Fb Financial Corporation · NYSE:FBK
Fb Financial — Q2 2020 Earnings Presentation
40 slides from Fb Financial's earnings presentation, Jul 21, 2020
Slide 1: Second Quarter 2020 Earnings Presentation
Second Quarter 2020 Earnings Presentation July 21, 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: 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 had been reinstated across the footprint with sneeze guards and social distancing Safety methods in place ▪Re-suspending lobby access
Slide 5: 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 County by county, Tennessee1 Open w/ Distancing Open w/ Distancing Open w/ Distancing 50% Capacity Open w/ Distancing no
Slide 6: And many customers are executing on the reopening
And many customers are executing on the reopening Color from the field ▪ “On the whole, our market is performing well. We do a fair amount of business with trucking operators, which we view as a leading indicator of the economy. May was a down month for that group, but they have bounced back and are
Slide 7: While we continue to work with impacted customers
While we continue to work with impacted customers Deferral programs Total first deferrals by type ($918 million1) ▪ First deferral held no requirements; granting of second $354.8 $321.7 deferrals are being decided on a case-by-case basis ▪ Standard consumer loan received 2-payment relief; standard c
Slide 8: 2Q 2020 highlights
2Q 2020 highlights Key highlights Financial results ◼ Originated and funded $314.7 million in Paycheck Protection Program 2Q 2020 loans, expected to create $5.5 million1 in fee income over the remaining life of the loans Diluted earnings per share $0.70 Adjusted diluted earnings per share2 $0.74 ◼ I
Slide 9: 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 $988.5 $1,000.0 ◼ Monitoring liquidity
Slide 10: Core deposit franchise provides stable liquidity
Core deposit franchise provides stable liquidity Total deposits ($mm) Cost of deposits Customer deposits Brokered and internet time deposits Noninterest bearing (%) Cost of total deposits (%) 35.0% 29.8% 30.0% $5,953 24.7% 24.5% 24.8% $5,377 $15 25.0% 23.0% $4,843 $4,922 $4,935 $20 20.0% $30 $25 $20
Slide 11: Well-capitalized headed into recession
Well-capitalized headed into recession Capital position Tangible book value per share3 2Q19 1Q202 2Q201,2 Shareholder’s equity/Assets 12.1% 11.8% 11.1% $19.07 $18.35 TCE/TA² 9.2% 9.1% 8.7% $11.56 $11.58 Common equity 10.4% 11.0% 11.4% tier 1/Risk-weighted assets 3Q16 4Q16 1Q20 2Q20 Tier 1 capital/Ri
Slide 12: Balanced portfolio
Balanced portfolio Portfolio mix C&I1 exposure by industry Other Balance Ex. PPP PPP 6% 1-4 family C&I CRE-OO Total % of Total Loans 15% Real Estate Rental and Leasing $ 278.7 $ 97.2 $ 375.9 22.7% $ 11.5 Retail Trade 65.3 101.1 166.4 10.0% 23.3 1-4 family HELOC Wholesale Trade 100.3 41.8 142.1 8.6%
Slide 13: Industries of concern
Industries of concern ◼ Concentrations representative of community bankers Industry exposures / gross loans (HFI) serving customers across our communities 7.7% ◼ Focused on in-market relationship banking ◼ Trends better than expected to date as markets reopened 5.3% in late April / early May, contin
Slide 14: Retail portfolio – 7.7% of gross loans HFI
Retail portfolio – 7.7% of gross loans HFI ◼ 53% C&I / CRE-OO and 47% CRE Non-OO and Other Portfolio overview ◼ CRE Non-owner occupied and Other – Generally smaller strip centers with backing of good Car, RV, Boat and ATV Dealers guarantors; largest single loan <$8 million 22% – High level of tenant
Slide 15: Healthcare portfolio – 5.3% of loans HFI
Healthcare portfolio – 5.3% of loans HFI ◼ Assisted Living / Nursing Care continues to perform well; no Portfolio overview known COVID-19 outbreaks at this time Other Healthcare and Social Assisted Living / Assistance Nursing Care / ◼ Offices of Physicians benefitted from the majority of our 25% Con
Slide 16: Hotel portfolio – 4.0% of gross loans HFI
Hotel portfolio – 4.0% of gross loans HFI ◼ Occupancy rates vary widely across footprint, with Nashville Outstanding by location hotels at approximately 30% - 40%, while other geographies are as high as 80% Out of Market ◼ Reports from operators reference leisure properties lead the way, 8% Thursday
Slide 17: Other Leisure – 2.3% of gross loans HFI
Other Leisure – 2.3% of gross loans HFI ◼ Confidence in portfolio due to current performance and Portfolio overview strong guarantors Other <5% ◼ Certain categories, such as marinas, have actually 18% Marinas 19% benefitted from current backdrop as safe recreational activities are sought Theaters ◼
Slide 18: Transportation and warehousing – 2.1% of gross loans HFI
Transportation and warehousing – 2.1% of gross loans HFI ◼ Overall satisfactory performance Portfolio overview Other ◼ Larger operators are improving Transportation and Warehousing 16% ◼ One small trucking operator with <$1.5 million in outstandings filed for bankruptcy during the quarter Consumer C
Slide 19: Restaurant – 1.3% of gross loans HFI (ex. PPP)
Restaurant – 1.3% of gross loans HFI (ex. PPP) ◼ Overall satisfactory performance Portfolio overview ◼ Quick service seeing satisfactory results with drive through model Other ◼ Full service impacted more heavily given costs to re-open 4% Bars and concerns regarding potential further shut-downs. 6%
Slide 20: Allowance for credit losses overview
Allowance for credit losses overview ◼ Current Expected Credit Loss (CECL) Allowance for Credit Losses (ACL) model utilizes a blend of Moody’s economic scenarios from June 20, 2020, with resulting key economic data summarized below: FQE, FYE 12/31, 3Q 2020 4Q 2020 1Q 2021 2020 2021 2022 2023 GDP (bc
Slide 21: Asset quality remains solid
Asset quality remains solid Nonperforming ratios Classified loans ($mm) 1 1,2 NPLs (HFI)/loans (HFI) NPAs/assets $88 0.77% $79 $80 0.74% 0.73% 0.71% $74 0.68% $69 0.59% 0.62% 0.60% 0.43% 0.47% 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 LLR/loans HFI (excluding PPP loans)3 Net charge-offs/aver
Slide 22: Core earnings power remains intact
Core earnings power remains intact Adjusted pre-tax, pre-provision return on average assets¹ 2.72% 2.40% 2.34% 2.25% 2.15% 1.81% 2015 2016 2017 2018 2019 YTD 2020 Drivers of profitability Loans/deposits Net interest margin Noninterest income ($mm) Core efficiency ratio1 Loans excluding HFS Loans HFS
Slide 23: 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% $7,000 6.0% $6,000 Avg. interest earning Yields and Costs (%) 5.0% $5,000 assets ($mm) 4.0% $4,000 3.0% $3,000 2.0% $2,000 1.0% $1,000 -- $0 2Q19 3Q1
Slide 24: Mortgage operations overview
Mortgage operations overview Highlights Quarterly mortgage production ◼ Record total Mortgage pre-tax contribution of $33.6mm for 2Q Consumer Direct 2Q19 1Q20 2Q20 2020 Retail Wholesale ◼ Mortgage sale margins continue to be elevated due to industry capacity constraints and low interest rates ◼ Mort
Slide 25: Managing operating leverage
Managing operating leverage Highlights Core efficiency ratio (tax-equivalent basis)¹ ◼ Consolidated 2Q 2020 core efficiency ratio¹ Banking segment of 57.5% driven by record mortgage Consolidated 93.3% contribution 92.4% Mortgage segment 85.0% 79.5% ◼ Converted FNB Financial Corp in May 2020; cost sa
Slide 26: Appendix
FB} Fee Bank Appendix
Slide 27: Adjusted net income and diluted earnings per share
GAAP reconciliation and use of non-GAAP financial measures Adjusted net income and diluted earnings per share 26
Slide 28: Pre-tax, pre-provision earnings and diluted earnings per share
GAAP reconciliation and use of non-GAAP financial measures Pre-tax, pre-provision earnings and diluted earnings per share 27
Slide 29: Adjusted pro forma net income and diluted earnings per share
GAAP reconciliation and use of non-GAAP financial measures Adjusted pro forma net income and diluted earnings per share* 28
Slide 30: Adjusted pre-tax, pre-provision earnings and diluted earnings per share
GAAP reconciliation and use of non-GAAP financial measures Adjusted pre-tax, pre-provision earnings and diluted earnings per share 29
Slide 31: Core efficiency ratio (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 30
Slide 32: Core efficiency ratio (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 31
Slide 33: Segment core efficiency ratios (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Segment core efficiency ratios (tax-equivalent basis) 32
Slide 34: Adjusted mortgage contribution
GAAP reconciliation and use of non-GAAP financial measures Adjusted mortgage contribution 33
Slide 35: Tangible assets and equity
GAAP reconciliation and use of non-GAAP financial measures Tangible assets and equity 34
Slide 36: Return on average tangible common equity
GAAP reconciliation and use of non-GAAP financial measures Return on average tangible common equity 35
Slide 37: 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 36
Slide 38: 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 37
Slide 39: 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 38
Slide 40: 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 39