Good morning and welcome to FB Financial Corporation's Third Quarter 2018 Earnings Conference Call. Hosting today's call from FB Financial is Chris Holmes, President and Chief Executive Officer. He is joined by James Gordon, Chief Financial Officer and Wib Evans, President of FB Ventures who will 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. Today’s call is being recorded and will be available for replay on FB Financial’s website for the next 12 months. At this time, all participants have been placed in a listen-only mode. The call will be open for questions after the presentation. During this presentation, FB Financial may make comments which constitute forward-looking statements. All forward-looking statements are subject to risk and uncertainties and other facts that may cause actual results and performances 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 undue reliance on such forward-looking statements. A more detailed description of these and other risks is contained in FB Financial’s 10-K filed with the SEC. 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 such 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 on FB Financial's website at www.firstbankonline.com. I would now like to turn the presentation over to Chris Holmes, FB Financial’s President and CEO. Please go ahead, sir.

All right. Thank you very much, Reilly and good morning. Thank you all for joining us on this call to review our results for the third quarter of 2018. We appreciate your interest in FB Financial. On today’s call, I am going to review the highlights of the third quarter, and then I'll turn the call over to James Gordon, our Chief Financial Officer, who will provide additional analysis on our financial results followed by your questions. Our team delivered outstanding growth and profitability this quarter. The relevant themes for the company; are one, loan growth deposit growth and margin; two, mortgage; three, credit; and four, capital. These themes are the same as most quarters but as always we’re going to give you some deeper insight into results and our outlook for the company. On the first one of those items, we grew loan growth deposit growth and margin into one theme because you can't have an important conversation about one without considering all three. Our growth in loans of 14.3% and customer deposits of 17.9% over the last three months has been outstanding. Our banking team has executed at a very high level all year with year-to-date annualized growth rate of 15.7% in loans and 16.4% in deposits. What makes the growth even more impressive is our 4.71% margin for the quarter or 4.46% excluding accretion in nonaccrual interest collections. Loan and deposit growth is easy without delivering profitability for growth what our margin requires balance and execution and again credit goes to our bank team. Since approximately 60% of our total revenue for each of the past three quarters has come from net interest income, these are some of our most important metrics and the ones that continue to be our strongest. Our loan growth rate for the…

Thanks, Chris and good morning everyone. First, I want to recap our operating results for the quarter as highlighted on Slide 3. Our diluted earnings per share was $0.68 on net income of $21.4 million delivering a solid return on average assets of 1.72% and a return on average tangible common equity of 17.4%. Our year-over-year performance was driven by outstanding organic growth, the Clayton Bank’s acquisition and the benefits from the enacted tax reform offset by high provision for loan losses of $1.8 million due primarily to loan growth and normalized net charge off of six basis points this quarter compared to net reversal of 800,000 last year driven by net recoveries of 15 basis points. Slide 4 illustrates the underlying fundamental trends of the company's profitability and demonstrates the consistent performance that we are targeting. Our adjusted return on average assets is 1.81% year-to-date demonstrating the strength and durability of core franchises earning power which enables consistent growth and profitability. This sustained level of profitability has been driven by strong loan growth, a strong margin supported by our low-cost customer deposit base, stable non-interest income, expense control and fundamental sound credit quality while being slightly offset by a challenging mortgage environment. Slide 5 presents the fundamental elements of our net interest margin, in particular, our healthy loan yields, fees and low cost core deposit portfolio. As Chris mentioned our deposit cost increased as we focused on growing time deposits this quarter but our net interest margin remains strong at 4.71%. As you can see, our net interest margin again was benefited by about 25 basis points of accretion and nonaccrual interest collections. Our core NIM of 4.46% settled into the upper end of our long-term guidance range of 4.25% to 4.5%. We expect to remain in that range…

Thank you, James. Overall, we did deliver strong performance and we're proud of our team. We appreciate your interest and investment in FB Financial. Operator, that completes our prepared remarks this morning and we would like to open this call for questions please.

[Operator Instructions] And we'll take our first question from Catherine Mealor with KBW. Please go ahead.

We discussed first on deposits, James, you mentioned that there is a CD campaign this past quarter and then you also talked about some of the brokerage CDs that you added on. Could you give us the incremental cost of each of those CDs that you added on this quarter?

The CD campaign, so we had an 11 months CD at 2.55%, then a 25 month CD at 3%. So the average was kind of in the middle of that, say in the 2.70% range for the bulk of that piece of the portfolio. The broker came in at about 2.40%, which now is below the Fed fund rate after the rate hike was right at the end of the quarter. We kind of took reverse advantage of the LIBOR disconnect from the funds rate on the borrowing side which slightly impacted the loan yields during the quarter. One other comment there. On the brokerage side, obviously we had good growth in our customer deposits. I mean, we haven't traditionally funded our customer growth through brokered funds and that's not the case this time. We had full year growth, it was strictly a move by - that our financial team brought to the table so that we get chance to lower our cost year by utilizing brokers and best to be swapping out broker for federal home loan bank and so that's what we did. So, it's different than what you some time - when you usually see brokerage you used to buy banks our size.

And so on the customer CD side, do you look at the weight of that CD as more of a catch up or maybe opposite of being kind of aggressive to try to get ahead of higher rates and would you expect this high of a beta as we move forward or do you feel like the beta that we saw this quarter is just more indicative of the reality of deposit cost in your market?

I think it was a little bit of all of that Catherine. I think part of it is accumulative. We had hoped that the good side for - since rate started moving up and had a pretty low beta on that since some of it was that cumulative catch-up and then but we also allowed to go higher to position for the future. Our cumulative beta is again in that 25% range and we’re proud of that. We think it will be less than this quarter going forward but it will still be higher than we’re really run out in the last three or four quarters leading into this quarter but it was all down strategically. We were able to get some customer's back to it well for higher rates elsewhere nearly deepen this customer relationships and we chose to do that versus say going out and doing ourselves borrowing at probably in line costs with those maturity levels and it was overall a strategic plan to position us for the future.

Yes, it’s always a balancing act Catherine as you know and so there is a balance between the growth and we're fortunate we have to get the growth and be in position to get the growth and particularly on the deposit side that comes with the cost these days. And so we acknowledge that and I think James described it well.

And to your point even with the higher beta, you’re still at the top end of your range. Do you think it's an important point? And then one of the questions just moving to mortgage - I'm sorry go ahead.

No, that’s exactly you’re exactly right that’s part of the balance.

And then one other thing on mortgage just what - what would be an acceptable mortgage specialty ratio as you think about next year as you write that business?

Yes, that’s where we think about is about 80% and frankly we'd like to be better than that especially in good times about 80% that's kind of threshold for us.

Okay, that’s great.

We just added some of the higher period of production like Chris said it would be over the year and not in any particular quarter to be able to kind of get to that 80 or better efficiency ratio.

And we'll take our next question from Tyler Stafford with Stephens Incorporated. Please go ahead.

So just a follow-up on Catherine's last question thinking about the mortgage business rather in a pretax income as you guys can talk about that waste. So, the mortgage business is expect to generate I guess at a pretax loss in the fourth quarter. So that exiting run rate I guess does put a big question mark on what 2019 pretax mortgage income could be. So any expectations or thoughts for next year as pretax mortgage just as you think about, you know the cost status or initiatives, expense initiatives that you are able to realize?

Yes Tyler just a couple of comments there, one as you know the mortgage business is hard forecast because so rate dependent and a lot of that is reading the market. And so it’s a difficult business to forecast and so we don’t want to get too specific on forecast. But if you look at what's out there in forecasting mortgage for next year, the volumes have forecasted to be similar to this year and slightly down or slightly down so similar to maybe slightly down. When we think about our business, we’re repositioning some things there and we would expect it to be a similar year for us in terms of volumes kind of moving with the market if you will. And then but keep in mind we do have some repositioning going on and so like I said hopefully that there will be some upside in that business for us as we look out to 2019 but that's really about. But we’ve done some - we did a couple of forecast during 2018 we had to revise those. And so like I said we want to stay away from current debt to getting too much into the forecasting business there.

Understood. Maybe - I’m sorry go ahead Chris.

No, did that help.

Yes, I understood. So on the consolidated mortgage expenses for the quarter it looks like they were flat quarter-over-quarter despite pressured volumes. Is that right and why wouldn’t there have been expense relief given the variable compensation tied to the volumes?

Some of the revenue was caused by higher - one by lower mortgage servicing revenues and slightly higher fair market value change on the servicing rates. So revenues on a same-store basis were slightly up for the quarter. So, and most of the adjustments that we’re doing on the expense side will be baked in largely by the end of the year.

Do you happen to have what just total deposit cost were at the very end of the quarter so just thinking about and exiting deposit costs?

Yes, so they have moved up about 9 or 10 basis points but I will say we've seen a pretty good movement since quarter end after the rate hike in our loan and in our contractual loan yields. We have about little over 700 million of LIBOR based loans which is about 20% of the portfolio and about 900 million of prime based loans. So we’ve seen good movements on that front as well. So call it in the upper 80s or around 90 basis points and the movement of cost which is kind of the cumulative of the campaign in the broker CDs going into that.

And we’ll take our next question from Peter Reese with Sandler O'Neil. Please go ahead.

Most of my questions have been answered but just maybe wanted to get some color on the buyback here obviously the stocks has been under a lot of pressure. So I just wanted to maybe get your thoughts on how aggressive you could be with the buyback, is it something you actually planned actively to use here or just what you’re thinking in terms of your stock price?

Yes, it’s a tool and we wanted to get the authorization because we don’t know what’s going to happen in the market, we don’t know what’s going to happen with stocks and especially bank stocks. So it's a tool and whether we got very aggressive or not is really dependent on the price. We’re conscious of dilution, because we love EPS accretion but we’re also conscious of book value dilution those are two things we would balance. And so if the prices continue to drop certainly we probably would deploy. The other thing that we’re balancing is acquisition opportunities. We continue to evaluate those. We continue to we want to make sure we're in a position to pull the trigger on something whether it's opportunistic or strategic. And so, from months to those opportunities, we would be issuing stock and so it doesn’t have that big of an impact on our tangible common equity or tangible asset ratio. And so we think even with the acquisition opportunities out there, we think it's viable tool for us to have.

And also we would have the opportunity - we have a little bit of creep in outstanding shares from equity plans that has a minimum at these levels would likely make sense that wouldn't be a significant component as if that would be a phase level that we could definitely see executing on and the rest of it would be dependent. As Chris said, other opportunities because that will become our little bit of the measuring stick for other opportunities is use of capital and growth and acquisition versus buybacks and which one will yield the best returns overall

And with your comments on M&A actually, obviously evaluations are changing a little bit but is there still something that you guys think is an opportunity for you out there and maybe have conversations changed at all and maybe have seller expectations changed?

Yes, it is an opportunity for us. We're still - we think it is still an opportunity but yes I think you hit some relevant points, while evaluations have changed especially at public companies. There are often times - it takes some time depending on what kind of potential partner you're talking to especially for private companies it may take some time for them to adjust their thinking. And so that may be a little more difficult because when valuations move down the way they have over the last two or three weeks, obviously it takes everybody's valuation down and so that's something that we still don't know. But I would suspect it may take a little bit of time for those to adjust. We still on a relevant basis, think we may get market opportunities and we want be compared to those. And we'll continue to be looking.

[Operator Instructions] And we'll take our next question from Alex Lau with JPMorgan. Please go ahead.

Going back to deposits, in the quarter we saw growth in time in the moving markets while noninterest bearing was flat in the quarter. And also with checking accounts trending lower from the start of the year from 50% to now 44%. To what extent are you seeing some of the lower cost or non interest bearing deposits migrate over to these attractive higher rates?

Yes, Alex, we do see some of that. We track that as best we are able to track that, and we do see some of that, it hasn't been a major move but also we've expected some of that. It's not something that gets a lot of discussion, I think there's some discussion in the industry about whether that's going to be the case. I do think it is going to be the case because most of - you've seen records non-interest bearing balances out there and I think some of those - I think there's been a fewer for the industry that some of that would move, and I do think some of it will. And it has with us, but it's actually been not significant. But you do see some of those balances and we saw it when we had the campaign, we saw some of that but again all manageable and most of that is frankly governed by our relationships. If you have a good relationships where you expect some of that and you would - and it would not be a very good customer service if you didn't have some of that. So I'd say, that explains most of what you see there.

And part of the non-interest bearing decreases when we sold the MSRs we lost some of the escrow which is on the non interest bearing category. I think it's now $10 million point-to-point but it's actually probably down more than some of the seasonal growth offset that. So, that was expected when we announced the settlement. MSRs that we would lose the corresponding as escrow balances from that.

And on the CD campaigns, are you seeing any kind of shift from consumer preferences from short term to longer term. I know both are pretty attractive rates, but any color on that?

We can't offer a little bit of a mix. I think it depends on what your position in life or your outlook or different things are. I don't think there's a consistent view of shorter loan. I think some like the loans as longer view so they don't have to worry about it, and some like the shorter view that they have the opportunity to do whatever the market is doing. And so I think it's mixed based on what their individual outlook or cash needs maybe at any particular time. So I would think really no consistent view on that, I'll call it overall basis.

My last question is on - back in the second quarter you called out potential hiring like a dozen revenue producers in the back half of the year, can you give an update on how you're tracking with that and are there any more hires in the pipeline?

Yes. I'll give you an update and so first we didn't talk about this because the numbers are not that significant. We did see a little bit of that come through on the expense line. Again, fully expected and right on what we thought. We've had those folks come along, we're actually also seeing some production if look around the - particularly the metropolitan part of our footprint. We've seen most of those markets have really good production. Again, that's coming through the growth numbers. We continue to have various conversations and continue, it’s a little like our loan and deposit pipelines. We had some various conversations going on out there with additional parties and whether they come to pass or not just is part of the competitive world that we live in. And so all of the ones that we've talked about have come to pass, there have been maybe - I'll say a handful of others and then there are a couple of potential bigger ones out there. But again it's - I consider that to be a normal part of our growth just like adding loans and deposits.

And it appears that there are no further questions at this time.

Okay. Well, thank you very much for joining us on the call. Thank you for your questions. We appreciate your interest in FBK and we appreciate your investment in FBK. Everybody have a great day. Thanks.

And this concludes today's call. Thank you for your participation. You may now disconnect.