Fb Financial Corporation · NYSE:FBK
Fb Financial — Q3 2020 Earnings Presentation
42 slides from Fb Financial's earnings presentation, Oct 27, 2020
Slide 1: Third Quarter 2020 Earnings Presentation
Third Quarter 2020 Earnings Presentation October 27, 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: 3Q 2020 highlights
3Q 2020 highlights Key highlights Financial results Closed Franklin Financial Network (“FSB”) merger in August; 3Q 2020 completed systems conversion on October 12th Diluted earnings per share $(0.14) Converted mobile and online banking platform in July Adjusted diluted earnings per share1 $1.46
Slide 5: 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 6: 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 7: And many customers are executing on the reopening
And many customers are executing on the reopening Color from the field “Economic activity across our markets continues to pick back up. Residential construction continues to perform very well, and we are seeing continued demand for commercial real estate transactions. We have taken a closer look a
Slide 8: While we continue to work with impacted customers
While we continue to work with impacted customers Deferral programs Remaining deferrals by type ($465 million1) $270.6 First deferral held no requirements; granting of second deferrals are being decided on a case-by-case basis Standard consumer loan received 2-payment relief; standard commercial
Slide 9: And closed an impactful merger
And 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 Nashville
Slide 10: 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 $1,585.0 Finalizing plan for the rem
Slide 11: Core deposit franchise provides stable liquidity
Core deposit franchise provides stable liquidity Total deposits ($mm) Cost of deposits Customer deposits Brokered and internet time deposits Noninterest bearing (%) Cost of total deposits (%) 35.0% 29.8% 30.0% $9,094 24.5% 24.8% 25.2% 24.7% 25.0% $92 20.0% $5,953 15.0% 1.11% 1.02% $5,377 $9,002 0.94
Slide 12: 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% 12.4% tier 1/Risk-weighted assets 3Q16 4Q16 2Q20 3Q20 Tier 1 capital
Slide 13: 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 Retail Trade 59.3 134.2 193.5 9.6% 23.5 C&I 33% 1-4 family HELOC Wholesale Trade 109.9 52.5 1
Slide 14: 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 15: 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% Gas Stations and properties, largely smaller strip centers Conv
Slide 16: 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 4% 5% but remain depressed Other MSA 8% Portfolio is larg
Slide 17: 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 18: 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 19: 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 – Theaters and entert
Slide 20: 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 21: 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 22: Allowance for credit losses overview
Allowance for credit losses overview 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 Total Prov
Slide 23: 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
Slide 24: 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 25: 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% Avg. interest earning $8,000 Yields and Costs (%) 5.0% assets ($mm) 4.0% $6,000 3.0% $4,000 2.0% $2,000 1.0% -- $0 3Q19 4Q19 1Q20 2Q20 3
Slide 26: Mortgage operations overview
Mortgage operations overview Highlights Quarterly mortgage production Record adjusted total mortgage pre-tax contribution1 of $39.5 Consumer Direct 3Q19 2Q20 3Q20 million for 3Q 2020 Retail Wholesale Mortgage sale margins continue to be elevated due to industry capacity constraints and low inter
Slide 27: 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 28: Appendix
FB} pee Bank Appendix
Slide 29: 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 28
Slide 30: GAAP reconciliation: pre-tax, pre-provision earnings
GAAP reconciliation and use of non-GAAP financial measures Pre-tax, pre-provision earnings and diluted earnings per share 29
Slide 31: GAAP reconciliation: adjusted pro forma net income
GAAP reconciliation and use of non-GAAP financial measures Adjusted pro forma net income and diluted earnings per share* 30
Slide 32: GAAP reconciliation: 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 31
Slide 33: GAAP reconciliation: core efficiency ratio
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 32
Slide 34: GAAP reconciliation: core efficiency ratio
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 33
Slide 35: GAAP reconciliation: segment core efficiency ratios
GAAP reconciliation and use of non-GAAP financial measures Segment core efficiency ratios (tax-equivalent basis) 34
Slide 36: GAAP reconciliation: adjusted mortgage contribution
GAAP reconciliation and use of non-GAAP financial measures Adjusted mortgage contribution 35
Slide 37: GAAP reconciliation: tangible assets and equity
GAAP reconciliation and use of non-GAAP financial measures Tangible assets and equity 36
Slide 38: GAAP reconciliation: return on average tangible common equity
GAAP reconciliation and use of non-GAAP financial measures Return on average tangible common equity 37
Slide 39: GAAP reconciliation: 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 38
Slide 40: GAAP reconciliation: adjusted pre-tax, pre-provision returns
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 39
Slide 41: GAAP reconciliation: adjusted pro forma returns
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 40
Slide 42: GAAP reconciliation: 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 41