FB Financial (US:FBK)2022-02-24 16:00Financial Position - As of December 31, 2021, FB Financial Corporation had total assets of $12.60 billion, loans held for investment of $7.60 billion, total deposits of $10.84 billion, and total common shareholders' equity of $1.43 billion[17]. - As of June 30, 2021, the company holds a 5.5% market share in the Nashville MSA, its largest market, with total deposits of approximately $31.7 billion[27]. - As of December 31, 2021, the company had 1,962 full-time equivalent associates with an average tenure of six years[51]. - The company declared cash dividends of $0.44 per share for the year ended December 31, 2021, an increase from $0.36 per share for the year ended December 31, 2020[178]. - The company repurchased a total of 168,322 shares during the quarter ended December 31, 2021, at an average price of $42.66 per share[179]. Market Presence - The Nashville metropolitan area accounted for 45% of total deposits as of June 30, 2021, with total deposits in Nashville reaching $4.87 billion[18]. - The company operates 82 full-service bank branches and several limited service banking locations across Tennessee, Alabama, Southern Kentucky, and North Georgia[17]. - The company has a deposit market share of 5.5% in Nashville, 4.2% in Knoxville, and 5.7% in Chattanooga as of June 30, 2021[24]. - The company aims to enhance market penetration in metropolitan markets by recruiting top bankers, developing branch presence, and expanding product offerings[27]. - The company faces strong competition in the Nashville MSA, with many competitors offering similar or wider banking services, which may impact loan and deposit growth[159]. Growth Strategy - The company expanded its footprint into Central Alabama in 2021 by hiring additional experienced senior bankers in Birmingham[20]. - The company has completed 13 acquisitions in the past 25 years, targeting small to mid-sized banks with total assets under $5 billion, of which there are approximately 115 in Tennessee and over 475 in contiguous states[27]. - The company intends to pursue acquisitions as part of its growth strategy, which involves operational, strategic, and regulatory risks[154]. - The market for acquisition targets is highly competitive, potentially affecting the company's ability to find suitable candidates[154]. - The company plans to continue leveraging its investments in technology to consolidate operations and improve efficiency while maintaining a decentralized client service model[29]. Financial Performance - Net income for the year ended December 31, 2021 increased to $190.3 million from $63.6 million in 2020, with diluted earnings per share rising to $3.97 from $1.67[204]. - Net interest income for the year ended December 31, 2021, was $347.37 million, an increase from $265.66 million in 2020[193]. - The adjusted efficiency ratio (tax equivalent basis) for the year ended December 31, 2021, was 64.9%, compared to 66.4% in 2020[193]. - Noninterest income decreased by $73.6 million to $228.3 million in 2021, driven by a decline in mortgage banking income[206]. - The company experienced a reversal of $41.0 million in net provisions for credit losses for the year ended December 31, 2021, compared to an expense of $108.0 million in 2020[188]. Risk Management - The company maintains a comprehensive risk management framework to address various risks, including credit, interest rate, and operational risks, supported by significant investments in technology and personnel[30]. - The company employs a consistent credit risk management program, with a Chief Credit Officer overseeing the integrity of the loan portfolio[40]. - The company emphasizes a relationship-oriented lending approach, focusing on understanding clients' financial conditions and economic environments[34]. - The company faces liquidity risk, relying on deposits and effective management of loan repayment schedules to fund operations[130]. - The company is subject to extensive federal and state regulations, which may impact growth and operational costs[135]. Regulatory Environment - The Dodd-Frank Act has increased regulatory compliance costs for the company since its asset size surpassed $10 billion in Q3 2020[65]. - The company is now subject to the Consumer Financial Protection Bureau's regulations, which include broad data collection powers for fair lending practices[67]. - The U.S. Basel III Capital Rules impose minimum capital requirements, including a common equity Tier 1 risk-based capital ratio of 4.5% and a total risk-based capital ratio of 8%[79]. - The ability to pay dividends is restricted by regulatory capital rules, requiring sufficient net income and capital adequacy ratios[78]. - The company must maintain a capital conservation buffer on top of its minimum risk-based capital requirements to avoid restrictions on capital distributions[79]. Technology and Innovation - The company has invested significantly in technology and infrastructure to create a scalable platform for future growth, including participation in the USDF Consortium for blockchain technology[29]. - Significant technology initiatives in 2021 included the introduction of Enterprise Workflow and Process Automation technologies, improving customer experience[59]. - The company is focusing on expanding market share and product offerings through partnerships with financial technology companies[146]. - Technological changes in the financial services industry may create competitive disadvantages due to larger competitors' greater resources[148]. - Innovations such as artificial intelligence and blockchain technology may disrupt traditional banking services, requiring adaptation to maintain competitiveness[148]. Economic Impact - The COVID-19 pandemic has resulted in significant economic disruptions, including elevated unemployment rates and declines in consumer spending, which may continue to affect the company's financial condition[160]. - The company has initiated relief programs for customers, including payment deferral programs and fee waivers, in response to the pandemic[163]. - Changes in interest rates could materially affect net interest income, asset quality, and overall profitability[130]. - Catastrophic events and climate change could negatively impact local economies and the creditworthiness of clients, affecting the company's financial results[149]. - The transition from LIBOR to SOFR as a reference rate is ongoing, with potential impacts on income and expenses due to changes in market risk profiles[130].