FB Financial Corporation Reports Strong 2018 Second Quarter Results
Reported diluted EPS of $0.70; Adjusted diluted EPS of $0.72, excluding offering-related expenses
Driven by 21.1% annualized loan growth; 17.3% annualized customer deposit growth
Adjusted ROAA of 1.91%; NIM of 4.81%
NASHVILLE, Tenn.--(BUSINESS WIRE)--July 23, 2018--FB Financial Corporation (the “Company”) (NYSE: FBK), parent company of FirstBank, reported net income of $22.1 million, or $0.70 per diluted common share, for the second quarter of 2018, compared to net income of $11.2 million, or $0.43 per diluted common share, for the second quarter of 2017. Adjusting for nondeductible offering-related expenses, net income was $22.7 million, or $0.72 per diluted common share, reflecting growth of 60.0% per share, when compared to net income of $11.7 million, or $0.45 per diluted common share for the second quarter of 2017, which excluded pre-tax merger-related expenses.
President and Chief Executive Officer Christopher T. Holmes stated, “Our team continues to deliver outstanding performance driven by growth in loans and deposits, which was balanced across markets and products. Our adjusted ROAA of 1.91% and our net interest margin of 4.81% are among the best in the industry. Our associates take pride in our elite financial performance and that is part of the culture of our company. We believe our disciplined, long-term approach positions us well for the future, including the last half of 2018.”
Performance Summary
| | | | | |
| | | For the Three Months Ended June 30, | |
| (dollars in thousands, except share data) | | 2018 | | | 2017 | |
| Results of operations | | | | | | | | |
| Net interest income | | $ | 51,517 | | | $ | 30,427 | |
| NIM | | | 4.81 | % | | | 4.19 | % |
| Provision for loan losses | | $ | 1,063 | | | $ | (865 | ) |
| Net (recovery) charge-off ratio | | | (0.11 | %) | | | (0.25 | %) |
| Noninterest income | | $ | 35,708 | | | $ | 35,657 | |
| Mortgage banking income | | | 28,544 | | | | 30,239 | |
| Total mortgage banking pre-tax contribution, adjusted(1) | | | 10.4 | % | | | 29.6 | % |
| Total revenue | | $ | 87,225 | | | $ | 66,084 | |
| Noninterest expenses | | | 56,303 | | | | 49,136 | |
| Merger/offering-related expenses | | | 671 | | | | 767 | |
| Efficiency ratio | | | 64.5 | % | | | 74.4 | % |
| Core efficiency ratio(1) | | | 62.1 | % | | | 70.2 | % |
| Net income | | | 22,065 | | | | 11,239 | |
| Diluted earnings per share | | $ | 0.70 | | | $ | 0.43 | |
| Effective tax rate | | | 26.1 | % | | | 36.9 | % |
| Net income, adjusted(1) | | $ | 22,736 | | | $ | 11,705 | |
| Diluted earnings per share, adjusted(1) | | $ | 0.72 | | | $ | 0.45 | |
| Weighted average number of shares - diluted | | | 31,294,044 | | | | 26,301,458 | |
| Actual shares outstanding - period end | | | 30,683,353 | | | | 28,968,160 | |
| Returns on average: | | | | | | | | |
| Assets | | | 1.86 | % | | | 1.40 | % |
| Adjusted(1) | | | 1.91 | % | | | 1.46 | % |
| Equity | | | 14.4 | % | | | 11.3 | % |
| Tangible common equity (1) | | | 19.0 | % | | | 13.0 | % |
| | Adjusted(1) | | | 19.6 | % | | | 13.5 | % |
(1) | Certain measures are considered non-GAAP financial measures. See “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued July 23, 2018. | |
| | |
| | | | | | | | | | | | | |
| | | 2018 | | | 2017 | | | Annualized | | | |
| (dollars in thousands) | | Second
Quarter | | | First Quarter | | | Second
Quarter | | | 2Q18 / 1Q18 % Change | | | 2Q18 / 2Q17 % Change |
| Balance Sheet Highlights | | | | | | | | | | | | | | | | | | |
| Investment securities | | $ | 611,435 | | | $ | 597,347 | | | $ | 553,357 | | | 9.5% | | | 10.5% |
| Loans - held for sale | | | 374,916 | | | | 414,518 | | | | 427,416 | | | -38.3% | | | -12.3% |
| Loans - held for investment | | | 3,415,575 | | | | 3,244,663 | | | | 1,970,974 | | | 21.1% | | | 73.3% |
| Allowance for loan losses | | | 26,347 | | | | 24,406 | | | | 23,247 | | | 31.9% | | | 13.3% |
| Total assets | | | 4,923,249 | | | | 4,725,416 | | | | 3,346,570 | | | 16.8% | | | 47.1% |
| Customer deposits | | | 3,844,009 | | | | 3,684,758 | | | | 2,726,060 | | | 17.3% | | | 41.0% |
| Total deposits | | | 3,909,863 | | | | 3,766,151 | | | | 2,727,593 | | | 15.3% | | | 43.3% |
| | Total shareholders' equity | | | 630,959 | | | | 611,075 | | | | 509,517 | | | 13.1% | | | 23.8% |
| Tangible book value per share(1) | | $ | 15.66 | | | $ | 14.99 | | | $ | 15.83 | | | | | | | |
| | Tangible common equity to tangible assets (1) | | | 10.1 | % | | | 10.2 | % | | | 13.9 | % | | | | | | |
(1) | Certain measures are considered non-GAAP financial measures. See “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued July 23, 2018. |
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Continued Focus on Execution of Strategy Drives Growth and Profitability
“Our annualized 21.1% loan and 17.3% customer deposit growth in the quarter was outstanding, driven by the needs of our existing customers and the addition of new customer relationships. These results demonstrate the capacity of our team to balance strong growth in revenue, loans and deposits while delivering peer-leading margins and controlling expenses. Our loan growth, deposit growth and net interest margin were all stronger than previous quarters, and above our long-term targets. We expect loan growth to settle back into our 10%-12% target range in the last half of 2018, but our success in the first half of the year should cause us to exceed our planned growth range for the year,” Holmes said.
Holmes continued, “Pricing and terms will always be competitive in a crowded industry, but we will continue to focus on delivering both growth and profitability. We believe our market-focused operating model is built to withstand the ebbs and flows of the interest rate and credit markets. Continuing to grow our customer deposits is important to our success and will come with accelerating increases in our cost of deposits and our deposit beta. Our deposit beta was a manageable 28% this quarter and we expect deposit betas to move upward in the coming quarters, partially offset by positive loan betas.”
The Company’s net interest margin (NIM) was 4.81% for the second quarter of 2018, compared to 4.64% and 4.19% for the first quarter of 2018 and the second quarter of 2017, respectively. This improvement was attained through contractual loan yield expansion and funding cost containment. Accretion related to purchased loans and collections of nonaccrual interest contributed 20 basis points to the Company’s NIM compared to 20 and 15 basis points for the first quarter of 2018 and the second quarter of 2017, respectively.
“As we indicated during our first quarter earnings call, we expected our adjusted net interest margin, which was a healthy 4.61%, to exceed the top-end of our long-term range. This is reflective of focusing on customer relationships versus wholesale business, capitalizing on fee opportunities and benefitting from the rising rate environment on loan yields,” Holmes commented.
Noninterest Income Remains Stable
Noninterest income was $35.7 million for the second quarter of 2018, compared to $33.3 million for the first quarter of 2018 and $35.7 million for the second quarter of 2017. Mortgage banking income was $28.5 million for the second quarter of 2018, compared to $26.5 million for the first quarter of 2018 and $30.2 million for the second quarter of 2017.
Holmes commented, “This quarter, our mortgage business represented 10.4% of the Company’s adjusted pre-tax income compared to 29.6% for the second quarter of 2017. These results reflect our near-term plan of growing our Banking Segment faster than our Mortgage Segment to maintain a total mortgage pre-tax contribution in the 10%-15% range. Our mortgage team continues to deliver significant noninterest income in the face of declining volumes and margin pressures in the mortgage business.”
Continuing to Improve Operating Efficiency
Noninterest expense was $56.3 million for the second quarter of 2018, compared to $56.2 million for the first quarter of 2018 and $49.1 million for the second quarter of 2017. Excluding the merger/offering-related expenses, noninterest expense was $55.6 million for the second quarter of 2018, compared to $55.0 million for the first quarter of 2018 and $48.4 million for the second quarter of 2017.
Chief Financial Officer, James R. Gordon, stated, “Our year-over-year operating leverage from organic growth, merger and ongoing cost efficiencies is best illustrated by the improvement in our Banking Segment efficiency ratio to 51.7% from 60.4% for the same period last year. Further demonstrating our progress, the Company’s total revenue has increased by more than twice the rate of its total noninterest expense when compared to the same period last year.”
Strong Asset Quality
During the second quarter of 2018, we recognized a provision for loan losses of $1.1 million, reflecting loan growth, stable fundamental credit metrics and net recoveries of 0.11% of average loans. Our nonperforming assets decreased from the previous quarter to $25.8 million, or 0.52% of total assets. Nonperforming loans declined to 0.26% of loans held for investment at June 30, 2018, compared to 0.30% at March 31, 2018.
Capital Strength for Future Growth
“We continue to generate capital at a strong pace, with an increase in tangible book value per share of 35.5% since our IPO in September 2016, which should continue to sustain both organic and acquired growth in future periods. Our tangible common equity to tangible assets ratio of 10.1% this quarter continues to provide us strategic and tactical flexibility, and supports our quarterly cash dividend of six cents per share,” commented Gordon.
Summary
“By focusing on serving our customers, understanding our markets and adhering to our core values, our associates continue to deliver outstanding results. We believe the Company is well-positioned to continue our performance across our attractive markets. We appreciate our customers, associates and shareholders and thank you for your continued support,” Holmes concluded.
WEBCAST AND CONFERENCE CALL INFORMATION
The live broadcast of FB Financial Corporation’s earnings conference call will begin at 8:00 a.m. CT on Tuesday, July 24, 2018, and the conference call will be broadcast live over the Internet at https://services.choruscall.com/links/fbk180724yyYSkAAU.html. An online replay will be available for twelve months approximately an hour following the conclusion of the live broadcast.
ABOUT FB FINANCIAL CORPORATION
FB Financial Corporation (NYSE: FBK) is a bank holding company headquartered in Nashville, Tennessee. FB Financial operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered community bank, with 56 full-service bank branches across Tennessee, North Alabama and North Georgia, and a national mortgage business with offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has approximately $4.9 billion in total assets.
SUPPLEMENTARY FINANCIAL INFORMATION AND EARNINGS PRESENTATION
Investors are encouraged to review this Earnings Release in conjunction with the Supplemental Financial Information and Earnings Presentation posted on the Company’s website, which can be found at https://investors.firstbankonline.com. This Earnings Release, the Supplemental Financial Information and the Earnings Presentation are also included with a Current Report on Form 8-K that the Company furnished to the U.S. Securities and Exchange Commission (SEC) on July 23, 2018.
BUSINESS SEGMENT RESULTS
The Company has included its business segment financial tables as part of this Earnings Release. A detailed discussion of our business segments is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and investors are encouraged to review that discussion in conjunction with this Earnings Release.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Earnings Release are 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 include, without limitation, statements relating to the Company’s assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, short and long-term performance goals, prospects, results of operations, strategic initiatives and the timing, benefits, costs and synergies of future acquisition, disposition and other growth opportunities. These statements, which are based upon certain assumptions and estimates and describe the Company’s future plans, results, strategies and expectations, can generally be identified by the use of the words and phrases “may,” “will,” “should,” “could,” “would,” “goal,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “aim,” “predict,” “continue,” “seek,” “projection” and other variations of such words and phrases and similar expressions. These forward-looking statements are not historical facts, and are based upon current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. The inclusion of these forward-looking statements should not be regarded as a representation by the Company or any other person that such expectations, estimates and projections will be achieved. Accordingly, the Company cautions investors that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict and that are beyond the Company’s control. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date of this Earnings Release, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this Earnings Release including, without limitation, the risks and other factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 16, 2018 under the captions “Cautionary note regarding forward-looking statements” and “Risk factors.” Many of these factors are beyond the Company’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this Earnings Release, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for the Company to predict their occurrence or how they will affect the Company.
GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL MEASURES
This Earnings Release 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 limitation, adjusted net income, adjusted diluted earnings per share, core net income, core diluted earnings per share, core noninterest expense and core noninterest income, core efficiency ratio (tax equivalent basis), Banking segment core efficiency ratio (tax equivalent basis), Mortgage segment core efficiency ratio (tax equivalent basis), adjusted mortgage contribution, core return on average assets and equity and core total revenue. Each of these non-GAAP metrics excludes certain income and expense items that the Company’s management considers to be non‐core in nature. The Company refers to these non‐GAAP measures as adjusted or core measures. The corresponding Earnings Release also presents tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on tangible common equity, return on average tangible common equity, adjusted return on average assets, adjusted return on average equity, core return on average tangible common equity and adjusted return on average tangible common equity. Each of these non-GAAP metrics excludes the impact of goodwill and other intangibles.
The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations as management believes such measures facilitate period-to-period comparisons and provide meaningful indications of its operating performance as they eliminate both gains and charges that management views as non-recurring or not indicative of operating performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant non-core gains and charges in the current and prior periods. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding the Company’s underlying operating performance and in the analysis of ongoing operating trends. In addition, because intangible assets such as goodwill and other intangibles, and the other items excluded each vary extensively from company to company, the Company believes that the presentation of this information allows investors to more easily compare the Company’s results to the results of other companies. However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the Company calculates the non-GAAP financial measures discussed herein may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures the Company has discussed herein when comparing such non-GAAP financial measures. See the “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued July 23, 2018 for a discussion and reconciliation of these measures to the most directly comparable GAAP financial measures.
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| Financial Summary and Key Metrics |
| (Unaudited) |
| (In Thousands, Except Share Data and %) |
| | | | | | |
| | 2018 | | 2017 |
| | | Second Quarter | | First Quarter | | Second Quarter |
| Statement of Income Data | | | | | | |
| Total interest income | | $ | 59,043 | | | $ | 54,848 | | | $ | 33,278 | |
| Total interest expense | | | 7,526 | | | | 6,419 | | | | 2,851 | |
| Net interest income | | | 51,517 | | | | 48,429 | | | | 30,427 | |
| Provision for loan losses | | | 1,063 | | | | 317 | | | | (865 | ) |
| Total noninterest income | | | 35,708 | | | | 33,275 | | | | 35,657 | |
| Total noninterest expense | | | 56,303 | | | | 56,151 | | | | 49,136 | |
| Net income before income taxes | | | 29,859 | | | | 25,236 | | | | 17,813 | |
| Income tax expense | | | 7,794 | | | | 5,482 | | | | 6,574 | |
| Net income | | $ | 22,065 | | | $ | 19,754 | | | $ | 11,239 | |
| Net interest income (tax—equivalent basis) | | $ | 51,909 | | | $ | 48,799 | | | $ | 31,158 | |
| Net income, adjusted* | | $ | 22,736 | | | $ | 20,636 | | | $ | 11,705 | |
| Per Common Share | | | | | | |
| Diluted net income | | $ | 0.70 | | | $ | 0.63 | | | $ | 0.43 | |
| Diluted net income, adjusted* | | $ | 0.72 | | | $ | 0.66 | | | $ | 0.45 | |
| Book value | | | 20.56 | | | | 19.92 | | | | 17.59 | |
| Tangible book value* | | | 15.66 | | | | 14.99 | | | | 15.83 | |
| Weighted average number of shares-diluted | | | 31,294,044 | | | | 31,421,830 | | | | 26,301,458 | |
| Period-end number of shares | | | 30,683,353 | | | | 30,671,763 | | | | 28,968,160 | |
| Selected Balance Sheet Data | | | | | | |
| Cash and due from banks | | $ | 67,863 | | | $ | 53,060 | | | $ | 59,112 | |
| Loans held for investment (HFI) | | | 3,415,575 | | | | 3,244,663 | | | | 1,970,974 | |
| Allowance for loan losses | | | (26,347 | ) | | | (24,406 | ) | | | (23,247 | ) |
| Loans held for sale | | | 374,916 | | | | 414,518 | | | | 427,416 | |
| Investment securities, at fair value | | | 611,435 | | | | 597,347 | | | | 553,357 | |
| Other real estate owned, net | | | 14,639 | | | | 15,334 | | | | 6,370 | |
| Total assets | | | 4,923,249 | | | | 4,725,416 | | | | 3,346,570 | |
| Customer deposits | | | 3,844,009 | | | | 3,684,758 | | | | 2,726,060 | |
| Brokered and internet time deposits | | | 65,854 | | | | 81,393 | | | | 1,533 | |
| Total deposits | | | 3,909,863 | | | | 3,766,151 | | | | 2,727,593 | |
| Borrowings | | | 326,897 | | | | 278,293 | | | | 43,790 | |
| Total shareholders' equity | | | 630,959 | | | | 611,075 | | | | 509,517 | |
| Selected Ratios | | | | | | |
| Return on average: | | | | | | |
| Assets | | | 1.86 | % | | | 1.71 | % | | | 1.40 | % |
| Shareholders' equity | | | 14.4 | % | | | 13.4 | % | | | 11.3 | % |
| Tangible common equity* | | | 19.0 | % | | | 17.9 | % | | | 13.0 | % |
| Average shareholders' equity to average assets | | | 12.9 | % | | | 12.8 | % | | | 12.4 | % |
| Net interest margin (NIM) (tax-equivalent basis) | | | 4.81 | % | | | 4.64 | % | | | 4.19 | % |
| Efficiency ratio (GAAP) | | | 64.5 | % | | | 68.7 | % | | | 74.4 | % |
| Core efficiency ratio (tax-equivalent basis)* | | | 62.1 | % | | | 65.5 | % | | | 70.2 | % |
| Loans held for investment to deposit ratio | | | 87.4 | % | | | 86.2 | % | | | 72.3 | % |
| Total loans to deposit ratio | | | 96.9 | % | | | 97.2 | % | | | 87.9 | % |
| Yield on interest-earning assets | | | 5.51 | % | | | 5.25 | % | | | 4.57 | % |
| Cost of interest-bearing liabilities | | | 0.96 | % | | | 0.85 | % | | | 0.55 | % |
| Cost of total deposits | | | 0.62 | % | | | 0.55 | % | | | 0.34 | % |
| Credit Quality Ratios | | | | | | |
| Allowance for loan losses as a percentage of loans held for investment | | | 0.77 | % | | | 0.75 | % | | | 1.18 | % |
Net (recoveries) charge-off's as a percentage of average loans held for investment | | | (0.11 | )% | | | (0.01 | )% | | | (0.25 | )% |
Nonperforming loans held for investment as a percentage of total loans held for investments | | | 0.26 | % | | | 0.30 | % | | | 0.50 | % |
| Nonperforming assets as a percentage of total assets | | | 0.52 | % | | | 0.59 | % | | | 0.58 | % |
| Preliminary capital ratios (Consolidated) | | | | | | |
| Shareholders' equity to assets | | | 12.8 | % | | | 12.9 | % | | | 15.2 | % |
| Tangible common equity to tangible assets* | | | 10.1 | % | | | 10.2 | % | | | 13.9 | % |
| Tier 1 capital (to average assets) | | | 10.9 | % | | | 10.7 | % | | | 15.5 | % |
| Tier 1 capital (to risk-weighted assets) | | | 11.4 | % | | | 11.8 | % | | | 18.3 | % |
| Total capital (to risk-weighted assets) | | | 12.0 | % | | | 12.3 | % | | | 19.1 | % |
| Common Equity Tier 1 (to risk-weighted assets) (CET1) | | | 10.7 | % | | | 11.0 | % | | | 17.2 | % |
| | | | | | |
| *These measures are considered non-GAAP financial measures. See “GAAP Reconciliation and Use of Non-GAAP Financial Measures” and the corresponding financial tables below for reconciliations of these Non-GAAP measures. Investors are encouraged to refer to the discussion of non-GAAP measures included in the corresponding earnings release. |
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| | | | | | |
| Non-GAAP Reconciliation |
| For the Quarters Ended |
| (Unaudited) |
| (In Thousands, Except Share Data and %) |
| | | | | | |
| | 2018 | | 2017 |
| Net income, adjusted | | Second Quarter | | First Quarter | | Second Quarter |
| Pre-tax net income | | $ | 29,859 | | $ | 25,236 | | | $ | 17,813 | |
| Plus merger and offering-related expenses | | | 671 | | | 1,193 | | | | 767 | |
Less significant gains (losses) on securities, other real estate owned and other items | | | - | | | - | | | | - | |
| Pre-tax net income, adjusted | | $ | 30,530 | | $ | 26,429 | | | $ | 18,580 | |
| Income tax expense, adjusted | | | 7,794 | | | 5,793 | | | | 6,875 | |
| Net income, adjusted | | $ | 22,736 | | $ | 20,636 | | | $ | 11,705 | |
| Weighted average common shares outstanding fully diluted | | | 31,294,044 | | | 31,421,830 | | | | 26,301,458 | |
| | | | | | |
| Diluted earnings per share, adjusted | | | | | | |
| Diluted earnings per common share | | $ | 0.70 | | $ | 0.63 | | | $ | 0.43 | |
| Plus merger and offering-related expenses | | | 0.02 | | | 0.04 | | | | 0.03 | |
Less significant gains (losses) on securities, other real estate owned and other items | | | - | | | - | | | | - | |
| Less tax effect | | | - | | | (0.01 | ) | | | (0.01 | ) |
| Diluted earnings per share, adjusted | | $ | 0.72 | | $ | 0.66 | | | $ | 0.45 | |
| | | | | | |
| Previously, the Company adjusted reported net income for the following items: (i) change in fair value in MSRs, net, and (ii) Gains (losses) from securities, OREO, MSRs, other assets, and other items. Beginning with the first quarter of 2018, the Company is only adjusting reported earnings for (i) merger and conversion costs; and (ii) other significant items impacting comparability between quarterly and annual periods including costs related to the secondary stock offering completed by our primary shareholder during the second quarter of 2018. Prior periods have been adjusted to conform to this presentation, see below for previously reported amounts: |
| | | | | | |
| | | | | | 2017 |
| Previously reported core results* | | | | | | Second Quarter |
| Core net income | | | | | | $ | 12,919 | |
| Core diluted earnings per share | | | | | | $ | 0.49 | |
| | | | | | |
| * Non-GAAP reconciliations of previously reported core results are included in previously issued earnings release supplements. |
| |
| |
| Non-GAAP Reconciliation |
| For the Quarters Ended |
| (Unaudited) |
| (In Thousands, Except Share Data and %) |
| | | | | | |
| | 2018 | | 2017 |
| Core efficiency ratio (tax-equivalent basis) | | Second Quarter | | First Quarter | | Second Quarter |
| Total noninterest expense | | $ | 56,303 | | | $ | 56,151 | | | $ | 49,136 | |
| Less merger and offering-related expenses | | | 671 | | | | 1,193 | | | | 767 | |
| Less loss on sale of mortgage servicing rights | | | - | | | | - | | | | 249 | |
| Core noninterest expense | | $ | 55,632 | | | $ | 54,958 | | | $ | 48,120 | |
| Net interest income (tax-equivalent basis) | | | 51,909 | | | | 48,799 | | | | 31,158 | |
| Total noninterest income | | | 35,708 | | | | 33,275 | | | | 35,657 | |
| Less change in fair value on mortgage servicing rights | | | (1,778 | ) | | | (1,713 | ) | | | (1,840 | ) |
Less (loss) gain on sales or write-downs of other real estate owned and other assets | | | (132 | ) | | | (118 | ) | | | 62 | |
| Less (loss) gain from securities, net | | | (97 | ) | | | (47 | ) | | | 29 | |
| Core noninterest income | | | 37,715 | | | | 35,153 | | | | 37,406 | |
| Core revenue | | $ | 89,624 | | | $ | 83,952 | | | $ | 68,564 | |
| Efficiency ratio (GAAP)(1) | | | 64.5 | % | | | 68.7 | % | | | 74.4 | % |
| Core efficiency ratio (tax-equivalent basis) | | | 62.1 | % | | | 65.5 | % | | | 70.2 | % |
| | | | | | |
| (1) Efficiency ratio (GAAP) is calculated by dividing reported noninterest expense by reported total revenue. |
| | | | | | |
| | 2018 | | 2017 |
| Banking segment core efficiency ratio (tax equivalent) | | Second Quarter | | First Quarter | | Second Quarter |
| Core consolidated noninterest expense | | $ | 55,632 | | | $ | 54,958 | | | $ | 48,120 | |
| Less Mortgage segment noninterest expense | | | 19,582 | | | | 18,910 | | | | 19,802 | |
| Add loss on sale of mortgage servicing rights | | | - | | | | - | | | | 249 | |
| Adjusted Banking segment noninterest expense | | | 36,050 | | | | 36,048 | | | | 28,567 | |
| Adjusted core revenue | | | 89,624 | | | | 83,952 | | | | 68,564 | |
| Less Mortgage segment noninterest income | | | 21,650 | | | | 20,363 | | | | 23,121 | |
| Less change in fair value on mortgage servicing rights | | | (1,778 | ) | | | (1,713 | ) | | | (1,840 | ) |
| Adjusted Banking segment total revenue | | $ | 69,752 | | | $ | 65,302 | | | $ | 47,283 | |
| Banking segment core efficiency ratio (tax-equivalent basis) | | | 51.7 | % | | | 55.2 | % | | | 60.4 | % |
| | | | | | |
| Mortgage segment core efficiency ratio (tax equivalent) | | | | | | |
| Consolidated Noninterest expense | | $ | 56,303 | | | $ | 56,151 | | | $ | 49,136 | |
| Less loss on sale of mortgage servicing rights | | | - | | | | - | | | | 249 | |
| Less Banking segment noninterest expense | | | 36,721 | | | | 37,241 | | | | 29,334 | |
| Adjusted Mortgage segment noninterest expense | | $ | 19,582 | | | $ | 18,910 | | | $ | 19,553 | |
| Total noninterest income | | | 35,708 | | | | 33,275 | | | | 35,657 | |
| Less Banking segment noninterest income | | | 14,058 | | | | 12,912 | | | | 12,536 | |
| Less change in fair value on mortgage servicing rights | | | (1,778 | ) | | | (1,713 | ) | | | (1,840 | ) |
| Adjusted Mortgage segment total revenue | | $ | 23,428 | | | $ | 22,076 | | | $ | 24,961 | |
| Mortgage segment core efficiency ratio (tax-equivalent basis) | | | 83.6 | % | | | 85.7 | % | | | 78.3 | % |
| | | | | | |
| | 2018 | | 2017 |
| Mortgage contribution, adjusted | | Second Quarter | | First Quarter | | Second Quarter |
| Mortgage segment pre-tax net contribution | | $ | 1,916 | | | $ | 1,111 | | | $ | 3,747 | |
| Retail footprint: | | | | | | |
| Mortgage banking income | | | 6,894 | | | | 6,108 | | | | 7,118 | |
| Mortgage banking expenses | | | 5,649 | | | | 5,097 | | | | 5,368 | |
Retail footprint pre-tax net contribution | | | 1,245 | | | | 1,011 | | | | 1,750 | |
| Total mortgage banking pre-tax net contribution | | $ | 3,161 | | | $ | 2,122 | | | $ | 5,497 | |
| Pre-tax net income | | | 29,859 | | | | 25,236 | | | | 17,813 | |
| % total mortgage banking pre-tax net contribution | | | 10.6 | % | | | 8.4 | % | | | 30.9 | % |
| Pre-tax net income, adjusted | | | 30,530 | | | | 26,429 | | | | 18,580 | |
| % total mortgage banking pre-tax net contribution, adjusted | | | 10.4 | % | | | 8.0 | % | | | 29.6 | % |
| | | | | | |
| | | | | | |
| Non-GAAP Reconciliation |
| For the Quarters Ended |
| (Unaudited) |
| (In Thousands, Except Share Data and %) |
| | | | | | |
| | 2018 | | 2017 |
| Tangible assets and equity | | Second Quarter | | First Quarter | | Second Quarter |
| Tangible Assets | | | | | | |
| Total assets | | $ | 4,923,249 | | | $ | 4,725,416 | | | $ | 3,346,570 | |
| Less goodwill | | | 137,190 | | | | 137,190 | | | | 46,867 | |
| Less intangibles, net | | | 13,203 | | | | 14,027 | | | | 4,048 | |
| Tangible assets | | $ | 4,772,856 | | | $ | 4,574,199 | | | $ | 3,295,655 | |
| Tangible Common Equity | | | | | | |
| Total shareholders' equity | | $ | 630,959 | | | $ | 611,075 | | | $ | 509,517 | |
| Less goodwill | | | 137,190 | | | | 137,190 | | | | 46,867 | |
| Less intangibles, net | | | 13,203 | | | | 14,027 | | | | 4,048 | |
| Tangible common equity | | $ | 480,566 | | | $ | 459,819 | | | $ | 458,602 | |
| Common shares outstanding | | | 30,683,353 | | | | 30,671,763 | | | | 28,968,160 | |
| Book value per common share | | $ | 20.56 | | | $ | 19.92 | | | $ | 17.59 | |
| Tangible book value per common share | | $ | 15.66 | | | $ | 14.99 | | | $ | 15.83 | |
| Total shareholders' equity to total assets | | | 12.8 | % | | | 12.9 | % | | | 15.2 | % |
| Tangible common equity to tangible assets | | | 10.1 | % | | | 10.2 | % | | | 13.9 | % |
| Net income | | $ | 22,065 | | | $ | 19,754 | | | $ | 11,239 | |
| Return on tangible common equity | | | 18.4 | % | | | 17.4 | % | | | 9.8 | % |
| | | | | | |
| | 2018 | | 2017 |
| Return on average tangible common equity | | Second Quarter | | First Quarter | | Second Quarter |
| Total average shareholders' equity | | $ | 615,950 | | | $ | 599,198 | | | $ | 398,805 | |
| Less average goodwill | | | 137,190 | | | | 137,190 | | | | 46,839 | |
| Less average intangibles, net | | | 13,615 | | | | 14,465 | | | | 4,124 | |
| Average tangible common equity | | $ | 465,145 | | | $ | 447,544 | | | $ | 347,842 | |
| Net income | | $ | 22,065 | | | $ | 19,754 | | | $ | 11,239 | |
| Return on average tangible common equity | | | 19.0 | % | | | 17.9 | % | | | 13.0 | % |
| | | | | | |
| | 2018 | | 2017 |
Return on average tangible common equity, adjusted | | Second Quarter | | First Quarter | | Second Quarter |
| Average tangible common equity | | | 465,145 | | | | 447,544 | | | | 347,842 | |
| Net income, adjusted | | $ | 22,736 | | | $ | 20,636 | | | $ | 11,705 | |
Return on average tangible common equity, adjusted | | | 19.6 | % | | | 18.7 | % | | | 13.5 | % |
| | | | | | |
| | 2018 | | 2017 |
| Return on average assets and equity, adjusted | | Second Quarter | | First Quarter | | Second Quarter |
| Net income | | $ | 22,065 | | | $ | 19,754 | | | $ | 11,239 | |
| Average assets | | | 4,763,991 | | | | 4,678,494 | | | | 3,224,783 | |
| Average equity | | | 615,950 | | | | 599,198 | | | | 398,805 | |
| Return on average assets | | | 1.86 | % | | | 1.71 | % | | | 1.40 | % |
| Return on average equity | | | 14.4 | % | | | 13.4 | % | | | 11.3 | % |
| Net income, adjusted | | | 22,736 | | | | 20,636 | | | | 11,705 | |
| Return on average assets, adjusted | | | 1.91 | % | | | 1.79 | % | | | 1.46 | % |
| Return on average equity, adjusted | | | 14.8 | % | | | 14.0 | % | | | 11.8 | % |
| | | | | | |
| | | | | | 2017 |
| Previously reported core metrics* | | | | | | Second Quarter |
| Core return on average tangible common equity | | | | | | | 14.9 | % |
| Core return on average assets | | | | | | | 1.61 | % |
| Core return on average equity | | | | | | | 13.0 | % |
| Core total revenue | | | | | | $ | 67,833 | |
| * Non-GAAP reconciliations of previously reported core results are included in previously issued earnings release supplements. |
CONTACT:
FB Financial Corporation
Media Contact:
Jeanie M. Rittenberry, 615-313-8328
jrittenberry@firstbankonline.com
www.firstbankonline.com
or
Financial Contact:
James R. Gordon, 615-564-1212
jgordon@firstbankonline.com
investorrelations@firstbankonline.com
