Fb Financial Corporation · NYSE:FBK
Fb Financial — Investor Presentation (May 2017)
42 slides from Fb Financial's investor presentation, May 5, 2017
Slide 1: Second Quarter 2017 Investor Presentation
Second Quarter 2017 Investor Presentation
Slide 2: Forward-looking statements
This investor presentation contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking stateme
Slide 3: Additional Information and Participants in the Solicitation
Additional Information and Participants in the Solicitation This investor presentation is for informational purposes only and does not constitute a solicitation of any vote or approval with respect to the Company’s proposed acquisition of the Clayton Banks. The issuance of the shares of the Company’
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. The Company’s management uses these non-GAAP financial measur
Slide 5: Strategic drivers
Strategic drivers Balanced business model buoyed by low-cost core deposit base Experienced senior management team Strong financial performer: delivering profitability and growth Community bank culture and family values Scalable banking & mortgage platforms Complementary positions in high growth metr
Slide 6: A leading community bank headquartered in Tennessee
A leading community bank headquartered in Tennessee Top 10 banks in Tennessee¹ Top 10 banks under $20bn assets in Tennessee¹ Source: SNL Financial; Note: Deposit data as of June 30, 2016; Pro forma for pending acquisitions announced as of April 28, 20171 Sorted by deposit market share, deposits are
Slide 7: Attractive footprint with balance between community markets and high growth metropolitan markets
Attractive footprint with balance between community markets and platforms in high growth metropolitan markets 269123Blue dots 193210228Metro markets 130131135Highway 167169172State county outlines 8715487Green dots 148194148Community markets Source files are619754_FirstBank Bancorp.ai and mapinfo No
Slide 8: Pro forma core results
Pro forma core results1 2015 2016 1Q17 Diluted earnings per share2 $1.91 $2.40 $0.42 Weighted average diluted shares 17.2 19.3 24.6 Net income (in millions) 2 $32.9 $46.3 $10.3 Return on average assets2 1.28% 1.54% 1.31% Return on average equity2 14.4% 16.7% 12.5% Core efficiency ratio2 73.1% 70.6%
Slide 9: Delivering profitability and growth
Delivering profitability and growth Drivers of profitability improvement 1 Our pro forma net income and tax-adjusted return on average assets include a pro forma provision for federal income taxes using a combined effective income tax rate of 33.76%, 35.37%, 35.63%, 35.08%, and 36.75% for the years
Slide 10: Net interest margin driven by multiple levers
Net interest margin driven by multiple levers Historical yield and costs 1 Includes tax-equivalent adjustment NIM (%) 3.52% 3.75% 3.93% 3.97% 4.10% 4.28% NIM, ex-accretion (%) 3.52% 3.75% 3.93% 3.96% 3.97% 4.12% Deposit cost (%) 0.78% 0.48% 0.36% 0.30% 0.29% 0.32% Loan (HFI) yield 2015 2016 1Q17 Con
Slide 11: Consistent loan growth and balanced portfolio
Consistent loan growth and balanced portfolio Total loan growth1 ($mm) and commercial real estate concentration Loan portfolio breakdown1 4Q 2012 1Q 2017 Total HFI loans: $1,901mm Source: Company filings; Note: Financial data as of March 31, 20171 Exclude HFS loans, C&I includes owner-occupied CRE2
Slide 12: Asset quality continues to improve
Asset quality continues to improve Source: Company filings. Financials as of March 31, 20171 1Q 2017 data annualized. Classified loans ($mm) Net charge-offs / average loans1 NPAs / assets LLR / loans (231) bps ($50) mm
Slide 13: Stable, low cost core deposit franchise
Stable, low cost core deposit franchise Total deposits ($mm) 1 Includes $45.4 million and $47.7 million in mortgage servicing-related escrow deposits for the year ended December 31, 2016 and the quarter ended March 31, 2017, respectively. Noninterest bearing deposits ($mm)1 CAGR 18.4% Deposit compos
Slide 14: Mortgage Banking outlook impacted by higher rates, offset by channel mix
Mortgage Banking outlook impacted by higher rates, offset by channel mix Mortgage Banking LTM revenue of $118.3 millionIRLC pipeline declined 16% from $532.9 million at year ended 2016 to $449.0 million at 1Q 2017Business model continuing to shift to increased purchase volumes given market and inter
Slide 15: Improving operating leverage remains a key objective
Improving operating leverage remains a key objective Continued focus to achieve better operating leverageBank’s core system creates a scalable platform designed to drive and support growth across marketsCapacity to grow business in key metropolitan markets, especially Nashville, Knoxville, Memphis a
Slide 16: Summary of capital position
Summary of capital position Source: Company filingsSee “Reconciliation of non-GAAP financial measures” and the Appendix hereto. Total regulatory capital at consolidated level. Capital position Total capital composition 12/31/15 12/31/16 3/31/2017 Shareholder’s equity / Assets 8.2% 10.1% 10.8% TCE /
Slide 17: Over 100 years of history in Tennessee
Over 110 years of history in TennesseeWriting the next chapter… 2003: Acquired The Bank of Murfreesboro in Nashville MSA 2007: Acquired branches from AmSouth Bank in Tennessee community markets 1984 1988 1996 1999 2001 2003 2004 2006 2012 2013 2015 Year: 2001: Opened branches in Nashville and Memphi
Slide 18: Acquisition of the Wholly-Owned Banks of Clayton HC, Inc.
Acquisition of the Wholly-Owned Banks of Clayton HC, Inc. Pending acquisition highlights
Slide 19: Strategically compelling and financially attractive transaction
Culture EPS Accretion Geography Strategically compelling and financially attractive transaction Tangible Book Value Dilution Entrepreneurial owner with West TN heritageHigh performance DNANiche lending expertise Internal Rate of Return Opportunity for operating leverage in existing marketsHighly add
Slide 20: Strategic expansion
Strategic expansion (1) Assumes 38.1% tax effect on pre-tax income.Source: Company data and SNL Financial.
Slide 21: Strategic rationale – In-footprint expansion with highly profitable banks
Strategic rationale – In-footprint expansion with highly profitable banks Track Record of Financial Performance The Clayton Banks have consistently ranked among the most profitable banks in TN (1) ROAA(2) 1Q 2017 5-Yr Avg. Clayton Bank 2.55% 2.30% American City Bank 1.64% 1.49% Combined 2.31% 2.09%
Slide 22: Strategic rationale – Attractive financial impact, establishes new business
Strategic rationale – Attractive financial impact, establishes new business Niche Lending Clayton Bank has managed Manufactured Housing (“MH”) lending through business cyclesApproximately $300 mm MH loans at year-end (~10% of pro forma loan portfolio)Strong risk-adjusted yields with sound credit met
Slide 23: Key transaction assumptions
Cost Savings Transaction Expenses Estimated one-time transaction expenses of $10.0 million, pre-tax Key transaction assumptions Loan Mark Gross loan mark of $30.2 million (~2.87% of gross loans)Gross loan mark is before reversals of ALLL ($20.4 million), remaining discount on acquired loans ($7.1 mi
Slide 24: Extensive due diligence conducted
Extensive due diligence conducted Close coordination with Clayton Banks’ management teams in all aspects of strategy and operationsRisk management analysis done by FirstBank’s senior management, including CEO, CFO, CRO, CCO, Operations, Human Resources, Compliance and General CounselComprehensive cr
Slide 25: Loan and deposit mix
Loan and deposit mix Pro Forma Loan Portfolio Pro Forma Deposit Mix Pro forma loan (HFI)-to-deposit ratio 82%Diversified portfolio with 38% C&I (includes CRE - Owner-Occupied) Pro forma loan yield estimated at 5.70%, FBK’s was 5.42% in 1Q 2017 Deposit profile of combined bank: 48% checking, 80% tran
Slide 26: Clayton Banks credit quality
Clayton Banks credit quality Loans Outstanding ($ millions) NPAs / Assets NCOs / Average Loans1 ALLL / Gross Loans HFI CAGR: 7.9% Source: SNL Financial & Company filings; Note: Financial data as of March 31, 2017.1 Annualized
Slide 27: Manufactured Housing niche lending adds meaningful risk-adjusted profitability
Manufactured Housing niche lending adds meaningful risk-adjusted profitability MH Balances ($M) MH Niche comprised of three areas operated from Knoxville with a national platformMH Communities (MHC) C&I and CRE-focused lending to experienced, sophisticated owners / operators of MH communities MH Ret
Slide 28: Appendix: FB Financial Standalone
Appendix: FB Financial Standalone
Slide 29: Reconciliation of non-GAAP financial measures: Pro forma core net income
Reconciliation of non-GAAP financial measures Pro forma core net income
Slide 30: Pro forma core diluted earnings per share
Reconciliation of non-GAAP financial measures (cont’d) Pro forma core diluted earnings per share
Slide 31: Tax-equivalent core efficiency ratio
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 32: Tangible book value per share and TCE to tangible assets
Tangible book value per common share and tangible common equity to tangible assets Reconciliation of non-GAAP financial measures (cont’d) On June 28, 2016, the Company declared a 100-for-1 stock split, increasing the number of issued and authorized shares from 171,800 to 17,180,000 and 250,000 to 25
Slide 33: Core deposits; core pro forma ROAA and ROAE
Core deposits Reconciliation of non-GAAP financial measures (cont’d) Core pro forma return on average assets and equity
Slide 34: Appendix: Clayton Banks
Appendix: Clayton Banks (FB) FirstBank
Slide 35: Overview of Clayton Bank
Headquartered in Knoxville, TN with a footprint extending to West TennesseeHigh, sustainable profitability with 2%+ through-the-cycle ROAA, driven by a combination of strong margins and low efficiency ratioManufactured Housing lending niche capitalizes on unique expertise and deep relationships thro
Slide 36: Knoxville market presence
Knoxville market presence Pro Forma Knoxville Footprint Third largest MSA in Tennessee, largest in East TennesseeSupports 120 automotive component manufacturers providing over 13,000 jobsWell situated to attract the key suppliers and assembly operations in the southeastHighly diversified economy Not
Slide 37: Clayton Bank historical financials
Clayton Bank historical financials Source: SNL Financial, Company Documents; Note: Data as of periods shown. Net Income, return on average assets and return of average equity assume 38.1% tax effect on pre-tax income.
Slide 38: Overview of American City Bank
Overview of American City Bank American City Bank Footprint Overview Headquartered in Tullahoma, TN with branches also in Manchester, TNEfficiently run, profitable institution with sustainable ROAA of ~1.5%, pricing power and strong capitalizationCustomer-focused business model driven by strong rela
Slide 39: American City Bank historical financials
American City Bank historical financials Source: SNL Financial, Company Documents; Note: Data as of periods shown. Net Income, return on average assets and return of average equity assume 38.1% tax effect on pre-tax income.
Slide 40: Enhances both metro and community market presence
Enhances both metro and community market presence Source: Company filings, SNL Financial; Note: Deposit data as of June 30, 2016.
Slide 41: Pro forma loan portfolio bolsters commercial lending platform
Pro forma loan portfolio bolsters commercial lending platform Source: Company filings; Note: Financial data (including pro forma data) as of March 31, 2017. FB Financial data based on GAAP data. Clayton Bank and Trust and American City Bank based on regulatory data. Excludes purchase accounting adju
Slide 42: Pro forma deposit composition remains transaction account-focused
Pro forma deposit composition remains transaction account-focused Source: Company filings; Note: Financial data (including pro forma data) as of March 31, 2017. FB Financial data based on GAAP data. Clayton Bank and Trust and American City Bank based on regulatory data. Excludes purchase accounting