Advertising expense includes expenses related to annual performance grantssponsorships, advertising, marketing, customer relations and performance stock units.business development and public relations. During the three months ended SeptemberJune 30, 2021, the one-time restricted stock units granted in conjunction with the IPO vested in full and we experienced an additional $0.52022, advertising expense decreased $1.5 million to $2.0 million as compared to $3.6 million in employer tax expense associated with this vesting. Costs relatedthe three months ended June 30, 2021. This decrease is primarily attributable to performance-based restricted stock units granted during 2021decreased costs of lead generation in our Mortgage segment driven by the Mortgage restructuring and 2020 amounted to $0.6reduction in production.
Mortgage restructuring expenses of $12.5 million and $0.2 millionwere reported during the three months ended SeptemberJune 30, 20212022 related to the exit from our direct-to-consumer internet delivery channel. These expenses primarily include $10.0 million related to salaries, commissions and 2020, respectively.employee benefits expense, including the acceleration of vesting on restricted stock units. Other components of this expense includes $1.1 million related to software license and maintenance fees, $0.4 million impairment of our operating lease right-of-use assets, and $0.9 million loss on disposal of fixed assets.
There were no merger costs for the three
Six months ended SeptemberJune 30, 20212022 compared to $20.7 million in merger cost for the threesix months ended SeptemberJune 30, 2020. Merger costs during the three months ended September 30, 2020 include costs associated with our acquisition of Franklin, which was completed on August 15, 2020.
Nine months ended September 30, 2021 compared to nine months ended September 30, 2020
Noninterest expense increaseddecreased by $15.4$1.4 million during the ninesix months ended SeptemberJune 30, 20212022 to $282.7$186.3 million as compared to $267.2$187.7 million in the ninesix months ended SeptemberJune 30, 2020.2021. Changes in selected components of noninterest expense in the above table are discussed below.
Salaries, commissions and employee benefits expense was the largest component of noninterest expenses representing 67.1%61.5% and 62.3%67.6% of total noninterest expense in the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. During the ninesix months ended SeptemberJune 30, 2021,2022, salaries and employee benefits expense increased $23.2decreased $12.3 million, or 13.9%9.7%, to $189.8$114.6 million as compared to $166.6$126.9 million for the ninesix months ended SeptemberJune 30, 2020.2021. This increasedecrease includes a $14.3 million decrease in incentive and commission compensation during the six months ended June 30, 2022, which was mainly due to an increase of $22.5 million employee salarieslargely driven by our increasethe decrease in headcount as a result of our mergersmortgage production volume and investment in additional revenue producers in our markets. Our full-time equivalent employees increased to 1,962 as of September 30, 2021from 1,831 as of September 30, 2020.
Costs resulting from our equity compensation grantsprofitability during the nine months ended September 30, 2021 and 2020 amounted to $8.1 million and $7.3 million, respectively. Additionally, during 2020 we began granting performance-basedperiod.
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stock units, which resulted in $1.0Mortgage restructuring expenses of $12.5 million and $0.6 million in expensewere reported during the ninesix months ended SeptemberJune 30, 2021 and 2020, respectively.
Occupancy and equipment expense increased $4.0 million to $17.2 million during the nine months ended September 30, 2021 as compared to $13.2 million in the nine months ended September 30, 2020. This increase is2022 related to increased leased property and maintenance costs which increasedthe exit from our direct-to-consumer internet delivery channel as a result of our merger activity and additional locations.
Merger costs amounted to $25.4 million for the nine months ended September 30, 2020 related to our acquisition and conversion of Farmers National and acquisition of Franklin. There was no such merger activity during nine months ended September 30, 2021.discussed above.
Other noninterest expense primarily includes mortgage servicing expenses, regulatory fees and deposit insurance assessments, software license and maintenance fees and various other miscellaneous expenses. Other noninterest expense increased $10.0decreased $2.7 million during the ninesix months ended SeptemberJune 30, 20212022 to $47.4$28.8 million compared to $37.4$31.5 million during the ninesix months ended SeptemberJune 30, 2020.2021. The increasechange includes a $1.2 million decrease in franchise tax expense, which reflects a $6.0 million increase in software licenses and maintenance fees, a $2.0 million increase in mortgage servicing expenses and a $1.3 million increase in regulatory fees and other costs associated with our growth, including the impact of $1.4 million in Tennessee state tax credits. These credits have historically been reflected in the income tax expense line item and were required to be reported in our 2020 acquisitions.pre-tax results as the Company produced no taxable income during the six months ended June 30, 2022. During the six months ended June 30, 2021, we incurred $0.6 million in offering costs under our registration rights agreement from the secondary offering completed during the period. There were no such costs during the six months ended June 30, 2022.
Efficiency ratio
The efficiency ratio is one measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. That is, the ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense by the sum of net interest income and noninterest income. For an adjusted efficiency ratio, we exclude certain gains, losses and expenses we do not consider core to our business.
Our efficiency ratio was 64.4%71.6% and 65.3%70.3% for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, and 71.2%68.4% and 66.5%65.8% for the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively. Our adjusted efficiency ratio, on a tax-equivalent basis, was 64.7%61.1% and 65.4%64.5% for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively, and 57.4%68.9% and 59.5%65.8% for the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of the adjusted efficiency ratio.
Return on equity and assets
The following table sets forth our ROAA, ROAE, dividend payout ratio and average shareholders’ equity to average assets ratio for the periods indicated:
Three Months Ended September 30,Nine Months Ended September 30,Year ended
December 31,
2021 2020 2021 2020 2020 
Return on average total assets1.51 %(0.24)%1.61 %0.32 %0.75 %
Return on average shareholders' equity12.9 %(2.13)%14.1 %2.61 %6.58 %
Dividend payout ratio11.8 %(77.4)%11.3 %56.4 %22.8 %
Average shareholders’ equity to average assets11.7 %11.4 %11.4 %12.1 %11.5 %

As previously discussed, during the three and nine months ended September 30, 2021, we recognized net reversals in our provisions for credit losses of $2.5 million and $30.2 million, respectively, which contributed to an improvement in return on average total assets of 1.51% and 1.61% for the three and nine months ended September 30, 2021, respectively. This compares to provisions for credit losses of $55.4 million and $110.9 million for the three and nine months ended September 30, 2020, which resulted in a return on average assets of (0.24)% and 0.32%, respectively. Our return on average shareholders’ equity was 12.9% and 14.1% for the three and nine months ended September 30, 2021, respectively, as compared to (2.13)% and 2.61% for the three and nine months ended September 30, 2020, respectively. The onset of the COVID-19 pandemic, our acquisition of Franklin and associated increases in provision expenses led to a net loss for the three months ended September 30, 2020, which drove an unusual dividend payout ratio for that period, which is not reflective of historical payout ratios or our intentions with respect to future dividends.


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Income taxes
Income tax expense was $9.7$6.7 million and $13.4 million for the three months ended SeptemberJune 30, 2022 and 2021, compared with income tax benefit of $2.0respectively, and $16.0 million and $29.0 million for the threesix months ended SeptemberJune 30, 2020. Our income tax expense was $38.7 million2022 and $5.5 million for the nine months ended September 30, 2021, and 2020, respectively. This represents effective tax rates of 17.7%25.8% and 26.7%23.7% for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively, and 21.5%22.7% and 23.4%23.2% for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. The primary differences from the enacted rates are applicable state income taxes and certain expenses that are not deductible reduced for non-taxable income and additional deductions for equity-based compensation upon vesting of restricted stock units. Additionally,State taxes, net of federal benefits, increased our effective tax rate by 6.1% and 3.3% for the three months ended June 30, 2022 and 2021 and by 3.6% and 2.9% for the six months ended June 30, 2022 and 2021, respectively. This increase included the impact of the $1.4 million in Tennessee state tax credits moving to other noninterest expense during the three and nine months ended SeptemberJune 30, 2021,2022 versus in income tax expense was further reduced byin previous periods. We had a $1.7net operating loss carryforward generated as a result of a previous acquisition which amounted to $5.9 million and $6.5 million as of June 30, 2022 and December 31, 2021, respectively. The net operating loss carryforward can be used to offset taxable income in future periods and reducing income tax benefit relatedliabilities in those future periods. While net operating losses are subject to a change incertain annual utilization limits under Section 382, we believe the valuenet operating loss carryforwards will be realized based on the projected annual limitation and the length of the net operating loss carryover period. Our determination of the realization of the net deferred tax asset thatis based on its assessment of all available positive and negative evidence. The net operating loss carryforward expires on December 31, 2029.
During the six months ended June 30, 2022, we generated a state net operating loss carryforward of $3.2 million, which may have varying expiration periods. No such loss was acquired from Franklin.generated during the three months ended June 30, 2022 or the three and six months ended June 30, 2021. We expect to generate sufficient taxable income to utilize the loss generated.
The Company is subject to Section 162(m), which limits the deductibility of compensation paid to certain individuals. The restricted stock unit plans that existed prior to the corporation being public vested after the reliance period as defined in the underlying Treasury Regulations. It is the Company’sour policy to apply the Section 162(m) limitations to stock-based compensation, including our restricted stock unit plan, first and then followed by cash compensation. As a result of the vesting of these units and cash compensation paid to date, the Company haswe have disallowed a portion of its compensation paid to the applicable individuals.
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Financial condition
The following discussion of our financial condition compares balances as of SeptemberJune 30, 2021 with2022 and December 31, 2020.
Total assets
Our total assets were $11.81 billion at September 30, 2021, compared to total assets of $11.21 billion as of December 31, 2020. This increase was driven by increases in our available-for-sale debt securities portfolio and loans HFI portfolio. Available-for-sale securities grew by $0.40 billion to $1.57 billion at September 30, 2021, as compared to $1.17 billion at December 31, 2020 while loans HFI increased by $0.21 billion to $7.29 billion as of September 30, 2021 from $7.08 billion, also as of December 31, 2020.2021.
Loan portfolio
The following table sets forth the balance and associated percentage of each class of financing receivable in our loan portfolio as of the dates indicated:
June 30,December 31,
 2022 2021 
(dollars in thousands)CommittedAmount Outstanding% of total outstandingCommittedAmount Outstanding% of total outstanding
Loan Type:    
Commercial and industrial (1)

$2,482,613 $1,479,424 17 %$2,060,028 $1,290,565 17 %
Construction3,097,486 1,575,331 18 %2,886,088 1,327,659 17 %
Residential real estate:
1-to-4 family1,458,401 1,457,452 17 %1,272,477 1,270,467 17 %
Line of credit1,021,721 425,485 5 %935,571 383,039 5 %
Multi-family403,712 391,970 5 %339,882 326,551 4 %
Commercial real estate:
Owner-Occupied1,103,796 1,053,872 12 %1,005,534 951,582 13 %
Non-Owner Occupied1,981,584 1,885,122 22 %1,839,990 1,730,165 23 %
Consumer and other404,030 355,681 4 %351,153 324,634 4 %
Total loans$11,953,343 $8,624,337 100 %$10,690,723 $7,604,662 100 %
(1)Includes $1.3 million and $4.0 million of PPP loans outstanding as of June 30, 2022 and December 31, 2021, respectively.
Our loanloans HFI portfolio is our most significant earning asset, comprising 61.8%70.7% and 63.2%60.4% of our total assets as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer loans that comply with our credit policies and that produce revenues consistent with our financial objectives. Our overall lending approach is primarily focused on providing credit to our customers directly rather than purchasingin the markets we serve, but we are also party to loan syndications and loan participations from other banks (collectively, “participated loans”). At SeptemberJune 30, 20212022 and December 31, 2020,2021, loans held for investment included approximately $242.4$281.2 million and $206.8$263.9 million, respectively, related to purchased participationparticipated loans. All loans, whether or not we act as a participant, are underwritten to the same standards as all other loans we originate. We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations.
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Loans by type
The following table sets forth the balance and associated percentage of each class of financing receivable in our loan portfolio as of the dates indicated:
As of September 30,As of December 31,
 2021 2020 
(dollars in thousands)Amount% of
total		Amount% of
total
Loan Type:    
Commercial and industrial (1)

$1,252,425 17 %$1,346,122 19 %
Construction1,190,623 16 %1,222,220 17 %
Residential real estate:
1-to-4 family1,175,155 16 %1,089,270 15 %
Line of credit392,440 5 %408,211 6 %
Multi-family324,662 5 %175,676 2 %
Commercial real estate:
Owner-Occupied938,241 13 %924,841 13 %
Non-Owner Occupied1,695,573 23 %1,598,979 23 %
Consumer and other325,555 5 %317,640 5 %
Total loans$7,294,674 100 %$7,082,959 100 %
(1)Includes $9.4 million and $212.6 million of loans originated as part of the PPP as of September 30, 2021 and December 31, 2020, respectively.
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Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. At SeptemberOur lending activity is heavily concentrated in the geographic market areas we serve, with highest concentration in Tennessee. This geographic concentration subjects our loan portfolio to the general economic conditions within the state. The risks created by this concentration have been considered by management in the determination of the appropriateness of the allowance for credit losses. As of June 30, 20212022 and December 31, 2020,2021, there were no concentrations of loans exceeding 10% of total loans other than the categories of loans disclosed in the table above. We believe our loan portfolio is diversified relative to industry concentrations across the various loan portfolio categories. While most industries have been adversely impacted as a result of COVID–19, certain industries are more sensitive and for that reason present greater risk than other industries. The following presents industry loan categories considered to be “of concern” in relation to our total portfolio as of September 30, 2021 and December 31, 2020.
Approximate % of
total loans
IndustryDescription of componentsSeptember 30, 2021December 31, 2020
Retail lendingIncludes non-owner occupied CRE, automobile, recreational vehicle and boat dealers, gas stations and convenience stores, pharmacies and drug stores, and sporting goods.8.8 %8.7 %
HealthcareIncludes assisted living, nursing and continuing care, medical practices, social assistance, mental health and substance abuse centers.4.4 %4.9 %
HotelVast majority of hotel exposure is built around long-term successful hotel operators and strong flags located within our banking footprint.4.6 %4.9 %
Other leisureIncludes marinas, recreational vehicle parks and campgrounds, fitness and recreational sports centers, sports teams and clubs, historical sites, and theaters.1.7 %1.7 %
TransportationIncludes trucking exposure made up of truckload operators, equipment lessors to owner/operators, and local franchisees of major national trucking companies. Also includes air travel (no commercial airlines) and support and to a lesser extent, consumer charter and transportation and warehousing.1.7 %1.6 %
RestaurantsMajority made up of full service restaurants with no major concentration by operator or brand. Also includes limited service restaurants and bars.2.2 %2.0 %
Banking regulators have established thresholds of less than 100% of tier 1 capital plus allowance for credit losses in construction lending and less than 300% of tier 1 capital plus allowance for credit losses in commercial real estate lending that management monitors as part of the risk management process. The construction concentration ratio is a percentage of the outstanding construction and land development loans to total tier 1 capital plus allowance for credit losses. The commercial real estate concentration ratio is a percentage of the outstanding balance of non-owner occupied commercial real estate, multifamily, and construction and land development loans to tier 1 capital plus allowance for credit losses. Management strives to operate within the thresholds set forth above.
When a company's ratios are in excess of one or both of these guidelines, banking regulators generally require an increased level of monitoring in these lending areas by management.
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The table below shows concentration ratios for the Bank and Company as of SeptemberJune 30, 20212022 and December 31, 2020, which both were within the stated thresholds.2021.
As a percentage (%) of tier 1 capital plus allowance for credit losses
FirstBankFB Financial Corporation
September 30, 2021
Construction91.2 %88.0 %
Commercial real estate247.6 %238.9 %
December 31, 2020
Construction93.1 %96.9 %
Commercial real estate228.3 %237.7 %
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As a percentage (%) of tier 1 capital plus allowance for credit losses
FirstBankFB Financial Corporation
June 30, 2022
Construction119.2 %116.8 %
Commercial real estate293.6 %287.7 %
December 31, 2021
Construction102.7 %99.8 %
Commercial real estate263.5 %256.0 %
Loan categories
The principal categories of our loans held for investment portfolio are discussed below:
Commercial and industrial loans.    We provide a mix of variable and fixed rate commercial and industrial loans. Our commercial and industrial loans are typically made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital and operating needs and business expansions, including the purchase of capital equipment and loans made to farmers relating to their operations. This category also includes loans secured by manufactured housing receivables. Commercial and industrial loans generally include lines of credit and loans with maturities of five years or less. This category also includes the loans we originated as part of the PPP, established by the Coronavirus Aid, Relief and Economic Security Act. The PPP is administered by the SBA, and loans we originated as part of the PPP may be forgiven by the SBA under a set of defined rules. These federally guaranteed loans were intended to provide up to 24 weeks of payroll and other operating costs as a source of aid to small- and medium-sized businesses. Commercial and industrial loans are generally made with operating cash flows as the primary source of repayment, but may also include collateralization by inventory, accounts receivable, equipment and personal guarantees. We plan to continue to make commercial and industrial loans an area of emphasis in our lending operations in the future. Excluding PPP loans totaling $9.4 million and $212.6 million as of September 30, 2021 and December 31, 2020, respectively, our commercial and industrial loans comprised $1.24 billion, or 17%, and $1.13 billion, or 16%, respectively, of our loans held for investment.
Commercial real estate owner-occupied loans.    Our commercial real estate owner-occupied loans include loans to finance commercial real estate owner occupied properties for various purposes including use as offices, warehouses, production facilities, health care facilities, retail centers, restaurants, churches and agricultural based facilities. Commercial real estate owner-occupied loans are typically repaid through the ongoing business operations of the borrower, and hence are dependent on the success of the underlying business for repayment and are more exposed to general economic conditions.
Commercial real estate non-owner occupied loans.    Our commercial real estate non-owner occupied loans include loans to finance commercial real estate non-owner occupied investment properties for various purposes including use as offices, warehouses, health care facilities, hotels, mixed-use residential/commercial, manufactured housing communities, retail centers, multifamily properties, assisted living facilities and agricultural based facilities. Commercial real estate non-owner occupied loans are typically repaid with the funds received from the sale of the completed property or rental proceeds from such property, and are therefore more sensitive to adverse conditions in the real estate market, which can also be affected by general economic conditions.
Residential real estate 1-4 family mortgage loans.    Our residential real estate 1-4 family mortgage loans are primarily made with respect to and secured by single family homes, including manufactured homes with real estate, which are both owner-occupied and investor owned. We intend to continue to make residential 1-4 family housing loans at a similar pace, so long as housing values in our markets do not deteriorate from current prevailing levels and we are able to make such loans consistent with our current credit and underwriting standards. First lien residential 1-4 family mortgages may be affected by unemployment or underemployment and deteriorating market values of real estate.
Residential line of credit loans.    Our residential line of credit loans are primarily revolving, open-end lines of credit secured by 1-4 family residential properties. We intend to continue to make residential line of credit loans if housing values in our markets do not deteriorate from current prevailing levels and we are able to make such loans consistent with our current credit and underwriting standards. Residential line of credit loans may be affected by unemployment or underemployment and deteriorating market values of real estate.
Multi-family residential loans.    Our multi-family residential loans are primarily secured by multi-family properties, such as apartments and condominium buildings. These loans may be affected by unemployment or underemployment and deteriorating market values of real estate.
Construction loans.    Our construction loans include commercial construction, land acquisition and land development loans and single-family interim construction loans to small- and medium-sized businesses and individuals. These loans are generally secured by the land or the real property being built and are made based on our assessment of the value of the property on an as-completed basis. We expect to continue to make construction loans at a similar pace so long as demand continues and the market for and values of such properties remain stable or continue to improve in our markets. These loans can carry risk of repayment when projects incur cost overruns, have an increase in the price of building materials, encounter zoning and environmental issues, or encounter other factors that may affect the completion of a
Commercial and industrial loans.We provide a mix of variable and fixed rate commercial and industrial loans. Our commercial and industrial loans are typically made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital and operating needs and business expansions, including the purchase of capital equipment and loans made to farmers relating to their operations. This category also includes loans secured by manufactured housing receivables. Commercial and industrial loans generally include lines of credit and loans with maturities of five years or less. This category also includes the loans we originated as part of the PPP, established by the Coronavirus Aid, Relief and Economic Security Act amounting to $1.3 million and $4.0 million as of June 30, 2022 and December 31, 2021, respectively. Commercial and industrial loans are generally made with operating cash flows as the primary source of repayment, but may also include collateralization by inventory, accounts receivable, equipment and personal guarantees. We plan to continue to make commercial and industrial loans an area of emphasis in our lending operations in the future.
Construction loans.Our construction loans include commercial construction, land acquisition and land development loans and single-family interim construction loans to small- and medium-sized businesses and individuals. These loans are generally secured by the land or the real property being built and are made based on our assessment of the value of the property on an as-completed basis. We expect to continue to make construction loans at a similar pace so long as demand continues and the market for and values of such properties remain stable or continue to improve in our markets. These loans can carry risk of repayment when projects incur cost overruns, have an increase in the price of building materials, encounter zoning and environmental issues, or encounter other factors that may affect the completion of a project on time and on budget. Additionally, repayment risk may be negatively impacted when the market experiences a deterioration in the value of real estate.
Residential real estate 1-4 family mortgage loans.Our residential real estate 1-4 family mortgage loans are primarily made with respect to and secured by single family homes, including manufactured homes with real estate, which are both owner-occupied and investor owned. We intend to continue to make residential 1-4 family housing loans at a similar pace, so long as housing values in our markets do not deteriorate from current prevailing levels and we are able to make such loans consistent with our current credit and underwriting standards. First lien residential 1-4 family mortgages may be affected by unemployment or underemployment and deteriorating market values of real estate.
Residential line of credit loans.Our residential line of credit loans are primarily revolving, open-end lines of credit secured by 1-4 family residential properties. We intend to continue to make residential line of credit loans if housing values in our markets do not deteriorate from current prevailing levels and we are able to make such loans consistent with our current credit and underwriting standards. Residential line of credit loans may be affected by unemployment or underemployment and deteriorating market values of real estate.
Multi-family residential loans.Our multi-family residential loans are primarily secured by multi-family properties, such as apartments and condominium buildings. These loans may be affected by unemployment or underemployment and deteriorating market values of real estate.
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project on time and on budget. Additionally, repayment risk may be negatively impacted when the market experiences a deterioration in the value of real estate.
Commercial real estate owner-occupied loans.Our commercial real estate owner-occupied loans include loans to finance commercial real estate owner occupied properties for various purposes including use as offices, warehouses, production facilities, health care facilities, retail centers, restaurants, churches and agricultural based facilities. Commercial real estate owner-occupied loans are typically repaid through the ongoing business operations of the borrower, and hence are dependent on the success of the underlying business for repayment and are more exposed to general economic conditions.
Commercial real estate non-owner occupied loans.Our commercial real estate non-owner occupied loans include loans to finance commercial real estate non-owner occupied investment properties for various purposes including use as offices, warehouses, health care facilities, hotels, mixed-use residential/commercial, manufactured housing communities, retail centers, multifamily properties, assisted living facilities and agricultural based facilities. Commercial real estate non-owner occupied loans are typically repaid with the funds received from the sale of the completed property or rental proceeds from such property, and are therefore more sensitive to adverse conditions in the real estate market, which can also be affected by general economic conditions
Consumer and other loans. 
Consumer and other loans.    Consumer and other loans include consumer loans made to individuals for personal, family and household purposes, including car, boat, manufactured homes (without real estate) and other recreational vehicle loans and personal lines of credit. Consumer loans are generally secured by vehicles, manufactured homes and other household goods. The collateral securing consumer loans may depreciate over time. The company seeks to minimize these risks through its underwriting standards. Other loans also include loans to states and political subdivisions in the U.S. These loans are generally subject to the risk that the borrowing municipality or political subdivision may lose a significant portion of its tax base or that the project for which the loan was made may produce inadequate revenue. None of these categories of loans represents a significant portion of our loan portfolio.

Loan maturity and sensitivities
The following tables presenttable presents the contractual maturities of our loan portfolio as of SeptemberJune 30, 2021 and December 31, 2020.2022. Loans with scheduled maturities are reported in the maturity category in which the payment is due. Demand loans with no stated maturity and overdrafts are reported in the “due in 1 year or less” category. Loans that have adjustable rates are shown as amortizing to final maturity rather than when the interest rates are next subject to change. The tables do not include prepayment assumptions or scheduled repayments.
Loan type (dollars in thousands)Maturing in one
year or less		Maturing in one
to five years		Maturing in
five years to fifteen years		Maturing after
fifteen years		Total
As of June 30, 2022    
Commercial and industrial$600,243 $656,889 $221,435 $857 $1,479,424 
Commercial real estate:
Owner occupied117,694 523,398 370,285 42,495 1,053,872 
Non-owner occupied172,785 796,838 886,124 29,375 1,885,122 
Residential real estate:
1-to-4 family70,078 387,215 276,597 723,562 1,457,452 
Line of credit24,460 91,627 308,698 700 425,485 
Multi-family14,963 232,590 127,843 16,574 391,970 
Construction844,659 494,392 214,051 22,229 1,575,331 
Consumer and other38,903 84,543 59,505 172,730 355,681 
Total ($)$1,883,785 $3,267,492 $2,464,538 $1,008,522 $8,624,337 
Total (%)21.8 %37.9 %28.6 %11.7 %100.0 %

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For loans due after one year or more, the following table presents the interest rate composition for loans outstanding as of June 30, 2022. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, the Company had $21.8$20.9 million and $22.4$21.5 million, respectively, in fixed-rate loans in which the Company has entered into variable rate swap contracts.
Loan type (dollars in thousands)Maturing in one
year or less		Maturing in one
to five years		Maturing after
five years		Total
As of September 30, 2021    
Commercial and industrial$522,908 $526,038 $203,479 $1,252,425 
Commercial real estate:
Owner occupied103,522 455,111 379,608 938,241 
Non-owner occupied102,666 812,671 780,236 1,695,573 
Residential real estate:
1-to-4 family72,775 357,683 744,697 1,175,155 
Line of credit34,139 76,113 282,188 392,440 
Multi-family24,159 196,342 104,161 324,662 
Construction627,243 434,034 129,346 1,190,623 
Consumer and other35,181 78,403 211,971 325,555 
Total ($)$1,522,593 $2,936,395 $2,835,686 $7,294,674 
Total (%)20.9 %40.2 %38.9 %100.0 %
Loan type (dollars in thousands)Maturing in one
year or less		Maturing in one
to five years		Maturing after
five years		Total
As of December 31, 2020    
Commercial and industrial$225,384 $955,847 $164,891 $1,346,122 
Commercial real estate:
Owner occupied114,993 453,426 356,422 924,841 
Non-owner occupied134,846 770,849 693,284 1,598,979 
Residential real estate:
1-to-4 family78,600 361,804 648,866 1,089,270 
Line of credit27,970 82,084 298,157 408,211 
Multi-family6,291 74,139 95,246 175,676 
Construction613,153 384,124 224,943 1,222,220 
Consumer and other29,051 77,398 211,191 317,640 
Total ($)$1,230,288 $3,159,671 $2,693,000 $7,082,959 
Total (%)17.4 %44.6 %38.0 %100.0 %

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For loans due after one year or more, the following tables present the sensitivities to changes in interest rates as of September 30, 2021 and December 31, 2020.
Loan type (dollars in thousands)Fixed
interest rate		Floating
interest rate		Total
As of September 30, 2021   
Commercial and industrial$356,146 $373,371 $729,517 
Commercial real estate:
Owner occupied564,664 270,055 834,719 
Non-owner occupied728,582 864,325 1,592,907 
Residential real estate:
1-to-4 family904,400 197,980 1,102,380 
Line of credit2,299 356,002 358,301 
Multi-family102,798 197,705 300,503 
Construction194,233 369,147 563,380 
Consumer and other275,737 14,637 290,374 
Total ($)$3,128,859 $2,643,222 $5,772,081 
Total (%)54.2 %45.8 %100.0 %
Loan type (dollars in thousands)Fixed
interest rate		Floating
interest rate		Total
As of December 31, 2020   
Commercial and industrial$577,567 $543,171 $1,120,738 
Commercial real estate:
Owner occupied534,035 275,813 809,848 
Non-owner occupied609,100 855,033 1,464,133 
Residential real estate:
1-to-4 family809,012 201,658 1,010,670 
Line of credit4,647 375,594 380,241 
Multi-family86,232 83,153 169,385 
Construction182,761 426,306 609,067 
Consumer and other267,263 21,326 288,589 
Total ($)$3,070,617 $2,782,054 $5,852,671 
Total (%)52.5 %47.5 %100.0 %

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Loan type (dollars in thousands)Fixed
interest rate		Floating
interest rate		Total
As of June 30, 2022   
Commercial and industrial$451,804 $427,377 $879,181 
Commercial real estate:
Owner occupied705,645 230,533 936,178 
Non-owner occupied874,222 838,115 1,712,337 
Residential real estate:
1-to-4 family1,119,428 267,946 1,387,374 
Line of credit4,929 396,096 401,025 
Multi-family182,329 194,678 377,007 
Construction304,624 426,048 730,672 
Consumer and other302,760 14,018 316,778 
Total ($)$3,945,741 $2,794,811 $6,740,552 
Total (%)58.5 %41.5 %100.0 %
The following table presents the contractual maturities of our loan portfolio segregated into fixed and floating interest rate loans as of SeptemberJune 30, 2021 and December 31, 2020.2022.
(dollars in thousands)(dollars in thousands)Fixed
interest rate		Floating
interest rate		Total(dollars in thousands)Fixed
interest rate		Floating
interest rate		Total
As of September 30, 2021   
As of June 30, 2022As of June 30, 2022   
One year or lessOne year or less$553,233$969,360$1,522,593One year or less$554,228$1,329,557$1,883,785
One to five yearsOne to five years1,736,4071,199,9882,936,395One to five years1,957,1511,310,3413,267,492
More than five years1,392,4521,443,2342,835,686
Five to fifteen yearsFive to fifteen years1,226,9701,237,5682,464,538
Over fifteen yearsOver fifteen years761,620246,9021,008,522
Total ($)Total ($)$3,682,092$3,612,582$7,294,674Total ($)$4,499,969$4,124,368$8,624,337
Total (%)Total (%)50.5 %49.5 %100.0 %Total (%)52.2 %47.8 %100.0 %
(dollars in thousands)Fixed
interest rate		Floating
interest rate		Total
As of December 31, 2020   
One year or less$321,315$908,973$1,230,288
One to five years1,906,3191,253,3523,159,671
More than five years1,164,2981,528,7022,693,000
Total ($)$3,391,932$3,691,027$7,082,959
Total (%)47.9 %52.1 %100.0 %


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Of the loans shown above with floating interest rates as of June 30, 2022, many have interest rate floors as follows:
Loans with interest rate floors (dollars in thousands)Loans with interest rate floors (dollars in thousands)Maturing in one year or lessWeighted average level of support (bps)Maturing in one to five yearsWeighted average level of support (bps)Maturing after five yearsWeighted average level of support (bps)TotalWeighted average level of support (bps)Loans with interest rate floors (dollars in thousands)Maturing in one year or lessWeighted average level of support (bps)Maturing in one to five yearsWeighted average level of support (bps)Maturing in five years to fifteen yearsWeighted average level of support (bps)Maturing after
fifteen years		Weighted average level of support (bps)TotalWeighted average level of support (bps)
As of September 30, 2021 
Loans with current rates above
floors:
Loans with current rates above
floors:
Loans with
current rates
above floors:
1-25 bps1-25 bps$60,970 24.90 $243,672 12.24 $141,287 16.76 $445,929 15.41 1-25 bps$49,506 23.64 $10,681 23.38 $54,749 15.50 $1,846 21.84 $116,782 19.77 
26-50 bps26-50 bps9,214 49.68 4,127 48.14 14,643 48.02 27,984 48.58 26-50 bps52,148 49.51 23,339 48.72 54,108 39.27 9,672 44.00 139,267 45.01 
51-75 bps51-75 bps810 74.99 4,233 74.46 14,041 73.00 19,084 73.41 51-75 bps169,393 74.37 121,979 71.72 76,787 71.85 12,902 71.50 381,061 72.92 
76-100 bps76-100 bps1,416 100.00 898 95.82 2,461 97.17 4,775 97.75 76-100 bps92,552 98.11 161,553 96.18 169,638 97.15 5,963 98.13 429,706 97.01 
101-125 bps101-125 bps665 122.29 188 125.00 1,843 121.71 2,696 122.08 101-125 bps202,599 123.24 71,121 121.25 74,664 120.39 79,531 109.43 427,915 119.85 
126-150 bps126-150 bps53 150.00 11,009 134.01 2,962 146.97 14,024 136.81 126-150 bps272,416 149.26 179,760 148.25 148,004 148.39 16,063 149.45 616,243 148.76 
151-200 bps151-200 bps6,893 174.98 5,036 192.41 5,048 177.11 16,977 180.78 151-200 bps124,075 173.85 172,316 170.26 122,953 171.11 16,902 172.54 436,246 171.61 
201-250 bps201-250 bps16 250.00 266 247.49 973 237.26 1,255 240.37 201-250 bps2,149 236.65 12,099 224.82 90,352 224.01 12,506 229.02 117,106 224.86 
251 bps and above251 bps and above817 319.88 603 283.38 2,629 298.85 4,049 300.78 251 bps and
above		16,959 307.70 6,564 349.36 46,148 317.67 34,975 355.79 104,646 330.79 
Total loans with current rates
above floors
Total loans with current rates
above floors
$80,854 46.24 $270,032 23.29 $185,887 37.16 $536,773 31.55 Total loans with
current rates
above floors		$981,797 120.55 $759,412 125.49 $837,403 133.58 $190,360 164.43 $2,768,972 128.86 
Loans with current rates below
floors:
Loans at interest
rate floors
providing
support:		Loans at interest
rate floors
providing
support:
1-25 bps1-25 bps$98,689 24.05 $89,367 18.77 $118,152 12.07 $306,208 17.89 1-25 bps$8,406 24.48 $22,468 11.80 $21,746 16.48 $7,111 18.42 $59,731 16.07 
26-50 bps26-50 bps86,981 46.46 105,486 40.76 114,198 48.16 306,665 45.13 26-50 bps4,839 45.20 34,290 50.00 4,167 38.60 1,021 50.00 44,317 48.40 
51-75 bps51-75 bps125,085 72.16 85,055 69.62 104,377 67.69 314,517 69.99 51-75 bps4,591 74.75 7,423 75.00 5,086 73.81 5,818 72.99 22,918 74.17 
76-100 bps76-100 bps51,210 97.58 86,158 90.13 93,239 88.67 230,607 91.20 76-100 bps— — 7,726 98.72 1,303 88.31 141 77.00 9,170 96.90 
101-125 bps101-125 bps39,256 123.99 40,511 119.12 90,057 115.80 169,824 118.49 101-125 bps2,672 120.32 25,857 123.13 8,818 113.78 107 125.00 37,454 120.74 
126-150 bps126-150 bps24,874 142.64 41,050 139.98 77,936 139.80 143,860 140.34 126-150 bps15 150.00 8,502 146.58 9,604 133.80 — — 18,121 139.81 
151-200 bps151-200 bps30,695 187.15 53,153 179.95 76,903 173.32 160,751 178.15 151-200 bps— — 27,196 187.58 15,863 161.40 — — 43,059 177.94 
201-250 bps201-250 bps20,783 232.25 24,367 224.69 37,844 223.36 82,994 225.98 201-250 bps1 240.00 — — 3,964 215.06 — — 3,965 215.06 
251 bps and above18,782 367.88 35,450 287.51 49,458 312.13 103,690 313.81 
Total loans with current rates
below floors
$496,355 93.35 $560,597 98.95 $762,164 106.02 $1,819,116 100.38 
Total loans at
interest rate
floors
providing
support		Total loans at
interest rate
floors
providing
support		$20,524 53.19 $133,462 96.14 $70,551 95.12 $14,198 44.44 $238,735 89.07 
84

Asset quality
In order to operate with a sound risk profile, we focus on originating loans that we believe to be of high quality. We have established loan approval policies and procedures to assist us in maintaining the overall quality of our loan portfolio. When delinquencies in our loans exist, we rigorously monitor the levels of such delinquencies for any negative or adverse trends. From time to time, we may modify loans to extend the term or make other concessions, including extensions or interest rate modifications, to help a borrower with a deteriorating financial condition stay current on their loan and to avoid foreclosure. Furthermore, we are committed to collecting on all of our loans, which can result in us carrying higher nonperforming assets. We believe this practice leads to higher recoveries in the long-term.
Nonperforming assets
Our nonperforming assets consist of nonperforming loans, other real estate owned and other miscellaneous non-earning assets. As of June 30, 2022 and December 31, 2021, we had $55.5 million and $63.0 million, respectively, in nonperforming assets. Nonperforming loans are those on which the accrual of interest has stopped, as well as loans that are contractually 90 days past due on which interest continues to accrue. Generally, the accrual of interest is discontinued when the full collection of principal or interest is in doubt or when the payment of principal or interest has been contractually 90 days past due, unless the obligation is both well secured and in the process of collection. In our loan review process, we seek to identify and proactively address nonperforming loans. Accrued interest receivable written off
77

as an adjustment to interest income amounted to $0.1 million and $0.2 million for both the three months ended SeptemberJune 30, 2022 and 2021, and 2020, respectively, and $0.7$0.3 million and $0.5$0.6 million for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. Additionally, we had net interest recoveries on nonperforming assets previously charged off of $0.4$0.5 million and $0.7 millionboth for the three months ended SeptemberJune 30, 20212022 and 2020, respectively,2021, and $1.6 million and $1.1$1.2 million for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
As of September 30, 2021 and December 31, 2020, we had $59.0 million and $84.2 million, respectively, in nonperforming assets. In addition to loans held for investment, nonperforming assets included commercial loans held for sale that were past due 90 days or more or not accruing interest. These nonperforming commercial loans held for sale represent a pool of previously acquired shared national credits and institutional healthcare loans that were acquired during 2020 in our acquisition of Franklin and amounted to $5.6$1.5 million and $6.5$5.2 million as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, other real estate owned included $3.5$3.0 million and $5.7$3.3 million, respectively, of excess land and facilities held for sale resulting from our prior acquisitions. Other nonperforming assets also included other repossessed non-real estate amounting to $0.3$0.5 million and $1.2$0.7 million as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively.
Government National Mortgage AssociationGNMA optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution provides servicing and was the original transferor. At the servicer’s option and without GNMA’s prior authorization, the servicer may repurchase such a delinquent loan for an amount equal to 100 percent of the remaining principal balance of the loan. Under FASB ASC Topic 860, “Transfers and Servicing,” this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When the Company is deemed to have regained effective control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be brought back onto the balance sheet, regardless of whether the Company intends to exercise the buy-back option if the buyback option provides the transferor a more-than-trivial benefit. At SeptemberJune 30, 20212022 and December 31, 2020,2021, there were $105.1$24.5 million and $151.2$94.6 million of delinquent GNMA loans that had previously been sold; however, we determined there not to be a more-than-trivial benefit of rebooking based on an analysis of interest rates and an assessment of potential reputational risk associated with these loans. As such, these were not recorded on our balance sheets as of SeptemberJune 30, 20212022 or December 31, 2020.

85

2021.
The following table provides details of our nonperforming assets, the ratio of such loans and other nonperforming assets to total assets, and certain other related information as of the dates presented:
As of September 30,As of December 31,June 30,December 31,
(dollars in thousands)(dollars in thousands)2021 2020 2020 (dollars in thousands)2022 20212021 
Loan TypeLoan Type  Loan Type  
Commercial and industrialCommercial and industrial$3,022 $6,590 $16,335 Commercial and industrial$3,469 $15,642 $1,583 
ConstructionConstruction4,908 2,214 4,626 Construction2,675 5,790 4,340 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage11,925 14,204 16,393 1-to-4 family mortgage15,997 13,096 13,956 
Residential line of creditResidential line of credit1,269 2,141 1,996 Residential line of credit1,505 1,237 1,736 
Multi-family mortgageMulti-family mortgage50 57 57 Multi-family mortgage375 53 49 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied6,239 2,194 7,948 Owner occupied7,123 8,074 6,710 
Non-owner occupiedNon-owner occupied11,666 12,358 12,471 Non-owner occupied7,263 12,016 14,084 
Consumer and otherConsumer and other3,948 3,891 4,630 Consumer and other5,713 3,619 4,845 
Total nonperforming loans held for investmentTotal nonperforming loans held for investment43,027 43,649 64,456 Total nonperforming loans held for investment$44,120 $59,527 $47,303 
Loans held for saleLoans held for sale5,625 12,812 6,489 Loans held for sale1,459 5,844 5,217 
Other real estate ownedOther real estate owned10,015 12,748 12,111 Other real estate owned9,398 11,986 9,777 
OtherOther347 1,184 1,170 Other527 816 686 
Total nonperforming assetsTotal nonperforming assets$59,014 $70,393 $84,226 Total nonperforming assets$55,504 $78,173 $62,983 
Total nonperforming loans held for investment as a
percentage of total loans held for investment
0.59 %0.61 %0.91 %
Total nonperforming loans held for investment as a percentage of total loans HFITotal nonperforming loans held for investment as a percentage of total loans HFI0.51 %0.83 %0.62 %
Total nonperforming assets as a percentage of
total assets
Total nonperforming assets as a percentage of
total assets
0.50 %0.64 %0.75 %Total nonperforming assets as a percentage of total assets0.46 %0.66 %0.50 %
Total nonaccrual loans HFI as a percentage of loans HFITotal nonaccrual loans HFI as a percentage of loans HFI0.34 %0.70 %0.47 %
Total accruing loans over 90 days delinquent as a
percentage of total assets
Total accruing loans over 90 days delinquent as a
percentage of total assets
0.08 %0.08 %0.12 %Total accruing loans over 90 days delinquent as a percentage of total assets0.12 %0.08 %0.09 %
Loans restructured as troubled debt restructuringsLoans restructured as troubled debt restructurings$29,645 $16,681 $15,988 Loans restructured as troubled debt restructurings$17,054 $42,678 $32,435 
Troubled debt restructurings as a percentage
of total loans held for investment
Troubled debt restructurings as a percentage
of total loans held for investment
0.41 %0.23 %0.23 %Troubled debt restructurings as a percentage of total loans held for investment0.20 %0.59 %0.43 %
We have evaluated our nonperforming loans held for investment and believe all nonperforming loans have been adequately reserved for in the allowance for credit losses as of SeptemberJune 30, 2022 and December 31, 2021. Management also continually monitors past due loans for potential credit quality deterioration. Loans not considered nonperforming include
78

loans 30-89 days past due amounting to $15.4$28.5 million at SeptemberJune 30, 20212022 as compared to $27.0$26.5 million at December 31, 2020.
Other real estate owned consists of properties acquired through foreclosure or acceptance of a deed in lieu of foreclosure in addition to excess facilities held for sale resulting from the consolidation of our facilities resulting from our mergers. These properties are carried at the lower of cost or fair value based on appraised value less estimated selling costs. Losses arising at the time of foreclosure of properties are charged against the allowance for credit losses. Reductions in the carrying value subsequent to foreclosure are charged to earnings and are included in “Gain (loss) on sales or write-downs of other real estate owned” in the accompanying consolidated statements of income. During the three and nine months ended September 30, 2021, other real estate owned included write-downs and partial liquidations of $0.1 million and $0.7 million, respectively, which combined with gains on sales of other real estate, resulted in a net gain of $2.0 million and $2.5 million, respectively. During the three and nine months ended September 30, 2020, other real estate owned included write-downs and partial liquidations of $1.6 million and $1.8 million, respectively, which combined with net gains on sales of other real estate owned, resulted in a net loss of $1.5 million and $1.4 million, respectively.
86

Loan Modifications due to COVID-19
On March 22, 2020, a statement was issued by our banking regulators and titled the “Interagency Statement on Loan
Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the “Interagency Statement”) that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further stipulated that a qualified loan modification was exempt by law from classification as a troubled debt restructuring, from the period beginning March 1, 2020 until the earlier of December 31, 2020, or the date that is 60 days after the date on which the national emergency concerning the COVID-19 pandemic is terminated. Section 541 of the CAA extended this relief to the earlier of January 1, 2022 or 60 days after the national emergency termination date. The Interagency Statement was subsequently revised in April 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations.
We have numerous customers that have experienced financial distress as a direct result of COVID-19, and in response we offered financial relief in the form of a payment deferral program to assist our customers through these unprecedented times. The majority of these modifications were consistent with the "Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus" and the CARES Act and did not qualify as TDRs. As of September 30, 2021 and December 31, 2020, the total amortized cost of loans deferred as part of this program that were no longer in deferral status amounted to $1.33 billion and $1.40 billion, respectively. As of September 30, 2021 and December 31, 2020, recorded balances in total loans remaining in deferral status under this program amounted to $18.0 million and $202.5 million, respectively. Additionally, we service mortgages on behalf of Fannie Mae, Freddie Mac and Ginnie Mae, and as of September 30, 2021 and December 31, 2020, approximately 2% and 6%, respectively, of customers serviced on behalf of the aforementioned companies were receiving forbearance assistance. The payment deferrals program differs from forbearance, in that all deferred payments are not normally due at the end of the deferral period. Instead, the payment due date is advanced to a future time period. Generally, interest continues to accrue on loans during the deferral period, unless the loan is on nonaccrual. Loans in deferral status are considered performing loans, and we anticipate collecting on these balances.
Classified loans
We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. We analyze loans that share similar risk characteristics collectively and loans that do not share similar risk characteristics are evaluated individually. Loans rated Pass include those that are adequately collateralized performing loans which management believes do not have conditions that have occurred or may occur that would result in the loan being downgraded into an inferior category. The Pass category also includes loans rated as Watch, which include those that management believes have conditions that have occurred, or may occur, which could result in the loan being downgraded to an inferior category. A Special Mention loan has potential or exhibited weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date.Classified loans include those considered substandard and doubtful. See Note 4, “Loans and allowance for credit losses” in the notes to our consolidated financial statements for a further description of these risk categories.

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The following tables set forth information related to the credit quality of our loan portfolio as of the dates presented.
Loan type (dollars in thousands)PassSpecial MentionClassifiedTotal
As of September 30, 2021    
Commercial and industrial$1,208,918 $15,790 $27,717 $1,252,425 
Construction1,179,175 2,650 8,798 1,190,623 
Residential real estate:
1-to-4 family mortgage1,149,537 4,208 21,410 1,175,155 
Residential line of credit387,472 407 4,561 392,440 
Multi-family mortgage323,398 — 1,264 324,662 
Commercial real estate:
Owner occupied906,494 8,203 23,544 938,241 
Non-owner occupied1,641,364 15,305 38,904 1,695,573 
Consumer and other319,664 469 5,422 325,555 
Total loans$7,116,022 $47,032 $131,620 $7,294,674 

Loan type (dollars in thousands)PassSpecial MentionClassifiedTotal
As of December 31, 2020    
Commercial and industrial$1,276,394 $30,382 $39,346 $1,346,122 
Construction1,207,391 6,114 8,715 1,222,220 
Residential real estate:
1-to-4 family mortgage1,055,293 9,800 24,177 1,089,270 
Residential line of credit400,206 2,653 5,352 408,211 
Multi-family mortgage175,619 — 57 175,676 
Commercial real estate:
Owner occupied866,738 31,544 26,559 924,841 
Non-owner occupied1,561,360 16,824 20,795 1,598,979 
Consumer and other305,383 5,035 7,222 317,640 
Total loans$6,848,384 $102,352 $132,223 $7,082,959 

2021.
Allowance for credit losses
The Company calculates its expected credit loss using a lifetime loss rate methodology. The Company utilizes probability-weighted forecasts, which consider multiple macroeconomic variables from a third-party vendor that are applicable to the type of loan. Each of the Company's loss rate models incorporate forward-looking macroeconomic projections throughout the reasonable and supportable forecast period and the subsequent historical reversion at the macroeconomic variable input level. In order to estimate the life of a loan, the contractual term of the loan is adjusted for estimated prepayments based on market information and the Company’s prepayment history.
The allowance for credit losses represents the portion of the loan's amortized cost basis that we do not expect to collect due to credit losses over the loan's life, considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions considering macroeconomic forecasts. Loan losses are charged against the allowance when we believe the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses is based on the loan's amortized cost basis, excluding accrued interest receivable, as we promptly charge off accrued interest receivable determined to be uncollectible. We determine the appropriateness of the allowance through periodic evaluation of the loan portfolio, lending-related commitments and other relevant factors, including macroeconomic forecasts and historical loss rates. In future quarters, we may update information and forecasts that may cause significant changes in the estimate in those future quarters.
The allowance See "Critical Accounting Estimates- Allowance for credit losses was $139.4 millionlosses" within management's discussion and $170.4 million and represented 1.91% and 2.41% of loans heldanalysis in our Form 10-K for investment as of September 30, 2021 and December 31, 2020, respectively. Excluding PPP loans with a recorded investment totaling $9.4 million and $212.6 million,additional information regarding our ACL as a percentage of total loans held for investment would have been 0 and 7 basis points higher as of September 30, 2021 and December 31, 2020, respectively. PPP loans are federally guaranteed as part of the CARES Act, provided the remaining PPP loan recipients receive loan forgiveness under the SBA regulations. As such, there is minimal credit risk associated with these loans.
In addition, we evaluated changes in reasonable and supportable forecasts of macroeconomic variables during the three and nine months ended September 30, 2021, primarily due to the impact of the COVID-19 pandemic, which resulted in projected decrease in lifetime losses and overall decrease in the ACL. Specifically, we performed additional qualitative evaluations for certain categories within our loan portfolio, in line with our established qualitative framework, weighting the impact of the current economic outlook, status of federal government stimulus programs, and other considerations, in order to identify specific industries or borrowers seeing credit improvement or deterioration specific to the COVID-19 pandemic.
88

We also maintain an allowance for credit losses on unfunded commitments, which decreased to $13.5 million as of September 30, 2021 from $16.4 million as of December 31, 2020, also as a result of the improving macroeconomic forecasts incorporated into our CECL loss rate model.methodology.
The following table presents the allocation of the allowance for credit losses by loan category as well as the ratio of loans by loan category compared to the total loan portfolio as of the dates indicated: 
As of September 30,As of December 31,
2021 2020June 30, 2022December 31, 2021
(dollars in thousands)(dollars in thousands)Amount% of
Loans		Amount% of
Loans		(dollars in thousands)Amount% of
Loans		ACL
as a % of loans HFI category		Amount% of
Loans		ACL
as a % of loans HFI category
Loan Type:Loan Type:Loan Type:
Commercial and industrialCommercial and industrial$14,838 17 %$14,748 19 %Commercial and industrial$10,191 17 %0.69 %$15,751 17 %1.22 %
ConstructionConstruction29,760 16 %58,477 17 %Construction38,383 18 %2.44 %28,576 17 %2.15 %
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage17,028 16 %19,220 15 % 1-to-4 family mortgage21,398 17 %1.47 %19,104 17 %1.50 %
Residential line of creditResidential line of credit5,765 5 %10,534 6 % Residential line of credit6,875 5 %1.62 %5,903 5 %1.54 %
Multi-family mortgageMulti-family mortgage12,013 5 %7,174 2 % Multi-family mortgage6,503 5 %1.66 %6,976 4 %2.14 %
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied12,376 13 %4,849 13 % Owner occupied7,329 12 %0.70 %12,593 13 %1.32 %
Non-owner occupiedNon-owner occupied36,406 23 %44,147 23 % Non-owner occupied22,536 22 %1.20 %25,768 23 %1.49 %
Consumer and otherConsumer and other11,260 5 %11,240 5 %Consumer and other13,057 4 %3.67 %10,888 4 %3.35 %
Total allowanceTotal allowance$139,446 100 %$170,389 100 %Total allowance$126,272 100 %1.46 %$125,559 100 %1.65 %










8979

The following table summarizes activity in our allowance for credit losses during the periods indicated:
Three Months Ended September 30,Nine Months Ended September 30,Year Ended December 31, Three Months Ended June 30,Six Months Ended June 30,Year Ended December 31,
(dollars in thousands)(dollars in thousands)2021 2020 2021 2020 2020 (dollars in thousands)2022 2021 2022 2021 2021 
Allowance for credit losses at beginning of periodAllowance for credit losses at beginning of period$144,663 $113,129 $170,389 $31,139 $31,139 Allowance for credit losses at beginning of period$120,049 $157,954 $125,559 $170,389 $170,389 
Impact of adopting ASC 326 on non-purchased credit
deteriorated loans		— — — 30,888 30,888 
Impact of adopting ASC 326 on purchased credit
deteriorated loans		— — — 558 558 
Charge-offs:Charge-offs:Charge-offs:
Commercial and industrialCommercial and industrial(2,175)(249)(2,812)(1,630)(11,735)Commercial and industrial(1,751)(360)(1,755)(637)(4,036)
ConstructionConstruction(1)—(30)(18)(18)Construction— — — (29)(30)
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage— (8)(149)(373)(403)1-to-4 family mortgage(23)(16)(23)(149)(154)
Residential line of creditResidential line of credit— —(18)(21)(22)Residential line of credit— (3)— (18)(18)
Multi-family mortgageMulti-family mortgage——— — — Multi-family mortgage— — — — (1)
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupied—(95)— (304)(304)
Non-owner occupiedNon-owner occupied— (166)— (711)(711)Non-owner occupied— — — — (1,566)
Consumer and otherConsumer and other(438)(475)(1,634)(1,512)(2,112)Consumer and other(614)(480)(1,189)(1,196)(2,063)
Total charge-offsTotal charge-offs$(2,614)$(993)$(4,643)$(4,569)$(15,305)Total charge-offs$(2,388)$(859)$(2,967)$(2,029)$(7,868)
Recoveries:Recoveries:Recoveries:
Commercial and industrialCommercial and industrial$19 $757 $235 $1,652 $1,712 Commercial and industrial$26 $87 $984 $216 $861 
ConstructionConstruction3 51 3 202 205 Construction11 — 11 — 3 
Residential real estate:Residential real estate:Residential real estate:
1-to-4 family mortgage1-to-4 family mortgage33 116 98 166 122 1-to-4 family mortgage14 41 26 65 125 
Residential line of creditResidential line of credit1 22 16 61 125 Residential line of credit16 9 17 15 115 
Multi-family mortgage— — — — — 
Commercial real estate:Commercial real estate:Commercial real estate:
Owner occupiedOwner occupied4 51 143 68 83 Owner occupied15 126 25 139 156 
Non-owner occupied— — — — — 
Consumer and otherConsumer and other169 175 554 471 756 Consumer and other348 190 565 385 773 
Total recoveriesTotal recoveries$229 $1,172 $1,049 $2,620 $3,003 Total recoveries$430 $453 $1,628 $820 $2,033 
Net (charge-offs) recoveries(2,385)179 (3,594)(1,949)(12,302)
Net charge-offsNet charge-offs(1,958)(406)(1,339)(1,209)(5,835)
Provision for credit lossesProvision for credit losses(2,832)45,834 (27,349)97,837 94,606 Provision for credit losses8,181 (12,885)2,052 (24,517)(38,995)
Initial allowance for credit losses on loans purchased
with credit deterioration		— 24,831 — 25,500 25,500 
Allowance for credit losses at the end of periodAllowance for credit losses at the end of period$139,446 $183,973 $139,446 $183,973 $170,389 Allowance for credit losses at the end of period$126,272 $144,663 $126,272 $144,663 $125,559 
Ratio of net (charge-offs) recoveries during the period to
average loans outstanding during the period		(0.13)%0.01 %(0.07)%(0.05)%(0.22)%
Allowance for credit losses as a percentage of loans at
end of period(a)
1.91 %2.55 %1.91 %2.55 %2.41 %
Allowance for credit losses as a percentage of
nonperforming loans at end of period(a)
324.1 %421.5 %324.1 %421.5 %264.3 %
Ratio of net charge-offs during the period to average loans
outstanding during the period		Ratio of net charge-offs during the period to average loans
outstanding during the period		(0.09)%(0.02)%(0.03)%(0.03)%(0.08)%
Allowance for credit losses as a percentage of loans at end of period(1)
Allowance for credit losses as a percentage of loans at end of period(1)
1.46 %2.01 %1.46 %2.01 %1.65 %
Allowance for credit losses as a percentage of nonaccrual loans HFI(1)
Allowance for credit losses as a percentage of nonaccrual loans HFI(1)
427.5 %286.9 %427.5 %286.9 %353.0 %
Allowance for credit losses as a percentage of nonperforming loans at end
of period(1)
Allowance for credit losses as a percentage of nonperforming loans at end
of period(1)
286.2 %243.0 %286.2 %243.0 %265.4 %
(a)(1) Excludes reserve for credit losses on unfunded commitments of $13.5$20.4 million, $16.1$13.2 million and $16.4$14.4 million recorded in accrued expenses and other liabilities at SeptemberJune 30, 2021, September2022, June 30, 2020,2021, and December 31, 2020,2021, respectively.











90
80

The following tables details our provision for credit losses and net charge-offs to average loans outstanding by loan category during the periods indicated:
Provision for credit losses(1)
Net charge-offsAverage loans held for investmentRatio of annualized net recoveries (charge-offs) to average loans
(dollars in thousands)
Three months ended June 30, 2022
Commercial and industrial$(783)$(1,725)$1,430,769 (0.48)%
Construction6,590 11 1,510,077 — %
Residential real estate:
1-to-4 family mortgage383 (9)1,403,214 — %
Residential line of credit314 16 413,126 0.02 %
Multi-family mortgage105 — 405,324 — %
Commercial real estate::
Owner occupied(1,102)15 1,032,523 0.01 %
Non-owner occupied1,246 — 1,795,905 — %
Consumer and other1,428 (266)332,840 (0.32)%
Total$8,181 $(1,958)$8,323,778 (0.09)%
Three months ended June 30, 2021
Commercial and industrial$(579)$(273)$1,278,142 (0.09)%
Construction(5,784)— 1,133,436 — %
Residential real estate:
1-to-4 family mortgage75 25 1,095,914 0.01 %
Residential line of credit(2,558)6 393,828 0.01 %
Multi-family mortgage1,818 — 304,890 — %
Commercial real estate::
Owner occupied972 126 921,496 0.05 %
Non-owner occupied(7,323)— 1,649,955 — %
Consumer and other494 (290)307,639 (0.38)%
Total$(12,885)$(406)$7,085,300 (0.02)%
Six months ended June 30, 2022
Commercial and industrial$(4,789)$(771)$1,383,591 (0.11)%
Construction9,796 11 1,446,157 — %
Residential real estate:
1-to-4 family mortgage2,291 3 1,354,941 — %
Residential line of credit955 17 399,707 0.01 %
Multi-family mortgage(473)— 382,753 — %
Commercial real estate::
Owner occupied(5,289)25 1,004,676 0.01 %
Non-owner occupied(3,232)— 1,747,587 — %
Consumer and other2,793 (624)325,310 (0.39)%
Total$2,052 $(1,339)$8,044,722 (0.03)%
Six months ended June 30, 2021
Commercial and industrial$(536)$(421)$1,289,988 (0.07)%
Construction(25,610)(29)1,109,972 (0.01)%
Residential real estate:
1-to-4 family mortgage536 (84)1,093,481 (0.02)%
Residential line of credit(3,815)(3)395,809 — %
Multi-family mortgage6,301 — 275,551 — %
Commercial real estate::
Owner occupied(281)139 903,841 0.03 %
Non-owner occupied(1,291)— 1,669,467 — %
Consumer and other179 (811)304,983 (0.54)%
Total$(24,517)$(1,209)$7,043,092 (0.03)%
(1) Excludes provision for credit losses on unfunded commitments of $4.1 million and $(1.0) million recorded for the three months ended June 30, 2022 and 2021, respectively, and $6.0 million and $(3.2) million for the six months ended June 30, 2022 and 2021, respectively.
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Provision for credit losses(1)
Net recoveries (charge-offs)Average loans held for investmentRatio of annualized net recoveries (charge-offs) to average loans
(dollars in thousands)
Year ended December 31, 2021
Commercial and industrial$4,178 $(3,175)$1,271,476 (0.25)%
Construction(29,874)(27)1,138,769 — %
Residential real estate:
1-to-4 family mortgage(87)(29)1,130,019 — %
Residential line of credit(4,728)97 392,907 0.02 %
Multi-family mortgage(197)(1)310,874 — %
Commercial real estate::
Owner occupied7,588 156 917,334 0.02 %
Non-owner occupied(16,813)(1,566)1,683,413 (0.09)%
Consumer and other938 (1,290)352,421 (0.37)%
Total$(38,995)$(5,835)$7,197,213 (0.08)%
1) Excludes reversal of provision for credit losses on unfunded commitments of $2.0 million recorded for the year ended December 31, 2021, respectively.
The allowance for credit losses was $126.3 million and $125.6 million and represented 1.46% and 1.65% of loans held for investment as of June 30, 2022 and December 31, 2021, respectively.
The primary reason for the increase in the allowance for credit losses is due to loan growth and a tightening monetary policy environment during the three and six months ended June 30, 2022. Specifically, we performed qualitative evaluations within our established qualitative framework, weighting the impact of the current economic outlook (including inflation, employment, global conflicts and supply chain concerns), status of federal government stimulus programs, and other considerations. Further, we increased our required reserve due to projected slower GDP growth over the next two to three fiscal years; expected elevated unemployment levels; and due to expected Federal Reserve interest rate increases in the short term. The qualitative evaluations above include weighted projections that the economy may be nearing a recession. We considered the conflict between Russia and Ukraine which has also led to uncertainty surrounding its potential impact and hardship on the U.S. economy. These considerations were slightly offset as the Company removed the impact of COVID troubled industries from its calculation during the three and six months ended June 30, 2022.
We experienced an improvement in credit quality indicators including lower nonaccrual loans and lower total nonperforming assets compared to December 31, 2021. Our total nonperforming loans as a percentage of loans held for investment as of June 30, 2022 was 0.51% compared to 0.62% as of December 31, 2021.
We also maintain an allowance for credit losses on unfunded commitments, which increased to $20.4 million as of June 30, 2022 from $14.4 million as of December 31, 2021 due to an increase in unfunded loan commitment balances, particularly in our construction pipeline, and due to the economic outlook noted above.
Loans held for sale
Commercial loans held for sale
On August 15, 2020, the CompanyThe Company's loans held for sale includes a previously acquired a portfolio of commercial loans, including shared national credits and institutional healthcare loans as part of the Franklin transaction that the Company has elected to account for as held for sale. The loans had a fair value of $100.5$37.8 million as of SeptemberJune 30, 20212022 compared to $215.4$79.3 million as of December 31, 2020.2021. The decreasechange is primarily attributable to loans within the portfolio being paid off through external refinancing and pay-downs. pay-downs and was partially offset by loan fundings on pre-existing loan commitments.
This decrease also includes gainslosses recognized on changesthe change in fair value amounting to $0.7 and $1.3 million forof the three and nine months ended September 30, 2021, respectively,portfolio which is included in 'other noninterest income' on the consolidated statement of income. This compares to gains on changes in fair valueincome of $2.0 million and $2.2 million for the three and ninesix months ended SeptemberJune 30, 20202022, respectively, compared to gains of $1.9$1.4 million and $0.5 million for valuation changes from the August 15, 2020 acquisition date through Septemberthree and six months ended June 30, 2020.2021, respectively.
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Mortgage loans held for sale
Mortgage loans held for sale were $755.2$222.4 million at SeptemberJune 30, 20212022 compared to $683.8$672.9 million at December 31, 2020.2021. Interest rate lock volume for the three months ended SeptemberJune 30, 2022 and 2021 totaled $0.70 billion and 2020, totaled$1.77 billion, respectively, and $2.01 billion and $2.42 billion, respectively, and $5.68 billion and $6.75$3.66 billion for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively. Generally, mortgage volume decreases in rising interest rate environments and slower housing markets and increases in lower interest rate environments and robust housing markets and decreases in rising interest rate environments and slower housing markets. The decrease in interest rate lock volume during the three and ninesix months ended SeptemberJune 30, 20212022 reflects the slow down experienced across the industry compared with the same periods in the prior year,three and six months ended June 30, 2021, which benefited from historically low interest rates pre-empted by the COVID-19 Pandemic. Interest rate lock commitments in the pipeline were $0.74 billion$292.7 million as of SeptemberJune 30, 20212022 compared with $1.19 billion$487.4 million as of December 31, 2020.2021. We expect to experience declines in mortgage loans held for sale through the remainder of 2022 associated with our exit from our direct-to-consumer channel, which was announced during the second quarter of 2022.
Mortgage loans to be sold are sold either on a “best efforts” basis or under a mandatory delivery sales agreement. Under a “best efforts” sales agreement, residential real estate originations are locked in at a contractual rate with third party private investors or directly with government sponsored agencies, and we are obligated to sell the mortgages to such investors only if the mortgages are closed and funded. The risk we assume is conditioned upon loan underwriting and market conditions in the national mortgage market. Under a mandatory delivery sales agreement, we commit to deliver a certain principal amount of mortgage loans to an investor at a specified price and delivery date. Penalties are paid to the investor if we fail to satisfy the contract. Gains and losses are realized at the time consideration is received and all other criteria for sales treatment have been met. These loans are typically sold within fifteen to twenty-five days after the loan is funded, depending on the economic environment and competition in the market. Although loan fees and some interest income are derived from mortgage loans held for sale, the main source of income is gains from the sale of these loans in the secondary market.
Deposits
Deposits represent the Bank’s primary source of funds. We continue to focus on growing core customer deposits through our relationship driven banking philosophy, community-focused marketing programs, and initiatives such as the development of our treasury management services.
Total deposits were $10.07$10.54 billion and $9.46$10.84 billion as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. Noninterest-bearing deposits at SeptemberJune 30, 20212022 and December 31, 20202021 were $2.61$2.90 billion and $2.27$2.74 billion, respectively, while interest-bearing deposits were $7.46$7.64 billion and $7.18$8.10 billion at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. This deposit growth includes increasesdecrease is primarily due a decrease in money market deposits outstanding of $359.0$451.2 million and $100.4 million in interest-bearing demand and savings deposits, respectively, in each case compared tofrom December 31, 2020.2021. This was offset by declinesincreases in customer time and brokered and internet timesaving deposits of $216.2$68.3 million and $33.5$35.7 million, respectively, in each case as of SeptemberJune 30, 20212022 compared to balances as of December 31, 2020.2021. This change in deposit composition is a result of our balance sheet management and focus on replacing time deposits with less costly funding sources. This strategy lowered the cost of our deposits for the six months ended June 30, 2022 to 0.22% compared to 0.36% for the six months ended June 30, 2021. Also, during the six months ended June 30, 2022, the Company entered into two designated fair value hedges to mitigate interest rate exposure associated with certain fixed-rate money market deposits. The aggregate fair value of these hedges included in the carrying amount of total money market deposits as of June 30, 2022 was $6.1 million.
Included in noninterest-bearing deposits are certain mortgage escrow and related customer deposits that our third-party servicing provider, Cenlar, transfers to the Bank which totaled $190.6$133.2 million and $148.0$127.6 million at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. Additionally, our deposits from municipal and governmental entities (i.e. "public deposits") totaled $1.66$2.34 billion at SeptemberJune 30, 2021,2022, compared to $1.68$2.29 billion at December 31, 2020.2021.
Our deposit base also includes certain commercial and high net worth individuals that periodically place deposits with the Bank for short periods of time and can cause fluctuations from period to period in the overall level of customer deposits
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outstanding. These fluctuations may include certain deposits from related parties as disclosed within Note 15,14, "Related party transactions" in the notes to our consolidated financial statements included in this Report. Management continues to focus on growing noninterest-bearing deposits while allowing more costly funding sources to mature.
Average deposit balances by type, together with the average rates per period are reflected in the average balance sheet amounts, interest paid and rate analysis tables included in this management's discussion and analysis under the subheading "Results of operations" discussion.


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The following table sets forth the distribution by type of our deposit accounts as of the dates indicated:
As of September 30,As of December 31,As of June 30,As of December 31,
2021 2020 2022 2021 
(dollars in thousands)(dollars in thousands)Amount% of total depositsAverage rateAmount% of total depositsAverage rate(dollars in thousands)Amount% of total depositsAverage rateAmount% of total depositsAverage rate
Deposit TypeDeposit TypeDeposit Type
Noninterest-bearing demandNoninterest-bearing demand$2,609,569 27 %— %$2,274,103 24 %— %Noninterest-bearing demand$2,895,520 27 %— %$2,740,214 26 %— %
Interest-bearing demandInterest-bearing demand2,850,795 28 %0.37 %2,491,765 26 %0.61 %Interest-bearing demand3,338,561 32 %0.33 %3,418,666 32 %0.35 %
Money marketMoney market2,970,959 29 %0.40 %2,902,230 30 %0.76 %Money market2,615,192 25 %0.21 %3,066,347 28 %0.36 %
Savings depositsSavings deposits453,106 4 %0.06 %352,685 4 %0.08 %Savings deposits516,271 5 %0.05 %480,589 4 %0.06 %
Customer time depositsCustomer time deposits1,159,472 12 %0.72 %1,375,695 15 %1.52 %Customer time deposits1,171,941 11 %0.57 %1,103,594 10 %0.67 %
Brokered and internet time depositsBrokered and internet time deposits28,017 — %1.87 %61,559 1 %0.90 %Brokered and internet time deposits5,817 — %1.31 %27,487 — %1.69 %
Total depositsTotal deposits$10,071,918 100 %0.32 %$9,458,037 100 %0.62 %Total deposits$10,543,302 100 %0.22 %$10,836,897 100 %0.30 %
Total Uninsured DepositsTotal Uninsured Deposits$5,572,038 53 %$4,877,819 45 %
Customer Time DepositsCustomer Time DepositsCustomer Time Deposits
0.00-0.50%0.00-0.50%$769,030 66 %$454,429 34 %0.00-0.50%$762,313 65 %$792,020 72 %
0.51-1.00%0.51-1.00%132,056 11 %253,883 18 %0.51-1.00%60,776 5 %97,644 9 %
1.01-1.50%1.01-1.50%89,805 8 %155,755 11 %1.01-1.50%22,292 2 %78,539 7 %
1.51-2.00%1.51-2.00%50,794 4 %169,414 12 %1.51-2.00%212,111 18 %36,090 3 %
2.01-2.50%2.01-2.50%50,915 5 %159,699 12 %2.01-2.50%28,278 2 %44,653 4 %
Above 2.50%Above 2.50%66,872 6 %182,515 13 %Above 2.50%86,171 8 %54,648 5 %
Total customer time depositsTotal customer time deposits$1,159,472 100 %$1,375,695 100 %Total customer time deposits$1,171,941 100 %$1,103,594 100 %
Brokered and Internet Time DepositsBrokered and Internet Time DepositsBrokered and Internet Time Deposits
0.00-0.50%0.00-0.50%$99 — %$— — %0.00-0.50%$99 2 %$99 — %
0.51-1.00%0.51-1.00%— — %— — %0.51-1.00%— — %— — %
1.01-1.50%1.01-1.50%595 2 %5,660 9 %1.01-1.50%247 4 %595 2 %
1.51-2.00%1.51-2.00%16,888 60 %42,311 69 %1.51-2.00%757 13 %16,358 60 %
2.01-2.50%2.01-2.50%4,464 17 %5,312 9 %2.01-2.50%4,215 72 %4,464 16 %
Above 2.50%Above 2.50%5,971 21 %8,276 13 %Above 2.50%499 9 %5,971 22 %
Total brokered and internet time depositsTotal brokered and internet time deposits28,017 100 %61,559 100 %Total brokered and internet time deposits$5,817 100 %$27,487 100 %
Total time depositsTotal time deposits$1,187,489 $1,437,254 Total time deposits$1,177,758 $1,131,081 
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Other earning assets
The following table sets forthSecurities purchased under agreements to resell ("reverse repurchase agreements")
We enter into agreements with certain customers to purchase investment securities under agreements to resell at specific dates in the future. This investment deploys some of our time deposits segmented by monthsliquidity position into an instrument that improves the return on those funds in low interest rate environments. Additionally, we believe it positions us more favorably for a rising interest rate environment. Securities purchased under agreements to maturityresell totaled $195.6 million and deposit amount as of September$74.2 million at June 30, 20212022 and December 31, 2020:
 As of September 30, 2021
(dollars in thousands)Time deposits
of $100 and
greater		Time deposits
of less
than $100		Total
Months to maturity:   
Three or less$165,543 $82,446 $247,989 
Over Three to Six145,562 89,956 235,518 
Over Six to Twelve211,529 116,172 327,701 
Over Twelve247,144 129,137 376,281 
Total$769,778 $417,711 $1,187,489 
 As of December 31, 2020
(dollars in thousands)Time deposits
of $100 and
greater		Time deposits
of less
than $100		Total
Months to maturity:   
Three or less$203,202 $123,080 $326,282 
Over Three to Six228,585 106,223 334,808 
Over Six to Twelve255,486 132,240 387,726 
Over Twelve254,672 133,766 388,438 
Total$941,945 $495,309 $1,437,254 

2021, respectively.
Investment portfolio
Our investment portfolio objectives include maximizing total return after other primary objectives are achieved such as, but not limited to, providing liquidity, capital preservation, and pledging collateral for various typeslines of credit and other borrowings. The investment objectives guide the portfolio allocation among securities types, maturities, and other attributes.
The following table shows the carrying value of our total securities available-for-sale by investment type and the relative percentage of each investment type for the dates indicated:
As of September 30,As of December 31,
20212020
(dollars in thousands)Carrying value% of totalCarrying value% of total
U.S. government agency securities$10,571 1 %$2,003 — %
Mortgage-backed securities - residential1,210,503 77 %773,336 67 %
Mortgage-backed securities - commercial15,712 1 %21,588 2 %
Municipal securities327,239 21 %356,329 30 %
U.S. Treasury securities6,006 — %16,628 1 %
Corporate securities2,527 — %2,516 — %
Total securities available-for-sale$1,572,558 100 %$1,172,400 100 %
The fair value of our available-for-sale debt securities portfolio at Septemberwas $1.62 billion and $1.68 billion as of June 30, 2021 was $1.57 billion compared to $1.17 billion at2022 and December 31, 2020. During the three months ended September 30, 2021, and 2020, we purchased $290.9 million and $154.3 million, respectively in investment securities and during the nine months ended September 30, 2021 and 2020, we purchased $645.7 million and $214.3 million in investment securities, respectively (excluding those acquired from Farmers National and merged from Franklin during the three and nine months ended September 30, 2020). The trade value of securities sold was $8.9 million during the three and nine months ended September 30, 2021 compared to $28.3 million during the three and nine months ended September 30, 2020.
During the three months ended September 30, 2021 and 2020, maturities and calls of securities totaled $68.1 million and $67.8 million, respectively, and during the nine months ended September 30, 2021 and 2020, maturities and calls of securities totaled $216.0 million and $140.2 million, respectively. As of SeptemberJune 30, 20212022 and December 31, 2020, net unrealized gains of $14.4 million and $34.6 million, respectively, were included in the fair value of available-for-sale debt securities.
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As of September 30, 2021, and December 31, 2020, the Company had $4.8$3.1 million and $4.6$3.4 million, respectively, in equity securities recorded at fair value that primarily consisted of mutual funds. The
During the three months ended June 30, 2022 and 2021, we purchased $73.1 million and $223.5 million in investment securities, respectively. During the six months ended June 30, 2022 and 2021, we purchased $243.2 million and $354.8 million in investment securities, respectively. During the three and six months ended June 30, 2022, we sold $1.2 million in
84

investment securities. There were no sales of securities sold during the three and six months ended June 30, 2021. During the three months ended June 30, 2022 and 2021, maturities and calls of securities totaled $65.3 million and $86.9 million, respectively. During the six months ended June 30, 2022 and 2021, maturities and calls of securities totaled $126.3 million and $147.9 million, respectively.
Included in the fair value of available-for-sale debt securities were net unrealized losses of $167.5 million at June 30, 2022 compared net unrealized gains of $4.7 million at December 31, 2021. Our available-for-sale debt securities portfolio incurred unrealized losses during the period due to a rising interest rate environment, but we believe we are well positioned to mitigate the impact of future rate increases due to the low duration of our portfolio. During the three months ended June 30, 2022 and 2021, the change in the fair value of equity securities resulted in a net loss of $24$ 110 thousand and a net gain of $59$136 thousand, during the three months ended September 30, 2021 and 2020, respectively. During the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, the change in the fair value of equity securities resulted in a net loss of $264 thousand and a net gain of $188$212 thousand, and $94 thousand, respectively.

The following table sets forth the fair value, scheduled maturities and weighted average yields for our investmentavailable-for-sale debt securities portfolio as of the dates indicated below:
As of September 30,As of December 31,As of June 30,As of December 31,
2021 2020  2022 2021 
(dollars in thousands)(dollars in thousands)Fair value% of total investment securities
Weighted average yield (1)
Fair value% of total investment securities
Weighted average yield (1)
(dollars in thousands)Fair value% of total investment securities
Weighted average yield (1)
Fair value% of total investment securities
Weighted average yield (1)
Treasury securities:Treasury securities:Treasury securities:
Maturing within one yearMaturing within one year$6,006 0.4 %1.63 %$16,628 1.4 %1.57 %Maturing within one year$— — %— %$— — %— %
Maturing in one to five yearsMaturing in one to five years— — %— %— — %— %Maturing in one to five years109,793 6.8 %2.10 %14,908 0.9 %1.24 %
Maturing in five to ten yearsMaturing in five to ten years— — %— %— — %— %Maturing in five to ten years— — %— %— — %— %
Maturing after ten yearsMaturing after ten years— — %— %— — %— %Maturing after ten years— — %— %— — %— %
Total Treasury securitiesTotal Treasury securities6,006 0.4 %1.63 %16,628 1.4 %1.57 %Total Treasury securities109,793 6.8 %2.10 %14,908 0.9 %1.24 %
Government agency securities:Government agency securities:Government agency securities:
Maturing within one yearMaturing within one year— — %— %— — %— %Maturing within one year— — %— %— — %— %
Maturing in one to five yearsMaturing in one to five years1,247 0.1 %1.00 %— — %— %Maturing in one to five years21,904 1.3 %1.58 %20,141 1.2 %1.33 %
Maturing in five to ten yearsMaturing in five to ten years9,324 0.6 %1.25 %2,003 0.2 %2.64 %Maturing in five to ten years19,157 1.2 %1.54 %13,729 0.8 %1.40 %
Maturing after ten yearsMaturing after ten years— — %— %— — %— %Maturing after ten years998 0.1 %0.64 %— — %— %
Total government agency securitiesTotal government agency securities10,571 0.7 %1.10 %2,003 0.2 %2.64 %Total government agency securities42,059 2.6 %1.54 %33,870 2.0 %1.36 %
Municipal securities
Municipal securities:Municipal securities:
Maturing within one yearMaturing within one year10,767 0.7 %3.02 %19,034 1.6 %1.07 %Maturing within one year3,077 0.2 %2.14 %21,884 1.3 %1.26 %
Maturing in one to five yearsMaturing in one to five years18,890 1.2 %1.90 %24,184 2.1 %2.06 %Maturing in one to five years20,271 1.3 %2.24 %19,903 1.2 %2.05 %
Maturing in five to ten yearsMaturing in five to ten years30,860 2.0 %3.36 %37,313 3.2 %2.76 %Maturing in five to ten years29,556 1.8 %3.50 %27,086 1.6 %3.38 %
Maturing after ten yearsMaturing after ten years266,722 17.0 %3.16 %275,798 23.5 %3.12 %Maturing after ten years220,260 13.6 %3.11 %269,737 16.1 %3.14 %
Total obligations of state and municipal subdivisionsTotal obligations of state and municipal subdivisions327,239 20.9 %3.06 %356,329 30.4 %3.07 %Total obligations of state and municipal subdivisions273,164 16.9 %3.08 %338,610 20.2 %2.97 %
Residential and commercial mortgage backed securities guaranteed by FNMA, GNMA and FHLMC:Residential and commercial mortgage backed securities guaranteed by FNMA, GNMA and FHLMC:Residential and commercial mortgage backed securities guaranteed by FNMA, GNMA and FHLMC:
Maturing within one yearMaturing within one year— — %— %— — %— %Maturing within one year— — %— %— — %— %
Maturing in one to five yearsMaturing in one to five years4,170 0.3 %2.50 %2,975 0.3 %3.12 %Maturing in one to five years3,912 0.2 %2.72 %4,041 0.2 %2.55 %
Maturing in five to ten yearsMaturing in five to ten years20,039 1.3 %2.23 %30,596 2.6 %2.47 %Maturing in five to ten years23,833 1.5 %2.66 %17,368 1.0 %2.28 %
Maturing after ten yearsMaturing after ten years1,202,006 76.3 %1.51 %761,353 64.9 %1.45 %Maturing after ten years1,157,855 71.6 %1.85 %1,263,213 75.3 %1.51 %
Total residential and commercial mortgage backed securities guaranteed by FNMA, GNMA and FHLMCTotal residential and commercial mortgage backed securities guaranteed by FNMA, GNMA and FHLMC1,226,215 77.9 %1.53 %794,924 67.8 %1.50 %Total residential and commercial mortgage backed securities guaranteed by FNMA, GNMA and FHLMC1,185,600 73.3 %1.87 %1,284,622 76.5 %1.53 %
Corporate securities:Corporate securities:Corporate securities:
Maturing within one yearMaturing within one year— — %— %— — %— %Maturing within one year— — %— %— — %— %
Maturing in one to five yearsMaturing in one to five years500 — %5.00 %500 — %5.00 %Maturing in one to five years371 — %5.00 %355 — %5.06 %
Maturing in five to ten yearsMaturing in five to ten years2,027 0.1 %4.19 %2,016 0.2 %4.19 %Maturing in five to ten years7,254 0.4 %3.87 %6,160 0.4 %4.05 %
Maturing after ten yearsMaturing after ten years— — %— %— — %— %Maturing after ten years— — %— %— — %— %
Total Corporate securitiesTotal Corporate securities2,527 0.1 %4.35 %2,516 0.2 %4.35 %Total Corporate securities7,625 0.4 %3.94 %6,515 0.4 %4.13 %
Total investment securities$1,572,558 100.0 %1.85 %$1,172,400 100.0 %2.29 %
Total available-for-sale debt securities Total available-for-sale debt securities$1,618,241 100.0 %2.09 %$1,678,525 100.0 %1.83 %
(1)Yields on a tax-equivalent basis.
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The following table summarizes the amortized cost of debt securities classified as available-for-sale and their approximate fair values as of the dates shown:
(dollars in thousands)Amortized costGross unrealized gainsGross unrealized lossesFair value
Securities available-for-sale    
As of September 30, 2021    
U.S. government agency securities$10,598 $5 $(32)$10,571 
Mortgage-backed securities - residential1,211,042 9,111 (9,650)1,210,503 
Mortgage-backed securities - commercial15,374 368 (30)15,712 
Municipal securities312,672 14,881 (314)327,239 
U.S. Treasury securities5,998 8 — 6,006 
Corporate securities2,500 35 (8)2,527 
 $1,558,184 $24,408 $(10,034)$1,572,558 
As of December 31, 2020
US Government agency securities$2,000 $3 $— $2,003 
Mortgage-backed securities - residential760,099 14,040 (803)773,336 
Mortgage-backed securities - commercial20,226 1,362 — 21,588 
Municipal securities336,543 19,806 (20)356,329 
U.S. Treasury securities16,480 148 — 16,628 
Corporate securities2,500 17 (1)2,516 
$1,137,848 $35,376 $(824)$1,172,400 
Securities purchased under agreements to resell ("reverse repurchase agreements")
We enter into agreements with certain customers to purchase investment securities under agreements to resell the following day. This investment deploys some of our liquidity position into an instrument that improves the return on those funds in the current low rate environment. Additionally, we believe it positions us more favorably for a potential rising interest rate environment in the future. Securities purchased under agreements to resell totaled $74.0 million and $0 at September 30, 2021 and December 31, 2020, respectively.
Borrowed funds
Deposits and investment securities available-for-sale are the primary source of funds for our lending activities and general business purposes. However, we may also obtain advances from the FHLB, purchase federal funds and engage in overnight borrowing from the Federal Reserve, correspondent banks, or enter into client repurchase agreements. We also use these sources of funds as part of our asset liability management process to control our long-term interest rate risk exposure, even if it may increase our short-term cost of funds.
Our level of short-term borrowing can fluctuate on a daily basis depending on funding needs and the source of funds to satisfy those needs, in addition to the overall interest rate environment and cost of public funds. Borrowings can include securities sold under agreements to repurchase, lines of credit, advances from the FHLB, federal funds purchased, and subordinated debt. The following table sets forth our total borrowings segmented by years to maturity as of September 30, 2021:
 September 30, 2021
(dollars in thousands)Amount% of totalWeighted average interest rate (%)
Maturing Within:   
September 30, 2022$41,730 24 %0.20 %
September 30, 2023— — %— %
September 30, 2024— — %— %
September 30, 2025— — %— %
September 30, 2026— — %— %
Thereafter129,448 76 %4.22 %
Total$171,178 100 %3.24 %

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Securities sold under agreements to repurchase
We enter into agreements with certain customers to sell certain securities under agreements to repurchase the security the following day. These agreements are made to provide customers with comprehensive treasury management programs a short-term return for their excess funds. Securities sold under agreements to repurchase totaled $41.7$31.7 million and $32.2$40.7 million at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively.
Subordinated debt
We have two wholly-owned subsidiaries that are statutory business trusts (“Trusts”). The Trusts were created for the sole purpose of issuing 30-year capital trust preferred securities to fund the purchase of junior subordinated debentures issued by the Company. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, our $0.9 million investment in the Trusts was included in other assets in the accompanying consolidated balance sheets, and our $30.0 million obligation is reflected as junior subordinated debt, respectively. The junior subordinated debt bears interest at floating interest rates based on a spread over 3-month LIBOR plus 315 basis points (3.28%(5.35% and 3.40%3.37% at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively) for the $21.7 million debenture and 3-month LIBOR plus 325 basis points (3.38%(5.50% and 3.50%3.47% at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively) for the remaining $9.3 million. The $9.3 million debenture may be redeemed prior to the 2033 maturity date upon the occurrence of a special event, and the $21.7 million debenture may be redeemed prior to 2033 at our option. The Company classified both debentures as additional Tier 1 capital as of June 30, 2022 and December 31, 2021.
Additionally, during 2020, we placedWe also have $100.0 million of ten year fixed-to-floating rate subordinated notes maturingscheduled to mature on September 1, 2030. This subordinated note instrument pays interest semi-annually in arrears based on a 4.5% fixed annual interest rate for the first five years of the notes. For years six through ten, the interest rate resets on a quarterly basis, and will be based on the 3-month Secured Overnight Financing Rate plus a spread of 439 basis points. We are entitled to redeem the notes in whole or in part on any interest payment date on or after September 1, 2025. During the first quarter of 2022, the Company entered into a designated fair value hedge to mitigate our interest rate exposure associated with these notes. The estimated fair value of the hedge included in borrowings on the consolidated balance sheet as of June 30, 2022 was $2.5 million. The Company has classified the subordinated notes issuance, net of the impact of the designated fair value hedge and unamortized issuance costs, of $1.5 million and $1.8 million, as Tier 2 capital at September 30, 2021 and December 31, 2020, respectively.
We also assumed two issues of subordinated debt, totaling $60,000, as part of the Franklin merger. The notes, issued by Franklin in 2016, feature $40,000 of 6.875% fixed-to-floating rate subordinated notes due March 30, 2026 ("March 2026 Subordinated Notes"), and $20,000 of 7% fixed-to-floating rate subordinated notes due July 1, 2026 ("July 2026 Subordinated Notes"). During the nine months ended September 30, 2021, we redeemed the two issues of subordinated debt in full. Additionally, during the three and nine months ended September 30, 2021, we recorded accretion of a purchase accounting premium of $0.0 million and $0.4 million, respectively, as a reduction to interest expense on borrowings. There was $60.0 million related to these issuances included as Tier 2 capital as of June 30, 2022, and net of unamortized issuance costs as of December 31, 2020.2021.
Other borrowings
During the first quarter of 2020, we entered into total borrowings against a credit line in the amount $15.0 million against the line to fund the cash consideration paid in connection with the Farmers National transaction. The line of credit matured on February 21, 2021 and was repaid in full. Other borrowings on our consolidated balance sheets also includes our finance lease liability totaling $1.5$1.4 million and $1.6$1.5 million as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. See Note 6,5, "Leases" within the Notes to our consolidated financial statements for additional information regarding our finance lease.
Liquidity and capital resources
Bank liquidity management
We are expected to maintain adequate liquidity at the Bank to meet the cash flow requirements of clients who may be either depositors wishing to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. Our Liquidity and Interest Rate Risk Policy is intended to cause the Bank to maintain adequate liquidity and, therefore, enhance our ability to raise funds to support asset growth, meet deposit withdrawals and lending needs, maintain reserve requirements and otherwise sustain our operations. We accomplish this through management of the
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maturities of our interest-earning assets and interest-bearing liabilities. We believe that our present position is adequate to meet our current and future liquidity needs.
We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all of our short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of clients, while maintaining an appropriate balance between assets and liabilities to meet the return on investment
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objectives of our shareholders. We also monitor our liquidity requirements in light of interest rate trends, changes in the economy and the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits.
Considering uncertainty surrounding the COVID-19 pandemic, we have taken steps to ensure adequate liquidity and access to funding sources. To date, we have not seen significant pressure on liquidity or sources of funding as a result of COVID-19 and have maintained higher than typical levels of liquidity in cash and cash equivalents to allow for flexibility.
As part of our liquidity management strategy, we also focus on minimizing our costs of liquidity and attempt to decrease these costs by growing our noninterest-bearing and other low-cost deposits, while replacing higher cost funding sources including time deposits and borrowed funds. While we do not control the types of deposit instruments our clients choose, we do influence those choices with the rates and the deposit specials we offer.
Our investment portfolio is another alternative for meeting liquidity needs. These assets generally have readily available markets that offer conversions to cash as needed. Securities within our investment portfolio are also used to secure certain deposit types and short-term borrowings. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, securities with a carrying value of $1.15$1.31 billion and $0.80$1.23 billion, respectively, were pledged to secure government, public, trust and other deposits and as collateral for short-term borrowings, letters of credit and derivative instruments.
Additional sources of liquidity include federal funds purchased, reverse repurchase agreements, FHLB borrowings, and lines of credit. Interest is charged at the prevailing market rate on federal funds purchased, reverse repurchase agreements and FHLB advances. Funds and advances obtained from the FHLB are used primarily to meet day to day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. There were no outstanding overnight cash management advances or other advances with the FHLB as of SeptemberJune 30, 20212022 or December 31, 2020.2021. There was $1.28$1.16 billion and $1.18$1.23 billion as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively available to borrow against. 
We also maintain lines of credit with other commercial banks totaling $345.0$315.0 million and $335.0$325.0 million as of SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively. These are unsecured, uncommitted lines of credit typically maturing at various times within the next twelve months. There were no borrowings against thethese lines as of SeptemberJune 30, 20212022 or December 31, 2020.2021. We also had an additional $50.0 million available through the promontory network as of both June 30, 2022 and December 31, 2021.
Holding company liquidity management
The Company is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. The Company’s main source of funding is dividends declared and paid to it by the Bank. Statutory and regulatory limitations exist that affect the ability of the Bank to pay dividends to the Company. Management believes that these limitations will not impact the Company’s ability to meet its ongoing short-term cash obligations. For additional information regarding dividend restrictions, see the “Item 1. Business - Supervision and regulation,” "Item 1A. Risk Factors - Risks related to our business" and " Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Dividend Policy," each of which is set forth in our Annual Report.
Due to state banking laws, the Bank may not declare dividends in any calendar year in an amount exceeding the total of its net income for that year combined with its retained net income of the preceding two years, without the prior approval of the Tennessee Department of Financial Institutions. Based upon this regulation, as of SeptemberJune 30, 20212022 and December 31, 2020, $127.72021, $105.4 million and $185.7$170.8 million of the Bank’s retained earnings were available for the payment of dividends without such prior approval. In addition, dividends paid by the Bank to the Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the three and ninesix months ended SeptemberJune 30, 2021,2022, there were $6.3$17.3 million and $116.3$34.5 million respectively, in cash dividends approved by the board for payment from the Bank to the holding company. During the three and ninesix months ended SeptemberJune 30, 2020,2021, there were $35.0 million and $110.0 million, respectively, in cash dividends approved by the board approved a quarterly dividendfor payment from the Bank to the holding company amounting to approximately $5.3 million.company. None of these required approval from the TDFI. Subsequent to SeptemberJune 30, 2021,2022, the board approved a dividend from the Bank to the holding company to be paid in the third quarter for $6.3$7.3 million that also did not require approval from the TDFI.
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During the three and ninesix months ended SeptemberJune 30, 2022, the Company declared and paid shareholder dividends of $0.13 per share, or $6.2 million and $0.26 per share, or $12.4 million, respectively. During the three and six months ended June 30, 2021, the Company declared and paid shareholder dividends of $0.11 per share, or $5.3 million and $0.33$0.22 per share, or $15.9 million, respectively. During the three and nine months ended September 30, 2020, the Company declared and paid dividends of $0.09 per share, or $4.3 million and $0.27 per share, or $10.2$10.6 million, respectively. Subsequent to SeptemberJune 30, 2021,2022, the Company declared a quarterly dividend in the amount of $0.11$0.13 per share, payable on NovemberAugust 22, 2021,2022, to stockholders of record as of NovemberAugust 8, 2021.2022.
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Shareholders’ equity and capital management
Our total shareholders’ equity was $1.32 billion at June 30, 2022 and $1.43 billion at December 31, 2021. Book value per share was $28.15 at June 30, 2022 and $30.13 at December 31, 2021, respectively. The Company is partydecrease in shareholders’ equity, during the first half of 2022, was primarily attributable to a registration rights agreement with its former majority shareholder entered intodecrease in connection with the 2016 initial public offering, under which the Company is responsible for payment of expenses (other than underwriting discountsaccumulated other comprehensive income related to unrealized losses on our available-for-sale securities portfolio. Additionally, our capital was impacted by retained net income, dividends paid, and commissions) relating to sales to the public by the shareholder of shares of the Company's$32.7 million in common stock beneficially owned by him. Such expenses include registration fees, legal and accounting fees, and printing costs payable byrepurchases during the Company and expensed when incurred. During the ninesix months ended SeptemberJune 30, 2021, the Company paid $0.6 million under this agreement related to the secondary offering completed during the second quarter of 2021. No such expenses were incurred during the three and nine months ended September 30, 2020.
Capital management and regulatory capital requirements2022.
Our capital management consists of providing adequate equity to support our current and future operations. We are subject to various regulatory capital requirements administered by state and federal banking agencies, including the TDFI, Federal Reserve and the FDIC. Failure to meet minimum capital requirements may prompt certain actions by regulators that, if undertaken, could have a direct material adverse effect on our financial condition and results of operations.
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The Federal Reserve and the FDIC have issued guidelines governing the levels of capital that banks must maintain. Those guidelines specify capital tiers, which include the classifications set forth in the following table. As of SeptemberJune 30, 20212022 and December 31, 2020,2021, we exceededmet all capital ratioadequacy requirements under prompt corrective actionfor which we are subject. See additional discussion regarding our capital adequacy and other regulatory requirements, as detailed in the table below:
 Actual
Required for capital
adequacy purposes (1)
To be well
capitalized under
prompt corrective
action provision
(dollars in thousands)AmountRatio
(%)		AmountRatio
(%)		AmountRatio
(%)
September 30, 2021      
Total capital (to risk weighted assets)
FB Financial Corporation$1,400,521 14.6 %$1,005,220 10.5 %N/AN/A
FirstBank$1,352,956 14.2 %$1,003,252 10.5 %$955,478 10.0 %
Tier 1 capital (to risk weighted assets)
FB Financial Corporation$1,213,432 12.7 %$813,750 8.5 %N/AN/A
FirstBank$1,165,867 12.2 %$812,156 8.5 %$764,382 8.0 %
Tier 1 Capital (to average assets)
FB Financial Corporation$1,213,432 10.4 %$467,369 4.0 %N/AN/A
FirstBank$1,165,867 10.0 %$465,817 4.0 %$582,271 5.0 %
Common Equity Tier 1 (CET1)      
FB Financial Corporation$1,183,432 12.4 %$670,147 7.0 %N/AN/A
FirstBank$1,165,867 12.2 %$668,835 7.0 %$621,061 6.5 %
December 31, 2020
Total capital (to risk weighted assets)
FB Financial Corporation$1,358,897 15.0 %$952,736 10.5 %N/AN/A
FirstBank$1,353,279 14.9 %$951,327 10.5 %$906,026 10.0 %
Tier 1 capital (to risk weighted assets)
FB Financial Corporation$1,090,364 12.0 %$771,262 8.5 %N/AN/A
FirstBank$1,142,548 12.6 %$770,122 8.5 %$724,820 8.0 %
Tier 1 Capital (to average assets)
FB Financial Corporation$1,090,364 10.0 %$435,064 4.0 %N/AN/A
FirstBank$1,142,548 10.5 %$435,279 4.0 %$544,098 5.0 %
Common Equity Tier 1 (CET1)
FB Financial Corporation$1,060,364 11.7 %$635,157 7.0 %N/AN/A
FirstBank$1,142,548 12.6 %$634,218 7.0 %$588,917 6.5 %
(1) Minimum ratios presented exclude theat within Note 12, "Minimum capital conservation buffer.
U.S. Basel III measures capital strength in three tiers and incorporates risk-adjusted assets to determine the risk-based capital ratios. Our common equity tier 1 capital primarily includes shareholders' equity less certain deductions for goodwill and other intangibles, net of taxes, net unrealized gains (losses) on AFS securities and derivative instruments, net of tax. Tier 1 capital is primarily comprised of common equity Tier 1 capital and included junior subordinated debentures with a carrying value of $30.0 million as of September 30, 2021 and December 31, 2020. Tier 2 capital components include a portion of the allowance for credit losses in excess of Tier 1 statutory limits and our remaining combined trust preferred security debt issuances.
In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL. The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard. In March 2020, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC announced an interim final rule, which became final on September 30, 2020, to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The final rule maintains the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Company adopted the capital transition relief over the permissible five-year period.
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Capital Expenditures
As of September 30, 2021, we do not have any planned material capital expenditures over the next twelve months.
Shareholders’ equity
Our total shareholders’ equity was $1.40 billion at September 30, 2021 and $1.29 billion at December 31, 2020. Book value per share was $29.36 at September 30, 2021 and $27.35 at December 31, 2020, respectively. The growth in shareholders’ equity during 2021 was primarily attributable to earnings retention, partially offset by changes in accumulated other comprehensive income, declared dividends and activity related to equity-based compensation.
Off-balance sheet arrangements
In the normal course of business, we enter into various transactions, which in accordance with GAAP, are not included as part of our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit, standby and commercial letters of credit, and commitments to purchase loans, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. For further information, see Note 9, "Commitments and contingencies"requirements" in the notes to theour consolidated financial statements included elsewhere in this Report.contained herein.























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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate sensitivity
Our market risk arises primarily from interest rate risk inherent in the normal course of lending and deposit-taking activities. Management believes that our ability to successfully respond to changes in interest rates will have a significant impact on our financial results. To that end, management actively monitors and manages our interest rate risk exposure.
The Asset Liability Management Committee, which is authorized by our board of directors, monitors our interest rate sensitivity and makes decisions relating to that process. The ALCO’s goal is to structure our asset/liability composition to maximize net interest income while managing interest rate risk so as to minimize the adverse impact of changes in interest rates on net interest income and capital in either a rising or declining interest rate environment. Profitability is affected by fluctuations in interest rates. A sudden and substantial change in interest rates may adversely impact our earnings because the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis.
We monitor the impact of changes in interest rates on our net interest income and economic value of equity using rate shock analysis. Net interest income simulations measure the short-term earnings exposure from changes in market rates of interest in a rigorous and explicit fashion. Our current financial position is combined with assumptions regarding future business to calculate net interest income under varying hypothetical rate scenarios. EVEEconomic Value of Equity measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time. A decrease in EVE due to a specified rate change indicates a decline in the long-term earnings capacity of the balance sheet assuming that the rate change remains in affect over the life of the current balance sheet. For purposes of calculating EVE, a zero percent floor is assumed on discount factors.
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The following analysis depicts the estimated impact on net interest income and EVE of immediate changes in interest rates at the specified levels for the periods presented:
Percentage change in:
Net interest income (1)
Percentage change in: Year 1Year 2
Change in interest ratesChange in interest rates
Net interest income (1)
Change in interest ratesJune 30,December 31,June 30,December 31,
Year 1Year 2
September 30,December 31,September 30,December 31,
(in basis points)(in basis points)2021 2020 2021 2020 (in basis points)2022 2021 2022 2021 
+400+40040.2 %46.8 %54.4 %52.3 %+40019.4 %40.9 %29.3 %54.8 %
+300+30029.7 %34.8 %40.5 %39.1 %+30014.4 %30.2 %21.8 %40.8 %
+200+20020.5 %22.8 %28.0 %26.1 %+20010.7 %20.9 %15.7 %28.3 %
+100+10010.4 %10.7 %14.5 %12.9 %+1006.08 %10.8 %8.66 %14.7 %
-100-100(6.23)%(3.80)%(9.29)%(6.80)%-100(6.29)%(6.32)%(9.19)%(10.2)%
-200-200(8.17)%(3.80)%(11.5)%(6.80)%-200(14.1)%(8.73)%(21.2)%(13.5)%
Percentage change in:
Percentage change in:
Economic value of equity (2)
Change in interest ratesChange in interest rates
Economic value of equity (2)
Change in interest ratesJune 30,December 31,
September 30,December 31,
(in basis points)(in basis points)2021 2020 (in basis points)2022 2021 
+400+4005.61 %40.0 %+400(10.6)%5.30 %
+300+3005.68 %32.8 %+300(7.21)%5.67 %
+200+2005.61 %24.2 %+200(3.58)%5.72 %
+100+1003.81 %13.2 %+100(1.01)%3.90 %
-100-100(8.16)%(6.40)%-100(0.34)%(8.13)%
-200-200(17.9)%(6.29)%-200(3.61)%(21.4)%
(1)The percentage change represents the projected net interest income for 12 months and 24 months on a flat balance sheet in a stable interest rate environment versus the projected net interest income in the various rate scenarios.
(2)The percentage change in this column represents our EVE in a stable interest rate environment versus EVE in the various rate scenarios.
The results for the net interest income simulations as of SeptemberJune 30, 20212022 and December 31, 20202021 resulted in an asset sensitive position. The primary influence of our asset sensitivity is the floating rate structure in many of our loans held for investment as well as the composition of our liabilities which is primarily core deposits. Non-interest bearing deposits continue be a strong source of funding which also increases asset sensitivity. The COVID-19 pandemic resulted in unprecedented monetary stimulus from the Federal Reserve, which included, but was not limited to, a 150 basis point decrease in the federal funds target rate. While our variable rate loan portfolio is indexed to market rates, deposits
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typically adjust at a percentage of the overall movement in market rates, resulting in margin compression. Index floors in our variable rate loans and aggressive deposit pricing should continue to mitigate some of this pressure in the near term.rates.
The preceding measures assume no change in the size or asset/liability compositions of the balance sheet. Thus, the measures do not reflect the actions the ALCO may undertake in response to such changes in interest rates. The scenarios assume instantaneous movements in interest rates in increments of 100, 200, 300 and 400 basis points. As interest rates are adjusted over a period of time, it is our strategy to proactively change the volume and mix of our balance sheet in order to mitigate our interest rate risk. The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions regarding characteristics of new business and the behavior of existing positions. These business assumptions are based upon our experience, business plans and published industry experience. Key assumptions employed in the model include asset prepayment speeds, competitive factors, the relative price sensitivity of certain assets and liabilities and the expected life of non-maturity deposits. Because these assumptions are inherently uncertain, actual results may differ from simulated results.
We may utilize derivative financial instruments as part of an ongoing effort to mitigate interest rate risk exposure to interest rate fluctuations and facilitate the needs of our customers.
The Company enters into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with customer contracts, the Company enters into an offsetting derivative contract. The Company manages its credit risk, or potential risk of default by its commercial customers through credit limit approval and monitoring procedures.
The Company has entered into interest rate swap contracts to hedge interest rate exposure on short term liabilities, as well as interest rate swap contracts to hedge interest rate exposure on subordinated debentures. These interest rate swaps are all accounted for as cash flow hedges, with the Company receiving a variable rate of interest and paying a fixed rate of interest.
The Company enters into rate lock commitments and forward loan sales contracts as part of our ongoing efforts to mitigate our interest rate risk exposure inherent in our mortgage pipeline and held for sale portfolio. Under the interest rate lock commitments, interest rates for a mortgage loan are locked in with the client for a period of time, typically 30-90 days. Once an interest rate lock commitment is entered into with a client, we also enter into a forward commitment to sell the residential mortgage loan to secondary market investors. Forward loan sale contracts are contracts for delayed sale and delivery of mortgage loans to a counter party. We agree to deliver on a specified future date, a specified instrument, at a specified price or yield. The credit risk inherent to us arises from the potential inability of counterparties to meet the terms of their contracts. In the event of non-acceptance by the counterparty, we would be subject to the credit and inherent (or market) risk of the loans retained.
Additionally, the Company enters into forward commitments, options and futures contracts that are not designated as hedging instruments, which serve as economic hedges of the change in fair value of its MSRs.
For more information about our derivative financial instruments, see Note 10,9, “Derivatives” in the notes to our consolidated financial statements. 
ITEM 4.4 — Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Report was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and other members of the Company’s senior management. The Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Report, the Company’s disclosure
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controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is: (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended SeptemberJune 30, 2021,2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all errors and fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.
PART II
ITEM 1—LEGAL PROCEEDINGS
Various legal proceedings to which we or our subsidiaries are party arise from time to time in the normal course of business. As of the date of this Report, there are no material pending legal proceedings to which we or any of our subsidiaries is a party or of which any of our or our subsidiaries’ properties are subject.

ITEM 1A—RISK FACTORS

There have been no material changes to the risk factors set forth in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2020, except as provided in the Company's Prospectus Supplement that was filed with the SEC on June 9, 2021.

2021.
ITEM 2—UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about repurchases of common stock by the Company during the quarter ended SeptemberJune 30, 2021:2022: 
Period(a)
Total number of shares purchased (1)		(b)
Average price paid per share		(c)
Total number of shares purchased as part of publicly announced plans or programs		(d)
Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
July 1 - July 31, 2021— $— — $100,000,000 
August 1 - August 31, 202110,954 39.79 10,954 99,563,842 
September 1 - September 30, 2021— — — 99,563,842 
Total10,954 $39.79 10,954 99,563,842 
Period
(a)
Total number of shares purchased(1)
(b)
Average price paid per share		(c)
Total number of shares purchased as part of publicly announced plans or programs
(d)
Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs(2)
April 1 - April 30, 2022337,120 $41.18 337,120 $86,107,381 
May 1 - May 31, 2022231,097 39.7 231,097 76,925,788 
June 1 - June 30, 202281,783 42.58 81,783 73,440,676 
Total650,000 $40.83 650,000 73,440,676 
(1) On February 18, 2021,March 14, 2022, the Company announced the board of directors’ authorization of a share repurchase program pursuant to which the Company may purchase up to $100 million in shares of the Company’s issued and outstanding common stock. The purchase authorizations granted under the new repurchase plan expireswill terminate either on Marchthe date on which the maximum dollar amount is repurchased under the new repurchase plan or on January 31, 2022.2024, whichever date occurs earlier. The new repurchase plan will be conducted pursuant to a written plan thatand is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act.Act of 1934, as amended.
(2) Amounts are inclusive of commissions and fees related to the stock repurchases.
10390


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ITEM 6—EXHIBITS
The exhibits listed on the accompanying Exhibit Index are filed, furnished or incorporated by reference (as stated therein) as part of this Report.
EXHIBIT INDEX

Exhibit NumberDescription
Amended and Restated Charter of FB Financial Corporation (incorporated by reference as Exhibit 3.1 to the Company’s Registration Statement on Form S-1/A (File No. 333-213210), filed on September 6, 2016)
Amended and Restated Bylaws of FB Financial Corporation (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-37875) Filed on November 14, 2016)
Registration Rights Agreement by and between FB Financial Corporation and James W. Ayers, dated September 15, 2016 (incorporated by reference as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-37875) filed on November 14, 2016)
Employment Agreement by and among FB Financial Corporation, FirstBank, and Christopher T. Holmes, dated July 31, 2021 (incorporated by reference as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (File No. 001-37875) filed on August 6, 2021)
Rule 13a-14(a) Certification of Chief Executive Officer*
Rule 13a-14(a) Certification of Chief Financial Officer*
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer**
101.INSInline XBRL Instance Document*
101.SCHInline XBRL Taxonomy Extension Schema Document*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*Filed herewith.
**Furnished herewith.
†Represents a management contract or a compensatory plan or arrangement.

10492

Signatures

Pursuant to the requirements of the section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
 FB Financial Corporation
  
 /s/ Michael M. Mettee
NovemberAugust 8, 20212022
Michael M. Mettee
Chief Financial Officer
(Principal Financial Officer)
/s/ Keith Rainwater
NovemberAugust 8, 20212022
Keith Rainwater
Chief Accounting Officer
(Principal Accounting Officer)


105