Fb Financial Corporation · NYSE:FBK
Fb Financial — Q1 2020 Earnings Presentation
38 slides from Fb Financial's earnings presentation, May 5, 2020
Slide 1: Second Quarter Investor Presentation
May 6, 2020 Second Quarter Investor Presentation
Slide 2: Important Information for Shareholders and Investors
IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORSIn connection with the proposed merger with Franklin, FB Financial has filed a registration statement on Form S-4 with the SEC. The registration statement contains the joint proxy statement of Franklin and FB Financial which was sent to the FB Fina
Slide 3: 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 4: 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 5: Snapshot of FB Financial today
Snapshot of FB Financial today Note: Unaudited financial data as of March 31, 2020.1 Non-GAAP financial measure. See “Use of non-GAAP financial measures” and “Reconciliation of non-GAAP financial measures” in the Appendix hereto. Financial highlights Balance sheet data ($mm) 3/31/2020 Total assets $
Slide 6: Recent corporate history
Recent corporate history 1 Pro forma net income and tax-adjusted return on average assets and return on average tangible common equity include a pro forma provision for federal income taxes using a combined effective income tax rate of 35.08% and 36.75% for the years ended December 31, 2015 and 2016
Slide 7: A leading community bank headquartered in Tennessee
A leading community bank headquarteredin Tennessee Source: SNL Financial; Note: Deposit data as of June 30, 2019; Pro forma for completed acquisitions since June 30, 2019 and pending acquisitions announced as of April 30, 2020.1 Sorted by deposit market share, deposits are limited to Tennessee.2 Com
Slide 8: Strategic drivers
Strategic drivers Great Place to Work Strategic M&A and Capital Optimization Experienced Senior Management Team Elite Financial Performance Scalable Platforms Enabled by Technology Empowered Teams Across Attractive Metro andCommunity Markets
Slide 9: Balance between community and metropolitan markets
Balance between community and metropolitan markets 1 Source: SNL Financial. Statistics are based upon county data. Market data is as of June 30, 2019 and is presented on a pro forma basis for completed acquisitions since June 30, 2019 and pending acquisitions as of April 30, 2020. Size of bubble rep
Slide 10: Well positioned in attractive metropolitan markets
Well positioned in attractive metropolitan markets Source: S&P Market Intelligence; Chattanooga, Knoxville, Memphis, Huntsville, Bowling Green Chambers of Commerce, U.S. Department of Labor, Bureau of Labor Statistics, NAICS1 January 9, 2013 “Nashville Takes its Turn in the Spotlight”; 2 Policom Cor
Slide 11: Aggressively managing for impact of COVID-19
Aggressively managing for impact of COVID-19 Prepared for Downturn Reprioritized objectives early: 1. Health and Safety 2. Liquidity 3. Capital 4. Profitability 5. GrowthLiquidity: $4.2 billion of on-balance sheet and contingent liquidity; Loans HFI / Deposits of 85%Capital: Strong current capital l
Slide 12: Assisting customers in the face of uncertainty
Assisting customers in the face of uncertainty Deferral Programs Paycheck Protection Program Offering relief in the form of deferral programs for all customers who request assistanceBegan proactively reaching out to consumer and commercial customers in mid-MarchStandard consumer loan receiving 2-pay
Slide 13: 1Q 2020 highlights
1Q 2020 highlights Key highlights Financial results Proactively addressing the impact of the COVID-19 virus on our associates, customers, communities and stakeholdersIncreased on-balance sheet liquidity to 12.0% of tangible assets from 9.2% in 4Q 2019; lowered loans HFI / deposits to 85%Adopted CECL
Slide 14: Strong liquidity position
Strong liquidity position On Balance Sheet Liquidity Loans HFI / Customer Deposits Sources of Liquidity 1Q 2020 Current On-Balance Sheet: Cash and Equivalents $425.1 Unpledged Securities 345.0 Equity Securities 3.4 Total On-Balance Sheet $773.5 Available Sources of Liquidity: Brokered CDs and Unsecu
Slide 15: Core deposit franchise provides stable liquidity
Core deposit franchise provides stable liquidity 1 Includes mortgage servicing-related escrow deposits of $45.4 million, $53.7 million, $53.5 million, $92.6 million and $110.1 million for the years ended December 31, 2016, 2017, 2018 and 2019 and the quarter ended March 31, 2020, respectively. There
Slide 16: Well-capitalized headed into recession
Well-capitalized headed into recession Tangible book value per share2 Simple capital structure Growth: 58.7% since IPO (September 2016) 1Q19 4Q19 1Q201 Shareholder’s equity/Assets 13.0% 12.4% 11.8% TCE/TA² 10.5% 9.7% 9.1% Common equity tier 1/Risk-weighted assets 12.0% 11.1% 11.0% Tier 1 capital/Ris
Slide 17: Consistent loan growth and balanced portfolio
Consistent loan growth and balanced portfolio Total loan growth3 ($million) and commercial real estate concentration Commercial real estate (CRE) concentrations4 % of Risk-Based Capital 4Q19 1Q20(preliminary) C&D loans subject to 100% risk-based capital threshold 88% 86% Total CRE loans subject to 3
Slide 18: Concentrations representative of community bankers serving customers
Concentrations representative of community bankers serving customers across our communitiesFocused on in-market relationship bankingDiversified portfolio across the footprint with solid asset quality entering 20203 SNC credits in entire portfolio with less than $75 million in total balances – all we
Slide 19: Retail portfolio – 8.6% of gross loans HFI
Retail portfolio – 8.6% of gross loans HFI Portfolio overview Deferral participants Credit quality 53% C&I/CRE-OO and 47% CRE Non-OO and OtherCRE Non-owner occupied and Other has no major concentrations by tenantPortfolio benefits from conservative underwriting parameters which typically require per
Slide 20: Healthcare & social assistance portfolio – 5.6% of loans HFI
Healthcare & social assistance portfolio – 5.6% of loans HFI Portfolio overview Deferral participants Credit quality Portfolio diversified over several segments across the footprintAssisted Living / Nursing Care / Continuing Care property types include assisted living with the largest loan ~$10M, on
Slide 21: Hotel portfolio – 4.2% of gross loans HFI
Hotel portfolio – 4.2% of gross loans HFI Outstanding by location Outstanding by flag Credit quality Portfolio built around long-term successful hotel operators and strong flagsProperties concentrated in limited service facilities with reduced reliance on food and beverage revenuesProject exposure r
Slide 22: Transportation and warehousing – 2.5% of gross loans HFI
Transportation and warehousing – 2.5% of gross loans HFI Portfolio overview Deferral participants Credit quality Trucking related exposure includes truckload operators, equipment lessors to owner/operators, and local franchisees of major national trucking companies. Largest relationship ~$26 million
Slide 23: Other Leisure – 2.3% of gross loans HFI
Other Leisure – 2.3% of gross loans HFI Portfolio overview Deferral participants Credit quality Diversified portfolio across the footprint encompassing a myriad of customers and typesLargest exposures include: ~$15M to an entertainment venue with strong collateralMultiple marinas across the franchis
Slide 24: Restaurant – 1.4% of gross loans HFI
Restaurant – 1.4% of gross loans HFI Portfolio overview Deferral participants Credit quality No major concentration by operator or brandLargest single customer ~$4M, secured by real estate. Strong local independent operatorPortfolio distributed across the footprintExpectations include varying levels
Slide 25: Allowance for credit losses overview
Allowance for credit losses overview 4Q 2019 ALLL to 1Q 2020 ACL Bridge Current Expected Credit Loss (CECL) Allowance for Credit Losses (ACL) model utilizes Moody’s baseline economic forecast issued on April 4, 2020 and a 3 year forecast period, summary below1:Initial adoption of CECL, increased ACL
Slide 26: Solid asset quality
Solid asset quality 1 Includes acquired excess land and facilities for all periods subsequent to the acquisition of the Clayton Banks and GNMA rebooked loans for 2017. Nonperforming ratios Classified loans ($mm) LLR / loans Net charge-offs (recoveries) / average loans
Slide 27: Core earnings power remains intact
Core earnings power remains intact ¹ See “Use of non-GAAP financial measures” and the Appendix hereto for a discussion and reconciliation of non-GAAP measures Adjusted pre-tax, pre-provision return on average assets¹ Drivers of profitability Net interest margin Noninterest income ($mm) Loans/deposit
Slide 28: Net interest margin remains strong
Net interest margin remains strong 1 Includes tax-equivalent adjustment. 2 Data for nonaccrual interest collections not available prior to 2016. NA = not available Historical yield and costs NIM1 3.97% 4.10% 4.46% 4.66% 4.34% 3.92% Impact of accretion and nonaccrual interest (bps) 0.01% 0.17% 0.24%
Slide 29: Mortgage operations overview
Mortgage operations overview Highlights Record total Mortgage pre-tax contribution of $8.0mm for 1Q 2020Mortgage sale margins continue to be elevated due to industry capacity constraints and low interest ratesMortgage banking income $32.7 mm, up 55.8% from 1Q 2019 and 25.1% from 4Q 2019MSR hedging o
Slide 30: Managing operating leverage
Managing operating leverage Core efficiency ratio1 (tax-equivalent basis) Highlights 1 Non-GAAP financial measure. See “Use of non-GAAP financial measures,” and “Reconciliation of non-GAAP financial measures” in the Appendix hereto. Consolidated 1Q 2020 core efficiency ratio¹ of 65.7%Integration of
Slide 31: Company overview (Franklin Financial Network)
Company overview Ticker: FSB (NYSE)Headquarters: Franklin, TennesseeFranchise highlights: Top community bank in highly attractive Williamson and Rutherford countiesRelationship oriented with local decision makingSeasoned team of local bankers—averaging ~20 years of experience Financial highlights as
Slide 32: Appendix
(FB) FirstBank Appendix
Slide 33: Reconciliation of non-GAAP financial measures
Reconciliation of non-GAAP financial measures Adjusted pro forma net income and diluted earnings per share1 1 2016 includes loss on sale of mortgage servicing rights, impairment of mortgage servicing rights, gain on sales or write-downs of other real estate owned and other assets and gain on sale of
Slide 34: Reconciliation of non-GAAP financial measures (cont'd)
Reconciliation of non-GAAP financial measures (cont’d) Tax-equivalent core efficiency ratio 1 Efficiency ratio (GAAP) is calculated by dividing non-interest expense by total revenue.
Slide 35: Reconciliation of non-GAAP financial measures (cont'd)
Reconciliation of non-GAAP financial measures (cont’d) Segment tax-equivalent core efficiency ratios 1 Includes mortgage segment other noninterest mortgage banking expense, depreciation, loss on sale of mortgage servicing rights and amortization and impairment of mortgage servicing rights.
Slide 36: Reconciliation of non-GAAP financial measures (cont'd)
Reconciliation of non-GAAP financial measures (cont’d) Tangible book value per common share and tangible common equity to tangible assets
Slide 37: Reconciliation of non-GAAP financial measures (cont'd)
Reconciliation of non-GAAP financial measures (cont’d) Adjusted pre-tax, pre-provision, return on average tangible common equity Adjusted pro forma return on average tangible common equity
Slide 38: Reconciliation of non-GAAP financial measures (cont'd)
Reconciliation of non-GAAP financial measures (cont’d) Adjusted pro forma return on average assets and equity Adjusted pro forma pre-tax, pre-provision return on average assets and equity