FB Financial CorpFBK
FB Financial Corp Fair Value Disclosure
Fair value of financial instruments
ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a framework for measuring the fair value of assets and liabilities according to a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used
when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances.
The hierarchy is broken down into the following three levels, based on the reliability of inputs:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs for assets or liabilities that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.
The Company records the fair values of financial assets and liabilities on a recurring and nonrecurring basis using the following methods and assumptions:
| Investment securities | Investment securities are recorded at fair value on a recurring basis. Fair values for securities are based on quoted market prices, where available. If quoted prices are not available, fair values are based on quoted market prices of similar instruments or are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the pricing relationship or correlation among other benchmark quoted securities. Investment securities valued using quoted market prices of similar instruments or that are valued using matrix pricing are classified as Level 2. | ||||
Loans held for sale | Mortgage loans held for sale are carried at fair value determined using current secondary market prices for loans with similar characteristics, that is, using Level 2 inputs. | ||||
Derivatives | The fair value of the Company's interest rate swap agreements to facilitate customer transactions are based upon fair values provided from entities that engage in interest rate swap activity and is based upon projected future cash flows and interest rates. The fair value of interest rate lock commitments associated with the mortgage pipeline is based on fees currently charged to enter into similar agreements, and for fixed-rate commitments, the difference between current levels of interest rates and the committed rates is also considered. The fair values of the Company's designated cash flow and fair value hedges are determined by calculating the difference between the discounted fixed rate cash flows and the discounted variable rate cash flows. The fair values of both the Company's hedges, including designated cash flow hedges and designated fair value hedges are based on pricing models that utilize observable market inputs. These financial instruments are classified as Level 2. | ||||
OREO | OREO is comprised of properties obtained in partial or total satisfaction of loan obligations and excess land and facilities held for sale. OREO acquired in settlement of indebtedness is recorded at the lower of the carrying amount of the loan or the fair value of the real estate less costs to sell. Fair value is determined on a nonrecurring basis based on appraisals by qualified licensed appraisers and is adjusted for management’s estimates of costs to sell and holding period discounts. OREO valuations are classified as Level 3. | ||||
Mortgage servicing rights | MSRs are carried at fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. As such, MSRs are considered Level 3. | ||||
Collateral- dependent loans | Collateral-dependent loans are loans for which, based on current information and events, the Company has determined foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral and it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Collateral-dependent loans are classified as Level 3. | ||||
The balances and levels of the assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 are presented in the following tables:
| At December 31, 2025 | Quoted prices in active markets for identical assets (liabilities) (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | Total | ||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||
| AFS debt securities: | ||||||||||||||||||||||||||
| U.S. government agency securities | $ | — | $ | 670,088 | $ | — | $ | 670,088 | ||||||||||||||||||
| Mortgage-backed securities - residential | — | 602,320 | — | 602,320 | ||||||||||||||||||||||
| Mortgage-backed securities - commercial | — | 10,678 | — | 10,678 | ||||||||||||||||||||||
| Municipal securities | — | 168,370 | — | 168,370 | ||||||||||||||||||||||
| U.S. Treasury securities | — | 7,125 | — | 7,125 | ||||||||||||||||||||||
| Corporate securities | — | 998 | — | 998 | ||||||||||||||||||||||
| Equity securities, at fair value | — | 155 | — | 155 | ||||||||||||||||||||||
| Total securities | $ | — | $ | 1,459,734 | $ | — | $ | 1,459,734 | ||||||||||||||||||
| Loans held for sale, at fair value | $ | — | $ | 172,974 | $ | — | $ | 172,974 | ||||||||||||||||||
| Mortgage servicing rights | — | — | 148,795 | 148,795 | ||||||||||||||||||||||
| Derivatives | — | 24,316 | — | 24,316 | ||||||||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||||||||
| Derivatives | — | 23,509 | — | 23,509 | ||||||||||||||||||||||
| At December 31, 2024 | Quoted prices in active markets for identical assets (liabilities) (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | Total | ||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||
| AFS debt securities: | ||||||||||||||||||||||||||
| U.S. government agency securities | $ | — | $ | 563,007 | $ | — | $ | 563,007 | ||||||||||||||||||
| Mortgage-backed securities - residential | — | 810,999 | — | 810,999 | ||||||||||||||||||||||
| Mortgage-backed securities - commercial | — | 14,857 | — | 14,857 | ||||||||||||||||||||||
| Municipal securities | — | 147,857 | — | 147,857 | ||||||||||||||||||||||
| U.S. Treasury securities | — | 299 | — | 299 | ||||||||||||||||||||||
| Corporate securities | — | 989 | — | 989 | ||||||||||||||||||||||
| Total securities | $ | — | $ | 1,538,008 | $ | — | $ | 1,538,008 | ||||||||||||||||||
| Loans held for sale, at fair value | $ | — | $ | 95,403 | $ | — | $ | 95,403 | ||||||||||||||||||
| Mortgage servicing rights | — | — | 162,038 | 162,038 | ||||||||||||||||||||||
| Derivatives | — | 29,951 | — | 29,951 | ||||||||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||||||||
| Derivatives | — | 32,383 | — | 32,383 | ||||||||||||||||||||||
The balances and levels of the assets measured at fair value on a nonrecurring basis as of December 31, 2025 and 2024 are presented in the following tables:
| At December 31, 2025 | Quoted prices in active markets for identical assets (liabilities (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | Total | ||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||
| Other real estate owned | $ | — | $ | — | $ | 4,757 | $ | 4,757 | ||||||||||||||||||
| Collateral-dependent net loans held for investment: | ||||||||||||||||||||||||||
| Commercial and industrial | — | — | 1,538 | 1,538 | ||||||||||||||||||||||
| Construction | — | — | 18,281 | 18,281 | ||||||||||||||||||||||
| Residential real estate: | ||||||||||||||||||||||||||
| 1-to-4 family mortgage | — | — | 287 | 287 | ||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||
| Owner occupied | — | — | 5,479 | 5,479 | ||||||||||||||||||||||
| Non-owner occupied | — | — | 640 | 640 | ||||||||||||||||||||||
| Total collateral-dependent loans | $ | — | $ | — | $ | 26,225 | $ | 26,225 | ||||||||||||||||||
| At December 31, 2024 | Quoted prices in active markets for identical assets (liabilities) (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | Total | ||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||
| Other real estate owned | $ | — | $ | — | $ | 2,873 | $ | 2,873 | ||||||||||||||||||
| Collateral-dependent net loans held for investment: | ||||||||||||||||||||||||||
| Commercial and industrial | $ | — | $ | — | $ | 694 | $ | 694 | ||||||||||||||||||
| Construction | — | — | 20,818 | 20,818 | ||||||||||||||||||||||
| Residential real estate: | ||||||||||||||||||||||||||
| Multifamily | — | — | 9,000 | 9,000 | ||||||||||||||||||||||
| Total collateral-dependent loans | $ | — | $ | — | $ | 30,512 | $ | 30,512 | ||||||||||||||||||
Historically, the Company had a portfolio of acquired commercial loans. There were no such loans outstanding as of December 31, 2025 and 2024 as the last relationship was exited during the year ended December 31, 2023. These commercial loans were measured at fair value. As such, these loans were excluded from the ACL. During the year ended December 31, 2023, the Company recognized a $2,114 loss in related to changes in the fair value of these loans.
The significant unobservable inputs (Level 3) used in the valuation and changes in fair value associated with the Company’s mortgage servicing rights for the years ended December 31, 2025, 2024, and 2023 are detailed at Note 9, “Mortgage servicing rights.”
The following tables present information as of December 31, 2025 and 2024 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
| December 31, 2025 | ||||||||||||||||||||||||||
| Financial instrument | Fair Value | Valuation technique | Significant unobservable inputs | Range of inputs | ||||||||||||||||||||||
| Collateral-dependent net loans held for investment | $ | 26,225 | Appraised value | Discount for costs to sell | 10%-22% | |||||||||||||||||||||
| Other real estate owned | $ | 4,757 | Appraised value | Discount for costs to sell | 0%-10% | |||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Financial instrument | Fair Value | Valuation technique | Significant unobservable inputs | Range of inputs | ||||||||||||||||||||||
| Collateral-dependent net loans held for investment | $ | 30,512 | Appraised value | Discount for costs to sell | 10%-40% | |||||||||||||||||||||
| Other real estate owned | $ | 2,873 | Appraised value | Discount for costs to sell | 0%-10% | |||||||||||||||||||||
Fair value for collateral-dependent loans is determined based on the estimated value of the collateral securing the loans, less estimated selling costs and closing costs related to liquidation of the collateral. For loans secured by real estate, the fair value is determined based on appraisals performed by qualified appraisers and reviewed by qualified personnel. For non-real estate collateral, fair value is determined based on various sources, including third party asset valuation and internally determined values based on cost adjusted or other judgmentally determined factors. Collateral-dependent loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on changes in market conditions from the time of valuation and management’s knowledge of the borrower and borrower’s business. As of December 31, 2025 and 2024, total amortized cost of collateral-dependent loans measured on a nonrecurring basis amounted to $29,057 and $34,712, respectively. The allowance for credit losses is calculated as the amount for which the loan’s amortized cost basis exceeds fair value.
Other real estate owned acquired in settlement of indebtedness is recorded at fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Any write-downs based on the asset’s fair value at the date of foreclosure are charged to the allowance for credit losses.
Appraisals for both collateral-dependent loans and other real estate owned are performed by certified appraisers whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the lending administrative department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry wide statistics. Collateral-dependent loans that are dependent on recovery through sale of equipment, such as farm equipment, automobiles and aircrafts are generally valued based on public source pricing or subscription services while more complex assets are valued through leveraging brokers who have expertise in the collateral involved.
Fair value option
The following table summarizes the Company’s loans held for sale as of the dates presented:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Loans held for sale under a fair value option: | ||||||||||||||
| Mortgage loans held for sale | 172,974 | 95,403 | ||||||||||||
| Loans held for sale not accounted for under a fair value option: | ||||||||||||||
| Mortgage loans held for sale - guaranteed GNMA repurchase option | 28,102 | 31,357 | ||||||||||||
| Total loans held for sale | $ | 201,076 | $ | 126,760 | ||||||||||
Mortgage loans held for sale
Net gains (losses) of $2,797, $376, and $(121) resulting from changes in the fair value of mortgage loans held for sale were recorded in income for the years ended December 31, 2025, 2024, and 2023, respectively. The Company also recognized fair value changes on derivative instruments used to hedge market-related risk associated with these mortgage loans. When combined with the fair value changes of the underlying loans, the total net gains (losses) were $2,684, $1,241 and $(1,815) for the years ended December 31, 2025, 2024, and 2023, respectively.
The change in fair value of mortgage loans held for sale and the related derivative instruments are recorded in mortgage banking income in the consolidated statements of income. Election of the fair value option allows the Company to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value.
The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these mortgage loans held for sale, valuation adjustments attributable to instrument-specific credit risk is nominal.
The following table summarizes the differences between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of December 31, 2025 and 2024:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Aggregate fair value | $ | 172,974 | $ | 95,403 | ||||||||||
| Aggregate unpaid principal balance | 168,692 | 93,918 | ||||||||||||
| Difference | $ | 4,282 | $ | 1,485 | ||||||||||
The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Non-financial instruments are excluded from the table below.
Fair Value | ||||||||||||||||||||||||||||||||
| December 31, 2025 | Carrying amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,155,895 | $ | 1,155,895 | $ | — | $ | — | $ | 1,155,895 | ||||||||||||||||||||||
| Investment securities | 1,459,734 | — | 1,459,734 | — | 1,459,734 | |||||||||||||||||||||||||||
| Net loans HFI | 12,197,643 | — | — | 12,155,340 | 12,155,340 | |||||||||||||||||||||||||||
| Loans held for sale, at fair value | 172,974 | — | 172,974 | — | 172,974 | |||||||||||||||||||||||||||
| Interest receivable | 58,565 | 463 | 7,962 | 50,140 | 58,565 | |||||||||||||||||||||||||||
| Mortgage servicing rights | 148,795 | — | — | 148,795 | 148,795 | |||||||||||||||||||||||||||
| 24,316 | — | 24,316 | — | 24,316 | ||||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||
| Without stated maturities | $ | 11,255,404 | $ | 11,255,404 | $ | — | $ | — | $ | 11,255,404 | ||||||||||||||||||||||
| With stated maturities | 2,654,557 | — | 2,655,532 | — | 2,655,532 | |||||||||||||||||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 99,865 | 99,865 | — | — | 99,865 | |||||||||||||||||||||||||||
| Subordinated debt, net | 83,670 | — | — | 88,281 | 88,281 | |||||||||||||||||||||||||||
| Interest payable | 21,549 | 3,677 | 17,872 | — | 21,549 | |||||||||||||||||||||||||||
| 23,509 | — | 23,509 | — | 23,509 | ||||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||||||||
| December 31, 2024 | Carrying amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,042,488 | $ | 1,042,488 | $ | — | $ | — | $ | 1,042,488 | ||||||||||||||||||||||
| Investment securities | 1,538,008 | — | 1,538,008 | — | 1,538,008 | |||||||||||||||||||||||||||
| Net loans HFI | 9,450,442 | — | — | 9,221,311 | 9,221,311 | |||||||||||||||||||||||||||
| Loans held for sale, at fair value | 95,403 | — | 95,403 | — | 95,403 | |||||||||||||||||||||||||||
| Interest receivable | 49,611 | 629 | 8,012 | 40,970 | 49,611 | |||||||||||||||||||||||||||
| Mortgage servicing rights | 162,038 | — | — | 162,038 | 162,038 | |||||||||||||||||||||||||||
| 29,951 | — | 29,951 | — | 29,951 | ||||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||
| Without stated maturities | $ | 9,361,140 | $ | 9,361,140 | $ | — | $ | — | $ | 9,361,140 | ||||||||||||||||||||||
| With stated maturities | 1,849,294 | — | 1,846,989 | — | 1,846,989 | |||||||||||||||||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 13,499 | 13,499 | — | — | 13,499 | |||||||||||||||||||||||||||
| Subordinated debt, net | 130,704 | — | — | 126,684 | 126,684 | |||||||||||||||||||||||||||
| Interest payable | 24,182 | 3,759 | 18,923 | 1,500 | 24,182 | |||||||||||||||||||||||||||
| 32,383 | — | 32,383 | — | 32,383 | ||||||||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2018 | Mar 12, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 31, 2017 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.