FB Financial Corporation

Good morning, everyone, and welcome to FB Financial Corporation's fourth quarter 2021 earnings conference call. Hosting the call today from FB Financial is Chris Holmes, President and Chief Executive Officer. He is joined by Michael Mati, Chief Financial Officer. Wade Perry, Chief Administration Officer, and Wib Evans, President of FB Ventures, will also be available during the question and answer session. Please note FB Financial's earnings release, supplemental financial information, and this morning's presentation are available on the investor relations page of the company's website at www.firstbankonline.com and on the Securities and Exchange Commission's website at www.sec.gov. Today's call is being recorded and will be available for replay on FB Financial's website approximately one hour after the conclusion of today's call. At this time, all participants have been placed in a listen-only mode. The call will be open for questions after the presentation. With that, I would like to turn the conference call over to Robert Hohen, Director of Corporate Finance. Please go ahead.

Thank you, Jamie. During this presentation, FB Financial may make comments which constitute forward-looking statements under the federal securities laws. All forward-looking statements are subject to risks and uncertainties. and other facts that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to put under your lines on such forward-looking statements. A more detailed description of these and other risks is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K. Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to comparable GAAP measures is available in FB Financial's earnings release, supplemental financial information, and this morning's presentation. which are available on the investor relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. I would now like to turn the presentation over to Chris Holmes, our president and CEO.

Thank you, Robert, and good morning. Thank you all for joining us this morning. We always appreciate your interest in FB Financial. We had an excellent quarter as we delivered strong organic growth, reported EPS of $1.02, and continued growth in our tangible book value per share. Our tangible book value per share at year-end was $24.67. That represents a compound annual growth rate of 15.5% since the company became public in September of 2016. While our returns are slightly less than we've come to expect from ourselves, our return on average assets of 1.6% reported and 1.4% adjusted, and our return on tangible common equity of 16.8% reported and 14.7% adjusted are sound, given the extended ultra-low rate environment. Earnings for the quarter were strong and relatively straightforward. During last quarter's call, I mentioned that our regional presidents thought the fourth quarter would show activity that could get us to double-digit loan growth for the year. As usual, they were right, and we had 315 million of net loan growth, excluding PPP, or 17% annualized for the quarter. This puts us at nearly 11% for the full year. We also had very strong non-interest bearing deposit growth with 20% annualized for the quarter and 23% for the year. Our net interest margin was stable for the fourth quarter at 3.19% in a zero rate environment. Expenses were stable and as expected. Our asset quality continues to be very strong with NPA's assets holding flat with the third quarter at 50 basis points and classified loans as a percentage of total loans dropping by 14 basis points to 1.66%. Charge-offs for the year were very manageable, 8 basis points, and we had a provision release of $10.8 million in the quarter. which leaves our allowance for credit losses at a very healthy 1.65% loans HFI at year end. We did have a significant gain on our commercial loans held for sale during the quarter, primarily related to two relationships that exited the bank. One of those had been written down materially prior to the Franklin merger, and one paid off and had a mark against it. We've been consistently describing this portfolio from the date of announcement in January of 2020 until today. We marked it conservatively at the merger date. We have very capable people managing it, and we have continued to manage it to maximize returns as we've worked it out of the bank. We had $11.2 million of net gains on the portfolio in 2021. and we have $79 million in loans left. All those same factors that yielded positive results so far still hold and we look forward to maximizing the value of the remaining portfolio in 2022. As for the core portfolio of the Legacy Franklin Financial, its performance has been stellar. As we enter 2022 and we think about our outlook, our long-term Organic target for loans has been 10% to 12% annually. With the current environment and the momentum that we're carrying into the year, we believe that we'll be on the upper end of that range for 2022. We're targeting similar growth in non-interest-bearing deposits. Our net interest margin should remain stable until rates rise, and we're positioned for rising rates, and we expect margin expansion throughout the year as rates move upwards. Expenses will increase, as you would expect, with healthy revenue growth. We expect an expense growth in mid to high single digits in 2022. Moving to mortgage, as expected, the fourth quarter was a challenging environment as refinance volumes came down significantly. We expect these conditions to persist in the first quarter. I don't believe our mortgage contribution in the first quarter will look much different than it did in the fourth. In short, we believe that 2022 will present strong opportunities for organic growth. One other area of opportunity became public last week as we announced we were one of five founding bank members of the USDF Consortium, which will focus on doing foundational work to allow banks to leverage the breakthrough blockchain technology for responsible innovation and growth. We feel the use cases of USDF are nearly limitless And in every case, it provides efficiency and enhanced experience both for us and our customers. Our Chief Administrative Officer, Wade Perry, is on the call. Wade has led our digital strategy and our innovations area, plus he's a board member of the USDF Consortium. We will also continue to evaluate acquisition opportunities. Nearly 18 months after our combination with Franklin, we have a high degree of confidence in our ability to identify, negotiate, and execute on mergers in a manner that delivers value for customers, associates, and shareholders. With Franklin Merger, we combine with the dominant community bank in attractive markets and added new associates that play vital roles in managing the resulting company and significantly raise the overall talent level of the resulting institution. The wish list of partners that we've identified would have similar mass in markets that we want to be active in, both in footprint and contiguous to our footprint, and all those banks are known in their local markets as the cream of the community banking crop. I want to emphasize we don't need to pursue acquisitions for the sake of growth. We're very excited about our organic growth probabilities. If a bank hasn't made our list, then we're too focused on organic opportunities in front of us right now to distract our team with the care and effort that we put into the integration process. So with that, I'm going to turn it over to Michael to discuss our financial results in a little more detail.