FBK 10-Q Quarterly Report Sept. 30, 2024

FB FINANCIAL CORP

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fbk-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________

FORM 10-Q

______________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 001-37875

_____________________________________________________________

FB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

______________________________________________________________


Tennessee			62-1216058
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1221 Broadway , Suite 1300 Nashville , Tennessee			37203
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: ( 615 ) 564-1212

___________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, Par Value $1.00 Per Share

FBK

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Small reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s Common Stock outstanding as of October 31, 2024 was 46,662,052 .

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
	Glossary Of Abbreviations And Acronyms	3
Item 1.	Consolidated Financial Statements	4
	Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	4
	Consolidated Statements of Income (Unaudited) for the three and nine months ended September 30, 2024 and 2023	5
	Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 30, 2024 and 2023	6
	Consolidated Statements of Changes in Shareholders' Equity (Unaudited) for the three and nine months ended S eptember 30, 2024 and 2023	7
	Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2024 and 2023	9
	Condensed Notes to Consolidated Financial Statements (Unaudited)	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	48
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	87
Item 4.	Controls and Procedures	89
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	90
Item 1A.	Risk Factors	90
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
Item 5.	Other Information	90
Item 6.	Exhibits	91
SIGNATURES		92

PART I

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

As used in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, references to “we,” “our,” “us,” “FB Financial,” or “the Company” refer to FB Financial Corporation, a Tennessee corporation, and our wholly-owned banking subsidiary, FirstBank, a Tennessee state-chartered bank, unless otherwise indicated or the context otherwise requires. References to “Bank” or “FirstBank” refer to FirstBank, our wholly-owned banking subsidiary.

The acronyms and abbreviations identified below are used in the Notes to the consolidated financial statements (unaudited) as well as in the Management’s discussion and analysis of financial condition and results of operations. You may find it helpful to refer to this page as you read this Report.

ACL

Allowance for credit losses

Federal Reserve

Board of Governors of the Federal Reserve
System

AFS

Available-for-sale

FHLB

Federal Home Loan Bank

ALCO

Asset Liability Management Committee

GAAP

U.S. generally accepted accounting principles

ASC

Accounting Standard Codification

GDP

Gross domestic product

ASU

Accounting Standard Update

GNMA

Government National Mortgage Association

Bank

FirstBank, subsidiary bank

HFI

Held for investment

BOLI

Bank-owned life insurance

NIM

Net interest margin

Certificate of Deposit

OREO

Other real estate owned

CECL

Current expected credit losses

PSU

Performance-based restricted stock units

Company

FB Financial Corporation

Report

Form 10-Q for the quarterly period ended September 30, 2024

CPR

Conditional prepayment rate

ROAA

Return on average assets

CRE

Commercial real estate

ROAE

Return on average common equity

ESPP

Employee Stock Purchase Plan

ROATCE

Return on average tangible common equity

EVE

Economic value of equity

RSU

Restricted stock units

FASB

Financial Accounting Standards Board

SEC

U.S. Securities and Exchange Commission

FDIC

Federal Deposit Insurance Corporation

SOFR

Secured overnight financing rate

FDM

Financial Difficulty Modification

TDFI

Tennessee Department of Financial Institutions

FB Financial Corporation and subsidiaries

Consolidated balance sheets

(Amounts are in thousands except share and per share amounts)


	September 30,		December 31,

	2024 (Unaudited)		2023
ASSETS
Cash and due from banks	$	126,470	$	146,542
Federal funds sold and reverse repurchase agreements	97,299		83,324
Interest-bearing deposits in financial institutions	727,981		581,066
Cash and cash equivalents	951,750		810,932
Investments:
Available-for-sale debt securities, at fair value	1,567,922		1,471,973

Federal Home Loan Bank stock, at cost	32,859		34,190
Loans held for sale (includes $ 72,608 and $ 46,618 at fair value, respectively)	103,145		67,847
Loans held for investment	9,478,129		9,408,783
Less: allowance for credit losses on loans HFI	156,260		150,326
Net loans held for investment	9,321,869		9,258,457
Premises and equipment, net	152,572		155,731
Operating lease right-of-use assets	47,346		54,295
Interest receivable	52,228		52,715
Mortgage servicing rights, at fair value	157,097		164,249
Bank-owned life insurance	72,167		76,143
Other real estate owned, net	3,779		3,192
Goodwill	242,561		242,561
Core deposit and other intangibles, net	6,449		8,709
Other assets	208,478		203,409
Total assets	$	12,920,222	$	12,604,403
LIABILITIES
Deposits
Noninterest-bearing	$	2,226,144	$	2,218,382
Interest-bearing checking	2,754,253		2,504,421
Money market and savings	4,098,496		4,204,851
Customer time deposits	1,378,118		1,469,811
Brokered and internet time deposits	519,200		150,822
Total deposits	10,976,211		10,548,287
Borrowings	182,107		390,964
Operating lease liabilities	59,584		67,643
Accrued expenses and other liabilities	139,898		142,622
Total liabilities	11,357,800		11,149,516
SHAREHOLDERS’ EQUITY
Common stock, $ 1 par value per share; 75,000,000 shares authorized; 46,658,019 and 46,848,934 shares issued and outstanding, respectively	46,658		46,849
Additional paid-in capital	858,106		864,258
Retained earnings	732,435		678,412
Accumulated other comprehensive loss, net	( 74,870 )		( 134,725 )
Total FB Financial Corporation common shareholders’ equity	1,562,329		1,454,794
Noncontrolling interest	93		93
Total equity	1,562,422		1,454,887
Total liabilities and shareholders’ equity	$	12,920,222	$	12,604,403

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Consolidated statements of income

(Unaudited)

(Amounts are in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Interest income:
Interest and fees on loans	$	158,625	$	153,882	$	469,610	$	443,458
Interest on investment securities
Taxable	13,943		6,399		35,014		19,449
Tax-exempt	1,104		1,795		3,714		5,407
Other	11,956		11,836		30,831		35,261
Total interest income	185,628		173,912		539,169		503,575

Interest expense:
Deposits	76,088		69,826		220,214		187,946
Borrowings	3,523		3,160		10,833		9,500
Total interest expense	79,611		72,986		231,047		197,446
Net interest income	106,017		100,926		308,122		306,129
Provision for credit losses on loans HFI	1,856		6,031		7,648		13,603
Provision for (reversal of) credit losses on unfunded commitments	58		( 3,210 )		( 2,728 )		( 11,369 )
Net interest income after provision for credit losses	104,103		98,105		303,202		303,895

Noninterest income:
Mortgage banking income	11,553		11,998		36,048		36,316
Investment services and trust income	3,721		3,072		10,338		8,227
Service charges on deposit accounts	3,378		2,959		9,686		9,197
ATM and interchange fees	2,840		2,639		8,598		7,664
Loss from investment securities, net	( 40,165 )		( 14,197 )		( 56,378 )		( 14,156 )
(Loss) gain on sales or write-downs of other real estate owned and other assets	( 289 )		115		( 5 )		465

Other income	2,465		1,456		8,786		7,491
Total noninterest (loss) income	( 16,497 )		8,042		17,073		55,204

Noninterest expenses:
Salaries, commissions and employee benefits	47,538		54,491		138,381		155,299
Occupancy and equipment expense	6,640		6,428		19,582		18,618
Data processing	2,486		2,338		7,180		6,796
Advertising	1,947		2,124		4,977		6,258
Legal and professional fees	1,900		1,760		5,798		7,067

Amortization of core deposit and other intangibles	719		889		2,260		2,819






Other expense	14,982		14,967		45,547		47,872
Total noninterest expense	76,212		82,997		223,725		244,729
Income before income taxes	11,394		23,150		96,550		114,370
Income tax expense	1,174		3,975		18,393		23,507
Net income applicable to FB Financial Corporation and noncontrolling interest	10,220		19,175		78,157		90,863
Net income applicable to noncontrolling interest	—		—		8		8
Net income applicable to FB Financial Corporation	$	10,220	$	19,175	$	78,149	$	90,855

Earnings per common share:
Basic	$	0.22	$	0.41	$	1.67	$	1.94
Diluted	0.22		0.41		1.67		1.94

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Consolidated statements of comprehensive income (loss)

(Unaudited)

(Amounts are in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income	$	10,220	$	19,175	$	78,157	$	90,863
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) in available-for-sale securities, net of tax expense (benefit) of $ 9,621 , $( 13,819 ), $ 6,674 and $( 11,650 )	27,265		( 39,316 )		18,597		( 33,110 )
Reclassification adjustment for loss on sale of securities included in net income, net of tax benefit of $ 10,467 , $ 3,674 , $ 14,692 and $ 3,674	29,698		10,426		41,686		10,426
Net unrealized loss in hedging activities, net of tax benefit of $ 21 , $ 35 , $ 151 and $ 99	( 59 )		( 101 )		( 428 )		( 281 )

Total other comprehensive income (loss), net of tax	56,904		( 28,991 )		59,855		( 22,965 )
Comprehensive income (loss) applicable to FB Financial Corporation and noncontrolling interest	67,124		( 9,816 )		138,012		67,898
Comprehensive income applicable to noncontrolling interest	—		—		8		8
Comprehensive income (loss) applicable to FB Financial Corporation	$	67,124	$	( 9,816 )	$	138,004	$	67,890

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Consolidated statements of changes in shareholders’ equity

(Unaudited)

(Amounts are in thousands except per share amounts)


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss, net		Total common shareholders’ equity		Noncontrolling interest		Total shareholders’ equity
Balance at June 30, 2023	$	46,799	$	859,516	$	644,043	$	( 163,407 )	$	1,386,951	$	93	$	1,387,044
Net income attributable to FB Financial Corporation and noncontrolling interest	—		—		19,175		—		19,175		—		19,175
Other comprehensive loss, net of taxes	—		—		—		( 28,991 )		( 28,991 )		—		( 28,991 )

Stock based compensation expense	1		2,783		—		—		2,784		—		2,784
Restricted stock units vested, net of taxes	26		( 348 )		—		—		( 322 )		—		( 322 )

Shares issued under employee stock purchase program	13		389		—		—		402		—		402
Dividends declared ($ 0.15 per share)	—		—		( 7,098 )		—		( 7,098 )		—		( 7,098 )

Balance at September 30, 2023	$	46,839	$	862,340	$	656,120	$	( 192,398 )	$	1,372,901	$	93	$	1,372,994

Balance at June 30, 2024	$	46,643	$	855,391	$	730,242	$	( 131,774 )	$	1,500,502	$	93	$	1,500,595
Net income attributable to FB Financial Corporation and noncontrolling interest	—		—		10,220		—		10,220		—		10,220
Other comprehensive income, net of taxes	—		—		—		56,904		56,904		—		56,904

Stock based compensation expense	1		2,350		—		—		2,351		—		2,351
Restricted stock units vested, net of taxes	4		( 108 )		—		—		( 104 )		—		( 104 )

Shares issued under employee stock purchase program	10		473		—		—		483		—		483
Dividends declared ($ 0.17 per share)	—		—		( 8,027 )		—		( 8,027 )		—		( 8,027 )

Balance at September 30, 2024	$	46,658	$	858,106	$	732,435	$	( 74,870 )	$	1,562,329	$	93	$	1,562,422

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Consolidated statements of changes in shareholders’ equity

(Unaudited)

(Amounts are in thousands except per share amounts)


	Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss, net		Total common shareholders’ equity		Noncontrolling interest		Total shareholders’ equity









Balance at December 31, 2022	$	46,738	$	861,588	$	586,532	$	( 169,433 )	$	1,325,425	$	93	$	1,325,518
Net income attributable to FB Financial Corporation and noncontrolling interest	—		—		90,855		—		90,855		8		90,863
Other comprehensive loss, net of taxes	—		—		—		( 22,965 )		( 22,965 )		—		( 22,965 )
Repurchase of common stock	( 136 )		( 4,808 )		—		—		( 4,944 )		—		( 4,944 )
Stock based compensation expense	7		8,310		—		—		8,317		—		8,317
Restricted stock units vested, net of taxes	141		( 2,069 )		—		—		( 1,928 )		—		( 1,928 )
Performance-based restricted stock units vested, net of taxes	68		( 1,383 )		—		—		( 1,315 )		—		( 1,315 )
Shares issued under employee stock purchase program	21		702		—		—		723		—		723
Dividends declared ($ 0.45 per share)	—		—		( 21,267 )		—		( 21,267 )		—		( 21,267 )
Noncontrolling interest distribution	—		—		—		—		—		( 8 )		( 8 )
Balance at September 30, 2023	$	46,839	$	862,340	$	656,120	$	( 192,398 )	$	1,372,901	$	93	$	1,372,994

Balance at December 31, 2023	$	46,849	$	864,258	$	678,412	$	( 134,725 )	$	1,454,794	$	93	$	1,454,887
Net income attributable to FB Financial Corporation and noncontrolling interest	—		—		78,149		—		78,149		8		78,157
Other comprehensive income, net of taxes	—		—		—		59,855		59,855		—		59,855
Repurchase of common stock	( 353 )		( 12,346 )		—		—		( 12,699 )		—		( 12,699 )
Stock based compensation expense	5		7,256		—		—		7,261		—		7,261
Restricted stock units vested, net of taxes	106		( 1,549 )		—		—		( 1,443 )		—		( 1,443 )
Performance-based restricted stock units vested, net of taxes	30		( 374 )		—		—		( 344 )		—		( 344 )
Shares issued under employee stock purchase program	21		861		—		—		882		—		882
Dividends declared ($ 0.51 per share)	—		—		( 24,126 )		—		( 24,126 )		—		( 24,126 )
Noncontrolling interest distribution	—		—		—		—		—		( 8 )		( 8 )
Balance at September 30, 2024	$	46,658	$	858,106	$	732,435	$	( 74,870 )	$	1,562,329	$	93	$	1,562,422

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Consolidated statements of cash flows

(Unaudited)

(Amounts are in thousands)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net income applicable to FB Financial Corporation and noncontrolling interest	$	78,157	$	90,863
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets and software	8,957		7,361
Amortization of core deposit and other intangibles	2,260		2,819
Amortization of issuance costs on subordinated debt	290		290
Capitalization of mortgage servicing rights	( 4,067 )		( 6,134 )
Net change in fair value of mortgage servicing rights	11,219		1,789
Stock-based compensation expense	7,261		8,317
Provision for credit losses on loans HFI	7,648		13,603
Reversal of credit losses on unfunded commitments	( 2,728 )		( 11,369 )
Provision for (reversal of) mortgage loan repurchases	200		( 650 )
Accretion of discounts and premiums on acquired loans, net	( 538 )		( 617 )
Amortization of premiums and discounts on securities, net	2,787		3,959
Loss from investment securities, net	56,378		14,156
Originations of loans held for sale	( 913,315 )		( 970,131 )

Proceeds from sale of loans held for sale	911,650		1,013,584
Gain on sale and change in fair value of loans held for sale	( 26,008 )		( 25,847 )

Net loss (gain) on write-downs of other real estate owned and other assets	5		( 465 )


(Reversal of) provision for deferred income taxes	( 3,895 )		1,660
Earnings on bank-owned life insurance	( 3,296 )		( 1,382 )
Changes in:
Operating lease assets and liabilities, net	( 1,110 )		1,591
Other assets and interest receivable	( 22,170 )		( 14,596 )
Accrued expenses and other liabilities	4,985		7,911
Net cash provided by operating activities	114,670		136,712
Cash flows from investing activities:
Activity in available-for-sale securities:
Sales	526,076		75,857
Maturities, prepayments and calls	224,070		91,361
Purchases	( 823,976 )		( 82,829 )

Net change in loans	( 73,631 )		21,419

Proceeds from sales of FHLB stock, net	1,331		23,832

Purchases of premises and equipment	( 4,977 )		( 16,563 )
Proceeds from the sale of premises and equipment	489		105
Proceeds from the sale of other real estate owned	1,846		5,692
Proceeds from the sale of other assets	898		1,197
Proceeds from bank-owned life insurance	7,272		236

Net cash (used in) provided by investing activities	( 140,602 )		120,307
Cash flows from financing activities:
Net increase (decrease) in deposits	423,427		( 219,798 )
Net decrease in securities sold under agreements to repurchase and federal funds purchased	( 89,056 )		( 12,240 )

Repayment of Bank Term Funding Program	( 130,000 )		—
Net decrease in short-term FHLB advances	—		( 175,000 )





Share based compensation withholding payments	( 1,787 )		( 3,243 )
Net proceeds from sale of common stock under employee stock purchase program	882		723
Repurchase of common stock	( 12,699 )		( 4,944 )
Dividends paid on common stock	( 23,847 )		( 21,026 )
Dividend equivalent payments made upon vesting of equity compensation	( 162 )		( 217 )
Noncontrolling interest distribution	( 8 )		( 8 )
Net cash provided by (used in) financing activities	166,750		( 435,753 )
Net change in cash and cash equivalents	140,818		( 178,734 )
Cash and cash equivalents at beginning of the period	810,932		1,027,052
Cash and cash equivalents at end of the period	$	951,750	$	848,318

FB Financial Corporation and subsidiaries

Consolidated statements of cash flows (continued)

(Unaudited)

(Amounts are in thousands)


	Nine Months Ended September 30,
	2024		2023
Supplemental cash flow information:
Interest paid	$	229,275	$	185,513
Taxes paid, net	34,173		37,875
Supplemental noncash disclosures:
Transfers from loans to other real estate owned	$	2,400	$	657
Transfers from loans to other assets	3,316		2,233
Transfers from other real estate owned to other assets	—		75




Transfers from loans to loans held for sale	167		11,351
Transfers from loans held for sale to loans	1,850		3,076
Loans provided for sales of other assets	924		516
Increase (decrease) in rebooked GNMA loans under optional repurchase program	9,308		( 4,137 )




Trade date payable - securities	—		10,930
Trade date receivable - securities	365		789
Dividends declared not paid on restricted stock units and performance stock units	279		241


Right-of-use assets obtained in exchange for operating lease liabilities	3,925		5,617

See the accompanying notes to the consolidated financial statements.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Note (1)— Basis of presentation

Overview and presentation

FB Financial Corporation (the “Company”) is a financial holding company headquartered in Nashville, Tennessee. The Company operates primarily through its wholly-owned subsidiary bank, FirstBank (the “Bank”) and its subsidiaries. As of September 30, 2024, the Bank had 77 full-service branches throughout Tennessee, Alabama, Kentucky and North Georgia, and a mortgage business with office locations across the Southeast, which primarily originates loans to be sold to third party private investors or government sponsored agencies in the secondary market.

The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with U.S. GAAP interim reporting requirements and general banking industry guidelines, and therefore, do not include all information and notes included in the annual consolidated financial statements in conformity with GAAP. These interim consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K.

The unaudited consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported results of operations for the reporting periods and the related disclosures. Although management’s estimates contemplate current conditions and how they are expected to change in the future, it is reasonably possible that actual conditions could vary from those anticipated, which could cause the Company’s financial condition and results of operations to vary significantly from those estimates.

Certain prior period amounts have been reclassified to conform to the current period presentation without any impact on the reported amounts of net income or shareholders’ equity.

Earnings per common share

Basic earnings per common share excludes dilution and is computed by dividing earnings attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under the restricted stock units granted but not yet vested and distributable. Diluted earnings per common share is computed by dividing earnings attributable to common shareholders by the weighted average number of common shares outstanding for the year, plus an incremental number of common-equivalent shares computed using the treasury stock method.

Certain restricted stock awards granted by the Company include non-forfeitable dividend equivalent rights and are considered participating securities for the purposes of computing earnings per common share. Accordingly, the Company is required to calculate basic and diluted earnings per common share using the two-class method. Calculation of earnings per common share under the two-class method (i) excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities and (ii) excludes from the denominator the dilutive impact of the participating securities.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following is a summary of the basic and diluted earnings per common share calculations for each of the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023			2024		2023
Basic earnings per common share:
Net income applicable to FB Financial Corporation	$	10,220	$	19,175		$	78,149	$	90,855
Dividends paid on and undistributed earnings allocated to participating securities	—		—			—		—
Earnings available to common shareholders	$	10,220	$	19,175		$	78,149	$	90,855
Weighted average basic shares outstanding	46,650,563		46,818,612			46,762,213		46,759,703
Basic earnings per common share	$	0.22	$	0.41		$	1.67	$	1.94
Diluted earnings per common share:
Earnings available to common shareholders	$	10,220	$	19,175		$	78,149	$	90,855
Weighted average basic shares outstanding	46,650,563		46,818,612			46,762,213		46,759,703
Weighted average diluted shares contingently issuable (1)	152,767		37,810			111,824		42,840
Weighted average diluted shares outstanding	46,803,330		46,856,422			46,874,037		46,802,543
Diluted earnings per common share	$	0.22	$	0.41		$	1.67	$	1.94

(1) Excludes 4 and 904 restricted stock units outstanding considered to be antidilutive for the three and nine months ended September 30, 2024 and 217,546 and 218,815 restricted stock units outstanding considered to be antidilutive for the three and nine months ended September 30, 2023.

Recently adopted accounting standards:

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” The FASB issued this update to clarify the guidance in ASC 820, “Fair Value Measurement,” when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, to amend a related illustrative example, and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The Company adopted this update effective January 1, 2024. The adoption did not have an impact on the Company’s consolidated financial statements or related disclosures.

In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements” as part of the Post-Implementation Review process of ASC 842, “Leases,” around related party arrangements between entities under common control. Under previous guidance, a lessee is generally required to amortize leasehold improvements that it owns over the shorter of the useful life of those improvements or the lease term. However, due to the nature of leasehold improvements made under leases between entities under common control, ASU 2023-01 requires a lessee in a common-control arrangement to amortize such leasehold improvements that it owns over the improvements’ useful life to the common control group, regardless of the lease term. The Company adopted this standard on January 1, 2024 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related disclosures.

Additionally, in March 2023, the FASB issued ASU 2023-02, “Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” The amendments in this update permit reporting entities to elect to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The Company adopted this standard effective January 1, 2024. The adoption of this accounting pronouncement did not have an impact on the Company’s historical consolidated financial statements but could influence the Company’s decisions with respect to investments in certain tax credits prospectively.

Newly issued not yet effective accounting standards:

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in this update are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker, a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the chief operating decision maker when deciding how to allocate resources. The ASU also requires all annual disclosures currently

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

required by Topic 280, “Segment Reporting,” to be included in interim periods. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and retrospective application is required for all periods presented. While the Company is continuing to evaluate the impact, ASU 2023-07 is not expected to have a material impact on the Company’s reportable segments disclosures.

In December 2023, the FASB issued ASU 2023-08, “Intangibles – Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets.” This update requires entities to present crypto assets measured at fair value separately from other intangible assets on the balance sheet and reflect changes from remeasurement in the net income. Additionally, an entity that receives crypto assets as noncash consideration in the ordinary course of business and converts them nearly immediately into cash is required to classify those cash receipts as cash flows from operating activities. Lastly, the update requires entities to provide interim and annual disclosures about the types of crypto assets they hold and any changes in their holdings of crypto assets. While the Company does not currently hold or facilitate transactions with crypto assets, the Company is evaluating the potential future financial statement and disclosure impact from adopting this guidance when it becomes applicable based on the Company’s crypto asset activities.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The amendments in this update enhance the transparency and decision usefulness of income tax disclosures. This ASU requires disclosures of specific categories and disaggregation of information in the rate reconciliation table. The ASU also requires disclosure of disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. The requirements of the ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and the amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is evaluating the impact this will have on the Company’s income tax disclosures.

Subsequent events

The Company has evaluated, for consideration of recognition or disclosure, subsequent events that occurred through the date of issuance of these financial statements. The Company has determined that there were no subsequent events that occurred after September 30, 2024, but prior to the issuance of these financial statements that would have a material impact on the Company’s consolidated financial statements.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Note (2)— Investment securities

The following tables summarize the amortized cost, allowance for credit losses and fair value of the AFS debt securities and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive loss, net at September 30, 2024 and December 31, 2023:


	September 30, 2024
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Allowance for credit losses on investments		Fair Value
Investment Securities
AFS debt securities
U.S. government agency securities	$	515,775	$	1,401	$	( 343 )	$	—	$	516,833
Mortgage-backed securities - residential	968,294		1,471		( 90,176 )		—		879,589
Mortgage-backed securities - commercial	17,147		—		( 858 )		—		16,289
Municipal securities	170,865		143		( 16,779 )		—		154,229

Corporate securities	998		—		( 16 )		—		982
Total	$	1,673,079	$	3,015	$	( 108,172 )	$	—	$	1,567,922


	December 31, 2023
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Allowance for credit losses on investments		Fair Value
Investment Securities
AFS debt securities
U.S. government agency securities	$	204,663	$	470	$	( 1,177 )	$	—	$	203,956
Mortgage-backed securities - residential	1,057,389		—		( 160,418 )		—		896,971
Mortgage-backed securities - commercial	18,186		—		( 1,225 )		—		16,961
Municipal securities	263,312		370		( 21,419 )		—		242,263
U.S. Treasury securities	111,729		—		( 3,233 )		—		108,496
Corporate securities	3,500		—		( 174 )		—		3,326
Total	$	1,658,779	$	840	$	( 187,646 )	$	—	$	1,471,973

The components of amortized cost for AFS debt securities on the consolidated balance sheets exclude accrued interest receivable since the Company elected to present accrued interest receivable separately on the consolidated balance sheets. As of September 30, 2024 and December 31, 2023, total accrued interest receivable on AFS debt securities was $ 5,848 and $ 7,212 , respectively.

AFS debt securities pledged at September 30, 2024 and December 31, 2023 had carrying amounts of $ 1,057,384 and $ 929,546 , respectively, and were pledged to secure a Federal Reserve line of credit, public deposits and repurchase agreements. Additionally at December 31, 2023, AFS debt securities were pledged to secure Bank Term Funding Program borrowings.

Within AFS debt securities, there were no aggregate holdings of any single issuer, other than U.S. Government sponsored enterprises, in an amount greater than 10% of shareholders’ equity during any period presented.

AFS debt securities transactions are recorded as of the trade date. At September 30, 2024, there were $ 365 in trade date receivables related to sales settled after period end. At December 31, 2023, there were no such trade date receivables. At both September 30, 2024 and December 31, 2023, there were no trade date payables that related to purchases settled after period end.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following tables show gross unrealized losses on AFS debt securities for which an allowance for credit losses has no t been recorded at September 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:


	September 30, 2024
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. government agency securities	$	143,783	$	( 338 )	$	816	$	( 5 )	$	144,599	$	( 343 )
Mortgage-backed securities - residential	—		—		470,625		( 90,176 )		470,625		( 90,176 )
Mortgage-backed securities - commercial	—		—		16,289		( 858 )		16,289		( 858 )
Municipal securities	23,993		( 1,772 )		115,191		( 15,007 )		139,184		( 16,779 )

Corporate securities	—		—		982		( 16 )		982		( 16 )
Total	$	167,776	$	( 2,110 )	$	603,903	$	( 106,062 )	$	771,679	$	( 108,172 )


	December 31, 2023
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. government agency securities	$	25,923	$	( 21 )	$	14,040	$	( 1,156 )	$	39,963	$	( 1,177 )
Mortgage-backed securities - residential	—		—		896,971		( 160,418 )		896,971		( 160,418 )
Mortgage-backed securities - commercial	—		—		16,961		( 1,225 )		16,961		( 1,225 )
Municipal securities	14,480		( 148 )		188,669		( 21,271 )		203,149		( 21,419 )
U.S. Treasury securities	—		—		108,496		( 3,233 )		108,496		( 3,233 )
Corporate securities	—		—		3,326		( 174 )		3,326		( 174 )
Total	$	40,403	$	( 169 )	$	1,228,463	$	( 187,477 )	$	1,268,866	$	( 187,646 )

As of September 30, 2024 and December 31, 2023, the Company’s AFS debt securities portfolio consisted of 266 and 439 individual securities, 207 and 370 of which were in an unrealized loss position, respectively.

The majority of the investment portfolio was either government guaranteed, an issuance of a government sponsored entity or highly rated by major credit rating agencies, and the Company has historically not recorded any credit losses associated with these investments. Municipal debt securities with market values below amortized cost at September 30, 2024 were reviewed for material credit events and/or rating downgrades with individual credit reviews performed. The issuers of these AFS debt securities continue to make timely principal and interest payments under the contractual terms of the securities and the issuers will continue to be observed as a part of the Company’s ongoing credit monitoring. As such, as of September 30, 2024 and December 31, 2023, it was determined that all AFS debt securities that experienced a decline in fair value below amortized cost basis were due to noncredit-related factors. Further, it is not likely that the Company will be required to sell these securities before recovery of their amortized cost basis. Therefore, there was no allowance for credit losses recognized on AFS debt securities as of September 30, 2024 or December 31, 2023. Periodically, AFS debt securities may be sold, or the composition of the portfolio realigned to improve yields, quality or marketability, or to implement changes in investment or asset/liability strategy, including maintaining collateral requirements and raising funds for liquidity purposes or preparing for anticipated changes in market interest rates.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The amortized cost and fair value of AFS debt securities by contractual maturity as of September 30, 2024 and December 31, 2023 are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	September 30,				December 31,

	2024				2023
	Available-for-sale				Available-for-sale
	Amortized cost		Fair Value		Amortized cost		Fair Value
Due in one year or less	$	1,895	$	1,892	$	64,776	$	64,279
Due in one to five years	4,189		4,143		75,996		71,801
Due in five to ten years	229,469		228,476		51,162		49,630
Due in over ten years	452,085		437,533		391,270		372,331
	687,638		672,044		583,204		558,041
Mortgage-backed securities - residential	968,294		879,589		1,057,389		896,971
Mortgage-backed securities - commercial	17,147		16,289		18,186		16,961
Total AFS debt securities	$	1,673,079	$	1,567,922	$	1,658,779	$	1,471,973

Sales and other dispositions of AFS debt securities were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Proceeds from sales	$	318,194	$	75,857	$	526,076	$	75,857
Proceeds from maturities, prepayments and calls	89,834		32,946		224,070		91,361
Gross realized gains	—		19		90		19
Gross realized losses	40,165		14,119		56,468		14,119

Equity Securities

The Company had equity securities without readily determinable market value included in other assets on the consolidated balance sheets with carrying amounts of $ 23,301 and $ 25,191 at September 30, 2024 and December 31, 2023, respectively. Additionally, the Company had equity securities accounted for under the equity method of accounting included in other assets on the consolidated balance sheets of $ 20,000 at September 30, 2024. The Company also had $ 32,859 and $ 34,190 of FHLB stock carried at cost at September 30, 2024 and December 31, 2023, respectively, included separately from the other equity securities discussed above.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Note (3)— Loans and allowance for credit losses on loans HFI

Loans outstanding as of September 30, 2024 and December 31, 2023, by class of financing receivable are as follows:


	September 30,		December 31,

	2024		2023
Commercial and industrial	$	1,688,815	$	1,720,733
Construction	1,079,726		1,397,313
Residential real estate:
1-to-4 family mortgage	1,612,031		1,568,552
Residential line of credit	591,049		530,912
Multi-family mortgage	654,188		603,804
Commercial real estate:
Owner-occupied	1,324,208		1,232,071
Non-owner occupied	2,048,036		1,943,525
Consumer and other	480,076		411,873
Gross loans	9,478,129		9,408,783
Less: Allowance for credit losses on loans HFI	( 156,260 )		( 150,326 )
Net loans	$	9,321,869	$	9,258,457

As of September 30, 2024 and December 31, 2023, $ 925,200 and $ 1,030,016 , respectively, of qualifying residential mortgage loans (including loans held for sale) and $ 1,604,389 and $ 1,984,007 , respectively, of qualifying commercial mortgage loans were pledged to the FHLB system securing advances against the Bank’s line of credit. Additionally, as of September 30, 2024 and December 31, 2023, qualifying commercial and industrial, construction and consumer loans, of $ 2,651,997 and $ 3,107,495 , respectively, were pledged to the Federal Reserve under the Borrower-in-Custody program.

The amortized cost of loans HFI on the consolidated balance sheets exclude accrued interest receivable as the Company presents accrued interest receivable separately on the balance sheet. As of September 30, 2024 and December 31, 2023, accrued interest receivable on loans HFI amounted to $ 43,503 and $ 43,776 , respectively.

Credit Quality - Commercial Type Loans

The Company categorizes commercial loan types into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans that share similar risk characteristics collectively. Loans that do not share similar risk characteristics may be evaluated individually.

The Company uses the following definitions for risk ratings:


			Pass.			Loans rated Pass include those that are adequately collateralized performing loans which management believes do not have conditions that have occurred or may occur that would result in the loan being downgraded into an inferior category. The Pass category also includes commercial loans rated as Watch, which include those that management believes have conditions that have occurred, or may occur, which could result in the loan being downgraded to an inferior category.




			Special Mention.			Loans rated Special Mention are those that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position at some future date. Management does not believe there will be a loss of principal or interest. These loans require intensive servicing and may possess more than normal credit risk.




			Classified.			Loans included in the Classified category include loans rated as Substandard and Doubtful. Loans rated as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful loans have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weakness or weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable.

Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following tables present the credit quality of the Company's commercial type loan portfolio as of September 30, 2024 and December 31, 2023 and the gross charge-offs for the nine months ended September 30, 2024 and the year ended December 31, 2023 by year of origination. Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination.





As of and for the nine months ended September 30, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial and industrial
Pass	$	132,257	$	189,261	$	154,303	$	61,545	$	32,166	$	115,917	$	908,150	$	1,593,599
Special Mention	2,795		2,851		2,609		73		—		195		26,260		34,783
Classified	—		59		20,468		4,593		2,900		6,256		26,157		60,433

Total	135,052		192,171		177,380		66,211		35,066		122,368		960,567		1,688,815

Current-period gross charge-offs	—		12		2		70		16		7		52		159
Construction
Pass	141,229		140,864		369,074		106,230		28,784		66,547		183,222		1,035,950
Special Mention	—		87		12,321		26		—		600		—		13,034
Classified	—		—		5,228		273		8,488		—		16,753		30,742

Total	141,229		140,951		386,623		106,529		37,272		67,147		199,975		1,079,726

Current-period gross charge-offs	—		—		—		—		—		—		92		92
Residential real estate:

Multi-family mortgage
Pass	29,685		5,879		241,414		224,347		52,376		70,251		19,245		643,197
Special Mention	—		—		—		9,980		—		—		—		9,980
Classified	—		—		—		—		—		1,011		—		1,011

Total	29,685		5,879		241,414		234,327		52,376		71,262		19,245		654,188


Current-period gross charge-offs	—		—		—		—		—		—		—		—
Commercial real estate:
Owner occupied
Pass	133,073		112,041		247,259		218,567		108,938		392,401		87,183		1,299,462
Special Mention	—		—		1,385		2,600		—		7,932		—		11,917
Classified	—		—		6,274		15		62		5,425		1,053		12,829

Total	133,073		112,041		254,918		221,182		109,000		405,758		88,236		1,324,208

Current-period gross charge-offs	—		—		—		—		—		—		—		—
Non-owner occupied
Pass	100,902		43,211		535,152		460,381		113,393		708,997		47,920		2,009,956
Special Mention	—		—		5,324		4,536		1,092		19,406		—		30,358
Classified	—		—		—		—		—		7,722		—		7,722

Total	100,902		43,211		540,476		464,917		114,485		736,125		47,920		2,048,036




Current-period gross charge-offs	—		—		—		—		—		—		—		—
Total commercial loan types
Pass	537,146		491,256		1,547,202		1,071,070		335,657		1,354,113		1,245,720		6,582,164
Special Mention	2,795		2,938		21,639		17,215		1,092		28,133		26,260		100,072
Classified	—		59		31,970		4,881		11,450		20,414		43,963		112,737

Total	$	539,941	$	494,253	$	1,600,811	$	1,093,166	$	348,199	$	1,402,660	$	1,315,943	$	6,794,973
Current-period gross charge-offs	$	—	$	12	$	2	$	70	$	16	$	7	$	144	$	251

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)





As of and for the year ended December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial and industrial
Pass	$	225,734	$	255,921	$	151,492	$	39,897	$	70,302	$	73,415	$	839,918	$	1,656,679
Special Mention	—		17,947		3,083		—		151		108		7,549		28,838
Classified	457		4,253		3,075		3,027		254		6,129		18,021		35,216

Total	226,191		278,121		157,650		42,924		70,707		79,652		865,488		1,720,733
Current-period gross charge-offs	14		7		201		22		—		87		131		462

Construction
Pass	179,929		677,387		148,312		46,697		39,140		49,954		208,491		1,349,910
Special Mention	1		4,659		2,943		1,202		—		690		12,000		21,495
Classified	—		2,349		1,484		6,620		—		—		15,455		25,908

Total	179,930		684,395		152,739		54,519		39,140		50,644		235,946		1,397,313
Current-period gross charge-offs	—		—		—		—		—		—		—		—

Residential real estate:

Multi-family mortgage
Pass	29,982		151,495		223,889		92,745		29,933		43,479		31,209		602,732
Special Mention	—		—		—		—		—		—		—		—
Classified	—		—		—		—		—		1,072		—		1,072

Total	29,982		151,495		223,889		92,745		29,933		44,551		31,209		603,804
Current-period gross charge-offs	—		—		—		—		—		—		—		—


Commercial real estate:
Owner occupied
Pass	118,030		261,196		231,241		115,397		151,146		281,253		53,970		1,212,233
Special Mention	—		1,297		1,827		—		154		2,617		—		5,895
Classified	—		6,305		16		—		760		5,789		1,073		13,943

Total	118,030		268,798		233,084		115,397		152,060		289,659		55,043		1,232,071
Current-period gross charge-offs	—		—		144		—		—		—		—		144

Non-owner occupied
Pass	47,026		474,560		478,878		117,429		178,448		580,168		43,577		1,920,086
Special Mention	—		—		3,975		—		—		10,435		—		14,410
Classified	—		—		1,001		—		381		7,647		—		9,029

Total	47,026		474,560		483,854		117,429		178,829		598,250		43,577		1,943,525
Current-period gross charge-offs	—		—		—		—		—		—		—		—

Total commercial loan types
Pass	600,701		1,820,559		1,233,812		412,165		468,969		1,028,269		1,177,165		6,741,640
Special Mention	1		23,903		11,828		1,202		305		13,850		19,549		70,638
Classified	457		12,907		5,576		9,647		1,395		20,637		34,549		85,168
Total	$	601,159	$	1,857,369	$	1,251,216	$	423,014	$	470,669	$	1,062,756	$	1,231,263	$	6,897,446
Current-period gross charge-offs	14		7		345		22		—		87		131		606

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Credit Quality - Consumer Type Loans

For consumer and residential loan classes, the Company primarily evaluates credit quality based on delinquency and accrual status of the loan, credit documentation and by payment activity. The performing or nonperforming status is updated on an on-going basis dependent upon improvement and deterioration in credit quality. Nonperforming loans include loans that are no longer accruing interest (nonaccrual loans) and loans past due ninety or more days and still accruing interest.

The following tables present the credit quality by classification (performing or nonperforming) of the Company’s consumer type loan portfolio as of September 30, 2024 and December 31, 2023 and the gross charge-offs for the nine months ended September 30, 2024 and the year ended December 31, 2023 by year of origination. Revolving loans are presented separately. Management considers the guidance in ASC 310-20 when determining whether a modification, extension, or renewal constitutes a current period origination.





As of and for the nine months ended September 30, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total





Residential real estate:
1-to-4 family mortgage
Performing	$	171,947	$	171,313	$	465,317	$	371,494	$	136,834	$	271,278	$	—	$	1,588,183
Nonperforming	80		564		6,365		6,571		3,126		7,142		—		23,848
Total	172,027		171,877		471,682		378,065		139,960		278,420		—		1,612,031
Current-period gross charge-offs	—		—		150		130		—		15		—		295
Residential line of credit
Performing	—		—		—		—		—		—		589,491		589,491
Nonperforming	—		—		—		—		—		—		1,558		1,558
Total	—		—		—		—		—		—		591,049		591,049
Current-period gross charge-offs	—		—		—		—		—		73		—		73
Consumer and other
Performing	112,563		97,908		79,587		38,215		30,704		105,231		634		464,842
Nonperforming	731		1,720		1,759		2,925		2,338		5,760		1		15,234
Total	113,294		99,628		81,346		41,140		33,042		110,991		635		480,076
Current-period gross charge-offs	956		446		201		233		56		244		—		2,136
Total consumer type loans
Performing	284,510		269,221		544,904		409,709		167,538		376,509		590,125		2,642,516
Nonperforming	811		2,284		8,124		9,496		5,464		12,902		1,559		40,640
Total	$	285,321	$	271,505	$	553,028	$	419,205	$	173,002	$	389,411	$	591,684	$	2,683,156
Current-period gross charge-offs	$	956	$	446	$	351	$	363	$	56	$	332	$	—	$	2,504

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)





As of and for the year ended December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total





Residential real estate:
1-to-4 family mortgage
Performing	$	198,537	$	500,628	$	399,338	$	145,484	$	81,905	$	226,587	$	—	$	1,552,479
Nonperforming	76		2,565		4,026		3,846		690		4,870		—		16,073
Total	198,613		503,193		403,364		149,330		82,595		231,457		—		1,568,552
Prior-period gross charge-offs	—		18		—		4		—		24		—		46
Residential line of credit
Performing	—		—		—		—		—		—		528,439		528,439
Nonperforming	—		—		—		—		—		—		2,473		2,473
Total	—		—		—		—		—		—		530,912		530,912
Prior-period gross charge-offs	—		—		—		—		—		—		—		—
Consumer and other
Performing	104,399		91,557		45,187		34,928		24,040		93,833		6,890		400,834
Nonperforming	528		1,025		2,562		1,819		1,264		3,841		—		11,039
Total	104,927		92,582		47,749		36,747		25,304		97,674		6,890		411,873
Prior-period gross charge-offs	1,463		564		139		201		110		372		2		2,851
Total consumer type loans
Performing	302,936		592,185		444,525		180,412		105,945		320,420		535,329		2,481,752
Nonperforming	604		3,590		6,588		5,665		1,954		8,711		2,473		29,585
Total	$	303,540	$	595,775	$	451,113	$	186,077	$	107,899	$	329,131	$	537,802	$	2,511,337
Prior-period gross charge-offs	1,463		582		139		205		110		396		2		2,897

Nonaccrual and Past Due Loans

The following tables represent an analysis of the aging by class of financing receivable as of September 30, 2024 and December 31, 2023:


September 30, 2024	30-89 days past due and accruing interest		90 days or more and accruing interest		Nonaccrual loans		Loans current on payments and accruing interest		Total
Commercial and industrial	$	760	$	600	$	22,458	$	1,664,997	$	1,688,815
Construction	2,734		365		11,181		1,065,446		1,079,726
Residential real estate:
1-to-4 family mortgage	21,644		15,249		8,599		1,566,539		1,612,031
Residential line of credit	2,061		1,331		227		587,430		591,049
Multi-family mortgage	—		—		25		654,163		654,188
Commercial real estate:
Owner occupied	236		95		8,904		1,314,973		1,324,208
Non-owner occupied	65		3,512		3,055		2,041,404		2,048,036
Consumer and other	12,961		5,098		10,136		451,881		480,076
Total	$	40,461	$	26,250	$	64,585	$	9,346,833	$	9,478,129

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)


December 31, 2023	30-89 days past due and accruing interest		90 days or more and accruing interest		Nonaccrual loans		Loans current on payments and accruing interest		Total
Commercial and industrial	$	732	$	—	$	21,730	$	1,698,271	$	1,720,733
Construction	6,579		165		2,872		1,387,697		1,397,313
Residential real estate:
1-to-4 family mortgage	21,768		9,355		6,718		1,530,711		1,568,552
Residential line of credit	2,464		1,337		1,136		525,975		530,912
Multi-family mortgage	—		—		32		603,772		603,804
Commercial real estate:
Owner occupied	480		—		3,188		1,228,403		1,232,071
Non-owner occupied	4,059		—		3,351		1,936,115		1,943,525
Consumer and other	10,961		1,836		9,203		389,873		411,873
Total	$	47,043	$	12,693	$	48,230	$	9,300,817	$	9,408,783

The following tables provide the amortized cost basis of loans on non-accrual status, as well as any related allowance as of September 30, 2024 and December 31, 2023 by class of financing receivable.



September 30, 2024	Nonaccrual with no related allowance		Nonaccrual with related allowance		Related allowance
Commercial and industrial	$	8,535	$	13,923	$	9,906
Construction	—		11,181		1,284
Residential real estate:
1-to-4 family mortgage	1,561		7,038		140
Residential line of credit	147		80		1
Multi-family mortgage	—		25		1
Commercial real estate:
Owner occupied	6,415		2,489		109
Non-owner occupied	2,598		457		6
Consumer and other	—		10,136		526
Total	$	19,256	$	45,329	$	11,973


December 31, 2023	Nonaccrual with no related allowance		Nonaccrual with related allowance		Related allowance

Commercial and industrial	$	3,678	$	18,052	$	5,011
Construction	2,267		605		59
Residential real estate:
1-to-4 family mortgage	1,444		5,274		103
Residential line of credit	685		451		8
Multi-family mortgage	—		32		1
Commercial real estate:
Owner occupied	2,920		268		15
Non-owner occupied	3,316		35		1
Consumer and other	—		9,203		498
Total	$	14,310	$	33,920	$	5,696

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following presents interest income recognized on nonaccrual loans for the three and nine months ended September 30, 2024:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Commercial and industrial	$	46	$	302	$	615	$	350
Construction	308		—		448		52
Residential real estate:
1-to-4 family mortgage	6		83		40		232
Residential line of credit	1		34		40		85
Multi-family mortgage	—		1		1		2
Commercial real estate:
Owner occupied	—		—		124		97
Non-owner occupied	—		58		89		195
Consumer and other	—		100		—		416
Total	$	361	$	578	$	1,357	$	1,429

Accrued interest receivable written off as an adjustment to interest income amounted to $ 128 and $ 536 for the three and nine months ended September 30, 2024, respectively, and $ 322 and $ 666 for the three and nine months ended September 30, 2023, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company may make certain modifications of loans to borrowers experiencing financial difficulty. These modifications may be in the form of an interest rate reduction, a term extension, principal forgiveness, payment deferral or a combination thereof. Upon the Company's determination that a modified loan has subsequently been deemed uncollectible, the portion of the loan deemed uncollectible is charged off against the allowance for credit losses on loans HFI. The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Tables within this section exclude loans that were paid off or are otherwise no longer in the loan portfolio as of period end.

The following tables present the amortized cost of FDM loans as of September 30, 2024 by class of financing receivable and type of concession granted that were modified during the three and nine months ended September 30, 2024.


Three Months Ended September 30, 2024	Term extension		Payment deferral and term extension		Interest rate reduction and term extension		Payment deferral, interest rate reduction, and term extension		Total		% of total class of financing receivables
Commercial and industrial	$	—	$	7,038	$	—	$	—	$	7,038	0.4	%
Construction	$	—	—		—		1,713		1,713		0.2	%








Total	$	—	$	7,038	$	—	$	1,713	$	8,751	0.1	%


Nine Months Ended September 30, 2024	Term extension		Payment deferral and term extension		Interest rate reduction and term extension		Payment deferral, interest rate reduction, and term extension		Total		% of total class of financing receivables
Commercial and industrial	$	—	$	7,038	$	—	$	—	$	7,038	0.4	%
Construction	—		14,195		—		1,713		15,908		1.5	%







Consumer and other	38		—		97		—		135		—	%
Total	$	38	$	21,233	$	97	$	1,713	$	23,081	0.2	%

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

During the three months ended September 30, 2023, the Company modified one residential mortgage loan with a balance of $ 31 and one commercial and industrial loan with a balance of $ 187 in the form of term extensions for borrowers experiencing financial difficulties. During the nine months ended September 30, 2023, the Company modified three residential mortgage loans with balances totaling $ 165 and one commercial and industrial loan with a balance of $ 187 in the form of term extensions for borrowers experiencing financial difficulties.

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficultly:


Three Months Ended September 30, 2024	Weighted average term extension (in months)	Weighted average payment deferral (in months)	Weighted average interest rate reduction
Commercial and industrial	12	12	— %
Construction	360	5	0.10 %


Nine Months Ended September 30, 2024	Weighted average term extension (in months)	Weighted average payment deferral (in months)	Weighted average interest rate reduction
Commercial and industrial	12	12	—
Construction	44	3	0.10 %







Consumer and other	25	—	1.49 %

During the three and nine months ended September 30, 2024, consumer and other loans of $ 32 defaulted that were previously modified in the prior 12 months by receiving a term extension. No financing receivables modified in the preceding twelve months had a payment default during the three and nine months ended September 30, 2023. For FDMs, a subsequent payment default is defined as the earlier of the FDM being placed on non-accrual status or reaching 30 days past due with respect to principal and/or interest payments. At September 30, 2024, the Company had commitments to lend additional funds to borrowers whose loans were classified as an FDM of $ 300 . There were no such commitments as of December 31, 2023.

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The table below depicts the performance of loans HFI as of September 30, 2024 made to borrowers experiencing financial difficulty that were modified in the prior twelve months.


September 30, 2024	30-89 days past due and accruing interest		90 days or more and accruing interest		Nonaccrual loans (1)		Loans current on payments and accruing interest		Total
Commercial and industrial	$	—	$	—	$	7,038	$	—	$	7,038
Construction	—		—		1,713		14,195		15,908
Residential real estate:
1-to-4 family mortgage	—		—		22		—		22





Consumer and other	32		—		—		104		136
Total	$	32	$	—	$	8,773	$	14,299	$	23,104

(1) Loans were on non-accrual when modified and subsequently classified as FDM.

Collateral-Dependent Loans

For collateral-dependent loans, or those loans for which repayment is expected to be provided substantially through the operation or sale of collateral, where the borrower is also experiencing financial difficulty, the following tables present the loans and the corresponding individually assessed allowance for credit losses by class of financing receivable. Significant changes in individually assessed reserves are due to changes in the valuation of the underlying collateral in addition to changes in accrual and past due status.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)


	September 30, 2024
	Type of Collateral
	Real Estate		Farmland		Business Assets		Total		Individually assessed allowance for credit loss
Commercial and industrial	$	—	$	—	$	21,061	$	21,061	$	9,722
Construction	22,060		1,653		—		23,713		907
Residential real estate:
1-to-4 family mortgage	1,562		—		—		1,562		—
Residential line of credit	148		—		—		148		—

Commercial real estate:
Owner occupied	—		6,415		—		6,415		—
Non-owner occupied	7,264		—		—		7,264		—

Total	$	31,034	$	8,068	$	21,061	$	60,163	$	10,629


	December 31, 2023
	Type of Collateral
	Real Estate		Farmland		Business Assets		Total		Individually assessed allowance for credit loss
Commercial and industrial	$	—	$	363	$	20,599	$	20,962	$	4,946
Construction	8,224		—		—		8,224		30
Residential real estate:
1-to-4 family mortgage	5,317		—		—		5,317		129
Residential line of credit	1,245		—		—		1,245		10

Commercial real estate:
Owner occupied	1,975		1,160		—		3,135		—
Non-owner occupied	3,316		—		—		3,316		—
Consumer and other	112		—		—		112		21
Total	$	20,189	$	1,523	$	20,599	$	42,311	$	5,136

Allowance for Credit Losses on Loans HFI

T he Company performed evaluations within its established qualitative framework, assessing the impact of the current economic outlook, including: continued actions taken by the Federal Reserve with regard to monetary policy, interest rates and the potential impact of those actions, potential impact of inflation on economic growth, potential negative economic forecasts, and other considerations. The increase in the allowance for credit losses on loans HFI as of September 30, 2024 compared with December 31, 2023 is primarily the result of overall loan growth combined with an increased risk of potential deterioration in the CRE portfolio which was qualitatively adjusted to address risks not otherwise captured by the credit loss model. These adjustments factor in the possibility that the economy may be nearing a recession, reflected through deterioration in asset quality projected over life of the loan portfolio. As of September 30, 2024, all CRE asset classes are expected to be negatively impacted by slowing demand coupled with refinancing risk in the current rate environment.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following tables provide the changes in the allowance for credit losses on loans HFI by class of financing receivable for the three and nine months ended September 30, 2024 and 2023:


	Commercial and industrial		Construction		1-to-4 family residential mortgage		Residential line of credit		Multi-family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied		Consumer and other		Total
Three Months Ended September 30, 2024
Beginning balance - June 30, 2024	$	22,530	$	34,170	$	25,631	$	10,097	$	8,810	$	11,312	$	24,543	$	17,962	$	155,055
Provision for (reversal of) credit losses on loans HFI	1,670		( 3,612 )		341		662		834		243		98		1,620		1,856
Recoveries of loans previously charged-off	23		—		9		18		—		12		—		202		264
Loans charged off	( 90 )		—		( 2 )		( 53 )		—		—		—		( 770 )		( 915 )

Ending balance - September 30, 2024	$	24,133	$	30,558	$	25,979	$	10,724	$	9,644	$	11,567	$	24,641	$	19,014	$	156,260
Nine Months Ended September 30, 2024
Beginning balance - December 31, 2023	$	19,599	$	35,372	$	26,505	$	9,468	$	8,842	$	10,653	$	22,965	$	16,922	$	150,326


Provision for (reversal of) credit losses on loans HFI	4,636		( 4,722 )		( 306 )		1,311		802		674		1,676		3,577		7,648
Recoveries of loans previously charged-off	57		—		75		18		—		240		—		651		1,041
Loans charged off	( 159 )		( 92 )		( 295 )		( 73 )		—		—		—		( 2,136 )		( 2,755 )


Ending balance - September 30, 2024	$	24,133	$	30,558	$	25,979	$	10,724	$	9,644	$	11,567	$	24,641	$	19,014	$	156,260


	Commercial and industrial		Construction		1-to-4 family residential mortgage		Residential line of credit		Multi-family residential mortgage		Commercial real estate owner occupied		Commercial real estate non-owner occupied		Consumer and other		Total
Three Months Ended September 30, 2023
Beginning balance - June 30, 2023	$	11,311	$	39,920	$	27,407	$	9,185	$	6,828	$	8,467	$	22,877	$	14,669	$	140,664
Provision for (reversal of) credit losses on loans HFI	6,293		( 2,025 )		( 1,724 )		( 23 )		20		2,046		( 130 )		1,574		6,031
Recoveries of loans previously charged-off	112		—		16		1		—		13		—		93		235
Loans charged off	( 154 )		—		( 4 )		—		—		—		—		( 638 )		( 796 )
Ending balance - September 30, 2023	$	17,562	$	37,895	$	25,695	$	9,163	$	6,848	$	10,526	$	22,747	$	15,698	$	146,134
Nine Months Ended September 30, 2023
Beginning balance - December 31, 2022	$	11,106	$	39,808	$	26,141	$	7,494	$	6,490	$	7,783	$	21,916	$	13,454	$	134,192


Provision for (reversal of) credit losses on loans HFI	6,475		( 1,923 )		( 466 )		1,668		358		2,792		831		3,868		13,603
Recoveries of loans previously charged-off	192		10		56		1		—		95		—		440		794
Loans charged off	( 211 )		—		( 36 )		—		—		( 144 )		—		( 2,064 )		( 2,455 )


Ending balance - September 30, 2023	$	17,562	$	37,895	$	25,695	$	9,163	$	6,848	$	10,526	$	22,747	$	15,698	$	146,134

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Note (4)— Other real estate owned

The amount reported as other real estate owned includes property acquired through foreclosure in addition to excess facilities held for sale and is carried at the lower of the carrying amount of the underlying loan or the fair value of the real estate less costs to sell. The following table summarizes the other real estate owned for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Balance at beginning of period	$	4,173	$	1,974	$	3,192	$	5,794
Transfers from loans	—		64		2,400		657
Transfers to other assets	—		( 75 )		—		( 75 )


Proceeds from sale of other real estate owned	( 412 )		( 537 )		( 1,846 )		( 5,692 )
Gain on sale of other real estate owned	18		93		33		835

Write-downs and partial liquidations	—		( 15 )		—		( 15 )
Balance at end of period	$	3,779	$	1,504	$	3,779	$	1,504

Included within the other real estate owned balance above, foreclosed residential real estate properties totaled $ 2,651 and $ 2,414 as of September 30, 2024 and December 31, 2023, respectively.

The recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $ 6,203 and $ 3,377 as of September 30, 2024 and December 31, 2023, respectively.

Note (5)— Leases

As of September 30, 2024, the Company was the lessee in 46 operating leases and 1 finance lease of certain branch, mortgage and operations locations with original terms greater than one year.

Many leases include options to renew, with terms that can extend the lease up to an additional 20 years or more. Certain lease agreements contain provisions to periodically adjust rental payments for inflation. Renewal options that management is reasonably certain to renew and fixed rent escalations are included in the right-of-use asset and lease liability.

Information related to the Company’s leases is presented below as of September 30, 2024 and December 31, 2023:


		September 30,			December 31,

	Classification	2024			2023
Right-of-use assets:
Operating leases	Operating lease right-of-use assets	$	47,346		$	54,295
Finance leases	Premises and equipment, net	1,173			1,256
Total right-of-use assets		$	48,519		$	55,551
Lease liabilities:
Operating leases	Operating lease liabilities	$	59,584		$	67,643
Finance leases	Borrowings	1,254			1,326
Total lease liabilities		$	60,838		$	68,969
Weighted average remaining lease term (in years) - operating		11.1			11.6
Weighted average remaining lease term (in years) - finance		10.6			11.4
Weighted average discount rate - operating		3.41		%	3.39		%
Weighted average discount rate - finance		1.76		%	1.76		%

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The components of total lease expense included in the consolidated statements of income were as follows:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
	Classification	2024		2023		2024		2023
Operating lease costs:
Amortization of right-of-use asset	Occupancy and equipment	$	1,362	$	2,104	$	5,048	$	6,226
Short-term lease cost	Occupancy and equipment	96		133		282		397
Variable lease cost	Occupancy and equipment	321		238		1,024		862

Gain on lease modifications and terminations	Occupancy and equipment	—		—		—		( 73 )
Finance lease costs:
Interest on lease liabilities	Interest expense on borrowings	6		6		17		18
Amortization of right-of-use asset	Occupancy and equipment	28		28		83		83

Sublease income	Occupancy and equipment	( 96 )		( 254 )		( 407 )		( 750 )
Total lease cost		$	1,717	$	2,255	$	6,047	$	6,763

The Company does not separate lease and non-lease components and instead elects to account for them as a single lease component. Variable lease cost primarily represents variable payments such as common area maintenance, utilities, and property taxes.

A maturity analysis of operating and finance lease liabilities and a reconciliation of cash flows to lease liabilities as of September 30, 2024 is as follows:


	Operating		Finance
	Leases		Lease
Lease payments due:
September 30, 2025	$	2,154	$	30
September 30, 2026	8,290		121
September 30, 2027	8,016		123
September 30, 2028	7,554		125
September 30, 2029	6,579		127
Thereafter	40,285		850
Total undiscounted future minimum lease payments	72,878		1,376
Less: imputed interest	( 13,294 )		( 122 )
Lease liabilities	$	59,584	$	1,254

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Note (6)— Mortgage servicing rights

Changes in the Company’s mortgage servicing rights were as follows for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023


Carrying value at beginning of period	$	164,505	$	166,433	$	164,249	$	168,365
Capitalization	1,418		2,073		4,067		6,134





Change in fair value:
Due to payoffs/paydowns	( 3,518 )		( 3,306 )		( 10,067 )		( 9,095 )
Due to change in valuation inputs or assumptions	( 5,308 )		7,510		( 1,152 )		7,306
Carrying value at end of period	$	157,097	$	172,710	$	157,097	$	172,710

The following table summarizes servicing income and expense, which are included in mortgage banking income and other noninterest expense, respectively, in the consolidated statements of income for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Servicing income	$	7,244	$	7,363	$	21,907	$	22,717
Change in fair value of mortgage servicing rights	( 8,826 )		4,204		( 11,219 )		( 1,789 )
Change in fair value of derivative hedging instruments	4,336		( 7,928 )		( 648 )		( 9,564 )
Servicing income	2,754		3,639		10,040		11,364
Servicing expenses	1,732		1,953		5,612		6,167
Net servicing income	$	1,022	$	1,686	$	4,428	$	5,197

Data and key economic assumptions related to the Company’s mortgage servicing rights as of September 30, 2024 and December 31, 2023 are as follows:


	September 30,			December 31,

	2024			2023
Unpaid principal balance of mortgage loans sold and serviced for others	$	10,402,118		$	10,762,906
Weighted-average prepayment speed (CPR)	6.81		%	6.19		%
Estimated impact on fair value of a 10% increase	$	( 4,563 )		$	( 4,616 )
Estimated impact on fair value of a 20% increase	$	( 8,819 )		$	( 8,924 )


Discount rate	9.48		%	9.62		%
Estimated impact on fair value of a 100 bp increase	$	( 7,286 )		$	( 7,637 )
Estimated impact on fair value of a 200 bp increase	$	( 13,960 )		$	( 14,624 )


Weighted-average coupon interest rate	3.57		%	3.47		%
Weighted-average servicing fee (basis points)	27			27
Weighted-average remaining maturity (in months)	336			334

The Company economically hedges the mortgage servicing rights portfolio with various derivative instruments to offset changes in the fair value of the related mortgage servicing rights. See Note 9, “Derivatives” for additional information on these hedging instruments.

As of September 30, 2024 and December 31, 2023, mortgage escrow deposits totaled $ 126,854 and $ 63,591 , respectively.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Note (7)— Income taxes

The following table presents a reconciliation of income taxes for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
Federal taxes calculated at statutory rate	$	2,392	21.0	%	$	4,862	21.0	%	$	20,275	21.0	%	$	24,018	21.0	%
(Decrease) increase resulting from:
State taxes, net of federal benefit	( 986 )		( 8.7 )	%	( 469 )		( 2.0 )	%	( 776 )		( 0.8 )	%	429		0.4	%


(Benefit) expense from equity based compensation	( 1 )		—	%	( 11 )		—	%	75		0.1	%	173		0.2	%
Municipal interest income, net of interest disallowance	( 313 )		( 2.7 )	%	( 448 )		( 1.9 )	%	( 1,014 )		( 1.1 )	%	( 1,355 )		( 1.2 )	%
Bank-owned life insurance	( 81 )		( 0.7 )	%	( 84 )		( 0.4 )	%	( 692 )		( 0.7 )	%	( 290 )		( 0.3 )	%


Section 162(m) limitation	43		0.4	%	57		0.2	%	247		0.3	%	287		0.3	%
Other	120		1.0	%	68		0.3	%	278		0.3	%	245		0.2	%
Income tax expense, as reported	$	1,174	10.3	%	$	3,975	17.2	%	$	18,393	19.1	%	$	23,507	20.6	%

Note (8)— Commitments and contingencies

Commitments to extend credit and letters of credit

The Company issues certain financial instruments to meet customer financing needs, including loan commitments, credit lines and letters of credit. The agreements associated with these type of unfunded loan commitments provide credit or support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates.

The same credit and underwriting policies the Company uses to evaluate and underwrite loans are also used to originate unfunded loan commitments, including obtaining collateral at exercise of the commitment. These unfunded loan commitments are only recorded in the consolidated financial statements when drawn upon and many expire without being used. The Company’s maximum off-balance sheet exposure to credit loss from these unfunded loan commitments is represented by the contractual amount of these instruments.


	September 30,		December 31,

	2024		2023
Commitments to extend credit, excluding interest rate lock commitments	$	2,713,360	$	2,906,016
Letters of credit	82,284		77,055
Balance at end of period	$	2,795,644	$	2,983,071

As of September 30, 2024 and December 31, 2023, unfunded loan commitments included above with floating interest rates totaled $ 2,551,217 and $ 2,459,669 , respectively.

As part of the credit loss process, the Company estimates expected credit losses on its unfunded loan commitments under the CECL methodology. When applying this methodology, the Company considers the likelihood that funding will occur, the contractual period of exposure to credit loss, the risk of loss, historical loss experience, and current conditions along with expectations of future economic conditions.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The table below presents activity within the allowance for credit losses on unfunded loan commitments included in accrued expenses and other liabilities on the Company’s consolidated balance sheets:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Balance at beginning of period	$	5,984	$	14,810	$	8,770	$	22,969


Provision for (reversal of) credit losses on unfunded commitments	58		( 3,210 )		( 2,728 )		( 11,369 )
Balance at end of period	$	6,042	$	11,600	$	6,042	$	11,600

Loan repurchases or indemnifications

In connection with the sale of mortgage loans to third-party private investors or government sponsored agencies, the Company makes representations and warranties as to the propriety of its origination activities, which are typical and customary to these types of transactions. Occasionally, investors require the Company to repurchase loans sold to them or otherwise indemnify the investor against certain losses under the terms of the warranties. When the Company is required to repurchase the loans, the loans are recorded at fair value in loans HFI. The total principal amount of loans repurchased (or indemnified for) was $ 1,382 and $ 4,893 for the three and nine months ended September 30, 2024, respectively and $ 1,631 and $ 6,328 for the three and nine months ended September 30, 2023, respectively.

The Company maintains a reserve associated with potential losses on loans previously sold included in accrued expenses and other liabilities on the Company's consolidated balance sheets. The following table summarizes this activity:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Balance at beginning of period	$	811	$	1,129	$	899	$	1,621
Provision for (reversal of) loan repurchases or indemnifications	75		( 200 )		200		( 650 )

Losses on loans repurchased or indemnified	( 178 )		—		( 391 )		( 42 )
Balance at end of period	$	708	$	929	$	708	$	929

Legal Proceedings

Various legal claims arise from time to time in the normal course of business, which, in the opinion of management, will not have a material effect on the Company’s consolidated financial statements.

Note (9)— Derivatives

The Company utilizes derivative financial instruments as part of its ongoing efforts to manage its interest rate risk exposure as well as interest rate exposure for its customers. Derivative financial instruments are included in the consolidated balance sheets line items other assets or other liabilities at fair value in accordance with ASC 815, “Derivatives and Hedging.” See Note 1, “Basis of presentation” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for additional information on the Company’s accounting policies related to derivative instruments and hedging activities.

Derivatives designated as fair value hedges

The Company enters into fair value hedging relationships using interest rates swaps to mitigate the Company’s exposure to losses in market value as interest rates change. Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps that relate to pricing of specific balance sheet assets and liabilities. Interest rate swaps generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date. The critical terms of the interest rate swaps match the terms of the corresponding hedged items. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Any initial and ongoing assessment of expected hedge effectiveness is based on regression analysis.

At December 31, 2023, the Company had interest rate swaps designated as fair value hedges to convert fixed rate money market deposits to variable with notional values totaling $ 200,000 and market values totaling $( 4,497 ) recorded in other liabilities on the consolidated balance sheets. Additionally at December 31, 2023, the Company had an interest rate swap

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

designated as a fair value hedge on subordinated debt with a notional value of $ 100,000 and market value of $( 673 ) recorded in other liabilities on the consolidated balance sheets. At September 30, 2024, the Company did not have any interest rate swaps that were designated as fair value hedges.

During the nine months ended September 30, 2024, the Company terminated interest rate swaps that were designated as fair value hedges on fixed rate money market deposits as well as a swap agreement designated as a fair value hedge covering subordinated debt that matured. For the terminated swaps, notional values totaled $ 200,000 and market values totaled $( 4,588 ) at termination. The remaining fair value adjustment on the terminated hedging relationships was amortized into interest expense over the respective contract terms of the original hedges. At September 30, 2024, there was no remaining fair value adjustment on the terminated swaps. For the matured swap, the notional value totaled $ 100,000 prior to maturity. The swap involved the receipt of fixed rate amounts from a counterparty in exchange for the Company making variable rate payments over the life of the agreement.

The following discloses the amount of expense included in interest expense on deposits and borrowings, related to the Company's fair value hedging instruments:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Designated fair value hedge:
Interest expense on deposits	$	—	$	( 1,927 )	$	—	$	( 5,204 )
Interest expense on borrowings	—		( 977 )		( 645 )		( 2,631 )
Total	$	—	$	( 2,904 )	$	( 645 )	$	( 7,835 )

During the three and nine months ended September 30, 2024, amortization expense totaling $ 993 and $ 4,588 , respectively, related to the terminated fair value hedges was recognized as an increase to interest expense on deposits. As of September 30, 2024, there is no remaining fair value adjustment related to the terminated fair value hedges included in money market and savings deposits on the consolidated balance sheets.

The following amounts were recorded on the balance sheet related to cumulative adjustments of fair value hedges as of December 31, 2023:


	December 31, 2023
Line item on the balance sheet	Carrying amount of the hedged item			Cumulative decrease in fair value hedging adjustment included in the carrying amount of the hedged item
Money market and savings deposits	$	198,143	(1)	$	( 4,497 )
Borrowings	98,715		(2)	( 673 )
Total	$	296,858		$	( 5,170 )

(1) The carrying value also includes an unaccreted purchase accounting fair value premium of $ 2,640 as of December 31, 2023.

(2) The carrying value also includes unamortized subordinated debt issuance costs of $ 612 as of December 31, 2023.

Derivatives designated as cash flow hedges

The Company enters into cash flow hedging relationships using interest rate swaps to mitigate the exposure to the variability in future cash flows or other forecast transactions associated with its floating rate assets and liabilities. The Company uses interest rate swap agreements to hedge the repricing characteristics of its floating rate subordinated debt. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Any initial and ongoing assessment of expected hedge effectiveness is based on regression analysis. The ongoing periodic measures of hedge ineffectiveness are based on the expected change in cash flows of the hedged item caused by changes in the benchmark interest rate.

At December 31, 2023, the Company had interest rate swaps designated as cash flow hedges on subordinated debt with notional values totaling $ 30,000 and market values totaling $ 579 recorded in other assets on the consolidated balance sheets. At September 30, 2024, the Company did not have any interest rate swaps that were designated as cash flow hedges.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

During the nine months ended September 30, 2024, the interest rate swaps that were designated as cash flow hedges covering subordinated debt with notional amounts of $ 30,000 matured.

The Company’s consolidated statements of income included a loss of $ 5 and a gain of $ 517 for the three and nine months ended September 30, 2024, respectively, and gains of $ 267 and $ 696 for three and nine months ended September 30, 2023, respectively, in interest expense on borrowings related to these cash flow hedges. The cash flow hedges were highly effective during the periods presented and as a result qualified for hedge accounting treatment. As such, no amounts were reclassified from accumulated other comprehensive loss into earnings as a result of hedge ineffectiveness during any period presented.

The following discloses the amount included in other comprehensive income (loss), net of tax, for derivative instruments designated as cash flow hedges for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Amount of loss recognized in other comprehensive income (loss), net of tax benefit of $ 21 , $ 35 , $ 151 and $ 99	$	( 59 )	$	( 101 )	$	( 428 )	$	( 281 )

Derivatives not designated as hedging instruments

Derivatives not designated under hedge accounting rules include those that are entered into as either economic hedges as part of the Company’s overall risk management strategy or to facilitate client needs. Economic hedges are those that are not designated as a fair value or cash flow hedge for accounting purposes but are necessary to economically manage the risk exposure associated with the assets and liabilities of the Company.

The Company enters into derivative instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with customer contracts, the Company enters into an offsetting derivative contract. The Company manages its credit risk, or potential risk of default by its commercial customers through credit limit approval and monitoring procedures.

The Company enters into interest rate-lock commitments on residential loan commitments that will be held for resale. These are considered derivative instruments with no hedge accounting designation, and the interest rate exposure on these commitments is economically hedged primarily with forward contracts. Gains and losses arising from changes in the valuation of the interest rate-lock commitments are recognized currently in earnings and are reflected under the line-item mortgage banking income in the consolidated statements of income.

The Company also enters into forwards, futures and option contracts to economically hedge the change in fair value of mortgage servicing rights. Gains and losses associated with these instruments are included in earnings and are reflected under the line-item mortgage banking income in the consolidated statements of income.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following tables provide details on the Company’s non-designated derivative financial instruments as of the dates presented:


	September 30, 2024
	Notional Amount		Asset		Liability

Interest rate contracts	$	542,155	$	24,725	$	24,763
Forward commitments	240,000		—		393
Interest rate-lock commitments	105,714		1,398		—
Futures contracts	263,500		—		1,334

Total	$	1,151,369	$	26,123	$	26,490


	December 31, 2023
	Notional Amount		Asset		Liability

Interest rate contracts	$	569,865	$	32,179	$	32,184
Forward commitments	159,000		—		861
Interest rate-lock commitments	69,217		1,203		—
Futures contracts	254,000		777		—

Total	$	1,052,082	$	34,159	$	33,045

Gains (losses) included in the consolidated statements of income related to the Company’s non-designated derivative financial instruments were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Included in mortgage banking income:
Interest rate lock commitments	$	18	$	( 537 )	$	194	$	( 358 )
Forward commitments	( 1,549 )		1,418		( 1,115 )		2,154
Futures contracts	3,612		( 7,009 )		( 787 )		( 7,593 )
Option contracts	—		—		—		( 1,125 )
Total	$	2,081	$	( 6,128 )	$	( 1,708 )	$	( 6,922 )

Netting of Derivative Instruments

Certain financial instruments, including derivatives, may be eligible for offset on the consolidated balance sheets when the “right of offset” exists or when the instruments are subject to an enforceable master netting agreement, which includes the right of the non-defaulting party or non-affected party to offset recognized amounts, including collateral posted with the counterparty, to determine a net receivable or net payable upon early termination of the agreement. Certain of the Company’s derivative instruments are subject to master netting agreements, however the Company has not elected to offset such financial instruments on the consolidated balance sheets. The following table presents the Company’s gross derivative positions as recognized on the consolidated balance sheets as well as the net derivative positions, including collateral pledged to the extent the application of such collateral did not reduce the net derivative liability position below zero, had the Company elected to offset those instruments subject to an enforceable master netting agreement:

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)













							Gross amounts not offset on the consolidated balance sheets
	Gross amounts recognized		Gross amounts offset on the consolidated balance sheets		Net amounts presented on the consolidated balance sheets		Financial instruments		Financial collateral pledged		Net Amount
September 30, 2024
Derivative financial assets	$	21,372	$	—	$	21,372	$	3,452	$	—	$	17,920
Derivative financial liabilities	$	9,721	$	—	$	9,721	$	3,452	$	6,269	$	—

December 31, 2023
Derivative financial assets	$	31,468	$	—	$	31,468	$	6,502	$	—	$	24,966
Derivative financial liabilities	$	11,330	$	—	$	11,330	$	6,502	$	4,828	$	—

Collateral Requirements

Most derivative contracts with customers are secured by collateral. Additionally, in accordance with the interest rate agreements with derivative counterparties, the Company may be required to post collateral with these derivative counterparties. As of September 30, 2024 and December 31, 2023, the Company had collateral posted of $ 21,791 and $ 14,042 , respectively, against its obligations under these agreements. Cash pledged as collateral on derivative contracts is recorded in other assets on the consolidated balance sheets.

Note (10)— Fair value of financial instruments

FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a framework for measuring the fair value of assets and liabilities according to a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances.

The hierarchy is broken down into the following three levels, based on the reliability of inputs:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs for assets or liabilities that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The Company records the fair values of financial assets and liabilities on a recurring and nonrecurring basis using the following methods and assumptions:


Investment securities						Investment securities are recorded at fair value on a recurring basis. Fair values for securities are based on quoted market prices, where available. If quoted prices are not available, fair values are based on quoted market prices of similar instruments or are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the pricing relationship or correlation among other benchmark quoted securities. Investment securities valued using quoted market prices of similar instruments or that are valued using matrix pricing are classified as Level 2.

Loans held for sale						Mortgage loans held for sale are carried at fair value determined using current secondary market prices for loans with similar characteristics, that is, using Level 2 inputs.

Derivatives						The fair value of the Company's interest rate swap agreements to facilitate customer transactions are based upon fair values provided from entities that engage in interest rate swap activity and is based upon projected future cash flows and interest rates. The fair value of interest rate lock commitments associated with the mortgage pipeline is based on fees currently charged to enter into similar agreements, and for fixed-rate commitments, the difference between current levels of interest rates and the committed rates is also considered. The fair values of the Company's designated cash flow and fair value hedges are determined by calculating the difference between the discounted fixed rate cash flows and the discounted variable rate cash flows. The fair values of both the Company's hedges, including designated cash flow hedges and designated fair value hedges are based on pricing models that utilize observable market inputs. These financial instruments are classified as Level 2.

OREO						OREO is comprised of properties obtained in partial or total satisfaction of loan obligations and excess land and facilities held for sale. OREO acquired in settlement of indebtedness is recorded at the lower of the carrying amount of the loan or the fair value of the real estate less costs to sell. Fair value is determined on a nonrecurring basis based on appraisals by qualified licensed appraisers and is adjusted for management’s estimates of costs to sell and holding period discounts. OREO valuations are classified as Level 3.

Mortgage servicing rights						MSRs are carried at fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. As such, MSRs are considered Level 3.

Collateral- dependent loans						Collateral-dependent loans are loans for which, based on current information and events, the Company has determined foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral and it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Collateral-dependent loans are classified as Level 3.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The balances and levels of the assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 are presented in the following tables:


At September 30, 2024	Quoted prices in active markets for identical assets (liabilities) (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Recurring valuations:
Financial assets:
AFS debt securities:
U.S. government agency securities	$	—	$	516,833	$	—	$	516,833
Mortgage-backed securities - residential	—		879,589		—		879,589
Mortgage-backed securities - commercial	—		16,289		—		16,289
Municipal securities	—		154,229		—		154,229

Corporate securities	—		982		—		982

Total securities	$	—	$	1,567,922	$	—	$	1,567,922
Loans held for sale, at fair value	$	—	$	72,608	$	—	$	72,608
Mortgage servicing rights	—		—		157,097		157,097
Derivatives	—		26,123		—		26,123
Financial Liabilities:
Derivatives	—		26,490		—		26,490


At December 31, 2023	Quoted prices in active markets for identical assets (liabilities) (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Recurring valuations:
Financial assets:
AFS debt securities:
U.S. government agency securities	$	—	$	203,956	$	—	$	203,956
Mortgage-backed securities - residential	—		896,971		—		896,971
Mortgage-backed securities - commercial	—		16,961		—		16,961
Municipal securities	—		242,263		—		242,263
U.S. Treasury securities	—		108,496		—		108,496
Corporate securities	—		3,326		—		3,326

Total securities	$	—	$	1,471,973	$	—	$	1,471,973
Loans held for sale, at fair value	$	—	$	46,618	$	—	$	46,618
Mortgage servicing rights	—		—		164,249		164,249
Derivatives	—		34,738		—		34,738
Financial Liabilities:
Derivatives	—		38,215		—		38,215

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The balances and levels of the assets measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023 are presented in the following tables:


At September 30, 2024	Quoted prices in active markets for identical assets (liabilities (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Nonrecurring valuations:
Financial assets:
Other real estate owned	$	—	$	—	$	2,243	$	2,243
Collateral-dependent net loans held for investment:
Commercial and industrial	—		—		2,350		2,350
Construction	—		—		6,958		6,958








Total collateral-dependent loans	$	—	$	—	$	9,308	$	9,308


At December 31, 2023	Quoted prices in active markets for identical assets (liabilities) (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Nonrecurring valuations:
Financial assets:
Other real estate owned	$	—	$	—	$	2,400	$	2,400
Collateral-dependent net loans held for investment:
Commercial and industrial	$	—	$	—	$	12,338	$	12,338
Construction	—		—		203		203
Residential real estate:
1-4 family mortgage	—		—		429		429




Consumer and other	—		—		71		71
Total collateral-dependent loans	$	—	$	—	$	13,041	$	13,041

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Historically, the Company had a portfolio of acquired commercial loans. There were no such loans outstanding as of September 30, 2024 as the last relationship was exited during the year ended December 31, 2023. These commercial loans were measured at fair value. As such, these loans were excluded from the ACL.

The following table sets forth the changes in fair value associated with this portfolio for the three and nine months ended September 30, 2023:


	Three Months Ended September 30, 2023
	Principal balance		Fair Value discount		Fair Value
Carrying value at beginning of period	$	12,232	$	( 2,965 )	$	9,267
Change in fair value:


Changes in valuation included in other noninterest income	—		( 7 )		( 7 )
Carrying value at end of period	$	12,232	$	( 2,972 )	$	9,260

	Nine Months Ended September 30, 2023
	Principal balance		Fair Value discount		Fair Value
Carrying value at beginning of period	$	34,357	$	( 3,867 )	$	30,490

Change in fair value:
Paydowns and payoffs	( 22,125 )		—		( 22,125 )

Changes in valuation included in other noninterest income	—		895		895
Carrying value at end of period	$	12,232	$	( 2,972 )	$	9,260

The significant unobservable inputs (Level 3) used in the valuation and changes in fair value associated with the Company’s mortgage servicing rights for the three and nine months ended September 30, 2024 and 2023 are detailed at Note 6, “Mortgage servicing rights.”

The following tables present information as of September 30, 2024 and December 31, 2023 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:

September 30, 2024

Financial instrument

Fair Value

Valuation technique

Significant
unobservable inputs

Range of
inputs

Collateral-dependent net loans
held for investment

9,308

Valuation of collateral

Discount for comparable sales

10 %- 70 %

Other real estate owned

2,243

Appraised value of property less costs to sell

Discount for costs to sell

0 %- 15 %

December 31, 2023

Financial instrument

Fair Value

Valuation technique

Significant
unobservable inputs

Range of
inputs

Collateral-dependent net loans
held for investment

13,041

Valuation of collateral

Discount for comparable sales

10 %- 61 %

Other real estate owned

2,400

Appraised value of property less costs to sell

Discount for costs to sell

0 %- 15 %

Fair value for collateral-dependent loans is determined based on the estimated value of the collateral securing the loans, less estimated selling costs and closing costs related to liquidation of the collateral. For loans secured by real estate, the fair value is determined based on appraisals performed by qualified appraisers and reviewed by qualified personnel. For non-real estate collateral, fair value is determined based on various sources, including third party asset valuation and internally determined values based on cost adjusted or other judgmentally determined factors. Collateral-dependent loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on changes in market conditions from the time of valuation and management’s knowledge of the borrower and borrower’s business. As of September 30, 2024 and December 31, 2023, total amortized cost of collateral-dependent loans measured on a nonrecurring basis amounted to $ 19,938 and $ 18,166 , respectively. The allowance for credit losses is calculated as the amount for which the loan’s amortized cost basis exceeds fair value.

Other real estate owned acquired in settlement of indebtedness is recorded at fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Any write-downs based on the asset’s fair value at the date of foreclosure are charged to the allowance for credit losses.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Appraisals for both collateral-dependent loans and other real estate owned are performed by certified appraisers whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the lending administrative department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry wide statistics. Collateral-dependent loans that are dependent on recovery through sale of equipment, such as farm equipment, automobiles and aircrafts are generally valued based on public source pricing or subscription services while more complex assets are valued through leveraging brokers who have expertise in the collateral involved.

Fair value option

The following table summarizes the Company’s loans held for sale as of the dates presented:


	September 30,		December 31,

	2024		2023
Loans held for sale under a fair value option:


Mortgage loans held for sale	72,608		46,618

Loans held for sale not accounted for under a fair value option:
Mortgage loans held for sale - guaranteed GNMA repurchase option	30,537		21,229
Total loans held for sale	$	103,145	$	67,847

Mortgage loans held for sale

Net (losses) gains of $( 241 ) and $ 315 resulting from fair value changes of mortgage loans were recorded in income during the three and nine months ended September 30, 2024, respectively, compared to net losses of $ 376 and $ 556 during the three and nine months ended September 30, 2023, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans held for sale. The net change in fair value of these loans held for sale and derivatives resulted in a net loss of $ 480 and a net gain of $ 1,337 for the three and nine months ended September 30, 2024, respectively, compared to net losses of $ 582 and $ 129 during the three and nine months ended September 30, 2023, respectively. The change in fair value of both mortgage loans held for sale and the related derivative instruments are recorded in mortgage banking income in the consolidated statements of income. Election of the fair value option allows the Company to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value.

The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these mortgage loans held for sale, valuation adjustments attributable to instrument-specific credit risk is nominal.

The following table summarizes the differences between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of September 30, 2024 and December 31, 2023:


	September 30,		December 31,

	2024		2023
Aggregate fair value	$	72,608	$	46,618
Aggregate unpaid principal balance	71,184		45,509
Difference	$	1,424	$	1,109

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Non-financial instruments are excluded from the table below.


			Fair Value
September 30, 2024	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	951,750	$	951,750	$	—	$	—	$	951,750
Investment securities	1,567,922		—		1,567,922		—		1,567,922
Net loans held for investment	9,321,869		—		—		9,053,392		9,053,392
Loans held for sale, at fair value	72,608		—		72,608		—		72,608
Interest receivable	52,228		1,304		7,421		43,503		52,228
Mortgage servicing rights	157,097		—		—		157,097		157,097
Derivatives	26,123		—		26,123		—		26,123
Financial liabilities:
Deposits:
Without stated maturities	$	9,078,893	$	9,078,893	$	—	$	—	$	9,078,893
With stated maturities	1,897,318		—		1,899,602		—		1,899,602
Securities sold under agreements to repurchase and federal funds purchased	19,708		19,708		—		—		19,708


Subordinated debt, net	130,608		—		—		125,625		125,625

Interest payable	20,581		4,052		16,154		375		20,581
Derivatives	26,490		—		26,490		—		26,490


	Fair Value
December 31, 2023	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	810,932	$	810,932	$	—	$	—	$	810,932
Investment securities	1,471,973		—		1,471,973		—		1,471,973
Net loans held for investment	9,258,457		—		—		9,068,518		9,068,518
Loans held for sale, at fair value	46,618		—		46,618		—		46,618
Interest receivable	52,715		388		8,551		43,776		52,715
Mortgage servicing rights	164,249		—		—		164,249		164,249
Derivatives	34,738		—		34,738		—		34,738
Financial liabilities:
Deposits:
Without stated maturities	$	8,927,654	$	8,927,654	$	—	$	—	$	8,927,654
With stated maturities	1,620,633		—		1,614,400		—		1,614,400
Securities sold under agreements to repurchase and federal funds purchased	108,764		108,764		—		—		108,764
Bank Term Funding Program	130,000		—		130,000		—		130,000
Subordinated debt, net	129,645		—		—		122,671		122,671

Interest payable	18,809		4,104		13,205		1,500		18,809
Derivatives	38,215		—		38,215		—		38,215

Note (11)— 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 also originates conforming residential mortgage loans through its Mortgage segment, whose activities also include the servicing of residential mortgage loans and securitization of loans to third party private investors or government sponsored agencies.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Beginning in 2024, the Company began assigning a transfer rate to allocate net interest income to products and business segments. The intent of the transfer rate methodology is to transfer interest rate risk among the segments and allow management to better measure the net interest margin contribution of its assets/liabilities by segment. Changes in management structure or allocation methodologies and procedures result in changes in reported segment financial data. Prior period results have been adjusted to conform to the current methodology.

The following tables present selected financial information with respect to the Company’s reportable segments for the three and nine months ended September 30, 2024 and 2023.


Three Months Ended September 30, 2024	Banking		Mortgage		Consolidated
Net interest income	$	104,335	$	1,682	$	106,017
Provisions for credit losses	1,861		53		1,914
Mortgage banking income	—		16,043		16,043
Change in fair value of mortgage servicing rights, net of hedging (1)	—		( 4,490 )		( 4,490 )
Other noninterest (loss) income	( 28,370 )		320		( 28,050 )
Depreciation and amortization	3,141		114		3,255
Amortization of intangibles	719		—		719
Other noninterest mortgage banking expense	—		—		—
Other noninterest expense	59,425		12,813		72,238
Income before income taxes	$	10,819	$	575	$	11,394
Income tax expense					1,174
Net income applicable to FB Financial Corporation and noncontrolling interest					10,220
Net income applicable to noncontrolling interest					—
Net income applicable to FB Financial Corporation					$	10,220
Total assets	$	12,337,135	$	583,087	$	12,920,222
Goodwill	242,561		—		242,561

(1) 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.


Three Months Ended September 30, 2023	Banking		Mortgage		Consolidated
Net interest income	$	99,359	$	1,567	$	100,926
Provisions for (reversals of) credit losses	3,253		( 432 )		2,821
Mortgage banking income	—		15,722		15,722
Change in fair value of mortgage servicing rights, net of hedging (1)	—		( 3,724 )		( 3,724 )
Other noninterest (loss) income	( 4,031 )		75		( 3,956 )
Depreciation and amortization	2,514		167		2,681
Amortization of intangibles	889		—		889
Other noninterest mortgage banking expense	—		—		—
Other noninterest expense	65,309		14,118		79,427
Income (loss) before income taxes	$	23,363	$	( 213 )	$	23,150
Income tax expense					3,975
Net income applicable to FB Financial Corporation and noncontrolling interest					19,175
Net income applicable to noncontrolling interest					—
Net income applicable to FB Financial Corporation					$	19,175
Total assets	$	11,904,608	$	585,023	$	12,489,631
Goodwill	242,561		—		242,561

(1) 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.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)


Nine Months Ended September 30, 2024	Banking (2)		Mortgage		Consolidated
Net interest income	$	303,990	$	4,132	$	308,122
Provisions for (reversals of) credit losses	5,131		( 211 )		4,920
Mortgage banking income	—		47,915		47,915
Change in fair value of mortgage servicing rights, net of hedging (1)	—		( 11,867 )		( 11,867 )
Other noninterest (loss) income	( 19,687 )		712		( 18,975 )
Depreciation and amortization	8,594		363		8,957
Amortization of intangibles	2,260		—		2,260

Other noninterest expense	175,104		37,404		212,508
Income before income taxes	$	93,214	$	3,336	$	96,550
Income tax expense					18,393
Net income applicable to FB Financial Corporation and noncontrolling interest					78,157
Net income applicable to noncontrolling interest (2)					8
Net income applicable to FB Financial Corporation					$	78,149
Total assets	$	12,337,135	$	583,087	$	12,920,222
Goodwill	242,561		—		242,561

(1) 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.

(2) Banking segment includes noncontrolling interest.


Nine Months Ended September 30, 2023	Banking (2)		Mortgage		Consolidated
Net interest income	$	301,438	$	4,691	$	306,129
Provisions for (reversals of) credit losses	2,316		( 82 )		2,234
Mortgage banking income	—		47,669		47,669
Change in fair value of mortgage servicing rights, net of hedging (1)	—		( 11,353 )		( 11,353 )
Other noninterest income (loss)	18,942		( 54 )		18,888
Depreciation and amortization	6,783		578		7,361
Amortization of intangibles	2,819		—		2,819

Other noninterest expense	192,070		42,479		234,549
Income (loss) before income taxes	$	116,392	$	( 2,022 )	$	114,370
Income tax expense					23,507


Net income applicable to FB Financial Corporation and noncontrolling interest					90,863
Net income applicable to noncontrolling interest (2)					8
Net income applicable to FB Financial Corporation					$	90,855
Total assets	$	11,904,608	$	585,023	$	12,489,631
Goodwill	242,561		—		242,561

(1) 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.

(2) Banking segment includes noncontrolling interest.

Note (12)— Minimum capital requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

Under regulatory guidance for non-advanced approach institutions, the Bank and Company are required to maintain minimum capital ratios as outlined in the table below. Minimum risk-based capital adequacy ratios below include a capital conservation buffer of 2.50%. As of September 30, 2024 and December 31, 2023, the Bank and Company met all capital adequacy requirements to which they are subject. Additionally, under U.S. Basel III Capital Rules, the Bank and Company opted out of including accumulated other comprehensive income in regulatory capital.

The Company elected to phase-in the impact related to adopting ASU 2016-13 over the permissible five-year transition relief period and delayed the initial impact of CECL adoption plus 25% of the quarterly increases in ACL in the first two

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

years after adoption. Beginning in 2022, the cumulative amount of the transition adjustments became fixed and were phased out in annual increments over a three-year period. 2024 represents the final year of this CECL adoption phase out, with 25% of the initial impact of CECL adoption being adjusted out of regulatory capital calculations.

Actual and required capital amounts and ratios are included below as of the dates indicated.


September 30, 2024	Actual				Minimum Requirement for Capital Adequacy with Capital Buffer			To Qualify as Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio

Total Capital (to risk-weighted assets)
FB Financial Corporation	$	1,686,651	15.1	%		$	1,170,701	10.5	%	N/A		N/A
FirstBank	1,651,199		14.9	%		1,167,269		10.5	%	$	1,111,684	10.0	%
Tier 1 Capital (to risk-weighted assets)
FB Financial Corporation	$	1,447,410	13.0	%		$	947,711	8.5	%	N/A		N/A
FirstBank	1,412,362		12.7	%		944,932		8.5	%	$	889,347	8.0	%
Common Equity Tier 1 Capital (to risk-weighted assets)
FB Financial Corporation	$	1,417,410	12.7	%		$	780,468	7.0	%	N/A		N/A
FirstBank	1,412,362		12.7	%		778,179		7.0	%	$	722,595	6.5	%
Tier 1 Capital (to average assets)
FB Financial Corporation	$	1,447,410	11.5	%		$	505,439	4.0	%	N/A		N/A
FirstBank	1,412,362		11.2	%		504,643		4.0	%	$	630,804	5.0	%


December 31, 2023	Actual				Minimum Requirement for Capital Adequacy with Capital Buffer			To Qualify as Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio

Total Capital (to risk-weighted assets)
FB Financial Corporation	$	1,635,848	14.5	%		$	1,182,028	10.5	%	N/A		N/A
FirstBank	1,600,950		14.2	%		1,179,886		10.5	%	$	1,123,701	10.0	%
Tier 1 Capital (to risk-weighted assets)
FB Financial Corporation	$	1,405,890	12.5	%		$	956,880	8.5	%	N/A		N/A
FirstBank	1,370,991		12.2	%		955,145		8.5	%	$	898,960	8.0	%
Common Equity Tier 1 Capital (to risk-weighted assets)
FB Financial Corporation	$	1,375,890	12.2	%		$	788,018	7.0	%	N/A		N/A
FirstBank	1,370,991		12.2	%		786,590		7.0	%	$	730,405	6.5	%
Tier 1 Capital (to average assets)
FB Financial Corporation	$	1,405,890	11.3	%		$	496,485	4.0	%	N/A		N/A
FirstBank	1,370,991		11.1	%		495,761		4.0	%	$	619,701	5.0	%

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Note (13)— Stock-based compensation

Restricted Stock Units

The Company grants RSUs under compensation arrangements for the benefit of certain employees and directors. RSU grants are subject to time-based vesting with associated compensation recognized on a straight-line basis based on the grant date fair value of the awards. The total number of RSUs granted represents the number of awards eligible to vest based upon the service conditions set forth in the grant agreements.

The following table summarizes changes in RSUs for the nine months ended September 30, 2024:




	Restricted Stock Units Outstanding	Weighted Average Grant Date Fair Value
Balance at beginning of period (unvested)	323,520	$	37.52
Granted	178,570	35.87
Vested	( 144,860 )	37.94
Forfeited	( 8,279 )	37.55
Balance at end of period (unvested)	348,951	$	36.51

The total fair value of RSUs vested and released was $ 207 and $ 5,496 for the three and nine months ended September 30, 2024, respectively, and $ 1,208 and $ 7,601 for the three and nine months ended September 30, 2023, respectively.

The compensation cost related to these grants and vesting of RSUs was $ 1,744 and $ 5,741 for the three and nine months ended September 30, 2024, respectively, and $ 1,965 and $ 5,859 for the three and nine months ended September 30, 2023, respectively. This includes amounts paid related to director grants and compensation elected to be settled in stock amounting to $ 237 and $ 584 during the three and nine months ended September 30, 2024, respectively, and $ 179 and $ 626 for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, there was $ 8,225 of total unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted-average period of 1.81 years. Additionally, as of September 30, 2024, there were 1,356,587 shares available for issuance under the Company’s stock compensation plans. As of September 30, 2024 and December 31, 2023, there was $ 291 and $ 268 , respectively, accrued in other liabilities related to dividend equivalent units declared to be paid upon vesting and distribution of the underlying RSUs.

Performance-Based Restricted Stock Units

The Company awards PSUs to certain employees. Under the terms of the awards, the number of units that will vest and convert to shares of common stock will be based on the Company’s achievement of certain performance metrics over a fixed three-year performance period. The number of shares issued upon vesting can range from 0 % to 200 % of the PSUs granted.

For PSUs granted prior to December 31, 2023, performance factors will be based on the Company’s achievement of core return on average tangible common equity over the performance period relative to a predefined peer group.

For PSUs granted after December 31, 2023, performance factors will be based on a combination of the same metric discussed above as well as the Company’s adjusted tangible book value over the performance period.

Compensation expense for PSUs is estimated each period based on the fair value of the Company’s stock at the grant date and the most probable outcome of the performance condition, adjusted for the passage of time within the performance period of the awards.

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

The following table summarizes information about the changes in PSUs as of and for the nine months ended September 30, 2024:






	Performance Stock Units Outstanding (1)	Weighted Average Grant Date Fair Value
Balance at beginning of period (unvested)	176,163	$	40.86
Granted	100,267	35.60
Performance adjustment (2)	( 9,778 )	42.71
Vested	( 40,071 )	42.71
Forfeited or expired	( 3,188 )	38.07
Balance at end of period (unvested)	223,393	$	38.06
(1) PSUs are presented as outstanding, granted and forfeited in the table above assuming targets are met and the awards pay out at 100 %. (2) The performance adjustment represents the difference in shares ultimately awarded due to performance attainment above or below target.

The following table summarizes data related to the Company’s outstanding PSUs as of September 30, 2024:


Grant Year	Grant Price		Performance Period	PSUs Outstanding
2022	$	44.44	2022 to 2024	48,710
2023	$	37.17	2023 to 2025	75,893
2024	$	35.60	2024 to 2026	98,790

The Company recorded compensation cost of $ 607 and $ 1,520 for the for the three and nine months ended September 30, 2024, respectively, and $ 819 and $ 2,458 for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024, maximum unrecognized compensation cost at 200 % payout related to the unvested PSUs was $ 13,395 , and the weighted average remaining performance period over which the cost could be recognized was 1.95 years. As of September 30, 2024 and December 31, 2023, there was $ 179 and $ 85 , respectively, accrued in other liabilities related to dividend equivalent units declared to be paid upon vesting and distribution of the underlying PSUs.

Employee Stock Purchase Plan

The Company maintains an employee stock purchase plan under which employees, through payroll deductions, are able to purchase shares of Company common stock. The employee purchase price is 95 % of the lower of the market price on the first or last day of the offering period. The maximum number of shares issuable during any offering period is 200,000 shares, limited to 725 shares for each participating employee. There were 11,256 and 12,306 shares of common stock issued under the ESPP with proceeds from employee payroll withholdings of $ 473 and $ 381 , during the three months ended September 30, 2024 and 2023, respectively. There were 21,862 and 20,520 shares of common stock issued under the ESPP with proceeds from employee payroll withholdings of $ 861 and $ 686 , during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, there were 2,272,364 shares available for issuance under the ESPP.

Note (14)— Related party transactions

Loans

The Bank has made and expects to continue to make loans to management, executive officers, the directors and significant shareholders of the Company and their related interests in the ordinary course of business, in compliance with regulatory requirements.

An analysis of loans to management, executive officers, the directors and significant shareholders of the Bank and their related interests is presented below:


Loans outstanding at January 1, 2024	$	49,073
New loans and advances	1,681
Change in related party status	—
Repayments	( 22,002 )
Loans outstanding at September 30, 2024	$	28,752

FB Financial Corporation and subsidiaries

Notes to consolidated financial statements

(Unaudited)

(Dollar amounts are in thousands, except share and per share amounts)

Unfunded commitments to management, executive officers, the directors, and significant shareholders and their related interests totaled $ 30,044 and $ 44,206 at September 30, 2024 and December 31, 2023, respectively.

Deposits

The Bank held deposits from related parties totaling $ 184,108 and $ 316,141 as of September 30, 2024 and December 31, 2023, respectively.

Leases

The Bank leases various office spaces from entities owned by certain directors of the Company under varying terms. Lease expense for these properties totaled $ 100 and $ 311 for the three and nine months ended September 30, 2024, respectively, and $ 102 and $ 295 for the three and nine months ended September 30, 2023, respectively.

Aviation lease

Through a wholly-owned subsidiary, FBK Aviation, LLC, the Company owns and maintains an aircraft. FBK Aviation, LLC maintains non-exclusive aircraft leases with entities owned by certain directors. The Company recognized income of $ 3 and $ 46 during the three and nine months ended September 30, 2024, respectively, and $ 15 and $ 26 during the three and nine months ended September 30, 2023, respectively, under these agreements.

Equity investment in preferred stock and master loan purchase agreement

The Company holds equity securities of a privately held entity which originates manufactured housing loans through utilization of its proprietary developed technology. This investment was accounted for as an equity method investment as of September 30, 2024 and as an equity security without readily determinable market value as of December 31, 2023. In the third quarter of 2024, the Company acquired additional equity securities in the privately held entity and determined that the Company can exercise significant influence over the entity. In connection with this investment, two Company employees serve on the entity's board of directors. This investment is included in other assets on the consolidated balance sheets with a carrying amount of $ 20,000 and $ 10,000 as of September 30, 2024 and December 31, 2023, respectively. No gains or losses have been recognized to date associated with this investment.

The Company also has a master loan purchase agreement with this privately held entity to purchase up to $ 250,000 in manufactured loan housing production over an initial five-year term. Under this agreement, the Company purchased $ 16,970 and $ 43,776 of loans for the three and nine months ended September 30, 2024, respectively, and purchased $ 12,676 and $ 19,125 of loans for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024 and December 31, 2023, the amortized cost of these loans HFI amounted to $ 73,808 and $ 32,154 , respectively.

ITEM 2 – Management’s discussion and analysis of financial condition and results of operations

The following is a discussion of our financial condition as of September 30, 2024 and December 31, 2023, and our results of operations for the three and nine months ended September 30, 2024 and 2023, and should be read in conjunction with our audited consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the SEC on February 27, 2024, and with the accompanying unaudited notes to the condensed consolidated financial statements set forth in this Report.

Forward-looking statements

Certain statements contained in this Report that are not historical in nature may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding the Company’s future plans, results, strategies, and expectations, including expectations around changing economic markets. These statements 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,” and other variations of such words and phrases and similar expressions. These forward-looking statements are not historical facts, and are based upon management’s current expectations, estimates, and projections, 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 shareholders and 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. 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 including, without limitation, (1) current and future economic conditions, including the effects of inflation, interest rate fluctuations, changes in the economy or global supply chain, supply-demand imbalances affecting local real estate prices, and high unemployment rates in the local or regional economies in which the Company operates and/or the US economy generally, (2) changes in government interest rate policies and its impact on the Company’s business, net interest margin, and mortgage operations, (3) any continuation of the recent turmoil in the banking industry, including the associated impact to the Company and other financial institutions of any regulatory changes or other mitigation efforts taken by government agencies in response, (4) increased competition for deposits, (5) the Company’s ability to effectively manage problem credits, (6) any deterioration in commercial real estate market fundamentals, (7) the Company’s ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions, (8) the Company’s ability to successfully execute its various business strategies, (9) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including legislative developments, (10) the effectiveness of the Company’s cybersecurity controls and procedures to prevent and mitigate attempted intrusions, (11) the Company’s dependence on information technology systems of third party service providers and the risk of systems failures, interruptions, or breaches of security, and (12) the impact of natural disasters, pandemics, and/or acts of war or terrorism, (13) events giving rise to international or regional political instability, including the broader impacts of such events on financial markets and/or global macroeconomic environments, and (14) general competitive, economic, political, and market conditions. Further information regarding the Company and factors which could affect the forward-looking statements contained herein can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in any of the Company’s subsequent filings with the SEC. 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 underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this Report, and the Company undertakes no 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. The Company qualifies all forward-looking statements by these cautionary statements .

Critical accounting policies

Our financial statements are prepared in accordance with GAAP and general practices within the banking industry. Within our financial statements, certain financial information contains approximate measurements of financial effects of transactions and impacts at the consolidated balance sheet dates and our results of operations for the reporting periods. We monitor the status of proposed and newly issued accounting standards to evaluate the impact on our financial condition and results of operations. Our accounting policies, including the impact of any newly issued accounting standards if applicable, are discussed in further detail in Note 1, “Basis of presentation,” in the notes to our consolidated financial statements in our Annual Report.

Financial highlights

The following table presents certain selected historical consolidated income statement and balance sheet data and key performance indicators and other measures as of the dates or for the periods indicated. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period.



	As of or for the three months ended						As of or for the nine months ended						As of or for the year-ended

	September 30,						September 30,						December 31,
(dollars in thousands, except share data)	2024			2023			2024			2023			2023
Selected Balance Sheet Data
Cash and cash equivalents	$	951,750		$	848,318		$	951,750		$	848,318		$	810,932
Investment securities, at fair value	1,567,922			1,351,153			1,567,922			1,351,153			1,471,973
Loans held for sale	103,145			103,858			103,145			103,858			67,847
Loans HFI	9,478,129			9,287,225			9,478,129			9,287,225			9,408,783
Allowance for credit losses on loans HFI	(156,260)			(146,134)			(156,260)			(146,134)			(150,326)

Total assets	12,920,222			12,489,631			12,920,222			12,489,631			12,604,403
Interest-bearing deposits (non-brokered)	8,230,867			8,105,713			8,230,867			8,105,713			8,179,430
Brokered deposits	519,200			174,920			519,200			174,920			150,475
Noninterest-bearing deposits	2,226,144			2,358,435			2,226,144			2,358,435			2,218,382
Total deposits	10,976,211			10,639,068			10,976,211			10,639,068			10,548,287
Borrowings	182,107			226,689			182,107			226,689			390,964
Allowance for credit losses on unfunded commitments	(6,042)			(11,600)			(6,042)			(11,600)			8,770
Total common shareholders’ equity	1,562,329			1,372,901			1,562,329			1,372,901			1,454,794
Selected Statement of Income Data
Total interest income	$	185,628		$	173,912		$	539,169		$	503,575		$	678,410
Total interest expense	79,611			72,986			231,047			197,446			271,193
Net interest income	106,017			100,926			308,122			306,129			407,217
Provisions for credit losses	1,914			2,821			4,920			2,234			2,539
Total noninterest (loss) income	(16,497)			8,042			17,073			55,204			70,543
Total noninterest expense	76,212			82,997			223,725			244,729			324,929
Income before income taxes	11,394			23,150			96,550			114,370			150,292
Income tax expense	1,174			3,975			18,393			23,507			30,052
Net income applicable to noncontrolling interest	—			—			8			8			16
Net income applicable to FB Financial Corporation	$	10,220		$	19,175		$	78,149		$	90,855		$	120,224

Net interest income (tax-equivalent basis)	$	106,634		$	101,762		$	310,087		$	308,638		$	410,562
Per Common Share
Basic net income	$	0.22		$	0.41		$	1.67		$	1.94		$	2.57
Diluted net income	0.22			0.41			1.67			1.94			2.57
Book value (1)	33.48			29.31			33.48			29.31			31.05
Tangible book value (2)	28.15			23.93			28.15			23.93			25.69
Cash dividends declared	0.17			0.15			0.51			0.45			0.60






Selected Ratios
Return on average:
Assets (3)	0.32		%	0.61		%	0.83		%	0.95		%	0.95		%
Common shareholders’ equity (3)	2.67		%	5.46		%	7.02		%	8.86		%	8.74		%
Tangible common equity (2)	3.19		%	6.67		%	8.45		%	10.9		%	10.7		%

Efficiency ratio	85.1		%	76.2		%	68.8		%	67.7		%	68.0		%
Core efficiency ratio (tax-equivalent basis) (2)	58.4		%	63.1		%	58.2		%	63.3		%	62.9		%
Loans HFI to deposit ratio	86.4		%	87.3		%	86.4		%	87.3		%	89.2		%
Noninterest-bearing deposits to total deposits	20.3		%	22.2		%	20.3		%	22.2		%	21.0		%
Net interest margin (tax-equivalent basis)	3.55		%	3.42		%	3.51		%	3.44		%	3.44		%
Yield on interest-earning assets	6.20		%	5.87		%	6.13		%	5.64		%	5.72		%
Cost of interest-bearing liabilities	3.63		%	3.41		%	3.58		%	3.05		%	3.16		%
Cost of total deposits	2.83		%	2.58		%	2.79		%	2.30		%	2.39		%



	As of or for the three months ended				As of or for the nine months ended				As of or for the year ended
	September 30,				September 30,				December 31,
	2024		2023		2024		2023		2023
Credit Quality Ratios
Allowance for credit losses on loans HFI as a percentage of loans HFI	1.65	%	1.57	%	1.65	%	1.57	%	1.60	%
Annualized net charge-offs as a percentage of average loans HFI	(0.03)	%	(0.02)	%	(0.02)	%	(0.02)	%	(0.01)	%

Nonperforming loans HFI as a percentage of loans HFI	0.96	%	0.59	%	0.96	%	0.59	%	0.65	%
Nonperforming assets as a percentage of total assets (4)	0.99	%	0.71	%	0.99	%	0.71	%	0.69	%

Capital Ratios (Company)
Total common shareholders’ equity to assets	12.1	%	11.0	%	12.1	%	11.0	%	11.5	%
Tangible common equity to tangible assets (2)	10.4	%	9.16	%	10.4	%	9.16	%	9.74	%
Tier 1 leverage	11.5	%	11.0	%	11.5	%	11.0	%	11.3	%
Tier 1 risk-based capital	13.0	%	12.1	%	13.0	%	12.1	%	12.5	%
Total risk-based capital	15.1	%	14.1	%	15.1	%	14.1	%	14.5	%
Common Equity Tier 1	12.7	%	11.8	%	12.7	%	11.8	%	12.2	%

(1) Book value per share equals our total common shareholders’ equity divided by the number of shares of our common stock outstanding as of the date presented.

(2) Non-GAAP financial measure; See "GAAP reconciliation and management explanation of non-GAAP financial measures” and non-GAAP reconciliations herein.

(3) ROAA and ROAE is calculated by dividing annualized net income or loss by average assets or average equity.

(4) Includes $30,537, $22,074 and $21,229 of optional rights to repurchase delinquent GNMA loans as of September 30, 2024, September 30, 2023 and December 31, 2023, respectively.

GAAP reconciliation and management explanation of non-GAAP financial measures

We identify certain financial measures discussed in this Report as being “non-GAAP financial measures.” The non-GAAP financial measures presented in this Report are adjusted efficiency ratio (tax-equivalent basis), tangible book value per common share, tangible common equity to tangible assets and return on average tangible common equity.

In accordance with the SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our consolidated statements of income, balance sheets or statements of cash flows. The non-GAAP financial measures that we discuss in this Report 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 we calculate the non-GAAP financial measures that we discuss in our selected historical consolidated financial data 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 we have discussed in our selected historical consolidated financial data when comparing such non-GAAP financial measures. The following reconciliation tables provide a more detailed analysis of these, and reconciliation for, each of non-GAAP financial measures.

Core efficiency ratio (tax-equivalent basis)

The core efficiency ratio (tax-equivalent basis) is a non-GAAP measure that excludes certain gains, losses and other selected items. Our management uses this measure in its analysis of our performance. Our management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. The most directly comparable financial measure calculated in accordance with GAAP is the efficiency ratio.

The following table presents a reconciliation of our core efficiency ratio (tax-equivalent basis) to our efficiency ratio for the periods below:


(dollars in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended December 31,
	2024			2023			2024			2023			2023
Core efficiency ratio (tax-equivalent basis)
Total noninterest expense	$	76,212		$	82,997		$	223,725		$	244,729		$	324,929


Less early retirement and severance costs	—			4,809			1,015			6,235			8,449


Less (gain) loss on lease terminations	—			—			—			(73)			1,770
Less FDIC special assessment	—			—			500			—			1,788



Core noninterest expense	$	76,212		$	78,188		$	222,210		$	238,567		$	312,922
Net interest income	$	106,017		$	100,926		$	308,122		$	306,129		$	407,217
Net interest income (tax-equivalent basis)	106,634			101,762			310,087			308,638			410,562
Total noninterest (loss) income	(16,497)			8,042			17,073			55,204			70,543
Less loss from securities, net	(40,165)			(14,197)			(56,378)			(14,156)			(13,973)
Less (loss) gain on sales or write-downs of other real estate owned and other assets	(289)			115			(5)			465			(27)
Less cash life insurance benefit	—			—			2,057			—			—
Less (loss) gain on change in fair value of commercial loans held for sale acquired in previous business combination	—			(7)			—			895			(2,114)




Core noninterest income	$	23,957		$	22,131		$	71,399		$	68,000		$	86,657
Total revenue	$	89,520		$	108,968		$	325,195		$	361,333		$	477,760
Core revenue (tax-equivalent basis)	$	130,591		$	123,893		$	381,486		$	376,638		$	497,219
Efficiency ratio	85.1		%	76.2		%	68.8		%	67.7		%	68.0		%
Core efficiency ratio (tax-equivalent basis)	58.4		%	63.1		%	58.2		%	63.3		%	62.9		%

Tangible book value per common share and tangible common equity to tangible assets

Tangible book value per common share and tangible common equity to tangible assets are non-GAAP measures that exclude the impact of goodwill and other intangibles used by management to evaluate capital adequacy. Because intangible assets, such as goodwill and other intangibles, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our capital position to other companies. The most directly comparable financial measure calculated in accordance with GAAP is book value per common share and our total shareholders’ equity to total assets.

The following table presents, as of the dates set forth below, tangible common equity compared with total common shareholders’ equity, tangible book value per common share compared with our book value per common share and common equity to tangible assets compared to total common shareholders’ equity to total assets :



	September 30,						December 31,
(dollars in thousands, except share data)	2024			2023			2023
Tangible assets
Total assets	$	12,920,222		$	12,489,631		$	12,604,403
Adjustments:
Goodwill	(242,561)			(242,561)			(242,561)
Intangibles, net	(6,449)			(9,549)			(8,709)
Tangible assets	$	12,671,212		$	12,237,521		$	12,353,133
Tangible common equity
Total common shareholders’ equity	$	1,562,329		$	1,372,901		$	1,454,794
Adjustments:
Goodwill	(242,561)			(242,561)			(242,561)
Intangibles, net	(6,449)			(9,549)			(8,709)
Tangible common equity	$	1,313,319		$	1,120,791		$	1,203,524
Common shares outstanding	46,658,019			46,839,159			46,848,934
Book value per common share	$	33.48		$	29.31		$	31.05
Tangible book value per common share	$	28.15		$	23.93		$	25.69
Total common shareholders’ equity to total assets	12.1		%	11.0		%	11.5		%
Tangible common equity to tangible assets	10.4		%	9.16		%	9.74		%

Return on average tangible common equity

Return on average tangible common equity is a non-GAAP measure that uses average shareholders’ equity and excludes the impact of goodwill and other intangibles. This measurement is used by management to provide a depiction of our profitability without being impacted by intangible assets, as intangible assets are not directly managed to generate earnings. The most directly comparable financial measure calculated in accordance with GAAP is return on average common shareholders' equity.

The following table presents, as of the dates set forth below, reconciliations of total average tangible common equity to average shareholders’ equity and return on average tangible common equity to return on average shareholders’ equity:


	Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended December 31,
(dollars in thousands)	2024			2023			2024			2023			2023
Return on average tangible common equity
Total average common shareholders’ equity	$	1,523,597		$	1,393,253		$	1,486,010		$	1,371,278		$	1,374,831
Adjustments:
Average goodwill	(242,561)			(242,561)			(242,561)			(242,561)			(242,561)
Average intangibles, net	(6,795)			(10,011)			(7,536)			(10,922)			(10,472)
Average tangible common equity	$	1,274,241		$	1,140,681		$	1,235,913		$	1,117,795		$	1,121,798
Net income applicable to FB Financial Corporation	$	10,220		$	19,175		$	78,149		$	90,855		$	120,224
Return on average common shareholders’ equity	2.67		%	5.46		%	7.02		%	8.86		%	8.74		%
Return on average tangible common equity	3.19		%	6.67		%	8.45		%	10.9		%	10.7		%

Company overview

We are a financial holding company headquartered in Nashville, Tennessee. We operate primarily through our wholly-owned subsidiary bank, FirstBank, and its subsidiaries. FirstBank provides a comprehensive suite of commercial and consumer banking services to clients in select markets in Tennessee, Kentucky, Alabama and North Georgia. As of September 30, 2024, our footprint included 77 full-service branches serving the following Tennessee Metropolitan Statistical Areas: Nashville, Chattanooga (including North Georgia), Knoxville, Memphis, and Jackson in addition to Bowling Green, Kentucky and Birmingham, Florence and Huntsville, Alabama. Our banking services extend to 17 community markets throughout Tennessee and North Georgia. FirstBank also provides retail mortgage banking services utilizing its bank branch network and mortgage banking offices strategically located throughout the southeastern United States.

We operate through two segments, Banking and Mortgage. We generate most of our revenue in our Banking segment from interest on loans and investments, loan-related fees, trust and investment services and deposit-related fees. Our primary source of funding for our loans is customer deposits, however we have other sources of funds including unsecured credit lines, brokered CDs, and other borrowings. We generate most of our revenue in our Mortgage segment from origination fees and gains on sales in the secondary mortgage loan market, as well as from mortgage servicing revenues.

Overview of recent financial performance

Results of operations

Three months ended September 30, 2024 compared to three months ended September 30, 2023

Our net income decreased during the three months ended September 30, 2024 to $10.2 million from $19.2 million for the three months ended September 30, 2023. Diluted earnings per common share were $0.22 and $0.41 for the three months ended September 30, 2024 and 2023, respectively. Our net income represented a ROAA of 0.32% and 0.61% for the three months ended September 30, 2024 and 2023, respectively, and a ROAE of 2.67% and 5.46% for the same periods. Our ROATCE for the three months ended September 30, 2024 and 2023 were 3.19% and 6.67%, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.

During the three months ended September 30, 2024, our net interest income increased to $106.0 million compared with $100.9 million in the three months ended September 30, 2023. Our net interest margin, on a tax-equivalent basis, increased to 3.55% for the three months ended September 30, 2024 as compared to 3.42% for the three months ended September 30, 2023. The increase in net interest margin was primarily driven by higher rates for loans HFI and taxable AFS debt securities offset by a smaller increase in the volume of interest-earnings assets compared to interest-bearing liabilities.

Noninterest income for the three months ended September 30, 2024 decreased by $24.5 million to a loss of $16.5 million, compared to $8.0 million for the three months ended September 30, 2023. The decrease was primarily the result of management’s election to sell $318.6 million of AFS debt securities, which resulted in a $40.2 million net loss on investment securities during the three months ended September 30, 2024 compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the three months ended September 30, 2023. Refer to the section “Other earnings assets” for additional information on the sale of the AFS debt securities.

Noninterest expense decreased to $76.2 million for the three months ended September 30, 2024, compared with $83.0 million for the three months ended September 30, 2023. The decrease in noninterest expense is due to decreases in salaries, commissions and employee benefits of $7.0 million primarily related to the Company’s efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses.

Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Our net income decreased during the nine months ended September 30, 2024 to $78.2 million from $90.9 million for the nine months ended September 30, 2023. Diluted earnings per common share were $1.67 and $1.94 for the nine months ended September 30, 2024 and 2023, respectively. Our net income represented a ROAA of 0.83% and 0.95% for the nine months ended September 30, 2024 and 2023, respectively, and a ROAE of 7.02% and 8.86% for the same periods. Our ROATCE for the nine months ended September 30, 2024 and 2023 were 8.45% and 10.9%, respectively. See “GAAP

reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.

During the nine months ended September 30, 2024, our net interest income increased to $308.1 million from $306.1 million for the nine months ended September 30, 2023. Our net interest margin, on a tax-equivalent basis, increased to 3.51% for the nine months ended September 30, 2024 as compared to 3.44% for the nine months ended September 30, 2023. The increase in net interest margin was primarily driven by higher interest rates mostly offset by our volume of interest-earnings assets decreasing compared to an increase in our interest-bearing liabilities.

Noninterest income for the nine months ended September 30, 2024 decreased by $38.1 million to $17.1 million, down from $55.2 million for the nine months ended September 30, 2023. The decrease in noninterest income was primarily due to a $56.4 million net loss on investment securities related to the sale of $526.4 million of AFS debt securities during the nine months ended September 30, 2024 compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the nine months ended September 30, 2023. Refer to the section “Other earnings assets” for additional information on the sale of the AFS debt securities. The decrease was partially offset by a $2.1 million increase in investment services and trust income and a $2.1 million cash life insurance benefit during the nine months ended September 30, 2024.

Noninterest expense decreased to $223.7 million for the nine months ended September 30, 2024, compared with $244.7 million for the nine months ended September 30, 2023. The decrease in noninterest expense is due to decreases in salaries, commissions and employee benefits of $16.9 million primarily related to the Company’s efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses. Additionally, the decrease is reflective of decreases in advertising, legal and professional expenses and franchise tax expense.

Business segment highlights

We operate our business in two business segments: Banking and Mortgage. See Note 11, “Segment reporting” in the notes to our consolidated financial statements contained herein for a description of these business segments.

Banking

Three months ended September 30, 2024 compared to three months ended September 30, 2023

Income before taxes from the Banking segment decreased for the three months ended September 30, 2024 to $10.8 million, compared to $23.4 million for the three months ended September 30, 2023. Net interest income increased by $5.0 million to $104.3 million during the three months ended September 30, 2024 compared to $99.4 million during the three months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in $1.9 million of provision expense during the three months ended September 30, 2024 compared to $3.3 million during the three months ended September 30, 2023. The Banking segment recorded a noninterest loss of $28.4 million in the three months ended September 30, 2024 compared to a $4.0 million loss in the three months ended September 30, 2023. This decrease includes a net loss on investment securities of $40.2 million associated with the sale of $318.6 million AFS debt securities during the three months ended September 30, 2024 compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the three months ended September 30, 2023. Noninterest expense decreased to $63.3 million for three months ended September 30, 2024 compared to $68.7 million for the three months ended September 30, 2023 due primarily to a decrease in salaries associated with our efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses.

Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Income before taxes from the Banking segment decreased for the nine months ended September 30, 2024 to $93.2 million, compared to $116.4 million for the nine months ended September 30, 2023. Net interest income increased by $2.6 million to $304.0 million during the nine months ended September 30, 2024 compared to $301.4 million during the nine months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in $5.1 million of provision expense during the nine months ended September 30, 2024 compared to $2.3 million during the nine months ended September 30, 2023. The Banking segment recorded a noninterest loss of $19.7 million in the nine months ended September 30, 2024 as compared to income of $18.9 million in the nine months ended September 30, 2023. This decrease includes a net loss on investment securities of $56.4 million associated with the sale of $526.4 million AFS debt securities during the nine months ended September 30, 2024 compared with a net loss on investment securities of $14.2 million as noted above for the nine months ended September 30, 2023. Noninterest expense decreased to

$186.0 million for nine months ended September 30, 2024 compared to $201.7 million for the nine months ended September 30, 2023 due to decreases in salaries, advertising, legal and professional fees and franchise tax expense.

Mortgage

Three months ended September 30, 2024 compared to three months ended September 30, 2023

Activity in our Mortgage segment resulted in a pre-tax net contribution of $0.6 million for the three months ended September 30, 2024 compared to a $0.2 million pre-tax net loss for the three months ended September 30, 2023. Net interest income was $1.7 million for the three months ended September 30, 2024 and $1.6 million for the three months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in provision expense of $0.1 million during the three months ended September 30, 2024 compared to a reversal of $0.4 million of provision expense during the three months ended September 30, 2023. Mortgage banking income decreased $0.4 million to $11.6 million during the three months ended September 30, 2024 compared to $12.0 million for the three months ended September 30, 2023. As noted below, mortgage banking income includes origination fees and realized gains and losses on the sale of mortgage loans, change in fair value of mortgage loans and derivatives, and mortgage loan servicing fees, which includes the net change in fair value of MSRs and related derivatives. Mortgage banking income is initially driven by the recognition of interest rate lock commitments at fair value at inception. This is subsequently adjusted for changes in the overall interest rate environment offset by derivative contracts entered into to mitigate the interest rate exposure. Upon sale of the loan, the net fair value gain is reclassified as a realized gain on sale.

The components of mortgage banking income for the three months ended September 30, 2024 and 2023 were as follows:


	Three Months Ended September 30,
(dollars in thousands)	2024			2023
Mortgage banking income
Gains and fees from origination and sale of mortgage loans held for sale	$	9,279		$	8,941
Net change in fair value of loans held for sale and derivatives	(480)			(582)
Change in fair value on MSRs, net of hedging	(4,490)			(3,724)
Mortgage servicing income	7,244			7,363
Total mortgage banking income	$	11,553		$	11,998
Interest rate lock commitment volume	$	381,240		$	373,068
Interest rate lock commitment volume by purpose (%):
Purchase	82.5		%	88.5		%
Refinance	17.5		%	11.5		%
Mortgage sales	$	327,270		$	325,321
Mortgage sale margin	2.84		%	2.75		%
Closing volume	$	317,502		$	328,169
Outstanding principal balance of mortgage loans serviced	$	10,402,118		$	10,875,274

Noninterest expense for the three months ended September 30, 2024 and 2023 was $12.9 million and $14.3 million, respectively. This decrease is reflective of a decrease in salaries and employee benefits associated with our efficiency and scalability initiatives.

Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Activity in our Mortgage segment resulted in a pre-tax net contribution of $3.3 million for the nine months ended September 30, 2024 compared to a $2.0 million pre-tax net loss for the nine months ended September 30, 2023. Net interest income was $4.1 million for the nine months ended September 30, 2024 compared to $4.7 million for the nine months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in a reversal of $0.2 million of provision expense during the nine months ended September 30, 2024 compared to a reversal of $0.1 million of provision expense during the nine months ended September 30, 2023. Mortgage banking income decreased $0.3 million to $36.0 million during the nine months ended September 30, 2024 compared to $36.3 million for the nine months ended September 30, 2023.

The components of mortgage banking income for the nine months ended September 30, 2024 and 2023 were as follows:


	Nine Months Ended September 30,
(dollars in thousands)	2024			2023
Mortgage banking income
Gains and fees from origination and sale of mortgage loans held for sale	$	24,671		$	25,081
Net change in fair value of loans held for sale and derivatives	1,337			(129)
Change in fair value on MSRs, net of hedging	(11,867)			(11,353)
Mortgage servicing income	21,907			22,717
Total mortgage banking income	$	36,048		$	36,316





Interest rate lock commitment volume	$	1,143,603		$	1,151,061
Interest rate lock commitment volume by purpose (%):
Purchase	84.8		%	87.9		%
Refinance	15.2		%	12.1		%

Mortgage sales	$	885,775		$	987,954
Mortgage sale margin	2.79		%	2.54		%
Closing volume	$	913,315		$	970,131
Outstanding principal balance of mortgage loans serviced	$	10,402,118		$	10,875,274

Noninterest expense for the nine months ended September 30, 2024 and 2023 was $37.8 million and $43.1 million, respectively. This decrease is reflective of a decrease in salaries and employee benefits associated with our efficiency and scalability initiatives.

Results of operations

Throughout the following discussion of our operating results, we present our net interest income, net interest margin and core efficiency ratio on a fully tax-equivalent basis. The fully tax-equivalent basis adjusts for the tax-favored status of net interest income from certain loans and investments.

Our tax-exempt income is converted to a tax-equivalent basis by adjusting for the combined federal and blended state statutory income tax rate of 26.06% for the three and nine months ended September 30, 2024 and 2023.

Net interest income

Net interest income is the most significant component of our earnings, generally comprising over 50% of our total revenues in a given period. Net interest income and margin are shaped by many factors, primarily the volume, term structure and mix of earning assets, funding mechanisms, and interest rate fluctuations. Other factors include accretion or amortization of discounts or premiums on purchased loans, prepayment risk on mortgage and investment–related assets, and the composition and maturity of earning assets and interest-bearing liabilities. Loans typically generate more interest income than investment securities with similar maturities. Funding from client deposits generally costs less than wholesale funding sources. Factors such as general economic activity, Federal Reserve monetary policy, and price volatility of competing alternative investments, can also exert significant influence on our ability to optimize the mix of assets and funding, net interest income and margin.

During the three and nine months ended September 30, 2024, the U.S. Treasury yield curve continued its path towards normalization and became less inverted as long-term note and bond rates decreased at a slower pace than shorter-term note rates. The curve remained inverted as of September 30, 2024, which is in contrast to the more normalized upward sloping U.S. Treasury yield curve exhibited during the three and nine months ended September 30, 2023. The Federal Funds Target Rate range was 4.75% - 5.00% and 5.25% - 5.50% as of September 30, 2024 and December 31, 2023, respectively. During the Federal Open Market Committee’s September 18, 2024 meeting, the federal funds rate was lowered 50 basis points, which was the first rate change since July 2023.

Three months ended September 30, 2024 compared to three months ended September 30, 2023

Net interest income increased to $106.6 million for the three months ended September 30, 2024 as compared to $101.8 million for the three months ended September 30, 2023. The change in net interest income was driven by a $11.5 million increase in interest income partially offset by an increase in interest expense of $6.6 million. Further discussion of the changes to interest income and expense are discussed below.

Interest income was $186.2 million for the three months ended September 30, 2024, compared to $174.7 million for the three months ended September 30, 2023, an increase of $11.5 million, which was primarily driven by an increase in yields and somewhat by an increase in volume of loans HFI and taxable investment securities.

Interest income on loans HFI increased $4.7 million to $157.8 million for the three months ended September 30, 2024 from $153.0 million for the three months ended September 30, 2023 primarily due to higher yields with a secondary driver of increased volume. The yield on loans HFI was 6.70% for the three months ended September 30, 2024, up 16 basis points from the three months ended September 30, 2023.

The components of our loan yield for the three months ended September 30, 2024 and 2023 were as follows:


	Three Months Ended September 30,
	2024				2023
(dollars in thousands)	Interest income		Average yield		Interest income		Average yield
Loan HFI yield components:
Contractual interest rate on loans HFI (1)	$	155,884	6.62	%	$	147,806	6.32	%
Origination and other loan fee income	1,779		0.08	%	4,345		0.19	%
(Amortization) accretion on purchased loans	(10)		—	%	312		0.01	%
Nonaccrual interest collections	98		—	%	575		0.02	%

Total loan HFI yield	$	157,751	6.70	%	$	153,038	6.54	%

(1) Includes tax equivalent adjustment using combined marginal tax rate of 26.06%.

Interest income on taxable investment securities increased $7.5 million to $13.9 million for the three months ended September 30, 2024 from $6.4 million for the three months ended September 30, 2023 due to the reinvestment of proceeds from the sale of AFS debt securities that were sold during the second half of 2023 and first nine months of 2024 to higher yielding U.S. government agency and mortgage-backed securities. The yield on taxable investment securities increased 184 basis points to 3.73% for the three months ended September 30, 2024 compared to 1.89% for the three months ended September 30, 2023.

Interest expense was $79.6 million for the three months ended September 30, 2024, an increase of $6.6 million as compared to the three months ended September 30, 2023. The increase in interest expense was driven equally by an increase in the average balance of interest-bearing liabilities which increased interest expense $3.6 million and an increase in the rate paid on interest-bearing liabilities which increased interest expense $3.0 million over the comparative time period. Increases in average balances of interest-bearing liabilities were led by brokered and internet time deposits of $140.0 million for the three months ended September 30, 2024 due to the issuance of brokered deposits as we took advantage of favorable relative terms available during the quarter. Notable contributors to the increase in interest expense are attributable to the rate paid on interest-bearing liabilities, including money market and customer time deposits, which increased $2.7 million and $1.6 million, respectively, from the three months ended September 30, 2023. These increases were most significantly influenced by increases in rates paid on these balances. The average rate on money market deposits increased 15 basis points to 3.93% for the three months ended September 30, 2024 from 3.78% for the three months ended September 30, 2023. The average rate on customer time deposits increased 60 basis points to 3.97% for the three months ended September 30, 2024 from 3.37% for the three months ended September 30, 2023.

More broadly, total cost of interest-bearing deposits was 3.58% for the three months ended September 30, 2024 compared to 3.33% for the three months ended September 30, 2023. As interest rates on deposits increase, we tend to experience some movement between deposit types as customers seek higher interest rates and shift from noninterest-bearing deposit accounts to interest-bearing deposit products.

Average balance and interest yield/rate analysis

The table below shows the average balances, income and expense and yield and rates of each of our interest-earning assets and interest-bearing liabilities on a tax equivalent basis, if applicable, for the periods indicated.


	Three Months Ended September 30,
	2024						2023
(dollars in thousands)	Average balances		Interest income/ expense		Average yield/ rate		Average balances		Interest income/ expense		Average yield/ rate
Interest-earning assets:
Loans HFI (1)(2)	$	9,362,937	$	157,751	6.70	%	$	9,280,530	$	153,038	6.54	%
Mortgage loans held for sale	66,828		1,102		6.56	%	60,291		1,047		6.89	%
Commercial loans held for sale	—		—		—	%	9,259		—		—	%
Investment securities:
Taxable	1,487,200		13,943		3.73	%	1,344,052		6,399		1.89	%
Tax-exempt (2)	181,465		1,493		3.27	%	291,863		2,428		3.30	%
Total investment securities (2)	1,668,665		15,436		3.68	%	1,635,915		8,827		2.14	%
Federal funds sold and reverse repurchase agreements	118,715		1,687		5.65	%	95,326		1,375		5.72	%
Interest-bearing deposits with other financial institutions	701,666		9,519		5.40	%	696,600		9,620		5.48	%
FHLB stock	32,919		750		9.06	%	36,624		841		9.11	%
Total interest-earning assets (2)	11,951,730		186,245		6.20	%	11,814,545		174,748		5.87	%
Noninterest-earning assets:
Cash and due from banks	131,308						128,780
Allowance for credit losses on loans HFI	(155,665)						(140,033)
Other assets (3)(4)	814,577						753,866
Total noninterest-earning assets	790,220						742,613
Total assets	$	12,741,950					$	12,557,158
Interest-bearing liabilities:
Interest bearing deposits:
Interest-bearing checking	$	2,624,046	$	20,998	3.18	%	$	2,668,970	$	20,506	3.05	%
Money market deposits	3,802,818		37,574		3.93	%	3,661,262		34,902		3.78	%
Savings deposits	357,165		65		0.07	%	410,403		65		0.06	%
Customer time deposits	1,349,986		13,479		3.97	%	1,400,290		11,909		3.37	%
Brokered and internet time deposits	322,667		3,972		4.90	%	182,652		2,444		5.31	%
Time deposits	1,672,653		17,451		4.15	%	1,582,942		14,353		3.60	%
Total interest-bearing deposits	8,456,682		76,088		3.58	%	8,323,577		69,826		3.33	%
Other interest-bearing liabilities:
Securities sold under agreements to repurchase and federal funds purchased	21,734		79		1.45	%	30,520		349		4.54	%
Federal Home Loan Bank advances	—		—		—	%	13,859		204		5.84	%
Subordinated debt	130,561		1,900		5.79	%	127,605		2,600		8.08	%
Other borrowings	125,616		1,544		4.89	%	1,365		7		2.03	%
Total other interest-bearing liabilities	277,911		3,523		5.04	%	173,349		3,160		7.23	%
Total Interest-bearing liabilities	8,734,593		79,611		3.63	%	8,496,926		72,986		3.41	%
Noninterest-bearing liabilities:
Demand deposits	2,241,512						2,410,280
Other liabilities (4)	242,155						256,606
Total noninterest-bearing liabilities	2,483,667						2,666,886
Total liabilities	11,218,260						11,163,812
FB Financial Corporation common shareholders’ equity	1,523,597						1,393,253
Noncontrolling interest	93						93
Shareholders’ equity	1,523,690						1,393,346
Total liabilities and shareholders’ equity	$	12,741,950					$	12,557,158
Net interest income (tax-equivalent basis) (2)			$	106,634					$	101,762
Interest rate spread (tax-equivalent basis) (2)					2.57	%					2.46	%
Net interest margin (tax-equivalent basis) (2)(5)					3.55	%					3.42	%
Cost of total deposits					2.83	%					2.58	%
Average interest-earning assets to average interest-bearing liabilities					136.8	%					139.0	%
(1) Average balances of nonaccrual loans and overdrafts are included in average loan balances (before deduction of ACL). (2) Interest income includes the effects of taxable-equivalent adjustments using a U.S. federal income tax rate and, where applicable, state income tax to increase tax-exempt interest income to a tax- equivalent basis. The net taxable-equivalent adjustment amounts included were $0.6 million and $0.8 million the three months ended September 30, 2024 and 2023, respectively. (3) Includes average net unrealized losses on investment securities available for sale of $153.8 million and $232.6 million for the three months ended September 30, 2024 and 2023, respectively. (4) Includes average of optional rights to repurchase government guaranteed GNMA mortgage loans previously sold that have become past due greater than 90 days of $25.5 million and $19.1 million for the three months ended September 30, 2024 and 2023, respectively. (5) The NIM is calculated by dividing annualized net interest income, on a tax-equivalent basis, by average total interest earning assets.

Yield/rate and volume analysis

The table below presents the components of the changes in net interest income for the three months ended September 30, 2024 and 2023. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volume and changes due to interest rates, with the changes in both volume and interest rates allocated to these two categories based on the proportionate absolute changes in each category.


	Three months ended September 30, 2024 compared to three months ended September 30, 2023 due to changes in
(dollars in thousands)	Volume		Yield/ rate		Net increase (decrease)
Interest-earning assets:
Loans held for investment (1)(2)	$	1,388	$	3,325	$	4,713
Loans held for sale - mortgage	108		(53)		55
Loans held for sale - commercial	—		—		—
Investment securities:
Taxable	1,342		6,202		7,544
Tax Exempt (2)	(908)		(27)		(935)
Federal funds sold and reverse repurchase agreements	332		(20)		312
Interest-bearing deposits with other financial institutions	69		(170)		(101)
FHLB stock	(84)		(7)		(91)
Total interest income (2)	2,247		9,250		11,497
Interest-bearing liabilities:
Interest-bearing checking	(359)		851		492
Money market deposits	1,399		1,273		2,672
Savings deposits	(10)		10		—
Customer time deposits	(502)		2,072		1,570
Brokered and internet time deposits	1,724		(196)		1,528
Securities sold under agreements to repurchase and federal funds purchased	(32)		(238)		(270)
Federal Home Loan Bank advances	(204)		—		(204)
Subordinated debt	43		(743)		(700)
Other borrowings	1,527		10		1,537
Total interest expense	3,586		3,039		6,625
Change in net interest income (2)	$	(1,339)	$	6,211	$	4,872
(1) Average loans are presented gross, including nonaccrual loans and overdrafts (before deduction of allowance for credit losses on loans HFI). (2) Interest income includes the effects of the tax-equivalent adjustments to increase tax-exempt interest income to a tax-equivalent basis. The net taxable-equivalent adjustment amounts included was $0.6 million and $0.8 million the three months ended September 30, 2024 and 2023, respectively.

Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

Net interest income was relatively flat for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, increasing $1.4 million to $310.1 million from $308.6 million. Increases in interest income of $35.1 million were largely offset by increases in interest expense of $33.6 million for the nine months ended September 30, 2024 compared to the prior period. The increase in interest income for the current year period was driven by an increase in yields on average earning assets incrementally offset by decreases in the average volume of interest-bearing deposits with other financial institutions. The increase in interest expense was primarily driven increases in the rate paid on interest-bearing liabilities.

Interest income on loans HFI increased $26.0 million to $466.9 million for the nine months ended September 30, 2024 from $440.9 million for the nine months ended September 30, 2023 due primarily to increasing yields. The average yield on loans HFI increased by 37 basis points period-over-period to 6.68% for the nine months ended September 30, 2024

from 6.31% for the nine months ended September 30, 2023.

The components of our loan yield for the nine months ended September 30, 2024 and 2023 were as follows:


	Nine Months Ended September 30,
	2024				2023
(dollars in thousands)	Interest income		Average yield		Interest income		Average yield
Loans HFI yield components:
Contractual interest rate on loans HFI (1)	$	460,796	6.59	%	$	428,000	6.13	%
Origination and other loan fee income	4,506		0.06	%	11,353		0.16	%
Accretion on purchased loans	538		0.01	%	617		0.01	%
Nonaccrual interest collections	1,093		0.02	%	950		0.01	%

Total loans HFI yield	$	466,933	6.68	%	$	440,920	6.31	%
(1) Includes tax equivalent adjustment using combined marginal tax rate of 26.06%.

Interest income on taxable investment securities increased $15.6 million to $35.0 million for the nine months ended September 30, 2024 from $19.4 million for the nine months ended September 30, 2023 due to the reinvestment of proceeds from the sale of AFS debt securities that were sold during the second half of 2023 and first and third quarters of 2024 to higher yielding U.S. government agency securities and mortgage-backed securities. The yield on taxable investment securities increased 133 basis points to 3.22% for the nine months ended September 30, 2024 compared to 1.89% for the nine months ended September 30, 2023.

Interest income on interest-bearing deposits with other financial institutions decreased to $23.2 million for the nine months ended September 30, 2024 from $28.5 million for the nine months ended September 30, 2023 due to a decrease in volume of interest-bearing deposits with other financial institutions partially offset by higher yields. The average balance of interest-bearing deposits with other financial institutions decreased $187.0 million to $573.9 million for the nine months ended September 30, 2024 from $760.9 million for the nine months ended September 30, 2023. The yield on interest-bearing deposits with other financial institutions increased 41 basis points to 5.41% for the nine months ended September 30, 2024 compared to 5.00% for the nine months ended September 30, 2023.

Interest expense was $231.0 million for the nine months ended September 30, 2024, an increase of $33.6 million as compared to $197.4 million for the nine months ended September 30, 2023. The increase was largely attributed to a rise in the rate paid on interest-bearing deposit accounts, most notably, on money market and customer time deposit products. Interest expense on money market deposits increased $22.6 million to $112.0 million for the nine months ended September 30, 2024 compared to $89.5 million for the nine months ended September 30, 2023. Interest expense on customer time deposits increased $9.6 million to $41.4 million for the nine months ended September 30, 2024 from $31.8 million for the nine months ended September 30, 2023. The average rate on money market deposits increased 53 basis points to 3.93% for the nine months ended September 30, 2024 from 3.40% for the nine months ended September 30, 2023. The average rate on customer time deposits increased 99 basis points to 3.96% for the nine months ended September 30, 2024 from 2.97% for the nine months ended September 30, 2023. Total cost of interest-bearing deposits was 3.53% for the nine months ended September 30, 2024 compared to 2.97% for the nine months ended September 30, 2023.

The average balance of other borrowings increased $127.9 million to $129.4 million for the nine months ended September 30, 2024 compared to $1.5 million for the nine months ended September 30, 2023. As a result, interest expense on other borrowings increased to $4.7 million for the nine months ended September 30, 2024 compared to $23 thousand for the nine months ended September 30, 2023. The yield on other borrowings increased 275 basis points to 4.83% for the nine months ended September 30, 2024 compared to 2.08% for the nine months ended September 30, 2023. The increase is due primarily of borrowings from the Bank Term Funding Program, which was paid-off at the end of this quarter. Refer to the section “Borrowings” for additional information on the BTFP.

Average balance and interest yield/rate analysis


	Nine Months Ended September 30,
	2024						2023
(dollars in thousands)	Average balances		Interest income/ expense		Average yield/ rate		Average balances		Interest income/ expense		Average yield/ rate
Interest-earning assets:
Loans HFI (1)(2)	$	9,337,942	$	466,933	6.68	%	$	9,337,932	$	440,920	6.31	%
Mortgage loans held for sale	65,443		3,333		6.80	%	59,982		2,979		6.64	%
Commercial loans held for sale	—		—		—	%	11,721		162		1.85	%
Investment securities:
Taxable	1,450,295		35,014		3.22	%	1,373,461		19,449		1.89	%
Tax-exempt (2)	205,310		5,023		3.27	%	293,408		7,313		3.33	%
Total investment securities (2)	1,655,605		40,037		3.23	%	1,666,869		26,762		2.15	%
Federal funds sold and reverse repurchase agreements	127,365		5,310		5.57	%	114,706		4,280		4.99	%
Interest-bearing deposits with other financial institutions	573,861		23,226		5.41	%	760,895		28,457		5.00	%
FHLB stock	33,486		2,295		9.15	%	41,912		2,524		8.05	%
Total interest-earning assets (2)	11,793,702		541,134		6.13	%	11,994,017		506,084		5.64	%
Noninterest-earning assets:
Cash and due from banks	141,220						133,881
Allowance for credit losses on loans HFI	(152,675)						(137,958)
Other assets (3)(4)	786,211						757,606
Total noninterest-earning assets	774,756						753,529
Total assets	$	12,568,458					$	12,747,546
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing checking	$	2,554,739	$	59,088	3.09	%	$	2,985,265	$	63,317	2.84	%
Money market deposits	3,810,318		112,031		3.93	%	3,517,106		89,465		3.40	%
Savings deposits	368,262		191		0.07	%	433,811		192		0.06	%
Customer time deposits	1,398,263		41,415		3.96	%	1,432,680		31,788		2.97	%
Brokered and internet time deposits	195,785		7,489		5.11	%	80,902		3,184		5.26	%
Time deposits	1,594,048		48,904		4.10	%	1,513,582		34,972		3.09	%
Total interest-bearing deposits	8,327,367		220,214		3.53	%	8,449,764		187,946		2.97	%
Other interest-bearing liabilities:
Securities sold under agreements to repurchase and federal funds purchased	23,537		350		1.99	%	29,249		492		2.25	%
Federal Home Loan Bank advances	—		—		—	%	38,736		1,487		5.13	%
Subordinated debt	130,249		5,801		5.95	%	126,970		7,498		7.90	%
Other borrowings	129,396		4,682		4.83	%	1,478		23		2.08	%
Total other interest-bearing liabilities	283,182		10,833		5.11	%	196,433		9,500		6.47	%
Total interest-bearing liabilities	8,610,549		231,047		3.58	%	8,646,197		197,446		3.05	%
Noninterest-bearing liabilities:
Demand deposits	2,230,271						2,475,850
Other liabilities (4)	241,535						254,128
Total noninterest-bearing liabilities	2,471,806						2,729,978
Total liabilities	11,082,355						11,376,175
FB Financial Corporation common shareholders’ equity	1,486,010						1,371,278
Noncontrolling interest	93						93
Shareholders’ equity	1,486,103						1,371,371
Total liabilities and shareholders’ equity	$	12,568,458					$	12,747,546
Net interest income (tax-equivalent basis) (2)			$	310,087					$	308,638
Interest rate spread (tax-equivalent basis) (2)					2.55	%					2.59	%
Net interest margin (tax-equivalent basis) (2)(5)					3.51	%					3.44	%
Cost of total deposits					2.79	%					2.30	%
Average interest-earning assets to average interest-bearing liabilities					137.0	%					138.7	%

(1) Average balances of nonaccrual loans and overdrafts are included in average loan balances.

(2) Interest income includes the effects of taxable-equivalent adjustments using a U.S. federal income tax rate and, where applicable, state income tax to increase tax-exempt interest income to a tax-equivalent basis. The net tax-equivalent adjustment amounts included in income were $2.0 million and $2.5 million for nine months ended September 30, 2024 and 2023, respectively.

(3) Includes average net unrealized losses on investment securities available for sale of $181.9 million and $222.5 million for the nine months ended September 30, 2024 and 2023, respectively.

(4) Includes average of optional rights to repurchase government guaranteed GNMA mortgage loans previously sold that have become past due greater than 90 days of $22.3 million and $21.1 million for the nine months ended September 30, 2024 and 2023, respectively.

(5) The NIM is calculated by dividing annualized net interest income, on a tax-equivalent basis, by average total earning assets.

Yield/rate and volume analysis

The tables below present the components of the changes in net interest income for the nine months ended September 30, 2024 and 2023. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volume and changes due to interest rates, with the changes in both volume and interest rates allocated to these two categories based on the proportionate absolute changes in each category.


	Nine months ended September 30, 2024 compared to nine months ended September 30, 2023 due to changes in
(dollars in thousands)	Volume		Yield/rate		Net increase (decrease)
Interest-earning assets:
Loans HFI (1)(2)	$	1	$	26,012	$	26,013
Loans held for sale - mortgage	278		76		354
Loans held for sale - commercial	(162)		—		(162)
Investment securities:
Taxable	1,855		13,710		15,565
Tax-exempt (2)	(2,155)		(135)		(2,290)
Federal funds sold and reverse repurchase agreements	528		502		1,030
Interest-bearing deposits with other financial institutions	(7,570)		2,339		(5,231)
FHLB stock	(577)		348		(229)
Total interest income (2)	(7,802)		42,852		35,050
Interest-bearing liabilities:
Interest-bearing checking deposits	(9,958)		5,729		(4,229)
Money market deposits	8,621		13,945		22,566
Savings deposits	(34)		33		(1)
Customer time deposits	(1,019)		10,646		9,627
Brokered and internet time deposits	4,394		(89)		4,305
Securities sold under agreements to repurchase and federal funds purchased	(85)		(57)		(142)
Federal Home Loan Bank advances	(1,487)		—		(1,487)
Subordinated debt	146		(1,843)		(1,697)
Other borrowings	4,629		30		4,659
Total interest expense	5,207		28,394		33,601
Change in net interest income (2)	$	(13,009)	$	14,458	$	1,449

(1) Average loans are presented gross, including nonaccrual loans and overdrafts.

(2) Interest income includes the effects of the tax-equivalent adjustments to increase tax-exempt interest income to a tax-equivalent basis. The net taxable-equivalent adjustment amounts included was $2.0 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Provision for credit losses

The provision for credit losses charged to operating expense is an amount which, in the judgment of management, is necessary to maintain the allowance for credit losses at an appropriate level under the current expected credit loss model. The determination of the amount of the allowance is complex and involves a high degree of judgment and subjectivity. Refer to Note 1, “Basis of presentation” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a detailed discussion regarding ACL methodology.

Our allowance for credit losses calculation as of September 30, 2024 resulted from management’s best estimate of losses over the life of loans and unfunded commitments in our portfolio in accordance with the CECL approach. Our calculation included forecasts for projected slower GDP growth over the next two to three years and expected elevated unemployment levels. We also considered the current global economic environment, including continued pressures on supply chains (and more specifically, oil and energy) and increased uncertainty due to geopolitical turmoil and its impact

on the U.S. economy. These factors may continue to lead to increased volatility in forecasted macroeconomic variables, a key input to our calculated level of allowance for credit losses.

Three months ended September 30, 2024 compared to three months ended September 30, 2023

We recognized a provision for credit losses on loans HFI of $1.9 million and $6.0 million for the three months ended September 30, 2024 and 2023, respectively. The decrease in our provision for credit losses on loans HFI during the three months ended September 30, 2024 was primarily due to reductions in balances outstanding for construction loans offset by growth in other classes of financing receivable in our loan portfolio. For the three months ended September 30, 2023, the decrease in the provision for credit losses on loans HFI was driven by decreased loan growth in our loans HFI combined with the economic variables signaling a possible recession in our forward-looking model partially offset by an increase in the provision for credit losses on loans HFI due to a single commercial and industrial relationship moving to nonaccrual status during the three months ended September 30, 2023.

We also estimate expected credit losses on off-balance sheet loan commitments that are not accounted for as derivatives. When applying the CECL methodology to estimate expected credit loss, we consider the likelihood that funding will occur, the contractual period of exposure to credit loss, the risk of loss, historical loss experience, and current conditions along with expectations of future economic conditions. We recorded a provision expense for credit losses on unfunded commitments of $0.1 million and a reversal of provision expense of $3.2 million for the three months ended September 30, 2024 and 2023, respectively. The reversal is due to a $9.3 million decrease in our unfunded commitments during the three months ended September 30, 2024, including a $6.7 million decrease in our construction portfolio. Commitments increased in commercial and industrial and residential real estate line of credit portfolios offset by reductions in construction and commercial real estate.

During the three months ended September 30, 2024 and 2023 it was determined that all AFS debt securities that experienced a decline in fair value below amortized cost basis were due to noncredit-related factors. Therefore, there was no provision for credit losses recognized on AFS debt securities during the three months ended September 30, 2024 or 2023.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

We recognized a provision for credit losses on loans HFI for the nine months ended September 30, 2024 and 2023 of $7.6 million and $13.6 million, respectively. The current period provision on loans HFI is due to growth in loan balances for most loan categories offset by significant decreases in construction lending. For the nine months ended September 30, 2023, the increase in the provision for credit losses on loans HFI was driven by a single commercial and industrial relationship moving to nonaccrual status during the period and the deteriorating economic forecasts.

We recorded a reversal of provision for credit losses on unfunded commitments of $2.7 million and $11.4 million for the nine months ended September 30, 2024 and 2023, respectively. The reversal of provision for credit losses on unfunded commitments for the nine months ended September 30, 2024 and 2023 is primarily due to management's concentrated effort to reduce unfunded loan commitments during the periods indicated including a $215.7 million and a $716.8 million decrease in our construction category as these projects primarily moved to permanent financing for the nine months ended nine months ended September 30, 2024 and 2023, respectively. Decreases in commitment balances for construction and commercial real estate were offset by increases in commercial and industrial and residential segments. This resulted in a $2.7 million and $11.4 million decrease in required ACL related to the unfunded commitments for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024 and 2023, it was determined that all AFS debt securities that experienced a decline in fair value below amortized cost basis were due to noncredit-related factors. Therefore, there was no provision for credit losses recognized on AFS debt securities during the nine months ended September 30, 2024 and 2023.

Noninterest income

The following table sets forth the components of noninterest income for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Mortgage banking income	$	11,553	$	11,998	$	36,048	$	36,316
Investment services and trust income	3,721		3,072		10,338		8,227
Service charges on deposit accounts	3,378		2,959		9,686		9,197
ATM and interchange fees	2,840		2,639		8,598		7,664
Loss from investment securities, net	(40,165)		(14,197)		(56,378)		(14,156)
(Loss) gain on sales or write-downs of other real estate owned and other assets	(289)		115		(5)		465

Other income	2,465		1,456		8,786		7,491
Total noninterest (loss) income	$	(16,497)	$	8,042	$	17,073	$	55,204

Three months ended September 30, 2024 compared to three months ended September 30, 2023

Noninterest income amounted to a $16.5 million loss for the three months ended September 30, 2024, a decrease of $24.5 million, or 305%, as compared to income of $8.0 million for the three months ended September 30, 2023. The decrease in noninterest income was driven by the net loss from investment securities.

Net loss from investment securities was $40.2 million and $14.2 million for the three months ended September 30, 2024 and 2023, respectively. The net loss from investment securities during the three months ended September 30, 2024 is the result of management’s election to sell $318.6 million of AFS debt securities to reinvest the proceeds of the sale into higher yielding AFS debt securities compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the three months ended September 30, 2023. Refer to the section “Other earnings assets” for additional information on the sale of the AFS debt securities.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

Noninterest income amounted to $17.1 million for the nine months ended September 30, 2024, a decrease of $38.1 million, or 69% , as compared to $55.2 million for the nine months ended September 30, 2023. The decrease in noninterest income was driven by the net loss from investment securities, offset by increases in investment services and trust income and BOLI income recognized in other noninterest income.

Investment services and trust income increased $2.1 million during the nine months ended September 30, 2024 to $10.3 million as compared to $8.2 million during the nine months ended September 30, 2023. The increase is primarily attributable to fees earned from higher assets under management stemming from market value improvement and existing account growth, as well as customer acquisition efforts through a mix of financial advisors joining the Company bringing new business and the addition of new accounts by the financial advisors already at the Company.

Net loss from investment securities was $56.4 million for the nine months ended September 30, 2024 compared to a net loss of $14.2 million for the nine months ended September 30, 2023. The net loss from investment securities during the nine months ended September 30, 2024 is the result of management’s election to sell $526.4 million of AFS debt securities to reinvest the proceeds into higher yielding AFS securities compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the nine months ended September 30, 2023. Refer to the section “Other earning assets” for additional information on the sale of the AFS debt securities.

Other income increased $1.3 million to $8.8 million during the nine months ended September 30, 2024 as compared to $7.5 million during the nine months ended September 30, 2023. This increase was primarily related to a $2.1 million increase in BOLI income resulting from a cash life insurance benefit during the nine months ended September 30, 2024 offset by a $0.9 million gain during the nine months ended September 30, 2023 associated with the change in fair value of the commercial loans held for sale portfolio that was exited during the year ended December 31, 2023.

Noninterest expense

The following table sets forth the components of noninterest expense for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Salaries, commissions and employee benefits	$	47,538	$	54,491	$	138,381	$	155,299
Occupancy and equipment expense	6,640		6,428		19,582		18,618
Data processing	2,486		2,338		7,180		6,796
Advertising	1,947		2,124		4,977		6,258
Legal and professional fees	1,900		1,760		5,798		7,067

Amortization of core deposit and other intangibles	719		889		2,260		2,819






Other expense	14,982		14,967		45,547		47,872
Total noninterest expense	$	76,212	$	82,997	$	223,725	$	244,729

Three months ended September 30, 2024 compared to three months ended September 30, 2023

Noninterest expense decreased by $6.8 million, or 8%, during the three months ended September 30, 2024 to $76.2 million as compared to $83.0 million in the three months ended September 30, 2023. The decrease in noninterest expense was attributable to a decrease in salaries, commissions and employee benefits.

Salaries, commissions and employee benefits expense is the largest component of noninterest expense and is comprised of salaries and wages in addition to other employee benefit costs. During the three months ended September 30, 2024, salaries and employee benefits expense decreased $7.0 million, or 13%, to $47.5 million as compared to $54.5 million for the three months ended September 30, 2023. This change was attributable to the impact of the Company’s efficiency and scalability initiatives, as well as a $2.9 million decrease from the Company applying an updated deferral methodology for loan fees and loan origination expenses.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

Noninterest expense decreased by $21.0 million, or 9%, during the nine months ended September 30, 2024 to $223.7 million as compared to $244.7 million in the nine months ended September 30, 2023. The decrease in noninterest expense was attributable to a decrease in salaries, commissions and employee benefits, legal and professional fees, advertising expense, and franchise tax expense recognized in other noninterest expense offset slightly by a FDIC special assessment expense.

Salaries, commissions and employee benefits expense is the largest component of noninterest expense. For the nine months ended September 30, 2024, salaries, commissions and employee benefits expense decreased $16.9 million, or 11%, to $138.4 million as compared to $155.3 million for the nine months ended September 30, 2023. This change was attributable to the impact of the Company’s efficiency and scalability initiatives, as well as a $7.8 million decrease from the Company applying an updated deferral methodology for loan fees and loan origination expenses.

Advertising expense includes expenses related to sponsorships, advertising, marketing, customer relations and business development, and public relations. During the nine months ended September 30, 2024, advertising expense decreased $1.3 million to $5.0 million compared to $6.3 million during the nine months ended September 30, 2023. This decrease was primarily attributable to marketing rebate activity with partners earned through higher transaction volumes during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Legal and professional fees decreased by $1.3 million during the nine months ended September 30, 2024 to $5.8 million as compared to $7.1 million during the nine months ended September 30, 2023. The decrease was primarily driven by the completion of internal projects in the prior year.

Other noninterest expense primarily includes mortgage servicing expenses, regulatory fees and deposit insurance assessments, software license and maintenance fees and various other miscellaneous expenses. Other noninterest expense decreased $2.3 million during the nine months ended September 30, 2024 to $45.5 million compared to $47.9 million during the nine months ended September 30, 2023. The decrease was primarily related to a $3.1 million decrease in franchise tax expense which was partially offset by $0.5 million expense related to the FDIC special assessment.

Efficiency ratio

The efficiency ratio is one measure of productivity in the banking industry. This ratio is a measure of the cost of generating one dollar of revenue. That is, the ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. This ratio is calculated by dividing noninterest expense by the sum of net interest income and noninterest income. For a core efficiency ratio, we exclude certain gains, losses and expenses we do not consider core to our business.

Our efficiency ratio was 85.1% and 68.8% for the three and nine months ended September 30, 2024, respectively, and 76.2% and 67.7% for the three and nine months ended September 30, 2023, respectively. Our core efficiency ratio, on a tax-equivalent basis, was 58.4% and 58.2% for the three and nine months ended September 30, 2024, respectively, and 63.1% and 63.3% the three and nine months ended September 30, 2023, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of the core efficiency ratio.

Income taxes

Income tax expense was $1.2 million and $4.0 million for the three months ended September 30, 2024 and 2023, respectively, and $18.4 million and $23.5 million for the nine months ended September 30, 2024 and 2023, respectively. This represents effective tax rates of 10.3% and 17.2% for the three months ended September 30, 2024 and 2023, respectively, and 19.1% and 20.6% for the nine months ended September 30, 2024 and 2023, respectively. The primary differences from the enacted rates are applicable state income taxes and certain expenses that are not deductible, reduced for non-taxable income. Refer to Note 7 “Income taxes” in the notes to the consolidated financial statements for additional information regarding the Company’s income tax expense and effective tax rates.

Financial condition

The following discussion of our financial condition compares balances as of September 30, 2024 and December 31, 2023.

Loan portfolio

The following table sets forth the balance and associated percentage of each class of financing receivable in our loan portfolio as of the dates indicated:


	September 30,						December 31,

	2024								2023
(dollars in thousands)	Committed		Amount Outstanding		% of total outstanding		Committed		Amount Outstanding		% of total outstanding
Loan Type:
Commercial and industrial	$	3,003,498	$	1,688,815	18	%	$	2,982,967	$	1,720,733	18	%
Construction	1,589,883		1,079,726		11	%	2,123,177		1,397,313		15	%
Residential real estate:
1-to-4 family mortgage	1,615,696		1,612,031		17	%	1,569,525		1,568,552		17	%
Residential line of credit	1,326,977		591,049		6	%	1,231,038		530,912		6	%
Multi-family mortgage	665,959		654,188		7	%	627,387		603,804		6	%
Commercial real estate:
Owner-occupied	1,392,083		1,324,208		14	%	1,305,503		1,232,071		13	%
Non-owner occupied	2,099,996		2,048,036		22	%	2,026,491		1,943,525		21	%
Consumer and other	497,397		480,076		5	%	437,382		411,873		4	%
Total loans	$	12,191,489	$	9,478,129	100	%	$	12,303,470	$	9,408,783	100	%

Our loans HFI portfolio is our most significant earning asset, comprising 73.4% and 74.6% of our total assets at September 30, 2024 and December 31, 2023, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer type loans that comply with our credit policies and that produce revenues consistent with our financial objectives. Our overall lending approach is primarily focused on providing credit to our customers directly in the markets we serve. However, we are also party to loan syndications and participations from other banks (collectively, “participated loans”). As of September 30, 2024 and December 31, 2023, loans HFI included approximately $224.9 million and $254.6 million, respectively, related to participated loans.

We also sell loan participations to unaffiliated third-parties as part of our credit risk management and balance sheet management strategy. During the three months ended September 30, 2024 and 2023, we sold $7.5 million and $14.5 million in loan participations, respectively. During the nine months ended September 30, 2024 and 2023, we sold $24.5 million and $30.8 million in loan participations, respectively. All loans, whether or not we act as a participant, are underwritten to the same standards as all other loans we originate. We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations.

Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Our lending activity is heavily concentrated in the geographic market areas we serve, with the highest concentration in Tennessee. This geographic concentration subjects our loan portfolio to the general economic conditions within the state. The risks created by this concentration have been considered by management in the determination of the appropriateness of the allowance for credit losses on loans HFI. As of September 30, 2024 and December 31, 2023, there were no concentrations of loans exceeding 10% of total loans other than our geographic exposure to Tennessee and Alabama, as well as the categories of loans disclosed in the table above. We believe our loan portfolio is diversified relative to industry concentrations across the various loan portfolio categories. For additional details related to the concentrations within our loan portfolio, refer to the industry classification and collateral property type concentration tables detailed later in this section.

Banking regulators have established guidelines of less than 100% of tier 1 capital plus allowance for credit losses in construction lending and less than 300% of tier 1 capital plus allowance for credit losses in commercial real estate lending that management monitors as part of the risk management process. The construction concentration ratio is a percentage of the outstanding construction and land development loans to total tier 1 capital plus allowance for credit losses. The commercial real estate concentration ratio is a percentage of the outstanding balance of non-owner occupied commercial real estate, multifamily, and construction and land development loans to tier 1 capital plus allowance for credit losses. Management strives to operate within the thresholds set forth above. When our ratios are in excess of one or both of these guidelines, banking regulators generally require an increased level of monitoring in these lending areas by management.

The table below shows concentration ratios for the Bank and Company as of September 30, 2024 and December 31, 2023.


	As a percentage (%) of tier 1 capital plus allowance for credit losses
	FirstBank		FB Financial Corporation
September 30, 2024
Construction	69.3	%	67.8	%
Commercial real estate	244.5	%	239.1	%
December 31, 2023
Construction	93.3	%	91.2	%
Commercial real estate	265.1	%	259.0	%


Loan categories: The principal categories of our loans held for investment portfolio are discussed below:
Commercial and industrial loans.			Commercial and industrial loans are typically made to small and medium-sized manufacturing, wholesale, retail and service businesses, and farmers for working capital and operating needs and business expansions. This category also includes loans secured by manufactured housing receivables made primarily to manufactured housing communities. Commercial and industrial loans generally include lines of credit and loans with maturities of five years or less. Commercial and industrial loans are generally made with operating cash flows as the primary source of repayment, but may also include collateralization by inventory, accounts receivable, equipment and personal guarantees.








Construction loans.			Construction loans include commercial construction, land acquisition and land development loans and single-family interim construction loans to small and medium-sized businesses and individuals. These loans are generally secured by the land or the real property being built and are made based on our assessment of the value of the property on an as-completed basis and repayment depends upon project completion and sale, refinancing, or operation of the real estate.









1-4 family mortgage loans.			Our residential real estate 1-4 family mortgage loans are primarily made with respect to and secured by single family homes, including manufactured homes with real estate, which are both owner-occupied and investor owned. Repayment depends primarily upon the cash flow of the borrower as well as the value of the real estate collateral.




Residential line of credit loans.			Our residential line of credit loans are primarily revolving, open-end lines of credit secured by 1-4 residential properties. Repayment depends primarily upon the cash flow of the borrower as well as the value of the real estate collateral.


Multi-family residential loans.			Our multi-family residential loans are primarily secured by multi-family properties, such as apartments and condominium buildings. Repayment depends primarily upon the cash flow of the borrower as well as the value of the real estate collateral.



Commercial real estate owner-occupied loans.			Our commercial real estate owner-occupied loans include loans to finance commercial real estate owner occupied properties for various purposes including use as offices, warehouses, production facilities, health care facilities, retail centers, restaurants, churches and agricultural based facilities. Commercial real estate owner-occupied loans are typically repaid through the ongoing business operations of the borrower.






Commercial real estate non-owner occupied loans.			Our commercial real estate non-owner occupied loans include loans to finance commercial real estate investment properties for various purposes including use as offices, warehouses, health care facilities, hotels, mixed-use residential/commercial, manufactured housing communities, retail centers, multifamily properties, assisted living facilities and agricultural based facilities. Commercial real estate non-owner occupied loans are typically repaid with the funds received from the sale or refinancing of the property or rental income from such property.









Consumer and other loans.			Consumer and other loans include loans to individuals for personal, family and household purposes, including car, boat and other recreational vehicle loans, manufactured homes (without real estate) and personal lines of credit. Consumer loans are generally secured by vehicles and other household goods, with repayment depending primarily on the cash flow of the borrower. Other loans also include loans to states and political subdivisions in the U.S. and are repaid through tax revenues or refinancing.

As part of our lending policy and risk management activities, we track lending exposure of commercial and industrial and owner-occupied commercial real estate by industry classification (as defined by the North American Industry Classification System) and type to determine potential risks associated with industry concentrations, and if any risk issues could lead to additional credit loss exposure. The table below provides a summary of our commercial and industrial and owner-occupied commercial real estate portfolios by industry classification.


	September 30, 2024
(dollars in thousands)	Committed		Amount Outstanding		Nonperforming
Commercial and industrial
Real estate rental and leasing	$	508,255	$	298,075	$	466
Finance and insurance	407,479		270,974		—
Construction	386,956		105,519		4,997
Manufacturing	264,815		177,027		4,479
Information	192,980		132,659		—
Professional, scientific and technical services	186,531		102,860		2,331
Wholesale trade	174,878		92,282		151
Educational services	166,043		29,091		—
Other services (except public administration)	113,673		72,358		102
Retail trade	111,667		77,198		7,257
Administrative and support and waste management and remediation services	105,871		63,542		2,264
Transportation and warehousing	90,698		81,378		37
Health care and social assistance	84,012		53,490		520
Arts, entertainment and recreation	45,827		36,710		—
Management of companies and enterprises	44,537		26,221		—
Accommodation and food services	30,339		26,288		26
Other	88,937		43,143		428
Total	$	3,003,498	$	1,688,815	$	23,058

Commercial real estate owner-occupied
Real estate rental and leasing	$	236,083	$	221,943	$	—
Other services (except public administration)	195,278		191,731		3,865
Retail trade	183,710		179,210		—
Health care and social assistance	128,408		125,926		225
Manufacturing	120,042		116,877		60
Accommodation and food services	105,308		104,506		—
Transportation and warehousing	73,864		59,086		—
Construction	70,906		61,799		—
Wholesale trade	69,625		66,698		—
Professional, scientific and technical services	41,154		39,280		95
Arts, entertainment and recreation	36,195		33,759		—
Agriculture, forestry, fishing and hunting	26,798		25,144		644
Educational services	20,980		18,551		—
Management of companies and enterprises	18,639		16,769		—
Finance and insurance	17,926		17,520		2,668
Administrative and support and waste management and remediation services	15,149		13,483		546
Other	32,018		31,926		896
Total	$	1,392,083	$	1,324,208	$	8,999

Additionally, we track our lending exposure of non-owner occupied commercial real estate and construction by collateral property type to determine potential risks associated with collateral types, and if any risk issues could lead to additional credit loss exposure.

The table below provides a summary of our non-owner occupied commercial real estate and construction loan portfolios by collateral property type.


	September 30, 2024
(dollars in thousands)	Committed		Amount Outstanding		Nonperforming
Commercial real estate non-owner occupied
Retail	$	505,372	$	491,584	$	3,866
Office	357,751		346,093		23
Warehouse and industrial	328,025		310,647		—
Hotel	310,401		310,169		2,678
Assisted living and special care facilities	141,652		141,233		—
Self-storage	135,755		134,081		—
Land-mobile home park	112,683		108,770		—
Healthcare facility	83,663		83,308		—
Restaurants, bars and event venues	39,809		37,944		—
Recreation, sports and entertainment	30,357		30,357		—
Other	54,528		53,850		—
Total	$	2,099,996	$	2,048,036	$	6,567

Construction
Consumer:
Construction	$	168,485	$	120,225	$	2,751
Land	40,463		36,616		—
Commercial:
Land	279,959		235,560		1,654
Multi-family	217,827		139,848		—
Office	26,893		15,972		6,151
Recreation, sports and entertainment	18,252		5,836		—
Convenience store and gas station	17,192		12,681		—
Retail	14,389		13,267		—
Self-storage	11,149		5,544		—
Car wash	3,975		3,975		—
Other	24,466		8,868		—


Residential Development:
Construction	624,298		371,975		990
Land	109,182		76,006		—
Lots	33,353		33,353		—
Total	$	1,589,883	$	1,079,726	$	11,546

Loan maturity and sensitivities

The following table presents the contractual maturities of our loan portfolio as of September 30, 2024. Loans with scheduled maturities are reported in the maturity category in which the payment is due. Demand loans with no stated maturity and overdrafts are reported in the “due in 1 year or less” category. Loans that have adjustable rates are shown as amortizing to final maturity rather than when the interest rates are next subject to change. The tables do not include prepayment assumptions or scheduled repayments.


	September 30, 2024
Loan type (dollars in thousands)	Maturing in one year or less			Maturing in one to five years			Maturing in five to fifteen years			Maturing after fifteen years			Total
Commercial and industrial	$	737,069		$	822,003		$	128,991		$	752		$	1,688,815
Construction	612,612			404,083			60,638			2,393			1,079,726
Residential real estate:
1-to-4 family mortgage	84,252			463,065			214,711			850,003			1,612,031
Residential line of credit	60,311			99,751			430,859			128			591,049
Multi-family mortgage	79,684			430,987			114,795			28,722			654,188
Commercial real estate:
Owner-occupied	144,441			788,045			374,420			17,302			1,324,208
Non-owner occupied	182,661			1,191,033			661,681			12,661			2,048,036
Consumer and other	29,904			69,168			82,092			298,912			480,076
Total ($)	$	1,930,934		$	4,268,135		$	2,068,187		$	1,210,873		$	9,478,129
Total (%)	20.4		%	45.0		%	21.8		%	12.8		%	100.0		%

For loans due after one year or more, the following table presents the interest rate composition for loans outstanding as of September 30, 2024.


	September 30, 2024
Loan type (dollars in thousands)	Fixed interest rate			Floating interest rate			Total
Commercial and industrial	$	414,481		$	537,265		$	951,746
Construction	122,953			344,161			467,114
Residential real estate:
1-to-4 family mortgage	1,152,011			375,768			1,527,779
Residential line of credit	4,161			526,577			530,738
Multi-family mortgage	342,022			232,482			574,504
Commercial real estate:
Owner-occupied	832,662			347,105			1,179,767
Non-owner occupied	966,952			898,423			1,865,375
Consumer and other	424,680			25,492			450,172
Total ($)	$	4,259,922		$	3,287,273		$	7,547,195
Total (%)	56.4		%	43.6		%	100.0		%

The following table presents the contractual maturities of our loan portfolio segregated into fixed and floating interest rate loans as of September 30, 2024.


	September 30, 2024
Contractual maturity (dollars in thousands)	Fixed interest rate			Floating interest rate			Total
One year or less	$	550,570		$	1,380,364		$	1,930,934
One to five years	2,413,685			1,854,450			4,268,135
Five to fifteen years	989,251			1,078,936			2,068,187
Over fifteen years	856,986			353,887			1,210,873
Total ($)	$	4,810,492		$	4,667,637		$	9,478,129
Total (%)	50.8		%	49.2		%	100.0		%

Of the loans shown above with floating interest rates as of September 30, 2024, many have interest rate floors as follows:


Loans with interest rate floors (dollars in thousands)	Maturing in one year or less		Weighted average level of support (bps)	Maturing in one to five years		Weighted average level of support (bps)	Maturing in five years to fifteen years		Weighted average level of support (bps)	Maturing after fifteen years		Weighted average level of support (bps)	Total		Weighted average level of support (bps)
Loans with current rates above floors:

1-25 bps	$	1,120	25	$	9,395	20	$	—	—	$	1,950	25	$	12,465	22
26-50 bps	14,490		50	18,335		36	12,642		47	—		—	45,467		43
51-75 bps	2,555		75	18,515		66	2,774		68	3,525		63	27,369		67
76-100 bps	14,260		100	35,706		90	6,784		100	1,749		83	58,499		94
101-200 bps	75,588		179	174,774		162	57,647		161	9,395		164	317,404		166
201-300 bps	114,805		259	226,774		252	138,872		248	25,903		244	506,354		252
301-400 bps	368,409		376	268,431		363	184,998		360	33,831		367	855,669		368
401-500 bps	431,013		459	478,397		462	433,448		456	65,845		454	1,408,703		459
501-600 bps	9,737		525	7,492		539	26,080		553	178,363		517	221,672		522
601 bps and above	452		687	21,512		697	8,792		690	2,178		792	32,934		370
Total loans with current rates above floors	$	1,032,429	375	$	1,259,331	340	$	872,037	378	$	322,739	447	$	3,486,536	370
Loans at interest rate floors providing support:
1-25 bps	$	—	—	$	16	10	$	531	15	$	—	—	$	547	15
26-50 bps	900		50	—		—	393		50	132		50	1,425		50
51-75 bps	399		75	38		65	—		—	—		—	437		74
76-100 bps	—		—	1,888		100	—		—	—		—	1,888		100
101-200 bps	—		—	698		136	—		—	—		—	698		136




Total loans at interest rate floors providing support	$	1,299	58	$	2,640	108	$	924	30	$	132	50	$	4,995	79

Asset quality

In order to operate with a sound risk profile, we focus on originating loans that we believe to be of high quality. We have established loan approval policies and procedures to assist us in maintaining the overall quality of our loan portfolio. When delinquencies in our loans exist, we rigorously monitor the levels of such delinquencies for any negative or adverse trends. From time to time, we may modify loans to extend the term or make other concessions, including interest rate reduction, a term extension, principal forgiveness, payment deferral, or a combination thereof, to help a borrower with a deteriorating financial condition stay current on their loan and to avoid foreclosure. Furthermore, we are committed to collecting on all of our loans. This practice leads to higher recoveries in the long-term.

Nonperforming assets

Our nonperforming assets consist of nonperforming loans, other real estate owned and other repossessed non-earning assets. As of September 30, 2024 and December 31, 2023, we had $127.3 million and $86.5 million, respectively, in nonperforming assets. Nonperforming loans are those on which the accrual of interest has stopped, as well as loans that are contractually 90 days past due on which interest continues to accrue. Accrued interest receivable written off as an adjustment to interest income amounted to $0.1 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively. Accrued interest receivable written off as an adjustment to interest income amounted to $0.5 million and $0.7 million for the nine months ended September 30, 2024 and 2023, respectively. Additionally, we had net interest recoveries on nonperforming assets previously charged off of $0.1 million and $0.6 million for the three months ended September 30, 2024 and 2023, respectively, and $1.1 million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively.

Nonperforming loans HFI increased by $29.9 million to $90.8 million as of September 30, 2024 compared to $60.9 million as of December 31, 2023. The increase in nonperforming loans primarily occurred in our 1-4 family mortgage residential real estate and construction portfolios.

As of September 30, 2024 and December 31, 2023, we had $30.5 million and $21.2 million, respectively, of delinquent GNMA optional repurchase loans previously sold included on our consolidated balance sheets in loans held for sale. These are considered nonperforming assets as we do not earn any interest on the unexercised option to repurchase these loans.

As of both September 30, 2024 and December 31, 2023, other real estate owned included $0.1 million of excess land and facilities held for sale resulting from our prior acquisitions. Other repossessed assets also included other repossessed non-real estate amounting to $2.2 million and $1.1 million as of September 30, 2024 and December 31, 2023, respectively.

The following table provides details of our nonperforming assets, the ratio of such loans and other nonperforming assets to total assets, and certain other related information as of the dates presented:


	September 30,						December 31,
(dollars in thousands)	2024			2023			2023
Loan Type:
Commercial and industrial	$	23,058		$	12,108		$	21,730
Construction	11,546			2,454			3,037
Residential real estate:
1-to-4 family mortgage	23,848			18,020			16,073
Residential line of credit	1,558			2,490			2,473
Multi-family mortgage	25			35			32
Commercial real estate:
Owner-occupied	8,999			3,521			3,188
Non-owner occupied	6,567			5,402			3,351
Consumer and other	15,234			10,497			11,039
Total nonperforming loans HFI	$	90,835		$	54,527		$	60,923
Commercial loans held for sale	—			9,260			—
Mortgage loans held for sale (1)	30,537			22,074			21,229
Other real estate owned	3,779			1,504			3,192
Other repossessed assets	2,182			1,300			1,139
Total nonperforming assets	$	127,333		$	88,665		$	86,483
Nonperforming loans HFI as a percentage of total loans HFI	0.96		%	0.59		%	0.65		%
Nonperforming assets as a percentage of total assets	0.99		%	0.71		%	0.69		%
Nonaccrual loans HFI as a percentage of loans HFI	0.68		%	0.46		%	0.51		%


(1) Represents optional right to repurchase government guaranteed GNMA mortgage loans previously sold that have become past due greater than 90 days.

We have evaluated our loans HFI classified as nonperforming and believe all nonperforming loans have been adequately reserved for in the allowance for credit losses on loans HFI as of September 30, 2024 and December 31, 2023. Management also continually monitors past due loans for potential credit quality deterioration. Loans not considered nonperforming include loans 30-89 days past due that continue to accrue interest amounting to $40.5 million at September 30, 2024 as compared to $47.0 million at December 31, 2023. The decrease from December 31, 2023 to September 30, 2024 primarily occurred within our construction and commercial real estate non-owner occupied portfolios.

Allowance for credit losses

The allowance for credit losses represents the portion of the loan’s amortized cost basis that we do not expect to collect due to credit losses over the loan’s life, considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions. Loan losses are charged against the allowance when we believe the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses is based on the loan’s amortized cost basis, excluding accrued interest receivable, as we promptly charge off uncollectible accrued interest receivable.

We calculate our expected credit loss using a lifetime loss rate methodology. We utilize probability-weighted forecasts, which consider multiple macroeconomic variables from Moody’s that are applicable to each type of loan. See Note 1, “Basis of presentation,” in the notes to our consolidated financial statements in our Annual Report that was filed with the SEC on February 27, 2024 for additional information regarding our methodology.

The following table presents the allocation of the allowance for credit losses on loans HFI by loan category as well as the ratio of loans by loan category compared to the total loan portfolio as of the dates indicated:


	September 30,		December 31,

	2024		2023
(dollars in thousands)	Amount		ACL as a % of loans HFI category		Amount		ACL as a % of loans HFI category

Loan Type:
Commercial and industrial	$	24,133	1.43	%	$	19,599	1.14	%
Construction	30,558		2.83	%	35,372		2.53	%
Residential real estate:
1-to-4 family mortgage	25,979		1.61	%	26,505		1.69	%
Residential line of credit	10,724		1.81	%	9,468		1.78	%
Multi-family mortgage	9,644		1.47	%	8,842		1.46	%
Commercial real estate:
Owner-occupied	11,567		0.87	%	10,653		0.86	%
Non-owner occupied	24,641		1.20	%	22,965		1.18	%
Consumer and other	19,014		3.96	%	16,922		4.11	%
Total allowance for credit losses on loans HFI	$	156,260	1.65	%	$	150,326	1.60	%

The following table summarizes activity in our allowance for credit losses on loans HFI during the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended December 31,
(dollars in thousands)	2024			2023			2024			2023			2023
Allowance for credit losses on loans HFI at beginning of period	$	155,055		$	140,664		$	150,326		$	134,192		$	134,192
Charge-offs:
Commercial and industrial	(90)			(154)			(159)			(211)			(462)
Construction	—			—			(92)			—			—
Residential real estate:
1-to-4 family mortgage	(2)			(4)			(295)			(36)			(46)
Residential line of credit	(53)			—			(73)			—			—

Commercial real estate:
Owner-occupied	—			—			—			(144)			(144)

Consumer and other	(770)			(638)			(2,136)			(2,064)			(2,851)
Total charge-offs	$	(915)		$	(796)		$	(2,755)		$	(2,455)		$	(3,503)
Recoveries:
Commercial and industrial	$	23		$	112		$	57		$	192		$	273
Construction	—			—			—			10			10
Residential real estate:
1-to-4 family mortgage	9			16			75			56			100
Residential line of credit	18			1			18			1			1

Commercial real estate:
Owner-occupied	12			13			240			95			109
Non-owner occupied	—			—			—			—			1,833
Consumer and other	202			93			651			440			573
Total recoveries	$	264		$	235		$	1,041		$	794		$	2,899
Net charge-offs	(651)			(561)			(1,714)			(1,661)			(604)
Provision for credit losses on loans HFI	1,856			6,031			7,648			13,603			16,738


Allowance for credit losses on loans HFI at the end of period	$	156,260		$	146,134		$	156,260		$	146,134		$	150,326
Ratio of annualized net charge-offs during the period to average loans outstanding during the period	(0.03)		%	(0.02)		%	(0.02)		%	(0.02)		%	(0.01)		%
Allowance for credit losses on loans HFI as a percentage of loans	1.65		%	1.57		%	1.65		%	1.57		%	1.60		%
Allowance for credit losses on loans HFI as a percentage of nonaccrual loans HFI	241.9		%	340.8		%	241.9		%	340.8		%	311.7		%
Allowance for credit losses on loans HFI as a percentage of nonperforming loans	172.0		%	268.0		%	172.0		%	268.0		%	246.7		%

The following tables details our provision for (reversal of) credit losses on loans HFI and net (charge-offs) recoveries to average loans HFI outstanding by loan category during the periods indicated:


	Provision for (reversal of) credit losses on loans HFI		Net (charge-offs) recoveries		Average loans HFI		Ratio of annualized net (charge-offs) recoveries to average loans HFI
(dollars in thousands)
Three months ended September 30, 2024
Commercial and industrial	$	1,670	$	(67)	$	1,640,508	(0.02)	%
Construction	(3,612)		—		1,143,612		—	%
Residential real estate:
1-to-4 family mortgage	341		7		1,594,875		—	%
Residential line of credit	662		(35)		573,962		(0.02)	%
Multi-family mortgage	834		—		617,951		—	%
Commercial real estate:
Owner-occupied	243		12		1,287,095		—	%
Non-owner occupied	98		—		2,045,146		—	%
Consumer and other	1,620		(568)		459,788		(0.49)	%
Total	$	1,856	$	(651)	$	9,362,937	(0.03)	%
Three months ended September 30, 2023
Commercial and industrial	$	6,293	$	(42)	$	1,670,570	(0.01)	%
Construction	(2,025)		—		1,576,975		—	%
Residential real estate:
1-to-4 family mortgage	(1,724)		12		1,549,929		—	%
Residential line of credit	(23)		1		508,509		—	%
Multi-family mortgage	20		—		513,579		—	%
Commercial real estate:
Owner-occupied	2,046		13		1,180,755		—	%
Non-owner occupied	(130)		—		1,891,470		—	%
Consumer and other	1,574		(545)		388,743		(0.56)	%
Total	$	6,031	$	(561)	$	9,280,530	(0.02)	%
Nine Months Ended September 30, 2024
Commercial and industrial	$	4,636	$	(102)	$	1,646,771	(0.01)	%
Construction	(4,722)		(92)		1,231,310		(0.01)	%
Residential real estate:
1-to-4 family mortgage	(306)		(220)		1,581,697		(0.02)	%
Residential line of credit	1,311		(55)		554,235		(0.01)	%
Multi-family mortgage	802		—		621,897		—	%
Commercial real estate:
Owner-occupied	674		240		1,257,455		0.03	%
Non-owner occupied	1,676		—		2,007,605		—	%
Consumer and other	3,577		(1,485)		436,972		(0.45)	%
Total	$	7,648	$	(1,714)	$	9,337,942	(0.02)	%
Nine Months Ended September 30, 2023
Commercial and industrial	$	6,475	$	(19)	$	1,674,103	—	%
Construction	(1,923)		10		1,650,585		—	%
Residential real estate:
1-to-4 family mortgage	(466)		20		1,559,052		—	%
Residential line of credit	1,668		1		503,558		—	%
Multi-family mortgage	358		—		499,082		—	%
Commercial real estate:
Owner-occupied	2,792		(49)		1,153,056		(0.01)	%
Non-owner occupied	831		—		1,922,824		—	%
Consumer and other	3,868		(1,624)		375,672		(0.58)	%
Total	$	13,603	$	(1,661)	$	9,337,932	(0.02)	%


	Provision for (reversal of) credit losses on loans HFI		Net (charge-offs) recoveries		Average loans HFI		Ratio of annualized net (charge-offs) recoveries to average loans HFI
(dollars in thousands)
Year Ended December 31, 2023
Commercial and industrial	$	8,682	$	(189)	$	1,678,832	(0.01)	%
Construction	(4,446)		10		1,594,317		—	%
Residential real estate:
1-to-4 family mortgage	310		54		1,558,477		—	%
Residential line of credit	1,973		1		507,884		—	%
Multi-family mortgage	2,352		—		519,554		—	%
Commercial real estate:
Owner occupied	2,905		(35)		1,169,680		—	%
Non-owner occupied	(784)		1,833		1,925,759		0.10	%
Consumer and other	5,746		(2,278)		381,474		(0.60)	%
Total	$	16,738	$	(604)	$	9,335,977	(0.01)	%

The ACL on loans HFI was $156.3 million and $150.3 million and represented 1.65% and 1.60% of loans HFI as of September 30, 2024 and December 31, 2023, respectively. For further information related to the change in the ACL refer to “Provision for credit losses” section herein and Note 3, “Loans and allowance for credit losses on loans HFI” in the notes to our consolidated financial statements.

For the three months ended September 30, 2024, we experienced net charge-offs of $0.7 million, or 0.03% of average loans HFI, compared to net charge-offs of $0.6 million, or 0.02% for the three months ended September 30, 2023. For both the nine months ended September 30, 2024 and 2023, we experienced net charge-offs of $1.7 million, or 0.02% of average loans HFI. Our ratio of total nonperforming loans HFI as a percentage of total loans HFI increased by 31 basis points to 0.96% as of September 30, 2024 compared to December 31, 2023.

Management has made an effort to reduce exposure to construction lending during three and nine months ended September 30, 2024. The reduction in construction balances and related allowance offset some of the additional allowance needed related to growth in other loan segments.

We also maintain an allowance for credit losses on unfunded commitments, which decreased to $6.0 million as of September 30, 2024 from $8.8 million as of December 31, 2023 due to a 6.26% or $181.3 million decrease in unfunded loan commitments during the period. Notably, there was a $215.7 million decrease in unfunded loan commitments in our construction segment, which resulted in a $2.7 million decrease in required ACL related to unfunded construction commitments. Our unfunded commitments in our construction loan category decreased as a result of management's concentrated effort to reduce commitments in specific categories judged to be inherently higher risk considering the current and projected economic conditions. The decrease in ACL related to unfunded construction commitment was primarily offset by increases in our ACL related to unfunded commercial and industrial and residential line of credit commitments.

Loans held for sale

Mortgage loans held for sale consisted of $72.6 million of residential real estate mortgage loans in the process of being sold to third-party private investors or government sponsored agencies and $30.5 million of GNMA optional repurchase loans. This compares to $46.6 million of residential real estate mortgage loans in the process of being sold to third-party private investors or government sponsored agencies and $21.2 million of GNMA optional repurchase loans as of December 31, 2023.

Deposits

Deposits represent the Bank’s primary source of funding. We continue to focus on growing core customer deposits through our relationship driven banking philosophy, community-focused marketing programs and our treasury management services.

Total deposits were $10.98 billion and $10.55 billion as of September 30, 2024 and December 31, 2023, respectively. Noninterest-bearing deposits at September 30, 2024 and December 31, 2023 were $2.23 billion and $2.22 billion, respectively, while interest-bearing deposits were $8.75 billion and $8.33 billion at September 30, 2024 and December 31, 2023, respectively.

Our noninterest-bearing deposits include mortgage escrow deposits which increased to $126.9 million as of September 30, 2024 from $63.6 million as of December 31, 2023. This increase was slightly offset by a migration to interest-yielding products such as interest-bearing checking deposits, which increased by $249.8 million from December 31, 2023.

In addition to customers seeking higher rates on noninterest-bearing deposit balances, customers also migrated from money market account balances to interest-bearing checking accounts. Money market and savings deposits decreased by $106.4 million from December 31, 2023.

Our deposits from municipal and governmental entities, also known as public funds, decreased by $184.6 million during the period within the interest-bearing checking category. The decrease in public funds was due to management’s decision to not renew certain maturing public deposits due to rising costs of these deposits.

Additionally, customer time deposits decreased by $91.7 million from December 31, 2023 which was largely driven by three large depositor relationship customers shifting deposits away from the bank for higher yields; however, each of the customers still maintain a relationship with us.

Brokered and internet time deposits increased by $368.4 million to $519.2 million as of September 30, 2024 compared to December 31, 2023. The increase was driven by an issuance of brokered deposits of $369.1 million at an average coupon of 4.15% as we took advantage of favorable relative terms available during the quarter.

Our deposit base may include certain deposits from related parties as disclosed within Note 14, “Related party transactions” in the notes to our consolidated financial statements included in this Report.

As a result of the changing interest rate environment and the shift in our deposit composition, we have experienced an increase in our cost of interest-bearing deposits and a decrease in our total deposits. Average deposit balances by type, together with the average rates per period are reflected in the average balance sheet amounts, interest paid, and rate analysis tables included in this management’s discussion and analysis under the subheading “Results of operations” discussion.

The following table sets forth the distribution by type of our deposit accounts as of the dates indicated:


	September 30,						December 31,
	2024						2023
(dollars in thousands)	Amount		% of total deposits		Average rate (1)		Amount		% of total deposits		Average rate (1)
Deposit Type
Noninterest-bearing demand	$	2,226,144	20	%	—	%	$	2,218,382	21	%	—	%
Interest-bearing demand	2,754,253		25	%	3.09	%	2,504,421		24	%	2.86	%
Money market	3,744,610		34	%	3.93	%	3,819,814		36	%	3.53	%
Savings deposits	353,886		3	%	0.07	%	385,037		4	%	0.06	%
Customer time deposits	1,378,118		13	%	3.96	%	1,469,811		14	%	3.15	%
Brokered and internet time deposits	519,200		5	%	5.11	%	150,822		1	%	5.27	%
Total deposits	$	10,976,211	100	%	2.79	%	$	10,548,287	100	%	2.39	%



Customer Time Deposits (2)
0.00-1.00%	$	32,899	3	%			$	62,464	4	%
1.01-2.00%	70,979		5	%			114,521		8	%
2.01-3.00%	40,861		3	%			51,346		4	%
3.01-4.00%	127,294		9	%			268,550		18	%
4.01-5.00%	1,021,880		74	%			812,781		55	%
Above 5.00%	84,205		6	%			160,149		11	%
Total customer time deposits	$	1,378,118	100	%			$	1,469,811	100	%
Brokered and Internet Time Deposits (2)
0.00-1.00%	$	—	—	%			$	99	—	%
1.01-2.00%	—		—	%			—		—	%
2.01-3.00%	—		—	%			248		—	%
3.01-4.00%	169,088		33	%			—		—	%
4.01-5.00%	200,000		38	%			—		—	%
Above 5.00%	150,112		29	%			150,475		100	%
Total brokered and internet time deposits	$	519,200	100	%			$	150,822	100	%
Total time deposits	$	1,897,318					$	1,620,633

(1) Average rates are presented for the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively.

(2) Rates are presented as of period-end.

Further details related to our deposit customer base is presented below as of the dates indicated:


	September 30,				December 31,

	2024				2023
(dollars in thousands)	Amount		% of total deposits		Amount		% of total deposits
Deposits by customer segment (1)
Consumer	$	4,676,492	43	%	$	4,880,890	46	%
Commercial	4,886,660		45	%	4,069,724		39	%
Public	1,413,059		12	%	1,597,673		15	%
Total deposits	$	10,976,211	100	%	$	10,548,287	100	%

(1) Segments are determined based on the customer account level.

The tables below set forth maturity information on time deposits and amounts in excess of the FDIC insurance limit as of September 30, 2024:



(dollars in thousands)	Amount		Weighted average interest rate at period end
Time deposits of $250 and less
Months to maturity:
Three or less	$	335,506	4.19	%
Over Three to Six	351,813		4.25	%
Over Six to Twelve	438,118		4.14	%
Over Twelve	319,260		3.75	%
Total	$	1,444,697	4.09	%

Time deposits of greater than $250
Months to maturity:
Three or less	$	126,953	4.51	%
Over Three to Six	125,210		4.46	%
Over Six to Twelve	174,473		4.30	%
Over Twelve	25,985		3.58	%
Total	$	452,621	4.36	%

Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Collateralized deposits are included within our total uninsured deposits.

Further details related to our estimated insured or collateralized deposits and uninsured and uncollateralized deposits is presented below as of the dates indicated:


	September 30,			December 31,

	2024			2023
Estimated insured or collateralized deposits (1)	$	7,654,786		$	7,414,224
Estimated uninsured and uncollateralized deposits (1)	$	3,321,425		$	3,134,063
Estimated uninsured and uncollateralized deposits as a % of total deposits (1)	30.3		%	29.7		%
Estimated uninsured deposits (2)	$	4,792,505		$	4,899,349

(1) Amounts are shown on a fully consolidated basis and exclude deposits of affiliates that are eliminated in consolidation.

(2) Amounts are shown on an unconsolidated basis consistent with regulatory reporting requirements.

Other earning assets

Securities purchased under agreements to resell ( “ reverse repurchase agreements ” )

We enter into agreements with certain customers to purchase investment securities under agreements to resell at specific dates in the future. This investment deploys some of our liquidity position into an instrument that improves the return on those funds. Securities purchased under agreements to resell totaled $60.2 million and $47.8 million at September 30, 2024 and December 31, 2023, respectively.

Federal Funds Sold

Federal funds may fluctuate from period to period depending upon our liquidity position at the time and our strategy for deploying liquidity. Federal funds sold totaled $37.1 million and $35.5 million at September 30, 2024 and December 31, 2023, respectively.

AFS debt securities portfolio

Our investment portfolio objectives include maximizing total return after other primary objectives are achieved such as, but not limited to, providing liquidity, capital preservation, and pledging collateral for certain deposit types, various lines of credit and other borrowings. The investment objectives guide the portfolio allocation among security types, maturities, and other attributes.

The fair value of our AFS debt securities portfolio was $1.57 billion and $1.47 billion as of September 30, 2024 and December 31, 2023, respectively. Included in the fair value of AFS debt securities were net unrealized losses of $105.2 million and $186.8 million as of September 30, 2024 and December 31, 2023, respectively. Current net unrealized losses are due to interest rate increases.

During the three months ended September 30, 2024, we sold $318.5 million of AFS debt securities with a weighted average yield of 2.25% and reinvested the proceeds of the sales into AFS securities with a weighted average yield of 5.25%. The sales resulted in a loss on securities of $40.2 million. We primarily sold low yielding mortgage-backed securities and municipal securities. Including the reinvestment of these proceeds into higher yielding U.S. government agency and mortgage-backed securities, we purchased $457.4 million of AFS debt securities during the three months ended September 30, 2024. Maturities, prepayments and calls of AFS debt securities totaled $89.9 million for the three months ended September 30, 2024.

During the nine months ended September 30, 2024, we sold $526.4 million of AFS debt securities, resulting in a loss on securities of $56.4 million. We primarily sold fixed rate, deeply discounted mortgage bonds and low yielding municipal bonds and reinvested the proceeds into U.S. government agency AFS debt securities and a blend of fixed and floating rate securities to achieve the best accretion profile for the Bank. Including the reinvestment of these proceeds, we purchased $824.0 million of AFS debt securities during the nine months ended September 30, 2024. Maturities, prepayments and calls of AFS debt securities totaled $224.1 million for the nine months ended September 30, 2024.

During the three and nine months ended September 30, 2023, we sold $76.6 million of AFS debt securities, contributing to a net loss on securities of $14.2 million. During the three and nine months ended September 30, 2023, we purchased $92.9 million and $93.8 million of AFS debt securities, respectively. During the three and nine months ended September 30, 2023, maturities, prepayments and calls of AFS debt securities totaled $33.0 million and $91.4 million, respectively.

The following table sets forth the fair value, scheduled maturities and weighted average yields for our AFS debt securities portfolio as of the dates indicated below:


	September 30,						December 31,

	2024						2023
(dollars in thousands)	Fair value		% of total investment securities		Weighted average yield (1)		Fair value		% of total investment securities		Weighted average yield (1)
U.S. Treasury securities:
Maturing within one year	$	—	—	%	—	%	$	61,466	4.2	%	2.50	%
Maturing in one to five years	—		—	%	—	%	47,030		3.2	%	1.59	%
Maturing in five to ten years	—		—	%	—	%	—		—	%	—	%
Maturing after ten years	—		—	%	—	%	—		—	%	—	%
Total U.S. Treasury securities	—		—	%	—	%	108,496		7.4	%	2.10	%
U.S. government agency securities:
Maturing within one year	—		—	%	—	%	—		—	%	—	%
Maturing in one to five years	—		—	%	—	%	13,094		0.9	%	1.96	%
Maturing in five to ten years	213,073		13.6	%	5.76	%	6,000		0.4	%	6.40	%
Maturing after ten years	303,760		19.4	%	5.95	%	184,862		12.6	%	6.23	%
Total U.S. government agency securities	516,833		33.0	%	5.87	%	203,956		13.9	%	5.96	%
Municipal securities:
Maturing within one year	1,892		0.1	%	3.14	%	2,813		0.2	%	2.23	%
Maturing in one to five years	3,161		0.2	%	3.29	%	11,677		0.8	%	5.85	%
Maturing in five to ten years	15,403		1.0	%	3.22	%	40,304		2.7	%	3.60	%
Maturing after ten years	133,773		8.5	%	2.91	%	187,469		12.7	%	2.94	%
Total municipal securities	154,229		9.8	%	2.95	%	242,263		16.4	%	3.00	%
Mortgage-backed securities - residential and commercial:
Maturing within one year	2,226		0.1	%	3.35	%	126		—	%	1.57	%
Maturing in one to five years	356		—	%	2.16	%	3,239		0.2	%	2.91	%
Maturing in five to ten years	14,878		0.9	%	2.77	%	33,121		2.3	%	2.97	%
Maturing after ten years	878,418		56.1	%	3.31	%	877,446		59.6	%	1.86	%
Total mortgage-backed securities - residential and commercial	895,878		57.1	%	3.31	%	913,932		62.1	%	1.90	%






Corporate securities:
Maturing within one year	—		—	%	—	%	—		—	%	—	%
Maturing in one to five years	982		0.1	%	2.78	%	—		—	%	—	%
Maturing in five to ten years	—		—	%	—	%	3,326		0.2	%	4.33	%
Maturing after ten years	—		—	%	—	%	—		—	%	—	%
Total corporate securities	982		0.1	%	2.78	%	3,326		0.2	%	4.33	%
Total AFS debt securities	$	1,567,922	100.0	%	4.12	%	$	1,471,973	100.0	%	2.66	%

(1) Yields on a tax-equivalent basis.

Borrowed funds

Deposits are the primary source of funds for our lending activities and general business purposes. However, we may also obtain advances from the FHLB, borrow from the Federal Reserve’s Discount Window, one-off borrowing programs from the Federal Reserve, purchase federal funds and engage in overnight borrowing with correspondent banks, or enter into client repurchase agreements. We also use these sources of funds as part of our asset liability management process to control our long-term interest rate risk exposure, even if it may increase our short-term cost of funds.

Our level of short-term borrowing can fluctuate on a daily basis depending on funding needs and the sources of funds to satisfy those needs, in addition to the overall interest rate environment and cost of public funds.

Securities sold under agreements to repurchase and federal funds purchased

We enter into agreements with certain customers to sell certain securities under agreements to repurchase the security the following day. These agreements are made to provide customers with comprehensive treasury management products

as a short-term return for their excess funds. Securities sold under agreements to repurchase totaled $19.7 million and $19.3 million at September 30, 2024 and December 31, 2023, respectively.

We also maintain lines with certain correspondent banks that provide borrowing capacity in the form of federal funds purchased. Federal funds purchased are short-term borrowings that typically mature within one to ninety days. Borrowings against these lines (i.e., federal funds purchased) totaled $89.4 million as of December 31, 2023. There were no such borrowings as of September 30, 2024.

FHLB short-term advances

As a member of the FHLB system, we may utilize advances from the FHLB in order to provide additional liquidity and funding. Under these short-term agreements, we maintain a line of credit that as of September 30, 2024 and December 31, 2023 had total borrowing capacity of $1.36 billion and $1.76 billion, respectively. As of September 30, 2024 and December 31, 2023, we had qualifying loans pledged as collateral securing these lines amounting to $2.53 billion and $3.01 billion, respectively. There were no FHLB advances outstanding as of September 30, 2024 or December 31, 2023.

Bank Term Funding Program

In March 2023, the Federal Reserve established the Bank Term Funding Program to make available funding to eligible depository institutions in order to help assure they have the ability to meet the needs of their depositors following the March 2023 high-profile bank failures. The program allows for advances for up to one year secured by eligible high-quality securities at par value extended at the one-year overnight index swap rate, plus 10 basis points, as of the day the advance is made. The interest rate is fixed for the term of the advance and there are no prepayment penalties. The BTFP ceased extending new borrowings on March 11, 2024. As of December 31, 2023, we had outstanding borrowings of $130.0 million under the BTFP at a borrowing rate of 4.85% with a maturity date of December 26, 2024. During the three months ended September 30, 2024, we repaid the $130.0 million borrowings in full.

Subordinated debt

During the year ended December 31, 2003, we formed two separate trusts which issued $9.0 million and $21.0 million of floating rate trust preferred securities as part of a pooled offering of such securities. We issued junior subordinated debentures of $9.3 million, which included proceeds of common securities which we purchased for $0.3 million, and junior subordinated debentures of $21.7 million which included proceeds of common securities of $0.7 million. The trusts were created for the sole purpose of issuing 30-year capital trust preferred securities to fund the purchase of junior subordinated debentures issued by us. Both issuances were to the trusts in exchange for the proceeds of the securities offerings, which represent the sole asset of the trusts.

Additionally, during the year ended December 31, 2020, we placed $100.0 million of ten year fixed-to-floating rate subordinated notes, maturing September 1, 2030.

Further information related to our subordinated debt as of September 30, 2024 is detailed below:

(dollars in thousands)

Year established

Maturity

Call date

Total debt outstanding

Interest rate

Coupon structure

Subordinated debt issued by trust preferred securities:

FBK Trust I (1)

2003

06/09/2033

6/09/2008

9,280

8.12%

3-month SOFR plus 3.51%

FBK Trust II (1)

2003

06/26/2033

6/26/2008

21,650

8.07%

3-month SOFR plus 3.41%

Additional subordinated debt:

FBK subordinated debt I (2)

2020

09/01/2030

9/1/2025

100,000

4.50%

Semi-annual fixed (3)

Unamortized debt issuance costs

(322)

Total subordinated debt, net

130,608

(1)The Company classifies $30.0 million of the Trusts' subordinated debt as Tier 1 capital.

(2)The Company classifies the issuance, net of unamortized issuance costs as Tier 2 capital, which will be phased out 20% per year in the final five years before maturity.

(3)Beginning on September 1, 2025 the coupon structure migrates to the 3-month SOFR plus a spread of 439 basis points through the end of the term of the debenture.

Other borrowings

Other borrowings on our consolidated balance sheets includes our finance lease liability totaling $1.3 million as of both September 30, 2024 and December 31, 2023. In addition, other borrowings on our consolidated balance sheets include

guaranteed rebooked GNMA loans previously sold that have become past due over 90 days and are eligible for repurchase totaling $30.5 million and $21.2 million as of September 30, 2024 and December 31, 2023, respectively. See Note 5, “Leases” and Note 10, “Fair value of financial instruments” within the notes to our consolidated financial statements herein for additional information regarding our finance lease and guaranteed GNMA loans eligible for repurchase, respectively.

Liquidity and capital resources

We are expected to maintain adequate liquidity at the Bank to meet the cash flow requirements of clients who may be either depositors wishing to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. Our Liquidity Policy is intended to cause the Bank to maintain adequate liquidity and, therefore, enhance our ability to raise funds to support asset growth, meet deposit withdrawals and lending needs and otherwise sustain our operations. We accomplish this through management of the maturities of our interest-earning assets and interest-bearing liabilities. We believe that our present position is adequate to meet our current and future liquidity needs.

We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all of our short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of clients, while maintaining an appropriate balance between assets and liabilities to optimize our net interest margin. We also monitor our liquidity requirements in light of interest rate trends, changes in the economy and the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits.

As part of our liquidity management strategy, we focus on minimizing our costs of liquidity and attempt to decrease these costs by growing our noninterest-bearing and other low-cost deposits, while replacing higher cost funding sources. While we do not control the types of deposit instruments our clients choose, we do influence those choices with the rates and the deposit specials we offer. Increasing interest rates generally attracts customers to higher cost interest-bearing deposit products as they seek to maximize their yield.

Our investment portfolio is another alternative for meeting liquidity needs. These assets generally have readily available markets that offer conversions to cash as needed. AFS debt securities within our investment portfolio are used to secure government, public, trust and other deposits and as collateral for short-term borrowings, letters of credit and derivative instruments. As of September 30, 2024 and December 31, 2023, we had pledged securities related to these items with carrying values of $1.06 billion and $0.93 billion, respectively.

Additional sources of liquidity include federal funds purchased, repurchase agreements, FHLB borrowings, and lines of credit. Interest is charged at the prevailing market rate on federal funds purchased, reverse repurchase agreements and FHLB advances. Overnight advances obtained from the FHLB are used primarily to meet day to day liquidity needs, particularly when the cost of such borrowing compares favorably to the rates that we would be required to pay to attract deposits. There were no FHLB advances outstanding as of September 30, 2024 or December 31, 2023. As of September 30, 2024, we had the ability to borrow $1.36 billion through these channels with remaining capacity of $1.36 billion. As of December 31, 2023, there was $1.76 billion available to borrow against with a remaining capacity of $1.30 billion.

We also maintained unsecured lines of credit with other commercial banks totaling $370.0 million as of both September 30, 2024 and December 31, 2023. These are unsecured, uncommitted lines of credit typically maturing at various times within the next twelve months. Borrowings against these lines (i.e., federal funds purchased) totaled $89.4 million as of December 31, 2023. There were no such borrowings against these lines as of September 30, 2024. As of both September 30, 2024 and December 31, 2023, we also had $50.0 million available through the IntraFi network, which allows us to offer banking customers access to FDIC insurance protection on deposits through our Bank which exceed FDIC insurance limits.

Our current on-balance sheet liquidity and available sources of liquidity are summarized in the table below:


	September 30,			December 31,

(dollars in thousands)	2024			2023
Current on-balance sheet liquidity:
Cash and cash equivalents	$	951,750		$	810,932
Unpledged AFS debt securities	510,538			542,427

Total on-balance sheet liquidity	$	1,462,288		$	1,353,359

Available sources of liquidity:
Unsecured borrowing capacity (1)	$	3,199,575		$	3,350,026
FHLB remaining borrowing capacity	1,355,884			1,297,702
Federal Reserve discount window	2,133,951			2,431,084
Total available sources of liquidity	$	6,689,410		$	7,078,812

On-balance sheet liquidity as a percentage of total assets	11.3		%	10.7		%
On-balance sheet liquidity and available sources of liquidity as a percentage of estimated uninsured and uncollateralized deposits (2)	245.4		%	269.0		%

(1) Includes capacity available per internal policy in the form of brokered deposits and unsecured lines of credit.

(2) Amounts are shown on a fully consolidated basis and exclude deposits of affiliates that are eliminated in consolidation.

The Company also maintains the ability to access capital markets to meet its liquidity needs. The Company may utilize various methods to raise capital, including through the sale of common stock, preferred stock, debt securities, warrants, rights, or other securities. Specific terms and prices would be determined at the time of any such offering. In the past, the Company has utilized capital markets to generate liquidity in the form of common stock and subordinated debt primarily for the purpose of funding acquisitions.

The Company is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. The Company’s main source of funding is dividends declared and paid by the Bank to the Company. Statutory and regulatory limitations exist that affect the ability of the Bank to pay dividends to the Company. Management believes that these limitations will not impact the Company’s ability to meet its ongoing short-term cash obligations. For additional information regarding dividend restrictions, see the “Item 1. Business - Supervision and regulation,” “Item 1A. Risk Factors - Risks related to our business” and “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Dividends,” each of which is set forth in our Annual Report.

Due to state banking laws, the Bank may not declare dividends in any calendar year in an amount exceeding the total of its net income for that year combined with its retained net income of the preceding two years, without the prior approval of the TDFI. Based upon this regulation, as of September 30, 2024 and December 31, 2023, $191.2 million and $218.4 million of the Bank’s retained earnings were available for the payment of dividends without such prior approval. In addition, dividends paid by the Bank to the Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. During the three and nine months ended September 30, 2024, there were $9.0 million and $37.5 million in cash dividends approved by the board for payment from the Bank to the holding company. Additionally, an asset dividend of an equity security amounting to $1.7 million was paid from the Bank to the holding company during the nine months ended September 30, 2024. During the three and nine months ended September 30, 2023, there were $8.5 million and $40.5 million in cash dividends approved by the board for payment from the Bank to the holding company. None of these required approval from the TDFI. Subsequent to September 30, 2024, the Board approved a dividend from the Bank to the holding company to be paid in the fourth quarter for $24.0 million that also did not require approval from the TDFI.

During the three and nine months ended September 30, 2024, the Company declared shareholder dividends of $0.17 per share, or $8.0 million and $0.51 per share, or $24.1 million, respectively. During the three and nine months ended September 30, 2023, the Company declared shareholder dividends of $0.15 per share, or $7.1 million and $0.45 per share, or $21.3 million, respectively. Subsequent to September 30, 2024, the Company declared a quarterly dividend in the amount of $0.17 per share, payable on November 19, 2024, to stockholders of record as of November 5, 2024.

Shareholders’ equity and capital management

Our total shareholders’ equity was $1.56 billion as of September 30, 2024 and $1.45 billion as of December 31, 2023. The increase in shareholders’ equity was primarily attributable to an increase in retained net income, net of dividends declared and unrealized loss reclassification adjustment for loss on sale of securities included in net income of $41.7 million (net of tax benefit) from December 31, 2023. The increase in shareholders’ equity as of September 30, 2024 was partially off-set by dividends declared of $24.1 million and stock repurchases of $12.7 million. Book value per common share was $33.48 as of September 30, 2024 and $31.05 as of December 31, 2023.

Our capital management consists of providing adequate equity to support our current and future operations. We are subject to various regulatory capital requirements administered by state and federal banking agencies, including the TDFI, Federal Reserve and the FDIC. Failure to meet minimum capital requirements may prompt certain actions by regulators that, if undertaken, could have a direct material adverse effect on our financial condition and results of operations. The Federal Reserve and the FDIC have issued guidelines governing the levels of capital that banks must maintain. As of September 30, 2024 and December 31, 2023, we met all capital adequacy requirements for which we were subject. See additional discussion regarding our capital adequacy and ratios within Note 12, “Minimum capital requirements” in the notes to our consolidated financial statements contained herein.


September 30, 2024	FB Financial Corporation		FirstBank		To be Well-Capitalized (1)
Total risk-based capital	15.1	%	14.9	%	10.0	%
Tier 1 risk-based capital	13.0	%	12.7	%	8.0	%
Common Equity Tier 1 ratio	12.7	%	12.7	%	6.5	%
Tier 1 leverage	11.5	%	11.2	%	5.0	%

(1) Applicable to Bank level capital.

Capital ratios are well above regulatory requirements for well-capitalized institutions. Management uses risk-based capital ratios in its analysis of the measures to assess the quality of capital and believes that investors may find it useful in their analysis of the Company.

ITEM 3 — Quantitative and Qualitative Disclosures About Market Risk

Interest rate sensitivity

Our market risk arises primarily from interest rate risk inherent in the normal course of lending and deposit-taking activities. Management believes that our ability to successfully respond to changes in interest rates will have a significant impact on our financial results. To that end, management actively monitors and manages our interest rate risk exposure.

The ALCO, which is authorized by our Board of Directors, monitors our interest rate sensitivity and makes decisions relating to that process. The ALCO’s goal is to structure our asset/liability composition to maximize net interest income while managing interest rate risk so as to minimize the adverse impact of changes in interest rates on net interest income and capital in either a rising or declining interest rate environment. Profitability is affected by fluctuations in interest rates. A sudden and substantial change in interest rates may adversely impact our earnings because the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis.

We monitor the impact of changes in interest rates on our net interest income and economic value of equity using rate shock analysis. Net interest income simulations measure the short-term earnings exposure from changes in market rates of interest in a rigorous and explicit fashion. Our current financial position is combined with assumptions regarding future business to calculate net interest income under varying hypothetical rate scenarios. EVE measures our long-term earnings exposure from changes in market rates of interest. EVE is defined as the present value of assets minus the present value of liabilities at a point in time. A decrease in EVE due to a specified rate change indicates a decline in the long-term earnings capacity of the balance sheet assuming that the rate change remains in effect over the life of the current balance sheet. For purposes of calculating EVE, a zero percent floor is assumed on discount factors.

The following analysis depicts the estimated impact on net interest income and EVE of immediate changes in interest rates at the specified levels for the periods presented:


	Percentage change in:
	Net interest income (1)

Change in interest rates	September 30,		December 31,

(in basis points)	2024		2023
+400	8.51	%	8.99	%
+300	6.90	%	6.81	%
+200	5.03	%	4.65	%
+100	2.65	%	2.44	%
-100	(2.75)	%	(2.86)	%
-200	(5.74)	%	(6.54)	%


	Percentage change in:
	Economic value of equity (2)
Change in interest rates	September 30,		December 31,

(in basis points)	2024		2023
+400	(15.5)	%	(16.6)	%
+300	(13.2)	%	(13.6)	%
+200	(8.37)	%	(8.05)	%
+100	(3.96)	%	(3.29)	%
-100	3.10	%	1.03	%
-200	5.22	%	(0.63)	%

(1) The percentage change represents the projected net interest income for 12 months on a flat balance sheet in a stable interest rate environment versus the projected net interest income in the various rate scenarios.

(2) The percentage change in this column represents our EVE in a stable interest rate environment versus EVE in the various rate scenarios.

The results for the net interest income simulations as of September 30, 2024 and December 31, 2023 resulted in an asset sensitive position. The primary influence of our asset sensitivity is the floating rate structure in many of our loans held for investment as well as the composition of our liabilities which is primarily customer deposits. Our floating-rate loan portfolio is indexed to market rates and timing of repricing of loans and deposits varies in proportion to market rate fluctuations. We actively monitor and perform stress tests on our deposit betas as part of our overall management of interest rate risk. This requires the use of various assumptions based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive pricing in the market, we anticipate that our future results will likely be different from the scenario results presented above and such differences could be material.

The preceding measures assume no change in the size or asset/liability compositions of the balance sheet. Thus, the measures do not reflect the actions the ALCO may undertake in response to such changes in interest rates. The scenarios assume instantaneous movements in interest rates in increments of 100, 200, 300 and 400 basis points. As interest rates are adjusted over a period of time, it is our strategy to proactively change the volume and mix of our balance sheet in order to mitigate our interest rate risk. The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions regarding characteristics of new business and the behavior of existing positions. These business assumptions are based upon our experience, business plans and published industry experience. Key assumptions employed in the model include asset prepayment speeds, competitive factors, the relative price sensitivity of certain assets and liabilities and the expected life of non-maturity deposits. Because these assumptions are inherently uncertain, actual results may differ from simulated results.

We may utilize derivative financial instruments as part of an ongoing effort to mitigate interest rate risk exposure to interest rate fluctuations and facilitate the needs of our customers. For more information about our derivative financial instruments, see Note 9, “Derivatives” in the notes to our consolidated financial statements.

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Report was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and other members of the Company’s senior management. The Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Report, the Company’s disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is: (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all errors and fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

PART II

ITEM 1—LEGAL PROCEEDINGS

Various legal proceedings to which we or our subsidiaries are party arise from time to time in the normal course of business. As of the date of this Report, there are no material pending legal proceedings to which we or any of our subsidiaries is a party or of which any of our or our subsidiaries’ properties are subject.

ITEM 1A—RISK FACTORS

There have been no material changes to the risk factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2—UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 21, 2024, the Company announced that its board of directors re-authorized the Company’s stock repurchase program pursuant to which the Company may purchase up to $100 million in shares of the Company’s issued and outstanding common stock. The current repurchase plan will terminate either on the date on which the maximum dollar amount is repurchased under the new repurchase plan or on January 31, 2026, whichever date occurs earlier. The repurchase plan will be conducted pursuant to a written plan and is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended.

The Company did not complete any share repurchases during the three months ended September 30, 2024. The dollar value of shares that may yet be repurchased under the program was $87.3 million as of September 30, 2024.

ITEM 5 — OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the quarter ended September 30, 2024, none of the Company’s directors or executive officers adopted , modified, or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

ITEM 6—EXHIBITS

The exhibits listed on the accompanying Exhibit Index are filed, furnished or incorporated by reference (as stated therein) as part of this Report.

EXHIBIT INDEX


Exhibit Number			Description

3.1			Amended and Restated Charter, as amended for SEC filing purposes only (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (File No. 001-37875) filed on August 4, 2023)
3.2			Amended and Restated Bylaws of FB Financial Corporation (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-37875) filed on November 14, 2016)
4.1			Registration Rights Agreement by and between FB Financial Corporation and James W. Ayers, dated September 15, 2016 (incorporated by reference as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-37875) filed on November 14, 2016)

































31.1			Rule 13a-14(a) Certification of Chief Executive Officer*
31.2			Rule 13a-14(a) Certification of Chief Financial Officer*
32.1			Section 1350 Certification of Chief Executive Officer and Chief Financial Officer**
101.INS			Inline XBRL Instance Document*
101.SCH			Inline XBRL Taxonomy Extension Schema Document*
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Filed herewith.
**			Furnished herewith.

†			Represents a management contract or a compensatory plan or arrangement.

Signatures

Pursuant to the requirements of the section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


						FB Financial Corporation





						/s/ Michael M. Mettee
November 4, 2024						Michael M. Mettee Chief Financial Officer (Principal Financial Officer)

						/s/ Jonathan Pennington
November 4, 2024						Jonathan Pennington Chief Accounting Officer (Principal Accounting Officer)

TABLE OF CONTENTS

Part I Item 2 Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3 Quantitative and Qualitative Disclosures About Market Risk Item 4 Controls and Procedures Part II Item 1 Legal Proceedings Item 1A Risk Factors Item 2 Unregistered Sales Of Equity Securities and Use Of Proceeds Item 5 Other Information Item 6 Exhibits

Exhibits

3.1 Amended and Restated Charter, as amended for SEC filing purposes only (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (File No. 001-37875) filed on August 4, 2023) 3.2 Amended and Restated Bylaws of FB Financial Corporation (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-37875) filed on November 14, 2016) 4.1 Registration Rights Agreement by and between FB Financial Corporation and James W. Ayers, dated September 15, 2016 (incorporated by reference as Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No. 001-37875) filed on November 14, 2016) 31.1 Rule 13a-14(a) Certification of Chief Executive Officer* 31.2 Rule 13a-14(a) Certification of Chief Financial Officer* 32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer**

FBK 10-Q Quarter ended Sept. 30, 2024

Exhibits