FB Financial Corporation (the “Company”) (NYSE: FBK), parent company of FirstBank, reported net income of $35.3 million, or $0.75 per diluted common share, for the second quarter of 2023, compared to $0.78 in the previous quarter and $0.41 in the second quarter of last year. Adjusted net income* was $36.0 million, or $0.77 per diluted common share, compared to $0.76 in the previous quarter and $0.64 in the second quarter of last year.
The Company’s deposits were $10.87 billion at June 30, 2023 compared to $11.18 billion at March 31, 2023 and $10.54 billion at June 30, 2022. The quarter-over-quarter decrease related to a reduction in public funds of $462.6 million. Loans held for investment ("HFI") were $9.33 billion at the end of the quarter compared to $9.37 billion at the end of the previous quarter and $8.62 billion at the end of the same quarter last year. The decline relative to the previous quarter was primarily driven by construction and non-owner occupied commercial real estate loan balances declining by $118.1 million. The Company grew book value to $29.64 and grew adjusted tangible book value* to $27.72, or 9.84% annualized from the first quarter. Net interest margin ("NIM") was 3.40% for the second quarter of 2023 compared to 3.51% and 3.52% in the prior quarter and the second quarter of 2022, respectively.
President and Chief Executive Officer, Christopher T. Holmes stated, "We boosted our balance sheet strength during the quarter so the Company is prepared regardless of whether the future brings challenges or opportunities. We continued reducing our exposure to public funds, enhancing our already diversified and granular deposit portfolio. We also reduced our exposure to commercial real estate, further strengthening our well-balanced loan portfolio. Additionally, our strong capital base and ample reserve for credit losses give us optionality in allocating capital and increasing returns as we move into the second half of 2023 and look forward to 2024."
2023 | 2022 | Annualized | ||||||||||||||||
(dollars in thousands, except share data) | Second Quarter | First Quarter | Second Quarter | 2Q23 / 1Q23
| 2Q23 / 2Q22
| |||||||||||||
Balance Sheet Highlights | ||||||||||||||||||
Investment securities, at fair value | $ | 1,422,391 | $ | 1,474,064 | $ | 1,621,344 | (14.1 | )% | (12.3 | )% | ||||||||
Mortgage loans held for sale(a) | 89,864 | 73,005 | 222,400 | 92.6 | % | (59.6 | )% | |||||||||||
Commercial loans held for sale, at fair value | 9,267 | 9,510 | 37,815 | (10.2 | )% | (75.5 | )% | |||||||||||
Loans held for investment | 9,326,024 | 9,365,996 | 8,624,337 | (1.71 | )% | 8.14 | % | |||||||||||
Allowance for credit losses | 140,664 | 138,809 | 126,272 | 5.36 | % | 11.4 | % | |||||||||||
Allowance for credit losses on unfunded commitments | 14,810 | 18,463 | 20,399 | (79.4 | )% | (27.4 | )% | |||||||||||
Total assets | 12,887,395 | 13,101,147 | 12,193,862 | (6.54 | )% | 5.69 | % | |||||||||||
Interest-bearing deposits (non-brokered) | 8,233,082 | 8,693,515 | 7,646,125 | (21.2 | )% | 7.68 | % | |||||||||||
Brokered deposits | 238,885 | 251 | 1,657 | 381,338.0 | % | 14,316.7 | % | |||||||||||
Noninterest-bearing deposits | 2,400,288 | 2,489,149 | 2,895,520 | (14.3 | )% | (17.1 | )% | |||||||||||
Total deposits | 10,872,255 | 11,182,915 | 10,543,302 | (11.1 | )% | 3.12 | % | |||||||||||
Estimated insured or collateralized deposits | 7,858,761 | 7,926,537 | 7,320,537 | (3.43 | )% | 7.35 | % | |||||||||||
Borrowings | 390,354 | 312,131 | 160,400 | 100.5 | % | 143.4 | % | |||||||||||
Total common shareholders' equity | 1,386,951 | 1,369,696 | 1,319,852 | 5.05 | % | 5.08 | % | |||||||||||
Book value per common share | $ | 29.64 | $ | 29.29 | $ | 28.15 | 4.79 | % | 5.29 | % | ||||||||
Adjusted tangible book value per common share* | $ | 27.72 | $ | 27.06 | $ | 25.24 | 9.84 | % | 9.83 | % | ||||||||
Total common shareholders' equity to total assets | 10.8 | % | 10.5 | % | 10.8 | % | ||||||||||||
Tangible common equity to tangible assets* | 8.98 | % | 8.68 | % | 8.90 | % | ||||||||||||
Estimated uninsured and uncollateralized deposits as a percentage of total deposits | 27.7 | % | 29.1 | % | 30.6 | % | ||||||||||||
*Non-GAAP financial measure; See "Use of non-GAAP Financial Measures" and non-GAAP reconciliations herein. | ||||||||||||||||||
(a) Includes optional right to repurchase government guaranteed GNMA mortgage loans previously sold that have become past due greater than 90 days amounting to $20,225 and $20,528 as of June 30, 2023 and March 31, 2023, respectively. | ||||||||||||||||||
2023 | 2022 | |||||||||||
(dollars in thousands, except share data) | Second Quarter | First Quarter | Second Quarter | |||||||||
Statement of Income Highlights | ||||||||||||
Net interest income | $ | 101,543 | $ | 103,660 | $ | 102,171 | ||||||
NIM | 3.40 | % | 3.51 | % | 3.52 | % | ||||||
Provisions for credit losses | $ | (1,078 | ) | $ | 491 | $ | 12,318 | |||||
Net charge-off ratio | 0.03 | % | 0.02 | % | 0.09 | % | ||||||
Noninterest income | $ | 23,813 | $ | 23,349 | $ | 33,214 | ||||||
Mortgage banking income | $ | 12,232 | $ | 12,086 | $ | 22,559 | ||||||
Total revenue | $ | 125,356 | $ | 127,009 | $ | 135,385 | ||||||
Noninterest expense | $ | 81,292 | $ | 80,440 | $ | 96,997 | ||||||
Efficiency ratio | 64.8 | % | 63.3 | % | 71.6 | % | ||||||
Core efficiency ratio* | 63.5 | % | 63.3 | % | 61.1 | % | ||||||
Pre-tax, pre-provision earnings | $ | 44,064 | $ | 46,569 | $ | 38,388 | ||||||
Adjusted pre-tax, pre-provision earnings* | $ | 44,965 | $ | 45,659 | $ | 52,856 | ||||||
Net income applicable to FB Financial Corporation | $ | 35,299 | $ | 36,381 | $ | 19,345 | ||||||
Diluted earnings per common share | $ | 0.75 | $ | 0.78 | $ | 0.41 | ||||||
Effective tax rate | 21.8 | % | 21.0 | % | 25.8 | % | ||||||
Adjusted net income* | $ | 35,973 | $ | 35,708 | $ | 30,051 | ||||||
Adjusted diluted earnings per common share* | $ | 0.77 | $ | 0.76 | $ | 0.64 | ||||||
Weighted average number of shares outstanding - fully diluted | 46,814,854 | 46,765,154 | 47,211,650 | |||||||||
Returns on average: | ||||||||||||
Return on average total assets | 1.10 | % | 1.15 | % | 0.62 | % | ||||||
Return on average shareholders' equity | 10.3 | % | 11.0 | % | 5.74 | % | ||||||
Return on average tangible common equity* | 12.6 | % | 13.6 | % | 7.09 | % | ||||||
*Non-GAAP financial measure; See "Use of non-GAAP Financial Measures" and non-GAAP reconciliations herein. | ||||||||||||
Balance Sheet and Net Interest Margin
The Company reported loans HFI of $9.33 billion at the end of the second quarter of 2023, a decrease of $40.0 million from the end of the prior quarter. The contraction was led by declines in construction and non-owner occupied commercial real estate loans of $118.1 million, or 13.0% annualized, which was partially offset by growth in commercial and multifamily loans. The contractual yield on loans increased to 6.16% for the second quarter of 2023 from 5.90% for the previous quarter.
Total deposits decreased by $310.7 million in the second quarter to $10.87 billion. The decrease in total deposits was due to a decrease in public funds of $462.6 million, much of which was seasonal. The Company's total cost of deposits increased to 2.38% duri
