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| 8-K - 8-K - FB Financial Corp | fbk-8k_20200212.htm |
First Quarter Investor Presentation February 12, 2020
IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORS In connection with the proposed merger with Franklin Financial Network, Inc. (“Franklin”), FB Financial Corporation (“FB Financial) will file a registration statement on Form S-4 with the Securities and Exchange Commission (“SEC”). The registration statement will contain the joint proxy statement of Franklin and FB Financial to be sent to the FB Financial and Franklin shareholders seeking their approvals in connection with the merger and the issuance of FB Financial common stock in the merger. The registration statement will also contain the prospectus of FB Financial to register the shares of FB Financial common stock to be issued in connection with the merger. A definitive joint proxy statement/prospectus will also be provided to FB Financial and Franklin shareholders as required by applicable law. Investors and shareholders are encouraged to read the registration statement, including the joint proxy statement/prospectus that will be part of the registration statement, as well as any other relevant documents filed by FB Financial and Franklin with the SEC, including any amendments or supplements to the registration statement and other documents filed with the SEC, because they will contain important information about the Franklin merger, Franklin, and FB Financial. The registration statement and other documents filed with the SEC may be obtained for free on the SEC’s website (www.sec.gov). The definitive proxy statement/prospectus will also be made available for free by contacting FB Financial Corporation Investor Relations at (615) 564-1212 or investors@firstbankonline.com, or by contacting Franklin Investor Relations at (615) 236-8327 or investors@franklinsynergy.com. This presentation does not constitute an offer to sell, the solicitation of an offer to sell or the solicitation of an offer to buy any securities, or the solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. PARTICIPANTS IN THE SOLICITATION FB Financial, Franklin, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from FB Financial and Franklin shareholders in connection with the proposed Franklin merger under the rules of the SEC. Information about the directors and executive officers of FB Financial may be found in the definitive proxy statement for FB Financial’s 2019 annual meeting of shareholders, filed with the SEC by FB Financial on April 16, 2019, and other documents subsequently filed by FB Financial with the SEC. Information about the directors and executive officers of Franklin may be found in the definitive proxy statement for Franklin’s 2019 annual meeting of shareholders, filed with the SEC by Franklin on April 12, 2019, and other documents subsequently filed by Franklin with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus when it becomes available. Free copies of these documents may be obtained as described in the paragraph above. 1
Forward–Looking Statements Certain statements contained in this presentation may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements relating to the timing, benefits, costs, and synergies of the proposed merger with Franklin (the “Franklin merger”) and of the proposed merger with FNB Financial Corp. (“FNB”) (together with the Franklin merger, the “mergers”), and FB Financial’s future plans, results, strategies, and expectations. 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,” “projection,” and other variations of such words and phrases and similar expressions. These forward-looking statements are not historical facts, and are based upon current expectations, estimates, and projections, many of which, by their nature, are inherently uncertain and beyond FB Financial’s control. The inclusion of these forward-looking statements should not be regarded as a representation by FB Financial or any other person that such expectations, estimates, and projections will be achieved. Accordingly, FB Financial 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) the risk that the cost savings and any revenue synergies from the mergers or another acquisition may not be realized or may take longer than anticipated to be realized, (2) disruption from the mergers with customer, supplier, or employee relationships, (3) the occurrence of any event, change, or other circumstances that could give rise to the termination of the merger agreement with Franklin, (4) the failure to obtain necessary regulatory approvals for the Franklin merger, (5) the failure to obtain the approval of FB Financial and Franklin’s shareholders in connection with the Franklin merger, (6) the possibility that the costs, fees, expenses, and charges related to the mergers may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities, (7) the failure of the conditions to the Franklin merger to be satisfied, (8) the risks related to the integrations of the combined businesses following the mergers, including the risk that the integrations will be materially delayed or will be more costly or difficult than expected, (9) the diversion of management time on issues related to the mergers, (10) the ability of FB Financial to effectively manage the larger and more complex operations of the combined company following the mergers, (11) the risks associated with FB Financial’s pursuit of future acquisitions, (12) the risk of expansion into new geographic or product markets, (13) reputational risk and the reaction of the parties’ respective customers to the mergers, (14) FB Financial’s ability to successful execute its various business strategies, including its ability to execute on potential acquisition opportunities, (15) the risk of potential litigation or regulatory action related to the Franklin merger, and (16) general competitive, economic, political, and market conditions. Further information regarding FB Financial and factors which could affect the forward-looking statements contained herein can be found in FB Financial's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, its Quarterly Reports on Form 10-Q for the three-month periods ended March 31, 2019, June 30, 2019 and September 30, 2019, and its other filings with the SEC. 2
Use of non-GAAP financial measures This presentation 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, adjusted net income, adjusted diluted earnings per share, adjusted pro forma net income, adjusted pro forma diluted earnings per share, core noninterest expense, core revenue, core noninterest income, core efficiency ratio (tax-equivalent basis), banking segment core efficiency ratio (tax-equivalent basis), mortgage segment core efficiency ratio (tax- efficiency basis), adjusted mortgage contribution, adjusted return on average assets and equity, pro forma return on average assets and equity, and pro form adjusted return on average assets and equity. Each of these non-GAAP metrics excludes certain income and expense items that the Company’s management considers to be non‐core/adjusted in nature. The Company refers to these non‐GAAP measures as adjusted or core measures. The corresponding Earnings Release also presents tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on tangible common equity, return on average tangible common equity, and adjusted return on average tangible common equity. Each of these non-GAAP metrics excludes 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 as management believes such measures facilitate period-to-period comparisons and provide meaningful indications of its operating performance as they eliminate both gains and charges that management views as non-recurring or not indicative of operating performance. 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 and prior periods. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding the Company’s 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 the Company calculates 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 the Company has 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. 3
Snapshot of FB Financial today Company overview Current organizational structure Second largest Nashville-headquartered bank and third largest Tennessee-based bank Originally chartered in 1906, one of the longest continually operated banks in Tennessee 100% stockholder of FirstBank Completed the largest bank IPO in Tennessee history in September 2016 Mr. James W. Ayers currently owns ~44% of FB Financial (~28% pro forma upon close of Franklin Financial Network merger) Attractive footprint in both high growth metropolitan markets and stable community markets Financial highlights ̶ Located in seven attractive metropolitan markets in Tennessee & Alabama Balance sheet data ($mm) 12/31/2019 ̶ Strong market position in twelve community markets Total assets $6,125 ̶ Mortgage offices located throughout footprint and strategically Loans - HFI 4,410 across the southeast, with a national online platform Total deposits 4,935 Provides community banking, relationship-based customer service with the products and capabilities of a larger bank Shareholder’s equity 762 ̶ Local people, local knowledge and local authority Key metrics (%) FY 2019 ̶ Personal banking, commercial banking, investment services, Adjusted ROAA (%) 1.55%1 trust and mortgage banking Adjusted ROATCE (%) 16.4%1 Completed acquisition of Atlantic Capital branches in April 2019 NIM (%) 4.34% Announced acquisition of FNB Financial Corporation in Scottsville, Core Efficiency (%) 65.4%1 KY on September 17, 2019 (~$250 million in assets) Tangible Common Equity / Tangible Assets (%) 9.7%1 Announced acquisition of Franklin Financial Network, Inc. (NYSE:FSB) on January 21, 2020 (~$3.8 billion in assets) Note: Unaudited financial data as of December 31, 2019. 1 Non-GAAP financial measure. See “Use of non-GAAP financial measures” and “Reconciliation of non-GAAP financial measures” in the Appendix hereto. 4
Recent corporate history 2015 2016 2017 2018 2019 Awarded Awarded Awarded Awarded Awarded “Top Workplaces” “Top Workplaces” “Top Workplaces” “Top Workplaces” “Top Workplaces” by the Tennessean by the Tennessean by the Tennessean by the Tennessean by the Tennessean Adj. ROAA1: 1.21% Adj. ROAA1: 1.46% Adj. ROAA1: 1.52% Adj. ROAA1: 1.69% Adj. ROAA1: 1.55% Adj. ROATCE1: 17.7% Adj. ROATCE1: 19.5% Adj. ROATCE1: 15.5% Adj. ROATCE1: 17.1% Adj. ROATCE1: 16.4% Year-End Assets: $2.9bn Year-End Assets: $3.3bn Year-End Assets: $4.7bn Year-End Assets: $5.1bn Year-End Assets: $10.3bn2 Completed acquisition of Converted core operating Completed acquisition of Finalized integration of Completed acquisition of 10 Northwest Georgia Bank, platform to Jack Henry Clayton Bank & Trust and Clayton Bank & Trust and net branches from Atlantic adding $79 million in loans American City Bank, American City Bank Capital Bank; moved from 7th and $246 million in Completed the largest bank adding $1.1 billion in loans acquisitions to 5th in Chattanooga MSA deposits and increasing IPO in Tennessee history; and $1.0 billion in deposits; deposit market share and Chattanooga MSA deposit priced for $19.00 per share moved from 41st in Initiated quarterly dividend 11th to 10th in Knoxville MSA market share to 8th Knoxville MSA to 10th; Completed secondary Converted treasury platform 20%+ EPS accretion and offering of 3.7 million tangible book neutral Completed mortgage common shares restructuring Announced pending acquisition of FNB Financial Corporation; will enter Bowling Green MSA ranked 7th in deposit market share 2020: Announced pending acquisition of Franklin Financial Network; on a pro forma basis move to 6th in the Nashville MSA in deposit market share from 12th;anticipate ~10% EPS accretion and tangible book value neutral at close 2 2015 2016 2017 2018 2019 1 Pro forma net income and tax-adjusted return on average assets and return on average tangible common equity include a pro forma provision for federal income taxes using a combined effective income tax rate of 35.08% and 36.75% for the years ended December 31, 2015 and 2016, respectively, and also includes the exclusion of a one-time tax charge from C Corp conversion in 3Q 2016 and the 4Q 2017 benefit from the 2017 Tax Cuts and Jobs Act. A combined effective tax rate of 26.06% is being applied for the years ended December 31, 2018 and 2019. See “Use of non-GAAP financial measures,” and “Reconciliation of non-GAAP financial measures” in the Appendix hereto. 2 Pro forma for pending acquisitions of FNB Financial Corp and Franklin Financial Network. 5
A leading community bank headquartered in Tennessee Top 10 banks in Tennessee1 Top 10 banks under $30bn assets in Tennessee1,2 Deposit Percent of Deposit Percent of TN TN Branches market company Branches market company Rank Name Headquarters deposits Rank Name Headquarters deposits (#) share deposits (#) share deposits ($bn) ($bn) (% ) (% ) (% ) (% ) 1 First Horizon Memphis, TN 164 $25.0 15.6% 42.0% 1 Pinnacle Nashville, TN 48 13.5 8.5% 69.3% 2 Regions Birmingham, AL 217 18.4 11.5% 18.7% 2 FB Financial Nashville, TN 75 7.5 4.7% 91.9% 3 BB&T Winston-Salem, NC 147 15.5 9.7% 4.7% 3 Wilson Bank & Trust Lebanon, TN 28 2.3 1.5% 100.0% 4 Pinnacle Nashville, TN 48 13.5 8.5% 69.3% 4 Reliant Bancorp Brentwood, TN 31 2.3 1.5% 100.0% 5 Bank of America Charlotte, NC 58 12.6 7.9% 0.9% 5 CapStar Financial Nashville, TN 22 2.1 1.3% 100.0% 6 FB Financial Nashville, TN 75 7.5 4.7% 91.9% 6 Simmons First Pine Bluff, AR 42 2.0 1.3% 12.4% 7 U.S. Bancorp Minneapolis, MN 90 3.5 2.2% 1.0% 7 Home Federal Knoxville, TN 23 1.7 1.1% 100.0% 8 Wilson Bank & Trust Lebanon, TN 28 2.3 1.5% 100.0% 8 SmartFinancial Knoxville, TN 24 1.7 1.1% 73.4% 9 Reliant Bancorp Brentwood, TN 31 2.3 1.5% 100.0% 9 Educational Loan Farragut, TN 14 1.6 1.0% 100.0% 10 Fifth Third Cincinatti, OH 36 2.3 1.4% 1.8% 10 Renasant Tupelo, MS 21 1.5 0.9% 14.7% #2 community bank in Tennessee2 Source: SNL Financial; Note: Deposit data as of June 30, 2019; Pro forma for completed acquisitions since June 30, 2019 and pending acquisitions announced as of February 4, 2020. 1 Sorted by deposit market share, deposits are limited to Tennessee. 2 Community bank defined as banks with less than $30bn in assets. 6
Strategic drivers Experienced Senior Management Team Strategic M&A and Elite Financial Capital Optimization Performance Scalable Platforms Enabled by Great Place to Work Technology Empowered Teams Across Attractive Metro and Community Markets 7
Balance between community and metropolitan markets Our pro forma footprint1 Metropolitan markets Bowling Community markets Green MSA Nashville Knoxville MSA MSA Jackson MSA Market rank by deposits: ̶ Nashville (6th) ̶ Chattanooga (5th) Memphis MSA ̶ Knoxville (9th) Chattanooga ̶ Jackson (3rd) MSA th Huntsville & Florence ̶ Bowling Green (7 ) MSAs ̶ Memphis (28th) ̶ Huntsville (19th) ̶ Florence (13th) Total loans (excluding HFS)2 Total full service branches2 Total deposits2 - $4.4bn - 68 branches - $4.9bn Other Mortgage / Other 12% 7% Community 41% Community Metropolitan 19% 69% Metropolitan Metropolitan 60% 59% Community 33% 1 Source: SNL Financial. Statistics are based upon county data. Market data is as of June 30, 2019 and is presented on a pro forma basis for completed acquisitions since June 30, 2019 and pending acquisitions as of February 4, 2020. Size of bubble represents size of company deposits in a given market. 2 Financial and operational data as of December 31, 2019. 8
Well positioned in attractive metropolitan markets Nashville rankings: “The new 'it' City” – The New York Times1 Chattanooga 4th largest MSA in TN Metro for professional and Most attractive mid-sized cities Diverse economy with over 24,000 businesses #1 business service jobs2 #2 for business3 Employs over 260,000 people Focused on attracting tech companies and start-ups; first municipality to debut Fastest growing large metro Healthiest economy in top 100 a gigabit network #3 economy4 #4 metro areas5 Memphis Home to leading companies…with more on the way 2nd largest MSA in TN AllianceBernstein LP to base 1,050 jobs in Davidson county Diversified business base and has the busiest cargo airport in North America North America HQ 11.5 million tourists visit annually, generating more than $3.3 billion for the local Amazon operations hub will economy in 2016 bring as many as 5,000 jobs Knoxville Nashville growth 3rd largest MSA in TN Approximately 14,000 warehousing and distribution jobs are in the area and Population growth 2010 – 2019 (%) account for an annual payroll of $3.8 billion 17.0% Well situated to attract the key suppliers and assembly operations in the 6.6% Southeast U.S. Nashville Huntsville Projected population growth 2019 – 2024 (%) Located in northern Alabama 6.8% 3.6% One of the strongest technology economies in the nation, with the highest concentration of engineers in the United States U.S. Nashville 6th largest county by military spending in the country Projected median HHI growth 2019 – 2024 (%) Jackson 8.8% 11.1% 8th largest MSA in TN Complements and solidifies our West Tennessee franchise U.S. Nashville FirstBank is an established leader with #3 market share Source: S&P Market Intelligence; Chattanooga, Knoxville, Memphis, Huntsville Chambers of Commerce, U.S. Department of Labor, Bureau of Labor Statistics, NAICS 1 January 9, 2013 “Nashville Takes its Turn in the Spotlight”; 2 Forbes, June 2017; 3 KPMG, April 2014; 4 Headlight Data, July 2017; 5 ACBJ, October 2017. 9
2019 highlights Key highlights Financial results 1 Adjusted diluted EPS of $2.83 for 2019, resulting in FY 2019 – Adjusted ROAA1 of 1.55% Diluted earnings per share $2.65 – Adjusted ROATCE1 of 16.4% Adjusted diluted earnings per share¹ $2.83 Loans (HFI) grew to $4.41 bn, a 20.2% increase from 4Q 2018 Net income ($mm) $83.8 – Organic growth of 10.0% Adjusted net income¹ ($mm) $89.3 Customer deposits grew to $4.91 bn, a 20.8% increase from 4Q 2018 Net interest margin 4.34% Impact of accretion and nonaccrual interest 18 – Organic growth of 6.3% (bps) Continued customer-focused balance sheet growth resulting in a net interest margin of 4.34% for 2019 Return on average assets 1.45% – Contractual yield on loans of 5.27% in 4Q 2019 Adjusted return on average assets¹ 1.55% – Cost of total deposits of 1.02% in 4Q 2019 Return on average tangible 15.4% Total pre-tax mortgage contribution, adjusted1 of $11.7 mm for common equity¹ 2019; completed mortgage restructuring in 3Q 2019 Adjusted return on average tangible common 16.4% equity¹ Completed acquisition of Atlantic Capital branches in East Tennessee and North Georgia in April 2019 Efficiency ratio 67.7% Core efficiency ratio¹ 65.4% Announced acquisition of FNB Financial Corporation in the Bowling Green, KY MSA on September 17, 2019; Tangible common equity / tangible assets¹ 9.7% Announced acquisition of Franklin Financial Network, Inc. in Williamson, Rutherford and Davidson counties in the Nashville MSA on January 21, 2020 1 Results are non-GAAP financial measures that adjust GAAP reported net income, total assets, equity and other metrics for certain intangibles, income and expense items as outlined in the non-GAAP reconciliation calculations, using a combined marginal income tax rate of 26.06% excluding one-time items. See “Use of non-GAAP financial measures” and the Appendix hereto for a discussion and reconciliation of non-GAAP financial measures. 10
Consistently delivering balanced profitability and growth Pro forma return on average assets, adjusted1,2 1.69% 1.52% 1.55% 1.46% 1.21% 0.91% 0.84% 2013 2014 2015 2016 2017 2018 2019 Drivers of profitability Loans/deposits Net interest margin Core Efficiency Ratio2 NPLs (HFI) / loans (HFI) (%) Loans excluding HFS Loans HFS 75.4% 4.66% 73.9% 73.1% 2.12% 101% 95% 4.46% 95% 4.34% 84% 88% 15% 70.6% 77% 81% 7% 6% 10% 4.10% 11% 19% 3.97% 3% 3.93% 68.1% 1.21% 65.8% 3.75% 65.4% 86% 88% 89% 0.68% 0.60% 74% 74% 70% 69% 0.54% 0.46% 0.32% 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 1 Pro forma net income and tax-adjusted return on average assets include a pro forma provision for federal income taxes using a combined effective income tax rate of 35.37%, 35.63%, 35.08%, and 36.75% for the years ended December 31, 2013, 2014, 2015, and 2016, respectively, and also includes the exclusion of a one-time tax charge from C Corp conversion in 3Q 2016 and the 4Q 2017 benefit from the 2017 Tax Cuts and Jobs Act. Non-GAAP financial measures. A combined effective tax rate of 26.06% is being applied for the years ended December 31, 2018 and 2019. 2 See “Use of non-GAAP financial measures,” and “Reconciliation of non-GAAP financial measures” in the Appendix hereto. 11
Net interest margin remains strong Historical yield and costs 7.0% Average interest earning assets ($mm) Yield on loans $6,000 Cost of deposits NIM 6.0% $5,000 5.0% $4,000 4.0% $3,000 3.0% ($mm) Yields Yields and Costs (%) $2,000 2.0% 1.0% $1,000 interestearning assetsAvg. -- $0 2013 2014 2015 2016 2017 2018 2019 NIM (%) 3.75% 3.93% 3.97% 4.10% 4.46% 4.66% 4.34% Impact of accretion and nonaccrual NA NA 0.01% 0.17% 0.24% 0.20% 0.18% interest (%)2 Deposit cost (%) 0.48% 0.36% 0.30% 0.29% 0.42% 0.76% 1.10% Loan (HFI) yield 2015 2016 2017 2018 2019 Contractual interest rate on loans HFI1 4.78% 4.69% 4.95% 5.42% 5.50% Origination and other loan fee income 0.28% 0.41% 0.32% 0.39% 0.31% 5.06% 5.10% 5.27% 5.81% 5.81% Nonaccrual interest collections2 NA 0.06% 0.14% 0.04% 0.02% Accretion on purchased loans 0.02% 0.20% 0.22% 0.23% 0.21% Loan syndication fees 0.05% 0.05% 0.03% 0.01% 0.00% Total loan yield (HFI) 5.13% 5.41% 5.66% 6.09% 6.04% 1 Includes tax-equivalent adjustment. 2 Data for nonaccrual interest collections not available prior to 2016. NA = not available 12
Consistent loan growth and balanced portfolio Total loan growth1 ($mm) and commercial real estate concentration % of Risk-Based Capital Commercial real estate (CRE) concentration 12/31/18 12/31/19 $4,410 C&D loans subject to 100% risk- $3,668 99% 88% $3,167 based capital threshold2 $1,702 $1,849 $1,341 $1,416 Total CRE loans subject to 300% 238% 247% risk-based capital threshold2 2013 2014 2015 2016 2017 2018 2019 Loan portfolio breakdown1 4Q18 4Q19 Other Other 6% 1-4 family 6% 1-4 family 15% 16% 1-4 family 1-4 family HELOC HELOC 5% 5% Multifamily Multifamily C&I 2% C&I 38% 37% 2% C&D C&D 15% 13% CRE CRE³ 19% 21% Total HFI loans: $3,668 million Total HFI loans: $4,410 million 1 Exclude HFS loans; C&I includes owner-occupied CRE; CRE excludes owner-occupied CRE. 2 Risk-based capital at FirstBank as defined in Call Report. 13
Stable core deposit franchise Total deposits ($mm) Cost of deposits 1 Noninterest bearing (%) Cost of total deposits (%) 30.0% 25.7% 26.1% 24.2% 25.0% 22.8% 22.8% 24.5% 19.8% 20.0% 1.10% 0.76% 15.0% $4,935 0.42% $4,172 10.0% $3,664 0.29% 0.48% $2,438 $2,672 5.0% 0.36% 0.30% $1,804 $1,924 0.0% 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 Noninterest bearing deposits ($mm)1 Deposit composition as of December 31, 2019 Time Noninterest- 24% bearing checking 25% Savings 4% $1,208 Interest-bearing $949 $888 checking $627 $697 $438 21% $357 Money market 2013 2014 2015 2016 2017 2018 2019 26% 46% Checking accounts 1 Includes mortgage servicing-related escrow deposits of $45.4 million, $53.7 million, $53.5 million and $92.6 million for the years ended December 31, 2016, 2017, 2018 and 2019, respectively. There were no mortgage servicing-related escrow deposits prior to those periods. 14
Mortgage operations overview Highlights Annual mortgage production Completed mortgage restructuring in 3Q 2019 with sale of Consumer Direct wholesale origination channels and back office right-sizing; Retail 2017 2018 2019 allows additional focus on enhancing retail channels and Wholesale improving operating efficiency moving forward Deployed new Consumer Direct digital platform which should improve cost per loan and response time with customers Total Mortgage pre-tax adjusted contribution1 of $11.7mm for 2019; adjusted for $2.0mm of restructuring related expenses, IRLC volume: $7.57bn $7.12bn $5.90bn 2 up 135% from 2018 IRLC pipeline : $504mm $319mm $453mm Refinance %: 42% 34% 56% Mortgage banking income $100.9mm for 2019, up 0.3% from Purchase %: 58% 66% 44% 2018 Mortgage banking income ($mm) Total pre-tax contribution, adjusted¹ (%) 2017 2018 2019 Banking (excluding retail footprint) Total Mortgage (including retail footprint) Gain on Sale $103.7 $98.1 $96.7 2016 2019 Fair value 10.0% $3.5 ($9.3) $3.5 changes 36.4% Servicing $13.2 $20.6 $17.7 Revenue Fair value ($3.5) ($8.7) ($17.0) 63.6% MSR changes Total 90.0% $116.9 $100.7 $100.9 Income ¹ See “Use of non-GAAP financial measures” and the Appendix hereto for a discussion and reconciliation of non-GAAP financial measures ² As of the respective period-end 15
Managing operating leverage Highlights Core efficiency ratio1 (tax-equivalent basis) Consolidated 2019 core efficiency ratio¹ of Banking Segment, declined 12.8 percentage points since 2013 65.4% Consolidated, declined 10.0 percentage points since 2013 Mortgage Segment Integration of Atlantic Capital branch acquisition completed and in line with 98.4% 95.9% 97.2% expectations 93.7% 86.6% 85.2% 82.7% 75.4% Continue to focus on mortgage efficiency 73.9% 73.1% improvements in order to enhance 71.5% 70.6% 69.3% 67.6% 68.1% 65.8% 65.4% profitability through the current rate 63.8% 60.6% 58.7% environment 56.5% Core bank operating expense growth in mid-single digits as company builds the foundation to cross $10 billion in asset size Continued investment in revenue producers, technology and operational capabilities to improve customer 2013 2014 2015 2016 2017 2018 2019 experience and provide scalability 1 Non-GAAP financial measure. See “Use of non-GAAP financial measures,” and “Reconciliation of non-GAAP financial measures” in the Appendix hereto. 16
Solid asset quality Nonperforming ratios Classified & PCI loans ($mm) NPLs (HFI) / loans (HFI) NPAs / assets¹ Classified Purchased credit impaired $89 2.12% $80 $70 $69 1.72% 1.53% $65 $66 $55 $55 $57 1.21% $46 1.01% 0.86% 0.77% 0.68% 0.58% 0.61% 0.54% 0.60% $21 0.46% $16 0.32% $0 $0 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 LLR / loans Net charge-offs (recoveries) / average loans 0.35% 2.41% 2.05% 1.50% 0.10% 0.12% 0.07% 1.18% 0.04% 0.00% 0.76% 0.79% 0.71% (0.13%) 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 1 Includes acquired excess land and facilities for all periods subsequent to the acquisition of the Clayton Banks and GNMA rebooked loans for 2017. 17
Strong capital position for future growth Capital position Tangible book value per share2 12/31/17 12/31/18 12/31/19 $18.55 $17.02 Shareholder’s equity / 12.6% 13.1% 12.4% $14.56 Assets $11.56 TCE / TA2 9.7% 10.5% 9.7% 3Q16 4Q17 4Q18 4Q19 Common equity tier 1 / 10.7% 11.7% 11.1% Risk-weighted assets Simple capital structure Tier 1 capital / Risk- Tier 2 ALLL 11.4% 12.4% 11.6% weighted assets Trust Preferred 5% 5% Total capital / Risk- 12.0% 13.0% 12.2% weighted assets Common Equity Tier 1 Capital Tier 1 capital / Average 90% 10.5% 11.4% 10.1% assets (Leverage Ratio) Total regulatory capital: $633.51 mm 1 Total regulatory risk based capital, FB Financial Corporation. 2 Non-GAAP financial measure. See “Use of non-GAAP financial measures,” and “Reconciliation of non-GAAP financial measures” in the Appendix hereto. 18
M&A strategy1 Drive times Glasgow Clarksville Tuscaloosa, AL: Kingsport ̶ Nashville ~3.5 hours Johnson ̶ Huntsville ~2 hours City Birmingham, AL: Asheville ̶ Nashville >3 hours ̶ Huntsville ~1.5 hours Atlanta, GA: Greenville ̶ Nashville ~3.5 hours ̶ Chattanooga <2 hours Greenville, SC: Atlanta FBK Current ̶ Nashville ~5 hours Birmingham ̶ Knoxville <3 hours FBK Pending Tuscaloosa Asheville, NC: Existing Markets ̶ Nashville ~4 hours Expansion Markets ̶ Knoxville ~2 hours Consolidation strategy across existing and contiguous markets Actively evaluate desirable opportunities in current and expansion Maintain positive, ongoing dialogue with targets to position markets, highlighted above ourselves as an option when they are ready to create a ̶ Financially attractive (EPS accretion, limit TBV dilution) partnership ̶ Cultural and strategic fit Potential targets in highlighted markets: Consolidate across Tennessee as attractive opportunities arise ̶ 26 banks headquartered in highlighted MSAs $400 million - Potential targets in current footprint: $3 billion in assets, 9 of which are greater than $1 billion ̶ ̶ 21 banks headquartered in TN between $400 million and 16 additional banks in community markets $400 million - $750 million in assets $3 billion, 3 of which are greater than $1 billion Existing FirstBank Mortgage offices in Tuscaloosa, Birmingham ̶ 9 banks between $750 million and $1 billion and Atlanta MSAs ̶ 12 banks $1 billion to $3 billion in assets 1 See Forward Looking Statements on slide 1 19
M&A update: announced merger with Franklin Financial Network, Inc. January 21, 2020 Company overview Financial highlights as of 12/31/2019 ($mm) ■ Ticker: FSB (NYSE) Assets $3,910 ■ Headquarters: Franklin, Tennessee Gross loans held for investment 2,804 Deposits 3,208 ■ Franchise highlights: Loan-to-deposit ratio 87% ̶ Top community bank in highly attractive Williamson and Rutherford counties Return on average assets (annualized) 1.01% 1 ̶ Relationship oriented with local decision making Core Efficiency Ratio 62.2% ̶ Seasoned team of local bankers—averaging ~20 years NPAs / Assets 0.09% of experience TCE / TA 10.4% CET1 12.4% Leading position in Williamson and Rutherford counties within the Nashville MSA Deposit Deposits Market Presence in Nashville MSA Instiution Rank ($mm) Share Branches Market demographics PF FirstBank / Franklin 1 $2,746 26.6% 12 11.8% 5-year Franklin 1 2,547 24.6% 8 deposit CAGR2 Bank of America 2 1,139 11.0% 4 $133k proj. median HHI First Horizon 3 923 8.9% 10 Regions 4 906 8.8% 9 2.3% median HHI proj. Williamson Reliant 5 879 8.5% 6 CAGR Pinnacle 1 $1,122 23.4% 8 9.2% 5-year PF FirstBank / Franklin 2 716 14.9% 9 deposit CAGR2 First Horizon 2 576 12.0% 7 $87k proj. median HHI Truist 3 539 11.3% 6 Regions 4 525 11.0% 9 3.0% median HHI proj. Rutherford Franklin branch Franklin 5 504 10.5% 6 CAGR Source: SNL Financial, FactSet; Note: Financial data as of December 31, 2019 ¹ Non-GAAP financial measure; ² CAGR shown with a deposit cap of $1bn 20
Franklin Financial Network, Inc. transaction overview ■ Deal value: $611 million ■ Consideration: ~95% stock / ~5% cash Consideration ■ Exchange ratio: Fixed exchange ratio of 0.9650x of FBK stock + $2.00 per share in cash 1 & structure ■ Pricing: 1.5x Price to tangible book value / 10x Price to 2021E synergized earnings ■ Pro forma ownership: 69% FB Financial / 31% Franklin Financial ̶ James W. Ayers pro forma ownership: ~28% ■ Earnings per share: ̶ 2020: ~5% accretion Financial ̶ 2021: ~10% accretion impact ■ Tangible book value per share: Neutral at close ■ Revenue synergies: Identified but not modeled Board of ■ Board of directors: Three independent members of Franklin Financial’s Board of Directors will be added directors to the FB Financial Board of Directors ■ Key employees: Key Franklin executives have entered into amended employment arrangements with FBK Employees & Community ■ Operations center: Pro forma company’s primary operations center and mortgage headquarters will be located in Franklin, TN ■ Approvals: Customary regulatory and FB Financial and Franklin Financial shareholders Approvals & ̶ James. W Ayers, 43.7% owner of FB Financial, has entered into a customary voting agreement to vote timing his shares in favor of the transaction ■ Expected closing: Third quarter of 2020 Source: FactSet; ¹ Based on FB Financial’s closing stock price of $38.80 as of January 17, 2020 21
M&A update: announced acquisition of FNB Financial Corp. September 17, 2019 Pro Forma footprint FNB highlights FBK Parent company of Farmers National Bank of Scottsville, which was founded FNB in 1923 FSB All 5 branches in the Bowling Green MSA, with 3 branches in Bowling Green and 2 branches in Scottsville Nashville MSA The Bowling Green MSA is the fastest growing MSA in Kentucky, is Bowling Green MSA contiguous to the Nashville MSA, and provides a natural expansion opportunity Quality deposit base with 30% noninterest bearing deposits & granular loan portfolio Farmers National Bank of Scottsville Selected Financials1 12/31/19 Total Assets $ 255,172 12/31/19 Loans HFI 178,603 12/31/19 ALLL 1,905 12/31/19 Deposits 205,957 12/31/19 Consolidated Equity(2) 41,218 2019 ROAA 1.11% 2019 Efficiency Ratio (FTE) 68.1% 4Q 2019 Net Interest Margin 4.00% 4Q 2019 Yield on Loans 5.79% 4Q 2019 Cost of Deposits 0.93% 12/31/19 NPAs / Assets 0.31% 12/31/19 Reserves / NPLs 238.4% 12/31/19 Reserves / Loans 1.07% 12/31/19 TCE / TA 16.1% Source: S&P Global Market Intelligence 12/31/19 Total RBC Ratio 22.0% 1 Financials are bank-level; 2 Consolidated FNB Financial Corp. equity. 22
FNB Financial Corp. transaction overview Expand into attractive Bowling Green MSA ranked 7th in deposit market share Dominant market share in Scottsville, KY with 54.5% of deposits Strong financial performer with net interest margin > 4.00% and ROAA > 1.15% Strategic Rationale Longstanding deposit relationships of a community bank founded in the 1920’s with a footprint in a high growth MSA Retain key management and local advisory board; similar culture Low execution risk; operate on same core processing system (Jack Henry) Transaction consideration of 954,827 shares of FBK common stock and $15.0 million of cash, or $51.9 million based on FBK closing price of $38.67 on September 16, 2019 Price / Tangible Book Value: 1.29x Transaction Price / LTM Net Income: 16.4x Summary Core Deposit Premium: 6.9% Transaction is subject to customary regulatory approvals and FNB shareholder approval; closing is expected February 2020 Immediate marginal EPS accretion (excluding one time charges and CECL related provision) Financial Neutral to TBVPS at close of the transaction (including CECL impact and one time charges) Impact Estimated neutral to regulatory capital ratios Source: S&P Global Market Intelligence 23
Appendix 24
Reconciliation of non-GAAP financial measures Pro forma net income, adjusted Pro forma diluted earnings per share, adjusted 1 2016 includes loss on sale of mortgage servicing rights, impairment of mortgage servicing rights, gain on sales or write-downs of other real estate owned and other assets and gain on sale of securities; 2015 includes bargain purchase gain and gain from securities; 2014 includes gain from securities; 2 The Company terminated its S-Corporation status and became a taxable corporate entity (“C Corporation”) on September 16, 2016 in connection with its initial public offering. Pro forma amounts for income tax expense, adjusted, and diluted earnings per share, adjusted, have been presented assuming the Company’s pro forma effective tax rate of 36.75%, 35.08%, 35.63%, and 35.37% for the years ended December 31, 2016, 2015, 2014, and 2013, respectively, and also includes the exclusion of a one-time tax change from C Corp conversion in 3Q 2016 and the 4Q 2017 benefit from the 2017 Tax Cuts and Jobs Act. 2019 and 2018 use a marginal tax rate on adjustments of 26.06%; 2017 uses a marginal tax rate on adjustments of 39.23%. 25
Reconciliation of non-GAAP financial measures (cont’d) Tax-equivalent core efficiency ratio1 1 Efficiency ratio (GAAP) is calculated by dividing non-interest expense by total revenue. 26
Reconciliation of non-GAAP financial measures (cont’d) Segment tax-equivalent core efficiency ratios 1 Includes mortgage segment other noninterest mortgage banking expense, depreciation, loss on sale of mortgage servicing rights and amortization and impairment of mortgage servicing rights. 27
Reconciliation of non-GAAP financial measures (cont’d) Tangible book value per common share and tangible common equity to tangible assets 28
Reconciliation of non-GAAP financial measures (cont’d) Pro forma return on average tangible common equity Pro forma return on average tangible common equity, adjusted 29
Reconciliation of non-GAAP financial measures (cont’d) Pro forma return on average assets and equity, adjusted 30
Reconciliation of non-GAAP financial measures (cont’d) Total mortgage contribution, adjusted ($) 31