Fb Financial Corporation · NYSE:FBK
Fb Financial — Q3 2020 Earnings Presentation
45 slides from Fb Financial's earnings presentation, Nov 9, 2020
Slide 1: Fourth Quarter 2020 Investor Presentation
Fourth Quarter 2020 Investor Presentation November 10, 2020
Slide 2: Forward-Looking Statements
Forward–Looking Statements Certain statements contained in this presentation 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 inc
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: Snapshot of FB Financial today
Snapshot of FB Financial today Company overview Franchise map1 Second largest Nashville-headquartered bank and third largest Tennessee-based bank Originally chartered in 1906, one of the longest continually operated banks in Tennessee 100% stockholder of FirstBank Completed the largest bank IP
Slide 5: Recent corporate history
Recent corporate history 2015 2016 2017 2018 2019 YTD 2020 Awarded Awarded Awarded Awarded Awarded Awarded “Top Workplaces” “Top Workplaces” “Top Workplaces” “Top Workplaces” “Top Workplaces” “Top Workplaces” by the Tennessean by the Tennessean by the Tennessean by the Tennessean by the Tennessean b
Slide 6: Strategic drivers
Strategic drivers Experienced Senior Management Team Strategic M&A and Elite Financial Capital Optimization Performance Scalable Platforms Enabled by Great Place to Work Technology Empowered Teams Across Attractive Metro and Community Markets 5
Slide 7: Balance between community and metropolitan markets
Balance between community and metropolitan markets Our pro forma footprint1 Metropolitan markets Bowling Community markets Green MSA Nashville Knoxville MSA MSA Jackson MSA Market rank by deposits: ̶ Nashville (6th) ̶ Chattanooga (5th) Memphis MSA ̶ Knoxville (9th) Chattanooga ̶ Jackson (3rd) MSA
Slide 8: Well positioned in attractive metropolitan markets
Well positioned in attractive metropolitan markets Chattanooga Nashville rankings: “The new ‘it’ City” – The New York Times1 4th largest MSA in TN Diverse economy with over 24,000 businesses in Metropolitan Economic Employs over 260,000 people Best Place for New Businesses3 #1 2 #2 Strength Ra
Slide 9: Aggressively managing for impact of COVID-19
Aggressively managing for impact of COVID-19 .No pandemic related reductions in force, and remote work environment has been effective Health and .Branch lobby service reinstated across the footprint with sneeze guards and social distancing methods Safety in place .Back office personnel have begun tr
Slide 10: Markets have reopened for economic activity
Markets have reopened for economic activity 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 Distancing Encou
Slide 11: While we continue to work with impacted customers
While we continue to work with impacted customers Deferral programs Remaining deferrals by type ($465 million1) . First deferral held no requirements; granting of second $270.6 deferrals are being decided on a case-by-case basis . Standard consumer loan received 2-payment relief; standard commercial
Slide 12: And have closed an impactful merger
And have closed an impactful merger Transaction Highlights Recent Nashville News . Closed acquisition on August 15, 2020 . Facebook plans $800 million Gallatin data center – Nashville Post, August 12, 2020 . Successful systems conversion on October 12, 2020 . Amazon announces 2,500 new jobs in Nashv
Slide 13: Strong liquidity position
Strong liquidity position Customer deposit base has seen consistent growth in On Balance Sheet Liquidity balances over the past 12 months and remains a stable base of funding and liquidity On-Balance Sheet Liqudity On balance sheet liquidity / tangible assets $1,585.0 Finalizing plan for the rem
Slide 14: Core deposit franchise provides stable liquidity
Core deposit franchise provides stable liquidity Total deposits ($mm) Cost of deposits Customer deposits Brokered and internet time deposits Noninterest bearing (%) Cost of total deposits (%) 35.0% 29.8% 30.0% 25.2% $9,094 24.7% 24.5% 24.8% 25.0% $92 20.0% 1.11% $5,953 15.0% 1.02% $5,377 $9,002 0.94
Slide 15: Well-capitalized for future opportunities
Well-capitalized for future opportunities Capital position Tangible book value per share3 3Q19 2Q202 3Q201,2 Shareholder’s equity/Assets 12.2% 11.1% 11.3% $20.87 $19.07 TCE/TA² 9.4% 8.7% 9.2% $11.56 $11.58 Common equity 10.8% 11.4% 11.8% tier 1/Risk-weighted assets 3Q16 4Q16 2Q20 3Q20 Tier 1 capital
Slide 16: Balanced portfolio
Balanced portfolio Portfolio mix C&I1 exposure by industry Other Balance Ex. PPP PPP 4% 1-4 family C&I CRE-OO Total % of Total Loans 16% Real Estate Rental and Leasing $ 326.7 $ 157.6 $ 484.3 23.9% $ 11.5 1 C&I Retail Trade 59.3 134.2 193.5 9.6% 23.5 33% 1-4 family HELOC Wholesale Trade 109.9 52.5 1
Slide 17: 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% Credit quality remains satisfactory overall Optimistic regarding the group’s resiliency and ability to manage through this economy
Slide 18: Retail portfolio – 8.7% of gross loans HFI
Retail portfolio – 8.7% of gross loans HFI 64% CRE Non-OO and Other and 36% C&I / CRE-OO Portfolio overview CRE Non-owner occupied and Other Car, RV, Boat and – Diverse portfolio across the footprint, primarily local ATV Dealers 17% properties, largely smaller strip centers Gas Stations and Conv
Slide 19: Hotel portfolio – 4.7% of gross loans HFI
Hotel portfolio – 4.7% of gross loans HFI Portfolio representative of seasoned operators, good flags and Outstanding by location good locations Underlying economics trending up as compared to April and May, Other Community Out of Market 5% but remain depressed 4% Other MSA Portfolio is largely
Slide 20: Healthcare portfolio – 4.7% of loans HFI
Healthcare portfolio – 4.7% of loans HFI Continue to report satisfactory results Portfolio overview Other Healthcare Operators continue to mange through COVID related and Social Assisted Living / Assistance Nursing Care / protocols 23% Continuing Care 36% Physician’s offices appear to be gener
Slide 21: Restaurant – 1.9% of gross loans HFI
Restaurant – 1.9% of gross loans HFI Majority are owner operators Portfolio overview Portfolio split roughly evenly between limited service and full service outlets Other C&D 2% Limited service has seen an ability to change their model, 2% leading to improvement Non-Owner Occ CRE Full servic
Slide 22: Other Leisure – 1.8% of gross loans HFI
Other Leisure – 1.8% of gross loans HFI Mix of industries represented with no concentration Portfolio overview Other <5% Outcomes related to the virus have varied 12% Marinas Golf Courses and 16% Country Clubs – Marinas and campgrounds have improved 7% RV Parks and Theaters Campgrounds – Theater
Slide 23: Transportation and warehousing – 1.8% of gross loans HFI
Transportation and warehousing – 1.8% of gross loans HFI Portfolio continues to fare well Portfolio overview Other Trucking overall shows strength Transportation and Warehousing 18% Warehousing has benefitted from storage and distribution Trucking 37% related to online shopping Consumer Charte
Slide 24: Allowance for credit losses overview
Allowance for credit losses overview Current Expected Credit Loss (CECL) Allowance for Credit Losses (ACL) model utilizes a blend of Moody’s economic scenarios from the third quarter, with resulting key economic data summarized below: FQE, FYE 12/31, 4Q 2020 1Q 2021 2020 2021 2022 2023 2024 GDP (b
Slide 25: Allowance for credit losses overview
Allowance for credit losses overview 3Q 2020 Adjusted Pre-Tax Earnings Components1 Merger Other Adjusted Related Non-Core GAAP Net Interest Income $ 68,828 $ - $ - $ 68,828 Provision for credit losses (6,988) 52,822 - 45,834 Provision for credit losses on unfunded commitments (862) 10,429 - 9,567 To
Slide 26: Asset quality remains solid
Asset quality remains solid Nonperforming ratios Classified loans / loans HFI 1 1,2 NPLs (HFI)/loans (HFI) NPAs/assets 0.77% 0.74% 0.72%0.71% 1.82% 1.82% 1.83% 1.76% 0.68% 0.64% 1.63% 0.62% 0.60% 0.61% 0.47% 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 LLR/loans HFI (excluding PPP loans)3 Net c
Slide 27: Core earnings power remains intact
Core earnings power remains intact Adjusted pre-tax, pre-provision return on average assets¹ 2.87% 2.40% 2.34% 2.25% 2.15% 1.81% 2015 2016 2017 2018 2019 YTD 2020 Drivers of profitability Loans/deposits Net interest margin Noninterest income ($mm) Core efficiency ratio1 Loans excluding HFS Loans HFS
Slide 28: Managing net interest margin through falling rates
Managing net interest margin through falling rates Historical yield and costs Average interest earning assets Yield on loans Cost of deposits NIM 7.0% $10,000 6.0% $8,000 5.0% 4.0% $6,000 3.0% $4,000 2.0% $2,000 1.0% ($mm) assets -- $0 Avg. interest earning Yields and Costs(%) 3Q19 4Q19 1Q20 2Q20 3Q
Slide 29: Mortgage operations overview
Mortgage operations overview Highlights Quarterly mortgage production Record adjusted total mortgage pre-tax contribution1 of $39.5 Consumer Direct million for 3Q 2020 Retail 3Q19 2Q20 3Q20 Wholesale Mortgage sale margins continue to be elevated due to industry capacity constraints and low inter
Slide 30: Managing operating leverage
Managing operating leverage Highlights Core efficiency ratio (tax-equivalent basis)¹ Consolidated 3Q 2020 core efficiency ratio¹ Banking segment of 58.2% driven by record mortgage Consolidated contribution 92.4% Mortgage segment 85.0% 79.5% Converted Franklin Financial Network in October 2020 66
Slide 31: Appendix
Appendix 30
Slide 32: GAAP reconciliation and use: Adjusted net income and diluted EPS
GAAP reconciliation and use of non-GAAP financial measures Adjusted net income and diluted earnings per share 31
Slide 33: GAAP reconciliation and use: Pre-tax, pre-provision earnings
GAAP reconciliation and use of non-GAAP financial measures Pre-tax, pre-provision earnings and diluted earnings per share 32
Slide 34: GAAP reconciliation and use: Adjusted pro forma net income
GAAP reconciliation and use of non-GAAP financial measures Adjusted pro forma net income and diluted earnings per share* 33
Slide 35: GAAP reconciliation and use: Adjusted pre-tax, pre-provision earnings
GAAP reconciliation and use of non-GAAP financial measures Adjusted pre-tax, pre-provision earnings and diluted earnings per share 34
Slide 36: GAAP reconciliation and use: Core efficiency ratio
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 35
Slide 37: GAAP reconciliation and use: Core efficiency ratio
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 36
Slide 38: GAAP reconciliation and use: Segment core efficiency ratios
GAAP reconciliation and use of non-GAAP financial measures Segment core efficiency ratios (tax-equivalent basis) 37
Slide 39: GAAP reconciliation and use: Adjusted mortgage contribution
GAAP reconciliation and use of non-GAAP financial measures Adjusted mortgage contribution 38
Slide 40: GAAP reconciliation and use: Tangible assets and equity
GAAP reconciliation and use of non-GAAP financial measures Tangible assets and equity 39
Slide 41: GAAP reconciliation and use: Return on average tangible common equity
GAAP reconciliation and use of non-GAAP financial measures Return on average tangible common equity 40
Slide 42: GAAP reconciliation and use: 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 41
Slide 43: GAAP reconciliation and use: Adjusted pre-tax, pre-provision ROATCE
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 42
Slide 44: GAAP reconciliation and use: Adjusted pro forma return on average assets and equity
GAAP reconciliation and use of non-GAAP financial measures Adjusted pro forma return on average assets and equity Adjusted pre-tax, pre-provision return on average assets and equity 43
Slide 45: GAAP reconciliation and use: Adjusted Allowance for Credit Losses to Loans HFI
GAAP reconciliation and use of non-GAAP financial measures Adjusted Allowance for Credit Losses to Loans Held for Investment 44