Market Overview

FB Financial Corporation Reports Strong 2018 Second Quarter Results

Share:

Reported diluted EPS of $0.70; Adjusted diluted EPS of $0.72,
excluding offering-related expenses

Driven by 21.1% annualized loan growth; 17.3% annualized customer
deposit growth

Adjusted ROAA of 1.91%; NIM of 4.81%

FB Financial Corporation (the "Company") (NYSE:FBK), parent company of
FirstBank, reported net income of $22.1 million, or $0.70 per diluted
common share, for the second quarter of 2018, compared to net income of
$11.2 million, or $0.43 per diluted common share, for the second quarter
of 2017. Adjusting for nondeductible offering-related expenses, net
income was $22.7 million, or $0.72 per diluted common share, reflecting
growth of 60.0% per share, when compared to net income of $11.7 million,
or $0.45 per diluted common share for the second quarter of 2017, which
excluded pre-tax merger-related expenses.

President and Chief Executive Officer Christopher T. Holmes stated, "Our
team continues to deliver outstanding performance driven by growth in
loans and deposits, which was balanced across markets and products. Our
adjusted ROAA of 1.91% and our net interest margin of 4.81% are among
the best in the industry. Our associates take pride in our elite
financial performance and that is part of the culture of our company. We
believe our disciplined, long-term approach positions us well for the
future, including the last half of 2018."

Performance Summary

         
  For the Three Months Ended June 30,
(dollars in thousands, except share data) 2018   2017

Results of operations

Net interest income $ 51,517 $ 30,427
NIM 4.81 % 4.19 %
Provision for loan losses $ 1,063 $ (865 )
Net (recovery) charge-off ratio (0.11 %) (0.25 %)
Noninterest income $ 35,708 $ 35,657
Mortgage banking income 28,544 30,239
Total mortgage banking pre-tax contribution, adjusted(1) 10.4 % 29.6 %
Total revenue $ 87,225 $ 66,084
Noninterest expenses 56,303 49,136
Merger/offering-related expenses 671 767
Efficiency ratio 64.5 % 74.4 %
Core efficiency ratio(1) 62.1 % 70.2 %
Net income 22,065 11,239
Diluted earnings per share $ 0.70 $ 0.43
Effective tax rate 26.1 % 36.9 %
Net income, adjusted(1) $ 22,736 $ 11,705
Diluted earnings per share, adjusted(1) $ 0.72 $ 0.45
Weighted average number of shares - diluted 31,294,044 26,301,458

Actual shares outstanding - period end

30,683,353 28,968,160

Returns on average:

Assets 1.86 % 1.40 %
Adjusted(1) 1.91 % 1.46 %
Equity 14.4 % 11.3 %
Tangible common equity (1) 19.0 % 13.0 %
  Adjusted(1)     19.6 %     13.5 %

(1)

Certain measures are considered non-GAAP financial measures.
See "Use of non-GAAP Financial Measures" and the corresponding
non-GAAP reconciliation tables in the Supplemental Financial
Information as well as "Use of non-GAAP Financial Measures" and
the Appendix in the Earnings Release Presentation issued July 23,
2018.

 

                         
  2018   2017   Annualized    
(dollars in thousands)

Second
Quarter

  First Quarter

Second
Quarter

2Q18 / 1Q18

% Change

2Q18 / 2Q17

% Change

Balance Sheet Highlights

 
Investment securities $ 611,435 $ 597,347 $ 553,357 9.5% 10.5%
Loans - held for sale 374,916 414,518 427,416 -38.3% -12.3%
Loans - held for investment 3,415,575 3,244,663 1,970,974 21.1% 73.3%
Allowance for loan losses 26,347 24,406 23,247 31.9% 13.3%
Total assets 4,923,249 4,725,416 3,346,570 16.8% 47.1%
Customer deposits 3,844,009 3,684,758 2,726,060 17.3% 41.0%
Total deposits 3,909,863 3,766,151 2,727,593 15.3% 43.3%
  Total shareholders' equity     630,959       611,075       509,517     13.1%     23.8%

Tangible book value per share(1)

$ 15.66 $ 14.99 $ 15.83
 

Tangible common equity to tangible assets (1)

    10.1 %     10.2 %     13.9 %            

(1)

Certain measures are considered non-GAAP financial measures.
See "Use of non-GAAP Financial Measures" and the corresponding
non-GAAP reconciliation tables in the Supplemental Financial
Information as well as "Use of non-GAAP Financial Measures" and
the Appendix in the Earnings Release Presentation issued July 23,
2018.

 

Continued Focus on Execution of Strategy Drives
Growth and Profitability

"Our annualized 21.1% loan and 17.3% customer deposit growth in the
quarter was outstanding, driven by the needs of our existing customers
and the addition of new customer relationships. These results
demonstrate the capacity of our team to balance strong growth in
revenue, loans and deposits while delivering peer-leading margins and
controlling expenses. Our loan growth, deposit growth and net interest
margin were all stronger than previous quarters, and above our long-term
targets. We expect loan growth to settle back into our 10%-12% target
range in the last half of 2018, but our success in the first half of the
year should cause us to exceed our planned growth range for the year,"
Holmes said.

Holmes continued, "Pricing and terms will always be competitive in a
crowded industry, but we will continue to focus on delivering both
growth and profitability. We believe our market-focused operating model
is built to withstand the ebbs and flows of the interest rate and credit
markets. Continuing to grow our customer deposits is important to our
success and will come with accelerating increases in our cost of
deposits and our deposit beta. Our deposit beta was a manageable 28%
this quarter and we expect deposit betas to move upward in the coming
quarters, partially offset by positive loan betas."

The Company's net interest margin (NIM) was 4.81% for the second quarter
of 2018, compared to 4.64% and 4.19% for the first quarter of 2018 and
the second quarter of 2017, respectively. This improvement was attained
through contractual loan yield expansion and funding cost containment.
Accretion related to purchased loans and collections of nonaccrual
interest contributed 20 basis points to the Company's NIM compared to 20
and 15 basis points for the first quarter of 2018 and the second quarter
of 2017, respectively.

"As we indicated during our first quarter earnings call, we expected our
adjusted net interest margin, which was a healthy 4.61%, to exceed the
top-end of our long-term range. This is reflective of focusing on
customer relationships versus wholesale business, capitalizing on fee
opportunities and benefitting from the rising rate environment on loan
yields," Holmes commented.

Noninterest Income Remains Stable

Noninterest income was $35.7 million for the second quarter of 2018,
compared to $33.3 million for the first quarter of 2018 and $35.7
million for the second quarter of 2017. Mortgage banking income was
$28.5 million for the second quarter of 2018, compared to $26.5 million
for the first quarter of 2018 and $30.2 million for the second quarter
of 2017.

Holmes commented, "This quarter, our mortgage business represented 10.4%
of the Company's adjusted pre-tax income compared to 29.6% for the
second quarter of 2017. These results reflect our near-term plan of
growing our Banking Segment faster than our Mortgage Segment to maintain
a total mortgage pre-tax contribution in the 10%-15% range. Our mortgage
team continues to deliver significant noninterest income in the face of
declining volumes and margin pressures in the mortgage business."

Continuing to Improve Operating Efficiency

Noninterest expense was $56.3 million for the second quarter of 2018,
compared to $56.2 million for the first quarter of 2018 and $49.1
million for the second quarter of 2017. Excluding the
merger/offering-related expenses, noninterest expense was $55.6 million
for the second quarter of 2018, compared to $55.0 million for the first
quarter of 2018 and $48.4 million for the second quarter of 2017.

Chief Financial Officer, James R. Gordon, stated, "Our year-over-year
operating leverage from organic growth, merger and ongoing cost
efficiencies is best illustrated by the improvement in our Banking
Segment efficiency ratio to 51.7% from 60.4% for the same period last
year. Further demonstrating our progress, the Company's total revenue
has increased by more than twice the rate of its total noninterest
expense when compared to the same period last year."

Strong Asset Quality

During the second quarter of 2018, we recognized a provision for loan
losses of $1.1 million, reflecting loan growth, stable fundamental
credit metrics and net recoveries of 0.11% of average loans. Our
nonperforming assets decreased from the previous quarter to $25.8
million, or 0.52% of total assets. Nonperforming loans declined to 0.26%
of loans held for investment at June 30, 2018, compared to 0.30% at
March 31, 2018.

Capital Strength for Future Growth

"We continue to generate capital at a strong pace, with an increase in
tangible book value per share of 35.5% since our IPO in September 2016,
which should continue to sustain both organic and acquired growth in
future periods. Our tangible common equity to tangible assets ratio of
10.1% this quarter continues to provide us strategic and tactical
flexibility, and supports our quarterly cash dividend of six cents per
share," commented Gordon.

Summary

"By focusing on serving our customers, understanding our markets and
adhering to our core values, our associates continue to deliver
outstanding results. We believe the Company is well-positioned to
continue our performance across our attractive markets. We appreciate
our customers, associates and shareholders and thank you for your
continued support," Holmes concluded.

WEBCAST AND CONFERENCE CALL INFORMATION

The live broadcast of FB Financial Corporation's earnings conference
call will begin at 8:00 a.m. CT on Tuesday, July 24, 2018, and the
conference call will be broadcast live over the Internet at https://services.choruscall.com/links/fbk180724yyYSkAAU.html.
An online replay will be available for twelve months approximately an
hour following the conclusion of the live broadcast.

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 community bank, with 56 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
approximately $4.9 billion in total assets.

SUPPLEMENTARY FINANCIAL INFORMATION AND EARNINGS PRESENTATION

Investors are encouraged to review this Earnings Release in conjunction
with the Supplemental Financial Information and Earnings Presentation
posted on the Company's website, which can be found at https://investors.firstbankonline.com.
This Earnings Release, the Supplemental Financial Information and the
Earnings Presentation are also included with a Current Report on Form
8-K that the Company furnished to the U.S. Securities and Exchange
Commission (SEC) on July 23, 2018.

BUSINESS SEGMENT RESULTS

The Company has included its business segment financial tables as part
of this Earnings Release. A detailed discussion of our business segments
is included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2017, and investors are encouraged to review that
discussion in conjunction with this Earnings Release.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Earnings Release are
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 Company's
assets, business, cash flows, condition (financial or otherwise), credit
quality, financial performance, liquidity, short and long-term
performance goals, prospects, results of operations, strategic
initiatives and the timing, benefits, costs and synergies of future
acquisition, disposition and other growth opportunities. These
statements, which are based upon certain assumptions and estimates and
describe the Company's future plans, results, strategies and
expectations, 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 about the Company's
industry, management's beliefs and certain assumptions made by
management, many of which, by their nature, are inherently uncertain and
beyond the Company's control. The inclusion of these forward-looking
statements should not be regarded as a representation by the Company or
any other person that such expectations, estimates and projections will
be achieved. Accordingly, the Company cautions 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 and that are beyond the Company's control. Although the
Company believes that the expectations reflected in these
forward-looking statements are reasonable as of the date of this
Earnings Release, 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 in this Earnings
Release including, without limitation, the risks and other factors set
forth in the Company's Annual Report on Form 10-K for the year ended
December 31, 2017, filed with the SEC on March 16, 2018 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. If one or more events related to these or other
risks or uncertainties materialize, or if the Company's underlying
assumptions prove to be incorrect, actual results may differ materially
from the forward-looking statements. Accordingly, investors should not
place undue reliance on any such forward-looking statements. Any
forward-looking statement speaks only as of the date of this Earnings
Release, and the Company does not undertake any obligation to publicly
update or review any forward-looking statement, whether as a result of
new information, future developments or otherwise, except as required by
law. New risks and uncertainties may emerge from time to time, and it is
not possible for the Company to predict their occurrence or how they
will affect the Company.

GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL MEASURES

This Earnings 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, adjusted net
income, adjusted diluted earnings per share, core net income, core
diluted earnings per share, core noninterest expense and core
noninterest income, core efficiency ratio (tax equivalent basis),
Banking segment core efficiency ratio (tax equivalent basis), Mortgage
segment core efficiency ratio (tax equivalent basis), adjusted mortgage
contribution, core return on average assets and equity and core total
revenue. Each of these non-GAAP metrics excludes 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 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, adjusted return on
average assets, adjusted return on average equity, core 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. See
the "Use of non-GAAP Financial Measures" and the corresponding non-GAAP
reconciliation tables in the Supplemental Financial Information as well
as "Use of non-GAAP Financial Measures" and the Appendix in the Earnings
Release Presentation issued July 23, 2018 for a discussion and
reconciliation of these measures to the most directly comparable GAAP
financial measures.

     
Financial Summary and Key Metrics
(Unaudited)
(In Thousands, Except Share Data and %)
 
2018 2017
    Second Quarter   First Quarter Second Quarter
Statement of Income Data
Total interest income $ 59,043 $ 54,848 $ 33,278
Total interest expense   7,526       6,419     2,851  
Net interest income 51,517 48,429 30,427
Provision for loan losses 1,063 317 (865 )
Total noninterest income 35,708 33,275 35,657
Total noninterest expense   56,303       56,151     49,136  
Net income before income taxes 29,859 25,236 17,813
Income tax expense   7,794       5,482     6,574  
Net income $ 22,065     $ 19,754   $ 11,239  
Net interest income (tax—equivalent basis) $ 51,909     $ 48,799   $ 31,158  
Net income, adjusted* $ 22,736     $ 20,636   $ 11,705  
Per Common Share
Diluted net income $ 0.70 $ 0.63 $ 0.43
Diluted net income, adjusted* $ 0.72 $ 0.66 $ 0.45
Book value 20.56 19.92 17.59
Tangible book value* 15.66 14.99 15.83
Weighted average number of shares-diluted 31,294,044 31,421,830 26,301,458
Period-end number of shares     30,683,353       30,671,763       28,968,160  
Selected Balance Sheet Data
Cash and due from banks $ 67,863 $ 53,060 $ 59,112
Loans held for investment (HFI) 3,415,575 3,244,663 1,970,974
Allowance for loan losses (26,347 ) (24,406 ) (23,247 )
Loans held for sale 374,916 414,518 427,416
Investment securities, at fair value 611,435 597,347 553,357
Other real estate owned, net 14,639 15,334 6,370
Total assets 4,923,249 4,725,416 3,346,570
Customer deposits 3,844,009 3,684,758 2,726,060
Brokered and internet time deposits 65,854 81,393 1,533
Total deposits 3,909,863 3,766,151 2,727,593
Borrowings 326,897 278,293 43,790
Total shareholders' equity     630,959       611,075       509,517  
Selected Ratios
Return on average:
Assets 1.86 % 1.71 % 1.40 %
Shareholders' equity 14.4 % 13.4 % 11.3 %
Tangible common equity* 19.0 % 17.9 % 13.0 %
Average shareholders' equity to average assets 12.9 % 12.8 % 12.4 %
Net interest margin (NIM) (tax-equivalent basis) 4.81 % 4.64 % 4.19 %
Efficiency ratio (GAAP) 64.5 % 68.7 % 74.4 %
Core efficiency ratio (tax-equivalent basis)* 62.1 % 65.5 % 70.2 %
Loans held for investment to deposit ratio 87.4 % 86.2 % 72.3 %
Total loans to deposit ratio 96.9 % 97.2 % 87.9 %
Yield on interest-earning assets 5.51 % 5.25 % 4.57 %
Cost of interest-bearing liabilities 0.96 % 0.85 % 0.55 %
Cost of total deposits     0.62 %     0.55 %     0.34 %
Credit Quality Ratios
Allowance for loan losses as a percentage of loans held for
investment
0.77 % 0.75 % 1.18 %

Net (recoveries) charge-off's as a percentage of average loans
held for investment

(0.11 )% (0.01 )% (0.25 )%

Nonperforming loans held for investment as a percentage of total
loans held for investments

0.26 % 0.30 % 0.50 %
Nonperforming assets as a percentage of total assets     0.52 %     0.59 %     0.58 %
Preliminary capital ratios (Consolidated)
Shareholders' equity to assets 12.8 % 12.9 % 15.2 %
Tangible common equity to tangible assets* 10.1 % 10.2 % 13.9 %
Tier 1 capital (to average assets) 10.9 % 10.7 % 15.5 %
Tier 1 capital (to risk-weighted assets) 11.4 % 11.8 % 18.3 %
Total capital (to risk-weighted assets) 12.0 % 12.3 % 19.1 %
Common Equity Tier 1 (to risk-weighted assets) (CET1)     10.7 %     11.0 %     17.2 %
 
*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 reconciliations of these
Non-GAAP measures. Investors are encouraged to refer to the
discussion of non-GAAP measures included in the corresponding
earnings release.
 

     
Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data and %)
 
2018 2017
Net income, adjusted   Second Quarter   First Quarter Second Quarter
Pre-tax net income $ 29,859 $ 25,236 $ 17,813
Plus merger and offering-related expenses 671 1,193 767

Less significant gains (losses) on securities, other real estate
owned and other items

  -     -     -  
Pre-tax net income, adjusted $ 30,530 $ 26,429 $ 18,580
Income tax expense, adjusted   7,794     5,793     6,875  
Net income, adjusted $ 22,736   $ 20,636   $ 11,705  
Weighted average common shares outstanding fully diluted 31,294,044 31,421,830 26,301,458
 
Diluted earnings per share, adjusted
Diluted earnings per common share $ 0.70 $ 0.63 $ 0.43
Plus merger and offering-related expenses 0.02 0.04 0.03

Less significant gains (losses) on securities, other real estate
owned and other items

- - -
Less tax effect   -     (0.01 )   (0.01 )
Diluted earnings per share, adjusted   $ 0.72   $ 0.66     $ 0.45  
 
Previously, the Company adjusted reported net income for the
following items: (i) change in fair value in MSRs, net, and (ii)
Gains (losses) from securities, OREO, MSRs, other assets, and other
items. Beginning with the first quarter of 2018, the Company is only
adjusting reported earnings for (i) merger and conversion costs; and
(ii) other significant items impacting comparability between
quarterly and annual periods including costs related to the
secondary stock offering completed by our primary shareholder during
the second quarter of 2018. Prior periods have been adjusted to
conform to this presentation, see below for previously reported
amounts:
 
2017
Previously reported core results*           Second Quarter
Core net income $ 12,919
Core diluted earnings per share           $ 0.49  
 
* Non-GAAP reconciliations of previously reported core results
are included in previously issued earnings release supplements.
 

 
Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data and %)
     
2018 2017
Core efficiency ratio (tax-equivalent basis)   Second Quarter   First Quarter Second Quarter
Total noninterest expense $ 56,303 $ 56,151 $ 49,136
Less merger and offering-related expenses 671 1,193 767
Less loss on sale of mortgage servicing rights   -       -     249  
Core noninterest expense $ 55,632     $ 54,958   $ 48,120  
Net interest income (tax-equivalent basis) 51,909 48,799 31,158
Total noninterest income 35,708 33,275 35,657
Less change in fair value on mortgage servicing rights (1,778 ) (1,713 ) (1,840 )

Less (loss) gain on sales or write-downs of other real estate
owned and other assets

(132 ) (118 ) 62
Less (loss) gain from securities, net   (97 )     (47 )   29  
Core noninterest income   37,715       35,153     37,406  
Core revenue $ 89,624     $ 83,952   $ 68,564  
Efficiency ratio (GAAP)(1) 64.5 % 68.7 % 74.4 %
Core efficiency ratio (tax-equivalent basis)     62.1 %     65.5 %     70.2 %
 
(1) Efficiency ratio (GAAP) is calculated by dividing reported
noninterest expense by reported total revenue.
 
2018 2017
Banking segment core efficiency ratio (tax equivalent)   Second Quarter   First Quarter Second Quarter
Core consolidated noninterest expense $ 55,632 $ 54,958 $ 48,120
Less Mortgage segment noninterest expense 19,582 18,910 19,802
Add loss on sale of mortgage servicing rights   -       -     249  
Adjusted Banking segment noninterest expense   36,050       36,048     28,567  
Adjusted core revenue 89,624 83,952 68,564
Less Mortgage segment noninterest income 21,650 20,363 23,121
Less change in fair value on mortgage servicing rights   (1,778 )     (1,713 )   (1,840 )
Adjusted Banking segment total revenue $ 69,752 $ 65,302 $ 47,283
Banking segment core efficiency ratio (tax-equivalent basis) 51.7 % 55.2 % 60.4 %
 
Mortgage segment core efficiency ratio (tax equivalent)
Consolidated Noninterest expense $ 56,303 $ 56,151 $ 49,136
Less loss on sale of mortgage servicing rights - - 249
Less Banking segment noninterest expense   36,721       37,241     29,334  
Adjusted Mortgage segment noninterest expense $ 19,582 $ 18,910 $ 19,553
Total noninterest income 35,708 33,275 35,657
Less Banking segment noninterest income 14,058 12,912 12,536
Less change in fair value on mortgage servicing rights   (1,778 )     (1,713 )   (1,840 )
Adjusted Mortgage segment total revenue $ 23,428     $ 22,076   $ 24,961  
Mortgage segment core efficiency ratio (tax-equivalent basis)     83.6 %     85.7 %     78.3 %
 
2018 2017
Mortgage contribution, adjusted   Second Quarter   First Quarter Second Quarter
Mortgage segment pre-tax net contribution $ 1,916 $ 1,111 $ 3,747
Retail footprint:
Mortgage banking income 6,894 6,108 7,118
Mortgage banking expenses   5,649       5,097     5,368  

Retail footprint pre-tax net contribution

  1,245       1,011     1,750  
Total mortgage banking pre-tax net contribution $ 3,161     $ 2,122   $ 5,497  
Pre-tax net income 29,859 25,236 17,813
% total mortgage banking pre-tax net contribution 10.6 % 8.4 % 30.9 %
Pre-tax net income, adjusted 30,530 26,429 18,580
% total mortgage banking pre-tax net contribution, adjusted     10.4 %     8.0 %     29.6 %
 

     
Non-GAAP Reconciliation
For the Quarters Ended
(Unaudited)
(In Thousands, Except Share Data and %)
 
2018 2017
Tangible assets and equity   Second Quarter   First Quarter Second Quarter
Tangible Assets
Total assets $ 4,923,249 $ 4,725,416 $ 3,346,570
Less goodwill 137,190 137,190 46,867
Less intangibles, net   13,203       14,027     4,048  
Tangible assets $ 4,772,856     $ 4,574,199   $ 3,295,655  
Tangible Common Equity
Total shareholders' equity $ 630,959 $ 611,075 $ 509,517
Less goodwill 137,190 137,190 46,867
Less intangibles, net   13,203       14,027     4,048  
Tangible common equity $ 480,566     $ 459,819   $ 458,602  
Common shares outstanding 30,683,353 30,671,763 28,968,160
Book value per common share $ 20.56 $ 19.92 $ 17.59
Tangible book value per common share $ 15.66 $ 14.99 $ 15.83
Total shareholders' equity to total assets 12.8 % 12.9 % 15.2 %
Tangible common equity to tangible assets 10.1 % 10.2 % 13.9 %
Net income $ 22,065 $ 19,754 $ 11,239
Return on tangible common equity     18.4 %     17.4 %     9.8 %
 
2018 2017
Return on average tangible common equity   Second Quarter   First Quarter Second Quarter
Total average shareholders' equity $ 615,950 $ 599,198 $ 398,805
Less average goodwill 137,190 137,190 46,839
Less average intangibles, net   13,615       14,465     4,124  
Average tangible common equity $ 465,145 $ 447,544 $ 347,842
Net income $ 22,065 $ 19,754 $ 11,239
Return on average tangible common equity     19.0 %     17.9 %     13.0 %
 
2018 2017

Return on average tangible common equity, adjusted

  Second Quarter   First Quarter Second Quarter
Average tangible common equity 465,145 447,544 347,842
Net income, adjusted $ 22,736 $ 20,636 $ 11,705

Return on average tangible common equity, adjusted

    19.6 %     18.7 %     13.5 %
 
2018 2017
Return on average assets and equity, adjusted   Second Quarter   First Quarter Second Quarter
Net income $ 22,065 $ 19,754 $ 11,239
Average assets 4,763,991 4,678,494 3,224,783
Average equity 615,950 599,198 398,805
Return on average assets 1.86 % 1.71 % 1.40 %
Return on average equity 14.4 % 13.4 % 11.3 %
Net income, adjusted 22,736 20,636 11,705
Return on average assets, adjusted 1.91 % 1.79 % 1.46 %
Return on average equity, adjusted     14.8 %     14.0 %     11.8 %
 
2017
Previously reported core metrics*           Second Quarter
Core return on average tangible common equity 14.9 %
Core return on average assets 1.61 %
Core return on average equity 13.0 %
Core total revenue           $ 67,833  
* Non-GAAP reconciliations of previously reported core results
are included in previously issued earnings release supplements.

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