EX-99.1 2 a51500223ex99_1.htm EXHIBIT 99.1
Exhibit 99.1

FB Financial Corporation Reports 2016 Fourth Quarter and Year End Results

Strong Banking Growth and Results Offset by Lower Mortgage Revenues

NASHVILLE, Tenn.--(BUSINESS WIRE)--January 26, 2017--FB Financial Corporation (“FB Financial”) (NYSE: FBK), parent company of FirstBank, reported its results today for the fourth quarter and year ended December 31, 2016.

President and CEO Christopher T. Holmes stated, “We reported record revenues, pre-tax income, loans and deposits for the year and benefited from our strong customer service model and our excellent market diversification across Tennessee, Georgia and Alabama. During 2016, we completed one of the most successful bank initial public stock offerings of the year, the largest bank IPO in Tennessee history. We also transformed our operating infrastructure to support growth and future expansion. We are very pleased with contributions from our over 1,100 dedicated associates who make these results possible by serving and caring for our customers.”

For the year ended December 31, 2016, the Company reported net income of $40.6 million, or $2.10 per diluted common share, compared to $47.9 million, or $2.79 per diluted common share, for 2015. The Company was a Sub-Chapter S-Corporation prior to September 16, 2016, at which time the Company converted to a C-Corporation in conjunction with its initial public offering. On a pro forma C-Corporation tax basis, 2016 net income was $39.4 million, or $2.04 per diluted common share, and $32.9 million, or $1.92 per diluted common share, for 2015.

Fourth Quarter Key Highlights

- Total revenues of $60.4 million for the quarter, up 22.2% from the fourth quarter of 2015
- Net interest margin on a tax-equivalent basis (NIM) of 3.99% up 14 basis points from the fourth quarter of 2015
- Loans held for investment (HFI) grew to $1.85 billion, up 12.4% on an annualized basis from September 30, 2016, and 8.6% from year-end 2015
- Total deposits grew to $2.67 billion, up 4.8% from September 30, 2016, on an annualized basis, and 9.6% from year-end 2015
- Mortgage loans closed totaled $1.55 billion for the quarter, an increase of 14.2% from the third quarter of 2015 and 126.1% from the fourth quarter of 2015
- Interest rate lock pipeline decreased by $317.6 million, or 37.3%, from $850.5 million to $532.9 million from the previous quarter
- Nonperforming assets to total assets declined to 0.58% at the end of the quarter from 0.86% at year-end 2015
- Book value per share and tangible book value per share ended the year at $13.71 and $11.58, respectively
- Shareholders’ equity to assets and tangible common equity to tangible assets ended the year at 10.09% and 8.65% respectively

Holmes continued, “The fourth quarter showed continued growth in our banking operations with annualized loan and deposit growth of 12.4% and 4.8%, respectively, while maintaining our net interest margin and our credit quality metrics. Our strong results for the fourth quarter were partially offset by expected lower mortgage revenue compared with the third quarter of 2016 due to the sharp increase in interest rates and the seasonal slowdown in mortgage activity associated with the fourth quarter. We are actively addressing these challenges in our mortgage operations as the higher interest rate environment persists.”

Financial Summary

Net income for the fourth quarter of 2016 was $9.0 million, or $0.37 per diluted common share, compared to $9.2 million, or $0.53 per diluted common share, for the fourth quarter of 2015, (on a pro forma C-corporation basis, pro forma net income was $5.9 million, or $0.35 per diluted common share for the fourth quarter of 2015).

During the fourth quarter of 2016, the Company recorded certain significant items which it considers non-core items impacting comparability between periods as follows:

- $4.4 million net pre-tax loss on the sale of mortgage-servicing rights (MSRs), net of related transaction expenses and hedging costs;
- $3.4 million impairment recovery on MSRs; and
- $1.0 million pre-tax variable compensation expense related to cash settled incentive restricted stock awards issued in periods prior to the IPO.

Adjusting net income for pre-tax, non-core net expenses totaling $2.4 million, core net income was $10.5 million, or $0.43 per diluted common share, for the fourth quarter of 2016, compared to pro forma core net income of $8.1 million, or $0.47 per diluted common share for the fourth quarter of 2015.

|  | Reported Results |  |  | Non-GAAP Core Results* |
|  | For the Three Months Ended December 31 |
|  | 2016 |  |  | 2015 (1) |  |  | 2016 |  |  | 2015 (2) |
Results of operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 9,010 |  |  | $ | 5,935 |  |  | $ | 10,484 |  |  | $ | 8,053 |
Diluted earnings per share (EPS) |  | $ | 0.37 |  |  | $ | 0.35 |  |  | $ | 0.43 |  |  | $ | 0.47 |
Total revenue |  | $ | 60,364 |  |  | $ | 49,405 |  |  | $ | 60,713 |  |  | $ | 49,690 |
Return on average assets (ROAA) |  |  | 1.12 | % |  |  | 0.83 | % |  |  | 1.30 | % |  |  | 1.13 | %
Return on average equity (ROAE) |  |  | 11.24 | % |  |  | 10.07 | % |  |  | 13.08 | % |  |  | 13.66 | %
Return on average tangible common equity (ROTCE)* |  |  | 13.40 | % |  |  | 13.01 | % |  |  | 15.60 | % |  |  | 17.65 | %
Key metrics |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net interest margin (tax equivalent basis) |  |  | 3.99 | % |  |  | 3.85 | % |  |  |  |  |  |  |  |
Core efficiency ratio* |  |  | 73.72 | % |  |  | 77.16 | % |  |  |  |  |  |  |  |
Total nonperforming assets as a percentage of total assets |  |  | 0.58 | % |  |  | 0.86 | % |  |  |  |  |  |  |  |
Allowance for loan losses as a percentage of loans held for investment |  |  | 1.18 | % |  |  | 1.44 | % |  |  |  |  |  |  |  |
Total loans / deposits |  |  | 88.20 | % |  |  | 81.00 | % |  |  |  |  |  |  |  |
*These measures are considered non-GAAP financial measures. See “GAAP Reconciliation and Use of Non-GAAP financial measures” and the corresponding financial tables below for a reconciliation and discussion of these non-GAAP measures. |
(1) Prior to the IPO in the third quarter of 2016, the Company was an S corporation and did not incur federal income taxes. In conjunction with the IPO, the Company converted to a C corporation. These results are on a pro forma basis to reflect the results of the Company on a C corporation basis. Reported net income as an S corporation was $9,191 with diluted EPS of $0.53 while ROAA, ROAE and ROTCE were 1.29%, 15.59% and 20.14%, respectively. |
(2) Core results are presented pro forma for conversion from S corporation to C corporation status. |

Customer-Focused Balance Sheet Growth Drives Interest Income and NIM

Loans held for investment at December 31, 2016, rose to $1.85 billion, an increase of $55.4 million, or 12.4% annualized, from September 30, 2016. This compares to an increase of $146.9 million, or 8.6%, from December 31, 2015. Average loans for the fourth quarter of 2016 were $1.81 billion, an increase of $147.7 million, or 8.9%, compared to the fourth quarter of 2015.

Total deposits increased to $2.67 billion at December 31, 2016, compared to $2.44 billion at December 31, 2015, reflecting an annual growth rate of 9.6% and were up an annualized 4.8% from September 30, 2016. Average deposit balances were $2.67 billion for the fourth quarter of 2016, an increase of $92.4 million, or 14.3% annualized, from the third quarter of 2016 of $2.58 billion and an increase of $336.9 million, or 14.5%, from the fourth quarter of 2015 balance of $2.33 billion. Average noninterest bearing deposit balances increased to $768.0 million for the fourth quarter of 2016, from $738.3 million for the third quarter of 2016, and $599.3 million for the fourth quarter of 2015. Cost of total deposits was 0.29% for the fourth quarter of 2016, compared to 0.28% for the fourth quarter of 2015.

Loans held for sale, generated by our mortgage operations, rose to $507.4 million at December 31, 2016, compared to $486.6 million and $273.2 million at September 30, 2016 and December 31, 2015, respectively. Average loans held for sale for the fourth quarter of 2016 were $510.2 million compared to $409.7 million and $315.2 million for the third quarter of 2016 and fourth quarter of 2015, respectively.

Our NIM increased to 3.99% for the fourth quarter of 2016, compared to 3.85% for the fourth quarter of 2015. Accretion related to acquired loans contributed 5 basis points to our NIM for the fourth quarter of 2016 compared to 11 and 3 basis points for the third quarter of 2016 and the fourth quarter of 2015, respectively. Net interest income was $29.0 million for the fourth quarter of 2016, compared to $27.6 million for the third quarter of 2016 and $25.3 million for the fourth quarter of 2015, an increase of 14.8% over the fourth quarter of 2015.

“Our solid growth in loans and deposits reflects our focus on building customer relationships across our markets and the continued growth of our metropolitan markets in Tennessee and Alabama. We remain very positive about our continued growth in 2017,” Holmes said.

Interest Rate Environment Pressures Noninterest Income Compared with the Third Quarter of 2016

Noninterest income rose 30.0% to $31.3 million for the fourth quarter of 2016, compared to $24.1 million for the same period in 2015.

Mortgage banking revenues were up 37.0% to $26.2 million for the fourth quarter of 2016, compared to $19.1 million for the same period in 2015. Net gains from mortgage closings and sales increased 27.4% to $22.4 million for the fourth quarter of 2016, compared to $17.6 million for the same period in 2015. Closings rose 126.1% to $1.55 billion in mortgage loans during the quarter compared to $686.3 million in the same period in 2015; however, our mortgage loan interest rate lock commitment pipeline decreased from $850.5 million at September 30, 2016 to $532.9 million at December 31, 2016. As previously discussed, the sharp increase in rates following the November election along with seasonal fluctuation led to a reduction in our mortgage banking revenues from the record levels recorded in the third quarter of 2016. Mortgage servicing revenue was $3.8 million for the fourth quarter of 2016, compared to $1.5 million for the same period in 2015 and $3.7 million for the third quarter of 2016.

Wilburn J. (“Wib”) Evans, President of FB Ventures, stated, “For 2016, our mortgage operations delivered record levels of closings and revenues. While our closing levels remained strong, our overall pipeline decreased significantly in the fourth quarter of 2016 primarily in refinance activity due to the sharp increase in mortgage rates. We were able to partially offset this with the increasing growth in our newly established correspondent division. The higher interest rates, lower volumes and change in mix put pressure on margins throughout the quarter. We will continue to evaluate our cost structure as market conditions evolve during 2017.”

Leverage of Noninterest Expense Base Improves Overall Efficiency

Noninterest expense was $47.3 million for the fourth quarter of 2016 compared to $41.9 million for the fourth quarter of 2015. Excluding the non-core items, core noninterest expense was $45.2 million for the fourth quarter of 2016 compared to $38.7 million for the fourth quarter of 2015. The primary drivers of the increase in noninterest expense was the impact of increased mortgage closing volumes.

Our efficiency ratio, which excludes the non-core items previously discussed, was 73.7% for the fourth quarter of 2016 compared to 77.2% for the fourth quarter of 2015. Our Banking Segment efficiency ratio was 65.1% for the fourth quarter of 2016, compared to 70.5% for the fourth quarter of 2015, while our Mortgage Segment efficiency ratio was 89.4% and 94.1%, respectively, for the same periods. See “GAAP Reconciliation and Use of Non-GAAP Financial Measures.”

“Enhancing our operating leverage is important to our strategy to grow earnings. Our core efficiency ratio improved since last year and benefited, in part, from our conversion to a new core processor in 2016. We believe we have the systems in place to support a larger bank in the future,” commented James R. Gordon, Chief Financial Officer.

Continued Asset Quality Improvement

Asset quality improved in the latest quarter as nonperforming assets declined to $19.1 million, or 0.58% of total assets, at December 31, 2016, from $24.9 million, or 0.86%, at December 31, 2015.

The allowance for loan losses equaled 1.18% of loans HFI at December 31, 2016, compared to 1.30% at September 30, 2016, and 1.44% at December 31, 2015. Net charge-offs were $791 thousand, or 0.17% annualized as a percentage of average loans HFI for the fourth quarter of 2016, compared to $515 thousand, or 0.12% for the third quarter of 2016, and to 0.14% for the fourth quarter of 2015.

The provision for loan losses was a reversal of $752 thousand for the fourth quarter of 2016 compared to a charge of $71 thousand and a reversal of $2.1 million for the third quarter of 2016 and the fourth quarter of 2015, respectively.

“Our asset quality was strong at year-end 2016,” commented Gordon. “We reported a 13.2% decrease in nonperforming loans, a 36.4% drop in foreclosed real estate, and a 42.4% decrease in trouble debt restructured loans compared with the fourth quarter of last year. Overall, our allowance has decreased from 1.44% at the end of 2015 to 1.18% at the end of 2016 demonstrating the strength of our markets and our continued focus on credit quality.”

Continued Capital Strength

The Company ended the year with a shareholders’ equity to assets ratio and a tangible common equity to tangible assets ratio of 10.09% and 8.65%, respectively, and a book value per common share and tangible book value per common share of $13.71 and $11.58, respectively. This compared to 8.16% and 6.43% and $13.78 and $10.66, respectively, at December 31, 2015. Our common equity tier one ratio improved to 11.05% at December 31, 2016, from 8.23% at December 31, 2015. See “GAAP Reconciliation and Use of Non-GAAP Financial Measures”

“FB Financial is positioned well for continued growth in 2017. Our metropolitan markets have proven to be solid contributors to loan and deposit growth in 2016 and our community markets provide a stable base for our operations. We remain focused on our strategy of building shareholder value through organic growth, acquisitions that leverage our operations, and providing best-in-market customer service,” Holmes concluded.

WEBCAST AND CONFERENCE CALL INFORMATION

The live broadcast of FB Financial Corporation’s conference call will begin at 8:00 a.m. CST on Friday, January 27, 2017, and the earnings conference call will be broadcast live over the Internet at http://services.choruscall.com/links/fbk170127ihSlw5zS.html. A 30-day online replay will be available approximately an hour following the conclusion of the live broadcast. Additionally, the Company has posted a Presentation of Fourth Quarter 2016 Results on its website, which can be found at https://investors.firstbankonline.com/.

ABOUT FB FINANCIAL CORPORATION

FB Financial Corporation (NYSE: FBK) is a bank holding company headquartered in Nashville, Tennessee. FB Financial operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered bank, with 45 full-service bank branches across Tennessee, North Alabama and North Georgia, and a national mortgage business with offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has over $3.2 billion in total assets.

CORRESPONDING FINANCIAL TABLES AND INFORMATION

Investors are encouraged to review the foregoing summary and discussion of the Company’s earnings and financial condition in conjunction with the detailed financial tables and information which the Company has also included in the earnings release and in its forthcoming Form 10-K. This information is also included in a current report on Form 8-K furnished to the U.S. Securities and Exchange Commission (SEC) today.

BUSINESS SEGMENT RESULTS

The Company has included its business segment financial tables as part of this release. A detailed discussion of the business segment results will be included in the Company’s forthcoming Form 10-K. Additionally, investors should review the segment information included in our Registration Statement on Form S-1 filed with the SEC on August 19, 2016 and as amended.

FORWARD-LOOKING STATEMENTS

This news release contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through the Company’s use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for the Company’s future business and financial performance and/or the performance of the banking and mortgage industry and economy in general. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements.

Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this news release including, without limitation, the risks and other factors set forth in the Company’s final prospectus filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, filed with the SEC on September 19, 2016 (Registration No. 333-213210) under the captions “Cautionary note regarding forward-looking statements” and “Risk factors.” Many of these factors are beyond the Company’s ability to control or predict. The Company believes the forward-looking statements contained herein are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. The Company does not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.

GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL MEASURES

This news release contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (GAAP) and therefore are considered non-GAAP financial measures. These non-GAAP financial measures include, without limitation, net income, diluted earnings per share, total revenues, return on average assets, return on average equity, return on average tangible common equity, noninterest expense and core efficiency ratio, in each case excluding certain income and expense items that the Company’s management considers to be non-core in nature. The Company refers to these non-GAAP measures as core measures. This news release also uses tangible book value per common share and the tangible common equity to tangible assets ratio, which are non-GAAP measures that exclude the impact of goodwill and other intangibles. The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant non-core gains and charges in the current period. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding our underlying operating performance and in the analysis of ongoing operating trends. In addition, because intangible assets such as goodwill and other intangibles, and the other items excluded each vary extensively from company to company, the Company believes that the presentation of this information allows investors to more easily compare the Company’s results to the results of other companies. However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures discussed herein may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures we have discussed herein when comparing such non-GAAP financial measures. The following tables provide a reconciliation of these measures to the most directly comparable GAAP financial measures.

Financial Summary and Key Metrics
(Unaudited)
(In Thousands, Except Share Data)
|  | 2016 |  | 2015
|  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Statement of Income Data |  |  |  |  |  |
Total interest income |  | $ | 31,567 |  |  | $ | 30,005 |  |  | $ | 27,552 |
Total interest expense |  |  | 2,535 |  |  |  | 2,388 |  |  |  | 2,256 |
Net interest income |  |  | 29,032 |  |  |  | 27,617 |  |  |  | 25,296 |
Provision for loan losses |  |  | (752 | ) |  |  | 71 |  |  |  | (2,127 | )
Total noninterest income |  |  | 31,332 |  |  |  | 43,962 |  |  |  | 24,109 |
Total noninterest expense |  |  | 47,319 |  |  |  | 55,529 |  |  |  | 41,880 |
Net income before income taxes |  |  | 13,797 |  |  |  | 15,979 |  |  |  | 9,652 |
Income tax expense |  |  | 4,787 |  |  |  | 14,772 |  |  |  | 461 |
Net income |  | $ | 9,010 |  |  | $ | 1,207 |  |  | $ | 9,191 |
Net interest income (tax—equivalent basis) |  | $ | 29,686 |  |  | $ | 28,213 |  |  | $ | 28,042 |
Pro forma net income |  | $ | 9,010 |  |  | $ | 10,033 |  |  | $ | 5,935 |
Pro forma core net income* |  | $ | 10,484 |  |  | $ | 12,935 |  |  | $ | 8,053 |
Per Common Share |  |  |  |  |  |
Diluted net income |  | $ | 0.37 |  |  | $ | 0.07 |  |  | $ | 0.53 |
Pro forma net income- diluted |  | $ | 0.37 |  |  | $ | 0.55 |  |  | $ | 0.35 |
Pro forma core net income- diluted* |  | $ | 0.43 |  |  | $ | 0.71 |  |  | $ | 0.47 |
Book value |  |  | 13.71 |  |  |  | 13.73 |  |  |  | 13.78 |
Tangible book value |  |  | 11.58 |  |  |  | 11.56 |  |  |  | 10.66 |
Weighted average number of shares-diluted |  |  | 24,500,943 |  |  |  | 18,332,192 |  |  |  | 17,180,000 |
Period-end number of shares |  |  | 24,107,660 |  |  |  | 23,975,122 |  |  |  | 17,180,000 |
Selected Balance Sheet Data |  |  |  |  |  |
Cash and due from banks |  | $ | 50,157 |  |  | $ | 51,292 |  |  | $ | 53,893 |
Loans held for investment |  |  | 1,848,784 |  |  |  | 1,793,343 |  |  |  | 1,701,863 |
Allowance for loan losses |  |  | (21,747 | ) |  |  | (23,290 | ) |  |  | (24,460 | )
Loans held for sale |  |  | 507,442 |  |  |  | 486,601 |  |  |  | 273,196 |
Available-for-sale securities, fair value |  |  | 582,183 |  |  |  | 553,357 |  |  |  | 649,387 |
Foreclosed real estate, net |  |  | 7,403 |  |  |  | 8,964 |  |  |  | 11,641 |
Total assets |  |  | 3,276,881 |  |  |  | 3,187,180 |  |  |  | 2,899,420 |
Total deposits |  |  | 2,671,562 |  |  |  | 2,640,072 |  |  |  | 2,438,474 |
Core deposits* |  |  | 2,611,438 |  |  |  | 2,575,797 |  |  |  | 2,386,154 |
Borrowings |  |  | 194,892 |  |  |  | 125,291 |  |  |  | 74,616 |
Total shareholders' equity |  |  | 330,498 |  |  |  | 329,108 |  |  |  | 236,674 |
Selected Ratios |  |  |  |  |  |
Return on average: |  |  |  |  |  |
Assets |  |  | 1.12 | % |  |  | 0.16 | % |  |  | 1.29 | %
Shareholders' equity |  |  | 11.24 | % |  |  | 1.74 | % |  |  | 15.59 | %
Tangible common equity* |  |  | 13.40 | % |  |  | 2.14 | % |  |  | 20.14 | %
Pro forma return on average: |  |  |  |  |  |
Assets |  |  | 1.12 | % |  |  | 1.32 | % |  |  | 0.83 | %
Shareholders' equity |  |  | 11.24 | % |  |  | 14.43 | % |  |  | 10.07 | %
Tangible common equity* |  |  | 13.40 | % |  |  | 17.79 | % |  |  | 13.01 | %
Average shareholders' equity to average assets |  |  | 9.95 | % |  |  | 9.17 | % |  |  | 8.25 | %
Net interest margin (tax-equivalent basis) |  |  | 3.99 | % |  |  | 4.05 | % |  |  | 3.85 | %
Core efficiency ratio (tax-equivalent basis)* |  |  | 73.72 | % |  |  | 69.65 | % |  |  | 77.16 | %
Loans held for investment to deposit ratio |  |  | 69.20 | % |  |  | 67.93 | % |  |  | 69.79 | %
Total loan to deposit ratio |  |  | 88.20 | % |  |  | 86.36 | % |  |  | 81.00 | %
Yield on interest-earning assets |  |  | 4.33 | % |  |  | 4.40 | % |  |  | 4.19 | %
Cost of interest-bearing liabilities |  |  | 0.49 | % |  |  | 0.48 | % |  |  | 0.46 | %
Cost of total deposits |  |  | 0.29 | % |  |  | 0.30 | % |  |  | 0.28 | %
Credit Quality Ratios |  |  |  |  |  |
Allowance for loan losses as a percentage of loans held for investment |  |  | 1.18 | % |  |  | 1.30 | % |  |  | 1.44 | %
Net (charge-off's) recoveries as a percentage of average total loans held for investment |  |  | (0.17 | )% |  |  | (0.12 | )% |  |  | (0.14 | )%
Nonperforming assets as a percentage of total assets |  |  | 0.58 | % |  |  | 0.68 | % |  |  | 0.86 | %
Preliminary capital ratios (Consolidated) |  |  |  |  |  |
Shareholders' equity to assets |  |  | 10.09 | % |  |  | 10.33 | % |  |  | 8.16 | %
Tangible common equity to tangible assets* |  |  | 8.65 | % |  |  | 8.84 | % |  |  | 6.43 | %
Tier 1 capital (to average assets) |  |  | 10.06 | % |  |  | 10.32 | % |  |  | 7.64 | %
Tier 1 capital (to risk-weighted assets |  |  | 12.21 | % |  |  | 12.37 | % |  |  | 9.58 | %
Total capital (to risk-weighted assets) |  |  | 13.04 | % |  |  | 13.32 | % |  |  | 11.15 | %
Common Equity Tier 1 (to risk-weighted assets) (CET1) |  |  | 11.05 | % |  |  | 11.16 | % |  |  | 8.23 | %
*These measures are considered non-GAAP financial measures. See “GAAP Reconciliation and Use of Non-GAAP financial measures” and the corresponding financial tables below for a reconciliation and discussion of these non-GAAP measures.

Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data)
|  | 2016 |  | 2015
Pro forma core net income |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Pre-tax net income |  | $ | 13,797 |  |  | $ | 15,979 |  |  | $ | 9,652 |
Non-core items: |  |  |  |  |  |
Noninterest income |  |  |  |  |  |
Gain on sale of securities |  |  | - |  |  |  | 416 |  |  |  | 2 |
(Loss) gain on sales or write-downs of foreclosed and other assets |  |  | (349 | ) |  |  | 1,653 |  |  |  | (287 | )
Noninterest expenses |  |  |  |  |  |
One-time equity grants |  |  | - |  |  |  | 2,960 |  |  |  | - |
Variable compensation charge related to cash settled equity awards |  |  | 1,041 |  |  |  | 213 |  |  |  | - |
Merger and conversion |  |  | - |  |  |  | 1,122 |  |  |  | 2,965 |
(Recovery of) impairment of mortgage servicing rights |  |  | (3,411 | ) |  |  | 2,402 |  |  |  | 194 |
Loss on sale of mortgage servicing rights |  |  | 4,447 |  |  |  | - |  |  |  | - |
Pre tax core net income |  | $ | 16,223 |  |  | $ | 20,607 |  |  | $ | 13,096 |
Pro forma core income tax expense |  |  | 5,739 |  |  |  | 7,672 |  |  |  | 5,043 |
Pro forma core net income |  | $ | 10,484 |  |  | $ | 12,935 |  |  | $ | 8,053 |
Weighted average common shares outstanding fully diluted |  |  | 24,500,943 |  |  |  | 18,332,192 |  |  |  | 17,180,000 |
Pro forma core diluted earnings per share |  |  |  |  |  |
Diluted earning per share |  | $ | 0.37 |  |  | $ | 0.07 |  |  | $ | 0.53 |
Non-core items: |  |  |  |  |  |
Noninterest income |  |  |  |  |  |
Gain on sale of securities |  |  | - |  |  |  | 0.02 |  |  |  | 0.00 |
(Loss) gain on sales or write-downs of foreclosed and other assets |  |  | (0.01 | ) |  |  | 0.09 |  |  |  | (0.02 | )
Noninterest expenses |  |  |  |  |  |
One-time equity grants |  |  | - |  |  |  | 0.16 |  |  |  | - |
Variable compensation charge related to cash settled equity awards |  |  | 0.04 |  |  |  | 0.01 |  |  |  | - |
Merger and conversion |  |  | - |  |  |  | 0.06 |  |  |  | 0.17 |
(Recovery of) impairment of mortgage servicing rights |  |  | (0.14 | ) |  |  | 0.13 |  |  |  | 0.01 |
Loss on sale of mortgage servicing rights |  |  | 0.18 |  |  |  | - |  |  |  | - |
Tax effect |  |  | (0.04 | ) |  |  | 0.39 |  |  |  | (0.27 | )
Pro forma core diluted earnings per share |  | $ | 0.43 |  |  | $ | 0.71 |  |  | $ | 0.47 |
|  | 2016 |  | 2015
Core efficiency ratio (tax-equivalent basis) |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Total noninterest expense |  | $ | 47,319 |  |  | $ | 55,529 |  |  | $ | 41,880 |
Less one-time equity grants |  |  | - |  |  |  | 2,960 |  |  |  | - |
Less variable compensation charge related to cash settled equity awards |  |  | 1,041 |  |  |  | 213 |  |  |  | - |
Less merger and conversion expenses |  |  | - |  |  |  | 1,122 |  |  |  | 2,965 |
Less (recovery of) impairment of mortgage servicing rights |  |  | (3,411 | ) |  |  | 2,402 |  |  |  | 194 |
Less loss on sale of mortgage servicing rights |  |  | 4,447 |  |  |  | - |  |  |  | - |
Core noninterest expense |  | $ | 45,242 |  |  | $ | 48,832 |  |  | $ | 38,721 |
Net interest income (tax-equivalent basis) |  |  | 29,686 |  |  |  | 28,213 |  |  |  | 25,786 |
Total noninterest income |  |  | 31,332 |  |  |  | 43,962 |  |  |  | 24,109 |
Less gain on sales or write-downs of foreclosed and other assets |  |  | (349 | ) |  |  | 1,653 |  |  |  | (287 | )
Less gain on sales of securities |  |  | - |  |  |  | 416 |  |  |  | 2 |
Core noninterest income |  |  | 31,681 |  |  |  | 41,893 |  |  |  | 24,394 |
Core revenue |  | $ | 61,367 |  |  | $ | 70,106 |  |  | $ | 50,180 |
Core efficiency ratio (tax-equivalent basis) |  |  | 73.72 | % |  |  | 69.65 | % |  |  | 77.16 | %

Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data)
|  | 2016 |  | 2015
Banking segment core efficiency ratio (tax equivalent) |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Core noninterest expense |  | $ | 45,242 |  |  | $ | 48,832 |  |  | $ | 38,721 |
Less Mortgage Banking segment noninterest expense |  |  | 20,463 |  |  |  | 23,744 |  |  |  | 13,477 |
Add (recovery of) impairment of mortgage servicing rights |  |  | (3,411 | ) |  |  | 2,402 |  |  |  | 194 |
Add loss on sale of mortgage servicing rights |  |  | 4,447 |  |  |  | - |  |  |  | - |
Adjusted Banking segment noninterest expense |  |  | 25,815 |  |  |  | 27,490 |  |  |  | 25,438 |
Adjusted core revenue |  |  | 61,367 |  |  |  | 70,106 |  |  |  | 50,180 |
Less Mortgage Banking segment noninterest income |  |  | 21,738 |  |  |  | 27,957 |  |  |  | 14,112 |
Adjusted Banking segment noninterest income |  | $ | 39,629 |  |  | $ | 42,149 |  |  | $ | 36,068 |
Banking segment core efficiency ratio (tax-equivalent basis) |  |  | 65.14 | % |  |  | 65.22 | % |  |  | 70.53 | %
Mortgage Banking segment core efficiency ratio (tax equivalent) |  |  |  |  |  |
Noninterest expense |  | $ | 47,319 |  |  | $ | 55,529 |  |  | $ | 41,880 |
Less impairment of mortgage servicing rights |  |  | (3,411 | ) |  |  | 2,402 |  |  |  | 194 |
Less loss on sale of mortgage servicing rights |  |  | 4,447 |  |  |  | - |  |  |  | - |
Less Banking segment noninterest expense |  |  | 26,856 |  |  |  | 31,785 |  |  |  | 28,403 |
Adjusted Mortgage Banking segment noninterest expense |  | $ | 19,427 |  |  | $ | 21,342 |  |  | $ | 13,283 |
Total noninterest income |  |  | 31,332 |  |  |  | 43,962 |  |  |  | 24,109 |
Less Banking segment noninterest income |  |  | 9,594 |  |  |  | 16,005 |  |  |  | 9,997 |
Adjusted Mortgage Banking segment noninterest income |  | $ | 21,738 |  |  | $ | 27,957 |  |  | $ | 14,112 |
Mortgage Banking segment core efficiency ratio (tax-equivalent basis) |  |  | 89.37 | % |  |  | 76.34 | % |  |  | 94.13 | %
|  | 2016 |  | 2015
Tangible assets and equity |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Tangible Assets |  |  |  |  |  |
Total assets |  | $ | 3,276,881 |  |  | $ | 3,187,180 |  |  | $ | 2,899,420 |
Less goodwill |  |  | 46,867 |  |  |  | 46,867 |  |  |  | 46,904 |
Less core deposit intangibles |  |  | 4,563 |  |  |  | 5,090 |  |  |  | 6,695 |
Tangible assets |  | $ | 3,225,451 |  |  | $ | 3,135,223 |  |  | $ | 2,845,821 |
Tangible Common Equity |  |  |  |  |  |
Total shareholders' equity |  | $ | 330,498 |  |  | $ | 329,108 |  |  | $ | 236,674 |
Less goodwill |  |  | 46,867 |  |  |  | 46,867 |  |  |  | 46,904 |
Less core deposit intangibles |  |  | 4,563 |  |  |  | 5,090 |  |  |  | 6,695 |
Tangible common equity |  | $ | 279,068 |  |  | $ | 277,151 |  |  | $ | 183,075 |
Common shares outstanding |  |  | 24,107,660 |  |  |  | 23,975,122 |  |  |  | 17,180,000 |
Book value per common share |  | $ | 13.71 |  |  | $ | 13.73 |  |  | $ | 13.78 |
Tangible book value per common share |  | $ | 11.58 |  |  | $ | 11.56 |  |  | $ | 10.66 |
Total shareholders' equity to total assets |  |  | 10.09 | % |  |  | 10.33 | % |  |  | 8.16 | %
Tangible common equity to tangible assets |  |  | 8.65 | % |  |  | 8.84 | % |  |  | 6.43 | %
Net income |  | $ | 9,010 |  |  | $ | 1,207 |  |  | $ | 9,191 |
Return on tangible common equity |  |  | 12.84 | % |  |  | 1.73 | % |  |  | 19.92 | %
|  | 2016 |  | 2015
Return on average tangible common equity |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Total average shareholders' equity |  | $ | 318,986 |  |  | $ | 276,549 |  |  | $ | 233,932 |
Less average goodwill |  |  | 46,839 |  |  |  | 46,839 |  |  |  | 46,875 |
Less average core deposit intangibles |  |  | 4,694 |  |  |  | 5,402 |  |  |  | 6,042 |
Average tangible common equity |  | $ | 267,453 |  |  | $ | 224,308 |  |  | $ | 181,015 |
Net income |  | $ | 9,010 |  |  | $ | 1,207 |  |  | $ | 9,191 |
Return on average tangible common equity |  |  | 13.40 | % |  |  | 2.14 | % |  |  | 20.14 | %
|  | 2016 |  | 2015
Pro forma return on average tangible common equity |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Tangible average equity |  | $ | 267,453 |  |  | $ | 224,308 |  |  | $ | 181,015 |
Pro forma net income |  | $ | 9,010 |  |  | $ | 10,033 |  |  | $ | 5,935 |
Pro forma return on average tangible common equity |  |  | 13.40 | % |  |  | 17.79 | % |  |  | 13.01 | %

Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data)
|  | 2016 |  | 2015
Pro forma core return on average tangible equity |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Pre-tax pro forma net income |  | $ | 13,797 |  |  | $ | 15,979 |  |  | $ | 9,652 |
Adjustments: |  |  |  |  |  |
Add non-core items |  |  | 2,426 |  |  |  | 4,628 |  |  |  | 3,444 |
Less pro forma core income tax expense |  |  | 5,739 |  |  |  | 7,672 |  |  |  | 5,043 |
Pro forma core net income |  | $ | 10,484 |  |  | $ | 12,935 |  |  | $ | 8,053 |
Pro forma core return on average tangible common equity |  |  | 15.60 | % |  |  | 22.94 | % |  |  | 17.65 | %
|  | 2016 |  | 2015
Pro forma core return on average assets and equity |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Net income |  | $ | 9,010 |  |  | $ | 1,207 |  |  | $ | 9,191 |
Average assets |  |  | 3,206,398 |  |  |  | 3,015,670 |  |  |  | 2,835,586 |
Average equity |  |  | 318,986 |  |  |  | 276,549 |  |  |  | 233,932 |
Return on average assets |  |  | 1.12 | % |  |  | 0.16 | % |  |  | 1.29 | %
Return on average equity |  |  | 11.24 | % |  |  | 1.74 | % |  |  | 15.59 | %
Pro forma core net income |  |  | 10,484 |  |  |  | 12,935 |  |  |  | 8,053 |
Pro forma core return on average assets |  |  | 1.30 | % |  |  | 1.71 | % |  |  | 1.13 | %
Pro forma core return on average equity |  |  | 13.08 | % |  |  | 18.61 | % |  |  | 13.66 | %
|  | 2016 |  | 2015
Pro forma core total revenue |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Net interest income |  | $ | 29,032 |  |  | $ | 27,617 |  |  | $ | 25,296 |
Noninterest income |  |  | 31,332 |  |  |  | 43,962 |  |  |  | 24,109 |
Less adjustments: |  |  |  |  |  |
Gain on sale of securities |  |  | - |  |  |  | 416 |  |  |  | 2 |
(Loss) gain on sales or write-downs of foreclosed and other assets |  |  | (349 | ) |  |  | 1,653 |  |  |  | (287 | )
Pro forma core total revenue |  | $ | 60,713 |  |  | $ | 69,510 |  |  | $ | 49,690 |
|  | 2016 |  | 2015
Core deposits |  | Fourth Quarter |  | Third Quarter |  | Fourth Quarter
Total deposits |  | $ | 2,671,562 |  |  | $ | 2,640,072 |  |  | $ | 2,438,474 |
Less jumbo time deposits |  |  | 60,124 |  |  |  | 64,275 |  |  |  | 52,320 |
Core deposits |  | $ | 2,611,438 |  |  | $ | 2,575,797 |  |  | $ | 2,386,154 |

CONTACT:
FB Financial Corporation
Media Contact:
Jeanie M. Rittenberry, 615-313-8328
jrittenberry@firstbankonline.com
www.firstbankonline.com
or
Financial Contact:
James R. Gordon, 615-564-1212
jgordon@firstbankonline.com
investorrelations@firstbankonline.com