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FBK FB Financial

Filed: 8 Nov 21, 2:07pm

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 September 30, 2021
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 Symbol  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 Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant 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, 2021 was 47,711,799.
1


Table of Contents




2


GLOSSARY OF ABBREVIATIONS AND ACRONYMS

As used in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (this "Report"), references to “we,” “our,” “us,” “FB Financial,” or “the Company” refer to FB Financial Corporation, a Tennessee corporation, and our wholly 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 owned banking subsidiary.

The acronyms and abbreviations identified below are used in the Notes to Consolidated Financial Statements (Unaudited) as well as in the Management’s Discussion and Analysis of Financial Condition and Results of Operations. You may find it helpful to refer to this page as you read this Report.

ACLAllowance For Credit LossesGAAPU.S. generally accepted accounting principles
AFSAvailable-for-SaleGNMAGovernment National Mortgage Association
ALCOAsset Liability Management CommitteeIPOInitial Public Offering
ASCAccounting Standard CodificationIRCInternal Revenue Code
ASUAccounting Standard UpdateMSRMortgage Servicing Rights
CAAConsolidated Appropriations ActJOBS ActJumpstart Our Business Startups Act
CARESCoronavirus Aid, Relief, and Economic Security ActLIBORLondon Interbank Offered Rate
CECLCurrent Expected Credit LossesLTIPLong-Term Incentive Plan
CEOChief Executive OfficerMSAMetropolitan Statistical Areas
CET1Common Equity Tier 1MSRMortgage Servicing Rights
CMACash Management AdvancesNIMNet Interest Margin
CPRConditional Prepayment RateOCCOffice of the Comptroller of the Currency
CRECommercial Real EstateOREOOther Real Estate Owned
EPSEarnings per SharePCDPurchased Credit Deteriorated
ESPPEmployee Stock Purchase PlanPPPPaycheck Protection Program
EVEEconomic Value of EquityPSUPerformance-based Restricted Stock Units
FASBFinancial Accounting Standards BoardREITReal 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-use
FDICFederal Deposit Insurance CorporationRSURestricted Stock Units
FHLBFederal Home Loan BankSBASmall Business Administration
FHLMCFederal Home Loan Mortgage CorporationSECU.S. Securities and Exchange Commission
FNBFarmers NationalTDFITennessee Department of Financial Institutions
FNMAFederal National Mortgage AssociationTDRTroubled Debt 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,
 2021 (Unaudited)2020 
ASSETS  
Cash and due from banks$100,568 $110,991 
Federal funds sold and reverse repurchase agreements145,333 121,153 
Interest-bearing deposits in financial institutions1,078,663 1,085,754 
Cash and cash equivalents1,324,564 1,317,898 
Investments:
Available-for-sale debt securities, at fair value1,572,558 1,172,400 
Equity securities, at fair value4,779 4,591 
Federal Home Loan Bank stock, at cost27,601 31,232 
Loans held for sale, at fair value855,706 899,173 
Loans7,294,674 7,082,959 
Less: allowance for credit losses139,446 170,389 
Net loans7,155,228 6,912,570 
Premises and equipment, net144,737 145,115 
Other real estate owned, net10,015 12,111 
Operating lease right-of-use assets44,006 49,537 
Interest receivable41,393 43,603 
Mortgage servicing rights, at fair value110,591 79,997 
Goodwill242,561 242,561 
Core deposit and other intangibles, net18,248 22,426 
Other assets258,303 274,116 
Total assets$11,810,290 $11,207,330 
LIABILITIES
Deposits
Noninterest-bearing$2,609,569 $2,274,103 
Interest-bearing checking2,850,795 2,491,765 
Money market and savings3,424,065 3,254,915 
Customer time deposits1,159,472 1,375,695 
Brokered and internet time deposits28,017 61,559 
Total deposits10,071,918 9,458,037 
Borrowings172,710 238,324 
Operating lease liabilities48,875 55,187 
Accrued expenses and other liabilities115,781 164,400 
Total liabilities10,409,284 9,915,948 
Commitments and contingencies (Note 9)00
SHAREHOLDERS' 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 
Additional paid-in capital897,428 898,847 
Retained earnings443,140 317,625 
Accumulated other comprehensive income, net12,637 27,595 
Total FB Financial Corporation common shareholders' equity1,400,913 1,291,289 
Noncontrolling interest93 93 
Total equity1,401,006 1,291,382 
Total liabilities and shareholders' equity$11,810,290 $11,207,330 
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,
 2021 2020 2021 2020 
Interest income:  
Interest and fees on loans$89,993 $76,504 $269,266 $201,350 
Interest on securities
Taxable3,989 2,286 10,652 7,961 
Tax-exempt1,883 1,933 5,772 4,956 
Other800 404 2,089 2,141 
Total interest income96,665 81,127 287,779 216,408 
Interest expense:
Deposits6,596 10,573 24,341 32,050 
Borrowings1,593 1,726 5,823 3,944 
Total interest expense8,189 12,299 30,164 35,994 
Net interest income88,476 68,828 257,615 180,414 
Provision for credit losses(2,832)45,834 (27,349)97,837 
Provision for credit losses on unfunded commitments301 9,567 (2,875)13,050 
Net interest income after provisions for credit losses91,007 13,427 287,839 69,527 
Noninterest income:
Mortgage banking income45,384 84,686 136,215 189,599 
Service charges on deposit accounts2,612 2,162 7,217 6,583 
ATM and interchange fees4,868 3,913 14,590 10,653 
Investment services and trust income2,511 1,828 7,518 4,893 
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)
Gain (loss) from other assets177 226 162 (156)
Other income1,398 5,133 6,578 10,395 
Total noninterest income59,006 97,026 175,036 221,217 
Noninterest expenses:
Salaries, commissions and employee benefits62,818 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 expense95,007 118,092 282,665 267,230 
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— — — 
Net income (loss) applicable to FB Financial Corporation$45,290 $(5,599)$141,458 $18,019 
Earnings (loss) per common share
Basic$0.96 $(0.14)$2.99 $0.52 
Diluted0.94 (0.14)2.95 0.52 
See the accompanying notes to the consolidated financial statements.
5


FB Financial Corporation and subsidiaries
Consolidated statements of comprehensive 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— — — 
Comprehensive income (loss) applicable to FB Financial Corporation$39,522 $(4,201)$126,500 $31,168 
 
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, 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 expense2,883 — — 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 — 141,458 141,466 
Other comprehensive income, net
of taxes
— — — (14,958)(14,958)— (14,958)
Repurchase of common stock(11)(425)— — (436)— (436)
Stock based compensation expense8,059 — — 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 expense3,014 — — 3,020 — 3,020 
Restricted stock units vested and
distributed, net of shares withheld
(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.
8

FB Financial Corporation and subsidiaries
Consolidated statements of cash flows
(Unaudited)
(Amounts are in thousands)
Nine Months Ended September 30,
2021 2020 
Cash flows from operating activities:
Net income applicable to FB Financial Corporation and noncontrolling interest$141,466 $18,019 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of fixed assets6,288 4,924 
Amortization of core deposit and other intangibles4,178 3,825 
Capitalization of mortgage servicing rights(31,382)(33,415)
Net change in fair value of mortgage servicing rights788 42,251 
Stock-based compensation expense8,065 7,253 
Provision for credit losses(27,349)97,837 
Provision for credit losses on unfunded commitments(2,875)13,050 
Provision for mortgage loan repurchases(266)2,128 
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)
Originations of loans held for sale(4,926,390)(4,739,497)
Repurchases of loans held for sale(384)— 
Proceeds from sale of loans held for sale4,939,323 4,690,135 
Gain on sale and change in fair value of loans held for sale(126,983)(202,336)
Net (gain) loss or write-downs of other real estate owned(2,478)1,368 
(Gain) loss on other assets(162)156 
Provision for deferred income taxes20,904 (31,543)
Changes in:
Operating leases(781)1,309 
Other assets and interest receivable(2,508)(77,566)
Accrued expenses and other liabilities(46,867)59,420 
Net cash used in operating activities(41,043)(141,949)
Cash flows from investing activities:
Activity in available-for-sale securities:
Sales8,855 28,257 
Maturities, prepayments and calls216,032 140,246 
Purchases(645,658)(214,285)
Net change in loans(61,795)(133,893)
Sales of FHLB stock4,294 — 
Purchases of FHLB stock(663)(515)
Purchases of premises and equipment(5,193)(2,652)
Proceeds from the sale of other real estate owned8,834 5,561 
Net cash acquired in business combinations— 248,439 
Net cash used in investing activities(475,294)71,158 
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)
Issuance of subordinated debt, net of issuance costs— 98,190 
Payments on subordinated debt(60,000)— 
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 
Share based compensation withholding payments(10,042)(1,268)
Net proceeds from sale of common stock under employee stock purchase program1,480 978 
Repurchase of common stock(436)— 
Dividends paid(16,324)(10,025)
Noncontrolling interest distribution(8)— 
Net cash provided by financing activities523,003 900,501 
Net change in cash and cash equivalents6,666 829,710 
Cash and cash equivalents at beginning of the period1,317,898 232,681 
Cash and cash equivalents at end of the period$1,324,564 $1,062,391 
Supplemental cash flow information:
Interest paid$34,542 $36,498 
Taxes paid55,609 16,449 
Supplemental noncash disclosures:
Transfers from loans to other real estate owned$4,945 $1,579 
Transfers from other real estate owned to premises and equipment— 841 
Loans provided for sales of other real estate owned685 — 
Transfers from loans to loans held for sale10,408 9,304 
Transfers from loans held for sale to loans52,151 49,508 
Stock consideration paid in business combination— 480,867 
Trade date payable - securities5,996 1,214 
Dividends declared not paid on restricted stock units340 139 
Decrease to retained earnings for adoption of new accounting standard— 25,018 
Right-of-use assets obtained in exchange for operating lease liabilities839 806 
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, FirstBank (the "Bank"). As of September 30, 2021, the Bank had 82 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 principles 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 sheet and the reported results of operations for the periods then ended. 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.
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,
 2021202020212020
Basic earnings (loss) per common share calculation:
Net income (loss) applicable to FB Financial Corporation$45,290 $(5,599)$141,458 $18,019 
Dividends paid on and undistributed earnings allocated to participating securities— — — — 
Earnings (loss) available to common shareholders$45,290 $(5,599)$141,458 $18,019 
Weighted average basic shares outstanding47,412,214 40,154,841 47,345,984 34,404,064 
Basic earnings (loss) per common share$0.96 $(0.14)$2.99 $0.52 
Diluted earnings per common share:
Earnings (loss) available to common shareholders$45,290 $(5,599)$141,458 $18,019 
Weighted average basic shares outstanding47,412,214 40,154,841 47,345,984 34,404,064 
Weighted average diluted shares contingently issuable(1)
594,933 482,904 637,510 436,228 
Weighted average diluted shares outstanding48,007,147 40,637,745 47,983,494 34,840,292 
Diluted earnings (loss) per common share$0.94 $(0.14)$2.95 $0.52 
(1)Excludes 15,974 and 20,448 restricted stock units outstanding considered to be antidilutive for the three and nine months ended September 30, 2021, respectively and 332,347 and 536,908 for three and nine months ended September 30, 2020.
Recently adopted accounting policies:
The Company did not modify or adopt any new accounting policies during the three and nine months ended September 30, 2021 that were not disclosed in the Company's 2020 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, 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 footprint to the Banking segment. See Note 12, "Segment reporting" for additional information on this change.
Recently adopted accounting standards:
Except as set forth below, the Company did not adopt any new accounting standards that were not disclosed in the Company's 2020 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 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 established a working group to transition from LIBOR and have begun efforts to transition to alternative rates consistent with industry timelines. We have identified products that utilize LIBOR and are implementing enhanced fallback language to facilitate the transition to alternative reference rates. ASU 2020-04 is 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.
The Company 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 concern 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 restructuring 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 acquisition that have not experienced more-than-insignificant credit deterioration since origination are initially recognized at 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'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.
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 




15

FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Note (3)—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 September 30, 2021 and December 31, 2020:  
September 30, 2021
 Amortized costGross unrealized gainsGross unrealized lossesAllowance for credit losses for investmentsFair Value
Investment Securities    
Available-for-sale debt securities  
U.S. government agency securities$10,598 $$(32)$— $10,571 
Mortgage-backed securities - residential1,211,042 9,111 (9,650)— 1,210,503 
Mortgage-backed securities - commercial15,374 368 (30)— 15,712 
Municipal securities312,672 14,881 (314)— 327,239 
U.S. Treasury securities5,998 — — 6,006 
Corporate securities2,500 35 (8)— 2,527 
Total$1,558,184 $24,408 $(10,034)$— $1,572,558 
December 31, 2020
 Amortized costGross unrealized gainsGross unrealized lossesAllowance for credit losses for investmentsFair Value
Investment Securities    
Available-for-sale debt securities    
U.S. government agency securities$2,000 $$— $— $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 
Total$1,137,848 $35,376 $(824)$— $1,172,400 
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 September 30, 2021 and December 31, 2020, total accrued interest receivable on debt securities was $4,744 and $4,540, respectively.
As of September 30, 2021 and December 31, 2020, the Company had $4,779 and $4,591, in marketable equity securities recorded at fair value, respectively.
Securities pledged at September 30, 2021 and December 31, 2020 had carrying amounts of $1,154,797 and $804,821, 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.
At September 30, 2021 and December 31, 2020, there were no trade date receivables 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 to purchases settled after period end.
 
16

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 September 30, 2021 and December 31, 2020 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,
 2021 2020 
 Available-for-saleAvailable-for-sale
 Amortized costFair valueAmortized costFair value
Due in one year or less$16,713 $16,773 $35,486 $35,662 
Due in one to five years20,242 20,637 24,278 24,684 
Due in five to ten years40,757 42,211 40,038 41,332 
Due in over ten years254,056 266,722 257,721 275,798 
331,768 346,343 357,523 377,476 
Mortgage-backed securities - residential1,211,042 1,210,503 760,099 773,336 
Mortgage-backed securities - commercial15,374 15,712 20,226 21,588 
Total debt securities$1,558,184 $1,572,558 $1,137,848 $1,172,400 
Sales and other dispositions of available-for-sale securities were as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Proceeds from sales$8,855 $28,257 $8,855 $28,257 
Proceeds from maturities, prepayments and calls68,126 67,886 216,032 140,246 
Gross realized gains76 563 91 563 
Gross realized losses39 39 
Additionally, the change in the fair value of equity securities resulted in a net unrealized loss of $24 and a net unrealized gain of $188 during the three and nine months ended September 30, 2021, respectively, net unrealized gains on equity securities of $59 and $94 were recognized in the three and nine months ended September 30, 2020, respectively.
The following tables show gross unrealized losses for which an allowance for credit losses has not been recorded at September 30, 2021 and December 31, 2020, 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)

 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.
17

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 and 2020, the Company evaluated available-for-sale debt securities with unrealized losses for expected credit loss and recorded no allowance for credit loss as the majority of the investment portfolio was either government guaranteed or an issuance of a government sponsored entity, was highly rated by major credit rating agencies and have a long history of zero losses. As such, no provision for credit losses was recorded during the three and nine months ended September 30, 2021 and 2020.
Note (4)—Loans and allowance for credit losses:
Loans outstanding at September 30, 2021 and December 31, 2020, by class of financing receivable are as follows:
 September 30,December 31,
 2021 2020 
Commercial and industrial (1)
$1,252,425 $1,346,122 
Construction1,190,623 1,222,220 
Residential real estate:
1-to-4 family mortgage1,175,155 1,089,270 
Residential line of credit392,440 408,211 
Multi-family mortgage324,662 175,676 
Commercial real estate:
Owner occupied938,241 924,841 
Non-owner occupied1,695,573 1,598,979 
Consumer and other325,555 317,640 
Gross loans7,294,674 7,082,959 
Less: Allowance for credit losses(139,446)(170,389)
Net loans$7,155,228 $6,912,570 
(1)Includes $9,415 and $212,645 of loans originated as part of the Paycheck Protection Program as of September 30, 2021 and December 31, 2020, 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.
As of September 30, 2021 and December 31, 2020, $1,220,451 and $1,248,857, respectively, of qualifying residential mortgage loans (including loans held for sale) and $1,571,007 and $1,532,749, 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 September 30, 2021 and December 31, 2020, $2,345,431 and $2,463,281, 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 excludes accrued interest receivable as the Company elected to present accrued interest receivable separately on the balance sheet. As of September 30, 2021 and December 31, 2020, total accrued interest receivable on loans held for investment was $34,915 and $38,316, respectively.
Allowance for Credit Losses
The Company estimated the allowance for credit losses under a current expected credit loss model as of September 30, 2021 and December 31, 2020. 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. 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 use the same methodology as TDRs. 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.
19

FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
The following provide the changes in the allowance for credit losses by class of financing receivable for the three and nine months ended September 30, 2021 and 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
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 33 — — 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 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 $$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 


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 $— $$— $167 $624 $$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 $— $$— $30 $1,531 $$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 

22

FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
Credit Quality
The Company categorizes 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. 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 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.
23

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 present the credit quality of our loan portfolio by year of origination as of September 30, 2021 and December 31, 2020. 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
Term Loans
Amortized Cost Basis by Origination Year
20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
Commercial and industrial
Pass$194,285 $105,301 $151,572 $60,459 $44,334 $61,502 $591,465 $1,208,918 
Special Mention68 246 414 19 2,051 12,987 15,790 
Classified893 2,601 2,678 3,527 3,618 6,711 7,689 27,717 
        Total195,246 108,148 154,664 64,005 47,957 70,264 612,141 1,252,425 
Construction
Pass455,443 337,263 145,945 47,026 19,507 67,697 106,294 1,179,175 
Special Mention— — — — 1,209 1,441 — 2,650 
Classified— — 3,035 2,879 2,698 182 8,798 
        Total455,443 337,263 148,980 49,905 20,720 71,836 106,476 1,190,623 
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 mortgage
Pass144,982 32,463 68,421 7,050 20,528 39,546 10,408 323,398 
Special Mention— — — — — — — — 
Classified— — — — — 1,264 — 1,264 
Total144,982 32,463 68,421 7,050 20,528 40,810 10,408 324,662 
Commercial real estate:
Owner occupied
Pass117,740 140,281 177,960 86,488 83,352 247,941 52,732 906,494 
Special Mention— — 1,328 3,595 112 2,948 220 8,203 
Classified— — 3,118 779 4,122 13,770 1,755 23,544 
Total117,740 140,281 182,406 90,862 87,586 264,659 54,707 938,241 
Non-owner occupied
Pass304,279 163,471 180,893 282,221 203,813 460,088 46,599 1,641,364 
Special Mention— — 3,812 3,452 — 8,041 — 15,305 
Classified— — 2,082 24,173 1,524 11,125 — 38,904 
Total304,279 163,471 186,787 309,846 205,337 479,254 46,599 1,695,573 
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 — 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 
25

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
Commercial and industrial
Pass$339,074 $185,636 $70,549 $59,917 $37,573 $42,685 $540,960 $1,276,394 
Special Mention231 824 561 445 915 2,580 24,826 30,382 
Classified2,501 2,688 11,227 4,425 6,582 1,277 10,646 39,346 
        Total341,806 189,148 82,337 64,787 45,070 46,542 576,432 1,346,122 
Construction
Pass461,715 390,443 86,490 52,942 40,907 62,890 112,004 1,207,391 
Special Mention469 1,485 2,197 1,221 729 13 — 6,114 
Classified573 1,755 3,178 141 — 3,068 — 8,715 
        Total462,757 393,683 91,865 54,304 41,636 65,971 112,004 1,222,220 
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 mortgage
Pass29,006 13,446 11,843 46,561 28,330 35,339 11,094 175,619 
Special Mention— — — — — — — — 
Classified— — — — — 57 — 57 
Total29,006 13,446 11,843 46,561 28,330 35,396 11,094 175,676 
Commercial real estate:
Owner occupied
Pass140,904 179,500 97,577 94,659 76,539 224,108 53,451 866,738 
Special Mention967 1,356 4,251 16,173 6,101 2,466 230 31,544 
Classified44 1,785 2,423 6,074 274 11,226 4,733 26,559 
Total141,915 182,641 104,251 116,906 82,914 237,800 58,414 924,841 
Non-owner occupied
Pass166,962 229,442 342,640 221,149 290,163 272,18438,820 1,561,360 
Special Mention— 1,500 6,672 — 207 8,445— 16,824 
Classified— 2,210 1,502 — — 17,083— 20,795 
Total166,962 233,152 350,814 221,149 290,370 297,712 38,820 1,598,979 
Consumer and other loans
Pass89,625 52,839 39,725 27,201 43,503 37,67314,817 305,383 
Special Mention281 797 1,588 468 526 1,36411 5,035 
Classified151 565 1,434 1,161 935 2,308668 7,222 
Total90,057 54,201 42,747 28,830 44,964 41,345 15,496 317,640 
26

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 
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 September 30, 2021 and December 31, 2020:
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
Commercial and industrial$1,400 $126 $2,896 $1,248,003 $1,252,425 
Construction2,078 1,057 3,851 1,183,637 1,190,623 
Residential real estate:
1-to-4 family mortgage5,233 6,989 4,936 1,157,997 1,175,155 
Residential line of credit1,132 — 1,269 390,039 392,440 
Multi-family mortgage— — 50 324,612 324,662 
Commercial real estate:
Owner occupied565 — 6,239 931,437 938,241 
Non-owner occupied452 — 11,666 1,683,455 1,695,573 
Consumer and other4,542 729 3,219 317,065 325,555 
Total$15,402 $8,901 $34,126 $7,236,245 $7,294,674 
 
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 

27

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 
Multi-family mortgage— 50 
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 during the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Commercial and industrial$190 $287 $523 $304 
Construction75 42 105 48
Residential real estate:
1-to-4 family mortgage114 15 199 21 
Residential line of credit197 72 242 72 
Multi-family mortgage— — — 
Commercial real estate:
Owner occupied187 32 419 75
Non-owner occupied123 76 353 185 
Consumer and other75 — 130 24 
Total$961 $524 $1,973 $729 
Accrued interest receivable written off as an adjustment to interest income amounted to $63 and $177 for the three months ended September 30, 2021 and 2020, respectively, and $660 and $459 for the nine months ended September 30, 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 September 30, 2021 and December 31, 2020, the Company had a recorded investment in TDRs of $29,645 and $15,988, 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 and $8,279 were classified as non-accrual loans as of September 30, 2021 and December 31, 2020, respectively. The Company has calculated $1,007 and $310 in allowances for credit losses on TDRs as of September 30, 2021 and December 31, 2020, respectively. Unfunded loan commitments related to these loans totaled $422 as of September 30, 2021. There were no commitments to extend any additional funds on troubled debt restructurings as of December 31, 2020.
The following tables present the financial effect of TDRs recorded during the periods indicated.
Three Months Ended September 30, 2021Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Residential real estate:
1-to-4 family mortgage1$134 $134 $— 
Total1$134 $134 $— 
Nine Months Ended September 30, 2021Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial$13,162 $13,162 $— 
Commercial real estate:
Owner occupied3,550 3,550 — 
Non-owner occupied11,997 11,997 — 
Residential real estate:
1-to-4 family mortgage945 945 — 
Residential line of credit11 11 — 
Total14 $29,665 $29,665 $— 
Three Months Ended September 30, 2020Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial$420 $420 $— 
Total$420 $420 $— 
Nine Months Ended September 30, 2020Number of loansPre-modification outstanding recorded investmentPost-modification outstanding recorded investmentCharge offs and specific reserves
Commercial and industrial$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 $— 
Troubled debt restructurings for which there was a payment default within twelve months following the modification totaled $305 during the three and nine months ended September 30, 2021. There were no such defaults during the three and nine months ended September 30, 2020. 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 nine months ended September 30, 2021 and 2020 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.
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 presents 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, 2021
Type of Collateral
Real EstateFinancial Assets and EquipmentIndividually assessed allowance for credit loss
Commercial and industrial$635 $2,166 $123 
Construction4,597 — 112 
Residential real estate:
1-to-4 family mortgage375 — — 
Residential line of credit1,123 — 
Commercial real estate:
Owner occupied7,808 — 167 
Non-owner occupied11,430 — 624 
Consumer and other26 — 
Total$25,994 $2,166 $1,035 
December 31, 2020
Type of Collateral
Real EstateFinancial Assets and EquipmentIndividually assessed allowance for credit loss
Commercial and industrial$— $1,728 $117 
Construction3,877 — — 
Residential real estate:
1-to-4 family mortgage226 — — 
Residential line of credit1,174 — 
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.
30

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)—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 nine months ended September 30, 2021 and 2020: 
Three Months EndedNine Months Ended
September 30,September 30,
 2021202020212020
Balance at beginning of period$11,986 $15,091 $12,111 $18,939 
Transfers from loans349 573 4,945 1,579 
Transfers to premises and equipment— — — (841)
Proceeds from sale of other real estate
   owned
(4,173)(1,411)(8,834)(5,561)
Gain on sale of other real estate owned2,090 119 3,190 464 
Loans provided for sales of other real
   estate owned
(152)— (685)— 
Write-downs and partial liquidations(85)(1,624)(712)(1,832)
Balance at end of period$10,015 $12,748 $10,015 $12,748 
Foreclosed residential real estate properties totaled $676 and $1,890 as of September 30, 2021 and December 31, 2020, 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 at September 30, 2021 and December 31, 2020, respectively.
Excess land and facilities held for sale resulting from branch consolidations totaled $3,501 and $5,703 as of September 30, 2021 and December 31, 2020, respectively.
Note (6)—Leases:
As of September 30, 2021, the Company was the lessee in 55 operating leases and 1 finance lease of certain branch, mortgage and operations locations, of which 44 operating leases and 1 finance lease currently have remaining terms varying from greater than one year to 34 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 to be completed in late 2022.
31

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 September 30, 2021 and December 31, 2020:
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 %

The components of total lease expense included in the consolidated statements of income were as follows:
Three Months EndedNine Months Ended
September 30,September 30,
Classification2021 2020 2021 2020 
Operating lease costs:
Amortization of right-of-use assetOccupancy and equipment$1,838 $1,663 $5,948 $4,341 
Short-term lease costOccupancy and equipment107 95 296 261 
Variable lease costOccupancy and equipment284 78 760 376 
Gain on lease modifications and
    terminations
Occupancy and equipment(14)— (801)— 
Finance lease costs:
Interest on lease liabilitiesInterest expense on borrowings— 21 — 
Amortization of right-of-use assetOccupancy and equipment28 — 83 — 
Total lease cost$2,250 $1,836 $6,307 $4,978 

During the three and nine months ended September 30, 2021, the Company recorded $14 and $801 in gains on lease modifications and terminations on certain 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.
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.
32

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 September 30, 2021 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 

Note (7)—Mortgage servicing rights:
Changes in the Company’s mortgage servicing rights were as follows for the three and nine months ended September 30, 2021 and 2020:
 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 

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 nine months ended September 30, 2021 and 2020: 
 Three Months Ended September 30,Nine Months Ended September 30,
 2021 2020 2021 2020 
Servicing income:
   Servicing income$7,539 $5,536 $21,258 $15,667 
   Change in fair value of mortgage servicing rights(239)(7,175)(788)(42,251)
   Change in fair value of derivative hedging instruments(2,128)(265)(9,987)15,705 
Servicing income (loss)5,172 (1,904)10,483 (10,879)
Servicing expenses2,156 1,999 7,381 5,392 
          Net servicing income (loss)(1)
$3,016 $(3,903)$3,102 $(16,271)
(1) Excludes benefit of custodial servicing related noninterest-bearing deposits held by the Bank.
33

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 September 30, 2021 and December 31, 2020 are as follows: 
 September 30,December 31,
 20212020
Unpaid principal balance$10,633,805 $9,787,657 
Weighted-average prepayment speed (CPR)9.46 %14.07 %
Estimated impact on fair value of a 10% increase$(4,737)$(4,493)
Estimated impact on fair value of a 20% increase$(9,107)$(8,599)
Discount rate11.56 %11.49 %
Estimated impact on fair value of a 100 bp increase$(4,454)$(2,942)
Estimated impact on fair value of a 200 bp increase$(8,571)$(5,674)
Weighted-average coupon interest rate3.29 %3.58 %
Weighted-average servicing fee (basis points)2728
Weighted-average remaining maturity (in months)330328
The Company 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, "Derivatives" for additional information on these hedging instruments.
As of September 30, 2021 and December 31, 2020, mortgage escrow deposits totaled to $190,631 and $147,957, respectively.
34

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 nine months ended September 30, 2021 and 2020:
 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 %

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.
35

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 assets at September 30, 2021 and December 31, 2020, are as follows: 
September 30,December 31
 2021 2020 
Deferred tax assets:  
Allowance for credit losses$38,751 $48,409 
Operating lease liabilities13,134 14,496 
Federal net operating loss1,541 1,753 
Deferred compensation6,798 8,872 
Unrealized loss on cash flow hedges326 499 
Other13,886 19,101 
Subtotal74,436 93,130 
Deferred tax liabilities:  
FHLB stock dividends$(484)$(561)
Operating leases - right of use assets(11,726)(13,197)
Depreciation(7,276)(7,491)
Amortization of core deposit intangibles(200)(684)
Unrealized gain on equity securities(3,879)(17)
Unrealized gain on debt securities(3,913)(13,027)
Mortgage servicing rights(28,774)(20,803)
Goodwill(13,133)(11,301)
Other(4,407)(9,653)
Subtotal(73,792)(76,734)
Net deferred tax assets$644 $16,396 
The Company has net operating loss carryforward acquired from Franklin of $7,338 as of September 30, 2021. 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 carryforward 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.

 
Note (9)—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,
 2021 2020 
Commitments to extend credit, excluding interest rate lock commitments$2,826,186 $2,719,996 
Letters of credit63,698 67,598 
Balance at end of period$2,889,884 $2,787,594 
As of September 30, 2021 and December 31, 2020, loan commitments included above with floating interest rates totaled $2.03 billion and $1.65 billion, respectively.
The Company estimates 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 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 nine months ended September 30, 2021 and 2020:
Three Months Ended September 30,Nine Months Ended September 30,
2021 20202021 2020 
Balance at beginning of period$13,202 $6,500 $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 commitments301 (862)(2,875)2,621 
Balance at end of period$13,503 $16,067 $13,503 $16,067 
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 and $4,386 for the three and nine months ended September 30, 2021, respectively and $1,329 and $5,696 for the three and nine months ended September 30, 2020, 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)

Note (10)—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 item “Other assets” or “Other liabilities” at fair value in accordance with ASC 815, “Derivatives and Hedging.”
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.

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%. 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 of September 30, 2021 and December 31, 2020, the fair value of 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 swaps were canceled during the year ended December 31, 2018, locking in 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 flow hedge matured during the year ended December 31, 2020, and the Company elected not to renew them. As such, during the fourth quarter of 2020, the remaining unamortized gain was reclassified from accumulated other comprehensive income to earnings.
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 
39

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 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)
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 Liabilities
September 30, 2021December 31, 2020September 30, 2021December 31, 2020
Gross amounts recognized$4,813 $3,863 $19,467 $34,051 
Gross amounts offset in the consolidated balance sheets— — — — 
Net amounts presented in the consolidated balance sheets4,813 3,863 19,467 34,051 
Gross amounts not offset in the consolidated balance sheets
Less: financial instruments3,816 857 3,816 857 
Less: financial collateral pledged— — 15,651 33,194 
Net amounts$997 $3,006 $— $— 
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 September 30, 2021 and December 31, 2020, the Company had minimum collateral posting thresholds with certain derivative counterparties and had collateral posted of $68,910 and $57,985, respectively, against its obligations under these agreements. Cash collateral related to derivative contracts is recorded in other assets in the consolidated balance sheets.
Note (11)—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.
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 swaps 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. Fair value of commitments 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. 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.
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
September 30, 2021Carrying amountLevel 1Level 2Level 3Total
Financial assets:     
Cash and cash equivalents$1,324,564 $1,324,564 $— $— $1,324,564 
Investment securities1,577,337 — 1,577,337 — 1,577,337 
Loans, net7,155,228 — — 7,255,887 7,255,887 
Loans held for sale855,706 — 755,210 100,496 855,706 
Interest receivable41,393 30 6,448 34,915 41,393 
Mortgage servicing rights110,591 — — 110,591 110,591 
Derivatives38,786 — 38,786 — 38,786 
Financial liabilities: 
Deposits: 
Without stated maturities$8,884,429 $8,884,429 $— $— $8,884,429 
With stated maturities1,187,489 — 1,196,141 — 1,196,141 
Securities sold under agreement to
repurchase and federal funds sold
41,730 41,730 — — 41,730 
Subordinated debt129,448 — — 134,668 134,668 
Other borrowings1,532 — 1,532 — 1,532 
Interest payable2,394 138 1,873 383 2,394 
Derivatives28,306 — 28,306 — 28,306 

 
 Fair Value
December 31, 2020Carrying amountLevel 1Level 2Level 3Total
Financial assets:     
Cash and cash equivalents$1,317,898 $1,317,898 $— $— $1,317,898 
Investment securities1,176,991 — 1,176,991 — 1,176,991 
Loans, net6,912,570 — — 7,058,693 7,058,693 
Loans held for sale899,173 — 683,770 215,403 899,173 
Interest receivable43,603 33 5,254 38,316 43,603 
Mortgage servicing rights79,997 — — 79,997 79,997 
Derivatives68,938 — 68,938 — 68,938 
Financial liabilities: 
Deposits: 
Without stated maturities$8,020,783 $8,020,783 $— $— $8,020,783 
With stated maturities1,437,254 — 1,446,605 — 1,446,605 
Securities sold under agreement to
repurchase and federal funds sold
32,199 32,199 — — 32,199 
Subordinated debt189,527 — — 192,149 192,149 
Other borrowings16,598 — 16,598 — 16,598 
Interest payable6,772 327 4,210 2,235 6,772 
Derivatives48,242 — 48,242 — 48,242 
42

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 September 30, 2021 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 

The balances and levels of the assets measured at fair value on a non-recurring basis at September 30, 2021 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
Non-recurring valuations:    
Financial assets:    
Other real estate owned$— $— $6,192 $6,192 
Collateral dependent loans:
Commercial and industrial$— $— $101 $101 
Construction— — 606 606 
Residential real estate:
Residential line of credit— — 311 311 
Commercial real estate:
Owner occupied— — 315 315 
Non-owner occupied— — 4,527 4,527 
Consumer and other— — 24 24 
Total collateral dependent loans$— $— $5,884 $5,884 
43

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, 2020 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
Recurring valuations:    
Financial assets:    
Available-for-sale securities:    
U.S. government agency securities$— $2,003 $— $2,003 
Mortgage-backed securities - residential— 773,336 — 773,336 
Mortgage-backed securities - commercial— 21,588 — 21,588 
Municipals, tax-exempt— 356,329 — 356,329 
Treasury securities— 16,628 — 16,628 
Corporate securities— 2,516 — 2,516 
Equity securities— 4,591 — 4,591 
Total securities$— $1,176,991 $— $1,176,991 
Loans held for sale$— $683,770 $215,403 $899,173 
Mortgage servicing rights— — 79,997 79,997 
Derivatives— 68,938 — 68,938 
Financial Liabilities:
Derivatives— 48,242 — 48,242 
 The balances and levels of the assets measured at fair value on a non-recurring basis at December 31, 2020 are presented in the following table: 
At December 31, 2020Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)
Significant
other observable inputs
(level 2)
Significant unobservable
inputs
(level 3)
Total
Non-recurring valuations:    
Financial assets:    
Other real estate owned$— $— $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 

The following tables present information as of September 30, 2021 and December 31, 2020 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
As of September 30, 2021
Financial instrumentFair ValueValuation techniqueSignificant 
unobservable inputs
Range of
inputs
Collateral dependent loans$5,884 Valuation of collateralDiscount for comparable sales0%-30%
Other real estate owned$6,192 Appraised value of property less costs to sellDiscount for costs to sell0%-15%
44

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
Financial instrumentFair ValueValuation techniqueSignificant 
unobservable inputs
Range of
inputs
Collateral dependent loans$6,153 Valuation of collateralDiscount for comparable sales0%-30%
Other real estate owned$6,662 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 client and client's business. As of September 30, 2021 and December 31, 2020, total amortized cost of collateral dependent loans measured on a non-recurring basis amounted to $6,918 and $7,839, 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,
20212020
Commercial and industrial$100,496 $215,403
Residential real estate:
1-4 family mortgage755,210 683,770 
Total loans held for sale$855,706 $899,173 
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 losses of $3,908 and $14,894 resulting from fair value changes of mortgage loans were recorded in income during the three and nine months ended September 30, 2021, respectively, compared to net gains of $20,378 and $6,512 during the three and nine months ended September 30, 2020, 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
45

FB Financial Corporation and subsidiaries
Notes to consolidated financial statements
(Unaudited)
(Dollar amounts are in thousands, except share and per share amounts)
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 September 30, 2021, and December 31, 2020, there were $105,094 and $151,184, 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 table sets forth the changes in fair value associated with this portfolio.
Three Months Ended September 30, 2021
Principal BalanceFair Value DiscountFair Value
Carrying value at beginning of period$135,972 $(11,850)$124,122 
Change in fair value:
  Pay-downs and pay-offs(24,366)— (24,366)
  Changes in valuation included in other noninterest income— 740 740 
      Carrying value at end of period$111,606 $(11,110)$100,496 
Nine Months Ended September 30, 2021
Principal BalanceFair Value DiscountFair Value
Carrying value at beginning of period$239,063 $(23,660)$215,403 
Change in fair value:
Pay-downs and pay-offs(116,158)— (116,158)
Write-offs to discount(11,299)11,299 — 
Changes in valuation included in other noninterest income— 1,251 1,251 
     Carrying value at end of period$111,606 $(11,110)$100,496 
Three Months Ended September 30, 2020
Principal balanceFair Value discountFair Value
Carrying value at beginning of period$— $— $— 
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)$241,256 
Nine Months ended September 30, 2020
Principal balanceFair Value discountFair Value
Carrying value at beginning of period$— $— $— 
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 income— 1,858 1,858 
      Carrying value at end of period$263,461 $(22,205)$241,256 
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.
46

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 September 30, 2021 and December 31, 2020: 
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)


Note (12)—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. The Company offers full-service conforming residential mortgage products, including conforming residential loans and services through 2 distinct delivery channels: retail and ConsumerDirect. Additionally, the Mortgage segment includes 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. 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 segment uses the proceeds from loan sales to repay obligations due to the Banking segment.





47

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:
Three Months Ended September 30, 2021BankingMortgageConsolidated
Net interest income$88,576 $(100)$88,476 
Provisions for credit losses(1)
(2,531)— (2,531)
Mortgage banking income(2)
— 47,751 47,751 
Change in fair value of mortgage servicing rights, net of hedging(2)
— (2,367)(2,367)
Other noninterest income13,823 (201)13,622 
Depreciation and amortization1,791 349 2,140 
Amortization of intangibles1,344 — 1,344 
Other noninterest expense55,642 35,881 91,523 
Income before income taxes$46,153 $8,853 $55,006 
Income tax expense9,716 
Net income applicable to FB Financial Corporation and noncontrolling
interest
45,290 
Net income applicable to noncontrolling interest(3)
— 
Net income applicable to FB Financial Corporation$45,290 
Total assets$10,712,281 $1,098,009 $11,810,290 
Goodwill242,561 — 242,561 
(1)Included $301 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)
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 —