Segment reporting

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment reporting

Segment reporting:

The Company and the Bank are engaged in the business of banking and provide a full range of financial services. The Company determines reportable segments based on the significance of the segment’s operating results to the overall Company, the products and services offered, customer characteristics, processes and service delivery of the segments and the regular financial performance review and allocation of resources by the Chief Executive Officer, the Company’s chief operating decision maker. The Company has identified two distinct reportable segments—Banking and Mortgage. The Company’s primary segment is Banking, which provides a full range of deposit and lending products and services to corporate, commercial and consumer customers. The Company offers full-service conforming residential mortgage products, including conforming residential loans and services through two distinct delivery channels: retail and ConsumerDirect. Additionally, the Mortgage segment includes the servicing of residential mortgage loans and the packaging and securitization of loans to governmental agencies. The Company’s mortgage division represents a distinct reportable segment which differs from the Company’s primary business of commercial and retail banking.

As previously reported, on March 31, 2021, the Company re-evaluated its business segments and revised to align all mortgage activities with the Mortgage segment. Previously, the Company had attributed retail mortgage activities originating from geographical locations within the footprint of the Company's branches to the Banking segment. Results for the comparable prior period have been revised to reflect this realignment. The impact of this change on previously reported segment results was the reclassification of mortgage retail footprint total net contribution of $9,508 and $18,382 from the Banking segment to the Mortgage segment for the three and nine months ended September 30, 2020, respectively.

The financial performance of the Mortgage segment is assessed based on results of operations reflecting direct revenues and expenses and allocated expenses. This approach gives management a better indication of the operating performance of the segment. When assessing the Banking segment’s financial performance, the CEO utilizes reports with indirect revenues and expenses including but not limited to the investment portfolio, electronic delivery channels and areas that primarily support the banking segment operations. Therefore, these are included in the results of the Banking segment. Other indirect revenue and expenses related to general administrative areas are also included in the internal financial results reports of the Banking segment utilized by the CEO for analysis and are thus included for Banking segment reporting. The Mortgage segment utilizes funding sources from the Banking segment in order to fund mortgage loans that are ultimately sold on the secondary market. The Mortgage segment uses the proceeds from loan sales to repay obligations due to the Banking segment.

The following tables provide segment financial information for three and nine months ended September 30, 2021 and 2020 as follows:

Three Months Ended September 30, 2021	Banking		Mortgage		Consolidated
Net interest income	$	88,576	$	(100)	$	88,476
Provisions for credit losses(1)	(2,531)		—		(2,531)
Mortgage banking income(2)	—		47,751		47,751
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(2,367)		(2,367)
Other noninterest income	13,823		(201)		13,622
Depreciation and amortization	1,791		349		2,140
Amortization of intangibles	1,344		—		1,344
Other noninterest expense	55,642		35,881		91,523
Income before income taxes	$	46,153	$	8,853	$	55,006
Income tax expense					9,716
Net income applicable to FB Financial Corporation and noncontrolling interest					45,290
Net income applicable to noncontrolling interest(3)					—
Net income applicable to FB Financial Corporation					$	45,290
Total assets	$	10,712,281	$	1,098,009	$	11,810,290
Goodwill	242,561		—		242,561

(1)Included $301 in provision for credit losses on unfunded commitments.

(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.

(3)Banking segment includes noncontrolling interest.

Three Months Ended September 30, 2020	Banking		Mortgage		Consolidated
Net interest income	$	68,791	$	37	$	68,828
Provisions for credit losses(1)	55,401		—		55,401
Mortgage banking income(2)	—		92,126		92,126
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(7,440)		(7,440)
Other noninterest income	12,340		—		12,340
Depreciation and amortization	1,550		273		1,823
Amortization of intangibles	1,417		—		1,417
Other noninterest expense(3)	69,568		45,284		114,852
(Loss) income before income taxes	$	(46,805)	$	39,166	$	(7,639)
Income tax benefit					(2,040)
Net loss applicable to FB Financial Corporation and noncontrolling interest					(5,599)
Net income applicable to noncontrolling interest(4)					—
Net loss applicable to FB Financial Corporation					$	(5,599)
Total assets	$	10,143,956	$	866,482	$	11,010,438
Goodwill	236,086		—		236,086

(1)Included $9,567 in provision for credit losses on unfunded commitments.

(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.

(3)Included $20,400 of merger costs in the Banking Segment primarily related to the acquisition and integration of Franklin and $330 of merger costs in the Mortgage segment related to the Franklin merger.

(4)Banking segment includes noncontrolling interest.

Nine Months Ended September 30, 2021	Banking		Mortgage		Consolidated
Net interest income	$	257,726	$	(111)	$	257,615
Provisions for credit losses(1)	(30,224)		—		(30,224)
Mortgage banking income(2)	—		146,990		146,990
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(10,775)		(10,775)
Other noninterest income	39,223		(402)		38,821
Depreciation and amortization	5,267		1,021		6,288
Amortization of intangibles	4,178		—		4,178
Other noninterest expense	163,261		108,938		272,199
Income before income taxes	$	154,467	$	25,743	$	180,210
Income tax expense					38,744
Net income applicable to FB Financial Corporation and noncontrolling interest					141,466
Net income applicable to noncontrolling interest(3)					8
Net income applicable to FB Financial Corporation					$	141,458
Total assets	$	10,712,281	$	1,098,009	$	11,810,290
Goodwill	242,561		—		242,561

(1)Included $(2,875) in provision for credit losses on unfunded commitments.

(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.

(3)Banking segment includes noncontrolling interest.

Nine Months Ended September 30, 2020	Banking		Mortgage		Consolidated
Net interest income	$	180,374	$	40	$	180,414
Provisions for credit losses(1)	110,887		—		110,887
Mortgage banking income(2)	—		216,145		216,145
Change in fair value of mortgage servicing rights, net of hedging(2)	—		(26,546)		(26,546)
Other noninterest income	31,618		—		31,618
Depreciation and amortization	4,545		770		5,315
Amortization of intangibles	3,825		—		3,825
Other noninterest expense(3)	150,022		108,068		258,090
(Loss) income before income taxes	$	(57,287)	$	80,801	$	23,514
Income tax expense					5,495
Net income applicable to FB Financial Corporation and noncontrolling interest					18,019
Net income applicable to noncontrolling interest(4)					—
Net income applicable to FB Financial Corporation					$	18,019
Total assets	$	10,143,956	$	866,482	$	11,010,438
Goodwill	236,086		—		236,086

(1)Includes $13,050 in provision for credit losses on unfunded commitments.

(2)Change in fair value of mortgage servicing rights, net of hedging is included in mortgage banking income in the Company's consolidated statements of income.

(3)Includes $25,036 of merger costs in the Banking segment related to the Farmers National acquisition and the Franklin merger and $330 of merger costs in the Mortgage segment related to the Franklin merger.

(4)Banking segment includes noncontrolling interest.

Our Banking segment provides our Mortgage segment with a warehouse line of credit that is used to fund mortgage loans held for sale. The warehouse line of credit, which is eliminated in consolidation, is limited based on interest income earned by the Mortgage segment. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit is recorded as interest income to our Banking segment and as interest expense to our Mortgage segment, both of which are included in the calculation of net interest income for each segment. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit was $6,075 and $3,940 for the three months ended September 30, 2021 and 2020, respectively, and $17,585 and $9,650 for the nine months ended September 30, 2021 and 2020, respectively.