Fb Financial Corporation · NYSE:FBK
Fb Financial — Q4 2020 Earnings Presentation
35 slides from Fb Financial's earnings presentation, Jan 26, 2021
Slide 1: 2020 Fourth Quarter and Annual Earnings Presentation
2020 Fourth Quarter and Annual Earnings Presentation January 26, 2021
Slide 2: Forward–Looking Statements
Forward–Looking Statements Certain statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements in
Slide 3: Use of non-GAAP financial measures
Use of non-GAAP financial measures This presentation contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures. These non-GAAP financial measures include, without limitati
Slide 4: 4Q 2020 and annual highlights
4Q 2020 and annual highlights Annual highlights Financial results ◼ Closed FNB Financial acquisition in February, completed systems 4Q 2020 FY 2020 conversion in May Diluted earnings per share $0.95 $1.67 ◼ Funded $315 million in PPP loans for customer base in the second Adjusted diluted earnings pe
Slide 5: Case counts have reduced activity in metro markets
Case counts have reduced activity in metro markets Government Guidance on Economic Activity Close Contact Entertainment Map Market Retail Restaurant Gyms Mask Orders Providers Venues Key Open w/ Open w/ Open w/ Open w/ Open w/ Strongly Tennessee1 Distancing Distancing Distancing Distancing Distancin
Slide 6: Core earnings power remains intact
Core earnings power remains intact Adjusted pre-tax, pre-provision return on average assets¹ 2.72% 2.40% 2.34% 2.25% 2.15% 1.81% 2015 2016 2017 2018 2019 2020 Drivers of profitability Loans/deposits Net interest margin Noninterest income ($mm) Core efficiency ratio1 Loans excluding HFS Loans HFS 101
Slide 7: Stabilizing net interest margin
Stabilizing net interest margin Historical yield and costs Average interest earning assets Yield on loans Cost of deposits NIM 7.0% $12,000 6.0% Avg. interest earning $10,000 Yields and Costs (%) 5.0% assets ($mm) $8,000 4.0% $6,000 3.0% 2.0% $4,000 1.0% $2,000 -- $0 4Q19 1Q20 2Q20 3Q20 4Q20 NIM 4.1
Slide 8: Mortgage continues to capitalize on rate environment
Mortgage continues to capitalize on rate environment Highlights Quarterly mortgage production ◼ Strong adjusted total mortgage pre-tax contribution1 of $22.9 Consumer Direct 4Q19 3Q20 4Q20 million Retail ◼ Mortgage sale margins continue to be elevated due to industry capacity constraints and low int
Slide 9: Realizing operating leverage through cost savings
Realizing operating leverage through cost savings Highlights Core efficiency ratio (tax-equivalent basis)¹ ◼ Consolidated 4Q 2020 core efficiency ratio¹ Banking segment of 58.5% Consolidated 92.4% Mortgage segment ◼ Banking segment efficiency ratio 79.5% improvement driven by realized cost savings f
Slide 10: Well-capitalized for future opportunities
Well-capitalized for future opportunities Capital position Tangible book value per share3 4Q19 3Q202 4Q201,2 Shareholder’s equity/Assets 12.4% 11.3% 11.5% $20.87 $21.64 TCE/TA² 9.7% 9.2% 9.3% $11.56 $11.58 Common equity 11.1% 11.8% 11.9% tier 1/Risk-weighted assets 3Q16 4Q16 3Q20 4Q20 Tier 1 capital
Slide 11: Liquidity position provides raw materials for growth
Liquidity position provides raw materials for growth ◼ Paid down $262 million in wholesale deposits and $200 On Balance Sheet Liquidity million in FHLB in 4Q 2020 On-Balance Sheet Liqudity ◼ Additional $86 million of wholesale deposits are expected to On balance sheet liquidity / tangible assets $2,
Slide 12: Cost of core deposit base continues to decline
Cost of core deposit base continues to decline Total deposits ($mm) Cost of deposits Customer deposits Brokered and internet time deposits Noninterest bearing (%) Cost of total deposits (%) 35.0% 29.8% 30.0% $9,457 25.2% $9,094 24.5% 24.8% 24.0% $62 25.0% $92 20.0% $5,953 15.0% 1.02% $5,377 $9,002 $
Slide 13: Balanced loan portfolio
Balanced loan portfolio Portfolio mix C&I1 exposure by industry Other Balance Ex. PPP PPP 5% 1-4 family C&I CRE-OO Total % of Total Loans 15% Real Estate Rental and Leasing $ 348.2 $ 153.6 $ 501.9 24.4% $ 6.8 1 Retail Trade 58.5 139.2 197.7 9.6% 14.7 C&I 1-4 family HELOC Wholesale Trade 106.3 56.2 1
Slide 14: Deferrals continue to decline
Deferrals continue to decline Deferral programs Principal and Interest Deferrals ($73 million) $46.3 ▪ Standard consumer loan received 2-payment relief; standard commercial loan received 90 day principal and interest forbearance; relationship managers had authority to offer plans that varied from th
Slide 15: Industries of concern
Industries of concern ◼ Industries initially considered to be the most susceptible to Industry exposures / gross loans (HFI) issues associated with the pandemic 8.7% ◼ Significant level of initial deferrals but steady improvement and return to pre-COVID payment plans ◼ Credit quality remains satisfa
Slide 16: Hotel portfolio – 4.9% of gross loans HFI
Hotel portfolio – 4.9% of gross loans HFI ◼ Portfolio representative of seasoned operators, good flags and Outstanding by location good locations (72% Hilton / Hyatt / IHG / Marriott / Wyndham) Other Community Out of Market 3% 5% ◼ Underlying economics remain depressed Other MSA 9% ◼ Portfolio is la
Slide 17: Restaurant – 2.0% of gross loans HFI
Restaurant – 2.0% of gross loans HFI ◼ Majority are owner operators Portfolio overview ◼ Portfolio split roughly evenly between limited service and full service outlets Other C&D 3% 2% ◼ Limited service has seen an ability to change their model, leading to improvement Non-Owner Occ CRE 25% ◼ Full se
Slide 18: Other Leisure – 1.7% of gross loans HFI
Other Leisure – 1.7% of gross loans HFI ◼ Mix of industries with no concentration Portfolio overview Other <5% Zoos and 11% ◼ Outdoor activities remain relatively unaffected Marinas Botanical Gardens 17% 5% Golf Courses and ◼ Majority of remaining deferrals are related to restricted Country Clubs bu
Slide 19: Asset quality remains solid
Asset quality remains solid Nonperforming ratios Classified loans / loans HFI 1 1,2 NPLs (HFI)/loans (HFI) NPAs/assets 0.88% 1.82% 1.83% 1.85% 0.77% 0.73% 1.76% 0.74% 0.72% 0.71% 1.63% 0.68% 0.60% 0.61%0.64% 4 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 LLR/loans HFI (excluding PPP loans)3 Net
Slide 20: Allowance for credit losses overview
Allowance for credit losses overview ◼ Current Expected Credit Loss (CECL) Allowance for Credit Losses (ACL) model utilizes Moody’s baseline scenario from the fourth quarter, with resulting key economic data summarized below: FQE, FYE 12/31, 1Q 2021 2Q 2021 2020 2021 2022 2023 2024 GDP (bcw$) $ 18,7
Slide 21: Appendix
FB} Fee Bank Appendix
Slide 22: GAAP reconciliation: Adjusted net income and diluted EPS
GAAP reconciliation and use of non-GAAP financial measures Adjusted net income and diluted earnings per share (1) 4Q2020 includes $4,533 FHLB prepayment penalty offset by $715 cash life insurance benefit and $1,370 gain from change in fair value of commercial loans held for sale acquired from Frankl
Slide 23: GAAP reconciliation: Adjusted pre-tax, pre-provision earnings
GAAP reconciliation and use of non-GAAP financial measures Adjusted pre-tax, pre-provision earnings (1) 4Q2020 includes $4,533 FHLB prepayment penalty offset by $715 cash life insurance benefit and $1,370 gain from change in fair value of commercial loans held for sale acquired from Franklin; 3Q2020
Slide 24: GAAP reconciliation: Adjusted earnings and diluted EPS
GAAP reconciliation and use of non-GAAP financial measures Adjusted earnings and diluted earnings per share* (1) 2020 includes charges of $6,838 related to a one time FHLB prepayment penalty and $1,505 related to losses on other real estate owned, offset by $715 cash life insurance benefit and $3,22
Slide 25: GAAP reconciliation: Adjusted pre-tax, pre-provision earnings
GAAP reconciliation and use of non-GAAP financial measures Adjusted pre-tax, pre-provision earnings (1) 2020 includes charges of $6,838 related to a one time FHLB prepayment penalty and $1,505 related to losses on other real estate owned, offset by $715 cash life insurance benefit and $3,228 gain fr
Slide 26: Core efficiency ratio (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 25
Slide 27: Core efficiency ratio (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 26
Slide 28: Segment core efficiency ratios (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Segment core efficiency ratios (tax-equivalent basis) 27
Slide 29: Adjusted mortgage contribution
GAAP reconciliation and use of non-GAAP financial measures Adjusted mortgage contribution 28
Slide 30: Tangible assets and equity
GAAP reconciliation and use of non-GAAP financial measures Tangible assets and equity 29
Slide 31: Return on average tangible common equity
GAAP reconciliation and use of non-GAAP financial measures Return on average tangible common equity 30
Slide 32: Adjusted return on average tangible common equity
GAAP reconciliation and use of non-GAAP financial measures Adjusted return on average tangible common equity Adjusted return on average assets and equity 31
Slide 33: Adjusted pre-tax, pre-provision return on average tangible common equity
GAAP reconciliation and use of non-GAAP financial measures Adjusted pre-tax, pre-provision return on average tangible common equity Adjusted pre-tax, pre-provision return on average assets and equity 32
Slide 34: Adjusted return on average assets and equity
GAAP reconciliation and use of non-GAAP financial measures Adjusted return on average assets and equity Adjusted pre-tax, pre-provision return on average assets and equity *Prior to the IPO in the third quarter of 2016, the Company was an S corporation and did not incur federal income taxes. In conj
Slide 35: Adjusted Allowance for Credit Losses to Loans Held for Investment
GAAP reconciliation and use of non-GAAP financial measures Adjusted Allowance for Credit Losses to Loans Held for Investment 34