# EDGAR Filing Document

**Accession Number:** 0001293537
**File Stem:** 0001293537-23-000001
**Filing Date:** 2023-2
**Character Count:** 45440
**Document Hash:** 8d60718bee654b5c83e60c9d5aa44fb9
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001293537-23-000001.hdr.sgml**: 20230221

**ACCESSION NUMBER**: 0001293537-23-000001

**CONFORMED SUBMISSION TYPE**: X-17A-5

**PUBLIC DOCUMENT COUNT**: 2

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230221

**DATE AS OF CHANGE**: 20230221

**EFFECTIVENESS DATE**: 20230221

**PERIOD START**: 20220101

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FNBB CAPITAL MARKETS, LLC
- **CENTRAL INDEX KEY:** 0001293537
- **IRS NUMBER:** 200532898
- **STATE OF INCORPORATION:** LA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** X-17A-5
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 008-66553
- **FILM NUMBER:** 23645649

**BUSINESS ADDRESS:**
- **STREET 1:** 600 UNIVERSITY PARK PLACE
- **STREET 2:** SUITE 380
- **CITY:** BIRMINGHAM
- **STATE:** AL
- **ZIP:** 35209
- **BUSINESS PHONE:** (225) 231-5011

**MAIL ADDRESS:**
- **STREET 1:** 600 UNIVERSITY PARK PLACE
- **STREET 2:** SUITE 380
- **CITY:** BIRMINGHAM
- **STATE:** AL
- **ZIP:** 35209

### Attached PDF Documents

**Attachment 1:** `FNBBCMFS22.pdf`

# **FNBB Capital Markets, LLC**

# **Financial Statements**

**December 31, 2022**

# **FNBB Capital Markets, LLC**  
**Financial Statements**  
**December 31, 2022**

## Table of Contents

|  | Page |
| --- | --- |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1-2 |
| FACING PAGE | 3 |
| OATH OR AFFIRMATION | 4 |
| FINANCIAL STATEMENTS |  |
| Statements of Financial Condition | 5 |
| Statements of Income | 6 |
| Statements of Changes in Member's Equity | 7 |
| Statements of Changes in Liabilities Subordinated to Claims of General Creditors | 8 |
| Statements of Cash Flows | 9 |
| Notes to Financial Statements | 10-17 |
| SUPPLEMENTAL SCHEDULES |  |
| Schedule I: Computation of Net Capital Under SEC Rule 15c3-1 | 18 |
| Schedule II: Computation for Determination of Reserve Requirements under SEC Rule 15c3-3 | 19 |
| Schedule III: Information for Possession or Control Requirements under SEC Rule 15c3-3 | 20 |
| REVIEW |  |
| Report of Independent Registered Public Accounting Firm | 21-22 |
| Exemption Report | 23 |

**P&N**  
Postlethwaite & Netterville

8550 United Plaza Blvd., Ste. 1001 - Baton Rouge, LA 70809  
225-922-4600 Phone - 225-922-4611 Fax - pncpa.com

*A Professional Accounting Corporation*

# **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors of FNBB Capital Markets, LLC

# **Opinion on the Financial Statements**

We have audited the accompanying statements of financial condition of FNBB Capital Markets, LLC (the Company) as of December 31, 2022 and 2021, the related statements of income, changes in member’s equity, changes in liabilities subordinated to claims of general creditors, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of FNBB Capital Markets, LLC as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

# **Basis for Opinion**

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the

- 1 -

P&N
Postlethwaite & Netterville

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

# Auditors' Report on Supplemental Information

The supplemental information contained in Schedule I: Computation of Net Capital Under SEC Rule 15c3-1, Schedule II: Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3, and Schedule III: Information for Possession or Control Requirements Under SEC Rule 15c3-3 has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, Schedule I: Computation of Net Capital Under SEC Rule 15c3-1, Schedule II: Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3, and Schedule III: Information for Possession or Control Requirements Under SEC Rule 15c3-3 are fairly stated, in all material respects, in relation to the financial statements as a whole.

We have served as FNBB Capital Markets, LLC's auditor since 2008.

Baton Rouge, Louisiana

February 17, 2023

- 2 -

# UNITED STATES

# SECURITIES AND EXCHANGE COMMISSION

# Washington, D.C. 20549

OMB APPROVAL

OMB Number: 3235-0123

Expires: Oct. 31, 2023

Estimated average burden

hours per response: 12

# ANNUAL REPORTS

# FORM X-17A-5

# PART III

SEC FILE NUMBER

8-66533

# FACING PAGE

Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934

| FILING FOR THE PERIOD BEGINNING | 01/01/2022 | AND ENDING | 12/31/2022 |
| --- | --- | --- | --- |
|  | MM/DD/YY |  | MM/DD/YY |

# A. REGISTRANT IDENTIFICATION

| NAME OF FIRM: | FNBB Capital Markets, LLC |
| --- | --- |

TYPE OF REGISTRANT (check all applicable boxes):

☑ Broker-dealer

☐ Security-based swap dealer

☐ Major security-based swap participant

☐ Check here if respondent is also an OTC derivatives dealer

ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)

600 University Park Place, Suite 380

| (No. and Street) |  |  |
| --- | --- | --- |
| Birmingham | AL | 35209 |
| (City) | (State) | (Zip Code) |

PERSON TO CONTACT WITH REGARD TO THIS FILING

| Laura Boudreaux | (225)231-5011 | LBoudreaux@bankers-bank.com |
| --- | --- | --- |
| (Name) | (Area Code - Telephone Number) | (Email Address) |

# B. ACCOUNTANT IDENTIFICATION

INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*

Postlethwaite & Netterville

| (Name - if individual, state last, first, and middle name) |  |  |  |
| --- | --- | --- | --- |
| 8550 United Plaza, Suite 1001 | Baton Rouge | LA | 70809 |
| (Address) | (City) | (State) | (Zip Code) |
| 10/16/2003 |  |  | 396 |

(Date of Registration with PCAOB)(if applicable)

(PCAOB Registration Number, if applicable)

# FOR OFFICIAL USE ONLY

* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable.

Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

- 3 -

# OATH OR AFFIRMATION

I, Laura Boudreaux, swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of FNBB Capital Markets, LLC, as of December 31, 2022, is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer.

Laura Boudreaux

Laura Boudreaux

Notary Public

Allen David, Notary Public LA ID 66765

This filing** contains (check all applicable boxes):

☑ (a) Statement of financial condition.
☐ (b) Notes to consolidated statement of financial condition.
☑ (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X).
☑ (d) Statement of cash flows.
☑ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
☑ (f) Statement of changes in liabilities subordinated to claims of creditors.
☑ (g) Notes to consolidated financial statements.
☑ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable.
☐ (i) Computation of tangible net worth under 17 CFR 240.18a-2.
☑ (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
☐ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable.
☐ (l) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3.
☑ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
☐ (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable.
☑ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist.
☐ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
☑ (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
☐ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
☑ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
☐ (t) Independent public accountant's report based on an examination of the statement of financial condition.
☑ (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
☐ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
☑ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
☑ (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR 240.17a-12, as applicable.
☐ (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k).
☐ (z) Other:

**To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.

- 4 -

# **FNBB CAPITAL MARKETS, LLC**  
 **BIRMINGHAM, AL**

# **STATEMENTS OF FINANCIAL CONDITION**  
 **DECEMBER 31, 2022 AND 2021**

# **ASSETS**

|  | 2022 | 2021 |
| --- | --- | --- |
| Cash and cash equivalents | $1,620,047 | $1,351,784 |
| Required clearing deposit | 16,930 | 16,900 |
| Commissions receivable | 107,984 | 105,207 |
| Tax receivable (Note 4) | 8,343 | - |
| Prepaid expenses | 49,141 | 48,337 |
| Total Assets | $1,802,445 | $1,522,228 |

# **LIABILITIES AND MEMBER'S EQUITY**

|  | 2022 | 2021 |
| --- | --- | --- |
| LIABILITIES |  |  |
| Due to affiliates (Note 4) | $76,844 | $21,901 |
| Commissions payable | 5,540 | - |
| Accrued employee benefits (Note 4) | 23,120 | 23,266 |
| Total Liabilities | $105,504 | 45,167 |
| MEMBER'S EQUITY |  |  |
| Contributed capital | 690,000 | 690,000 |
| Accumulated equity | 1,006,941 | 787,061 |
| Total Member's Equity | 1,696,941 | 1,477,061 |
| Total Liabilities and Member's Equity | $1,802,445 | $1,522,228 |

The accompanying notes are an integral part of these financial statements.

- 5 -

# **FNBB CAPITAL MARKETS, LLC**  
 **BIRMINGHAM, AL**

# **STATEMENTS OF INCOME**  
 **YEARS ENDED DECEMBER 31, 2022 AND 2021**

|  | 2022 | 2021 |
| --- | --- | --- |
| REVENUES: |  |  |
| Interest income | $24,899 | $ - |
| Commissions and fees on: |  |  |
| Securities | 127,864 | 88,735 |
| Investment company shares | 461,833 | 578,044 |
| Insurance | 513,310 | 565,680 |
| Investment advisory | 103,884 | 121,103 |
| Total revenues | 1,231,790 | 1,353,562 |
| EXPENSES: |  |  |
| Salaries and employee benefits | 148,454 | 141,803 |
| Commissions | 512,950 | 579,869 |
| Other general and administrative expenses | 166,480 | 164,489 |
| Licenses and fees | 56,570 | 46,558 |
| Accounting and auditing fees | 35,100 | 33,500 |
| Consulting fees | 15,125 | 15,000 |
| Total expenses | 934,679 | 981,219 |
| Income before income taxes | 297,111 | 372,343 |
| Income tax expense | 77,231 | 94,781 |
| Net income | $219,880 | $277,562 |

The accompanying notes are an integral part of these financial statements.

- 6 -

# **FNBB CAPITAL MARKETS, LLC**  
**BIRMINGHAM, AL**

# **STATEMENTS OF CHANGES IN MEMBER'S EQUITY**  
**YEARS ENDED DECEMBER 31, 2022 AND 2021**

|  | Contributed Capital | Accumulated Equity | Total |
| --- | --- | --- | --- |
| Balance, January 1, 2021 | $690,000 | 509,499 | $1,199,499 |
| Net Income |  | 277,562 | 277,562 |
| Balance, December 31, 2021 | 690,000 | 787,061 | 1,477,061 |
| Net Income |  | 219,880 | 219,880 |
| Balance, December 31, 2022 | $690,000 | $1,006,941 | $1,696,941 |

The accompanying notes are an integral part of these financial statements.

- 7 -

# **FNBB CAPITAL MARKETS, LLC**
**BIRMINGHAM, AL**

# **STATEMENTS OF CHANGES IN LIABILITIES SUBORDINATED TO**
**CLAIMS OF GENERAL CREDITORS**
**YEARS ENDED DECEMBER 31, 2022 AND 2021**

| Liabilities subordinated to claims of general creditors at January 1, 2021 | $ | - |
| --- | --- | --- |
| Increases |  | - |
| Decreases |  | - |
| Liabilities subordinated to claims of general creditors at December 31, 2021 |  | - |
| Increases |  | - |
| Decreases |  | - |
| Liabilities subordinated to claims of general creditors at December 31, 2022 | $ | - |

The accompanying notes are an integral part of these financial statements.

- 8 -

# **FNBB CAPITAL MARKETS, LLC**  
 **BIRMINGHAM, AL**

# **STATEMENTS OF CASH FLOWS**  
 **YEARS ENDED DECEMBER 31, 2022 AND 2021**

|  | 2022 | 2021 |
| --- | --- | --- |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| Net income | $219,880 | $277,562 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Effect of changes in operating assets and liabilities: |  |  |
| Commissions receivable | (2,777) | (12,653) |
| Taxes receivable | (8,343) | - |
| Prepaid expenses | (804) | (279) |
| Commissions payable | 5,540 | (1,725) |
| Accrued employed benefits | (146) | (13,378) |
| Due to affiliates | 54,943 | (11,962) |
| Net cash provided by operating activities | 268,293 | 237,565 |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| Net cash used in investing activities | - | - |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| Net cash used in financing activities | - | - |
| NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 268,293 | 237,565 |
| Cash, beginning of year | 1,368,684 | 1,131,119 |
| Cash, end of year | $1,636,977 | $1,368,684 |

The accompanying notes are an integral part of these financial statements.

- 9 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 1. Summary of Significant Accounting Policies

# Description of Business

FNBB Capital Markets, LLC (the "Company") is a Financial Industry Regulatory Authority (FINRA) registered broker/dealer under the Securities Exchange Act of 1934. The Company was initially approved to offer retirement products consisting of mutual funds and variable annuities to member banks of its sole member.

Effective July 28, 2005, in order to allow the Company to offer expanded services to member banks of First National Bankers Bank (FNBB) due to restrictions within FNBB's charter, FNBB transferred its interest in the Company to First National Bankers Bankshares, Inc. (the "Parent" or "FNBB, Inc."), and coincident therewith, the Parent became the sole member of the Company. The Company is a wholly owned subsidiary of the Parent. The Company was approved by FINRA in December 2005 to offer the sale of general securities including but not limited to mutual funds and variable insurance products to individual and corporate customers. In 2017, the Company reinstated its Registered Investment Advisory registration with the state of Alabama to provide advisory services on certain retirement products sold by the Company. In March 2005, the Company executed an agreement with a third-party clearing broker/dealer to introduce customer accounts and accept customer funds and securities. The Company also began executing contracts with registered representatives and brokers for the sale of these products.

# Cash and Cash Equivalents

Cash and cash equivalents consist of cash and interest-bearing deposits. At times during the year, the Company's cash accounts exceeded the related amount of federal depository insurance. The Company has not experienced any loss in such accounts and believes it is not exposed to any significant credit risk.

The Company considers financial instruments with a maturity of less than 90 days at the time of origination to be cash equivalents.

# Required Clearing Deposit

The Company has an interest bearing deposit with its clearing broker pursuant to its clearing agreement, discussed above, that is considered to be a required clearing deposit and restricted. The required clearing deposit has been included in cash on the Statement of Cash Flows for both years presented.

# Furniture and Equipment, Net

Furniture and equipment is recorded at cost. Depreciation is recorded on a straight-line basis using an estimated useful life of 3-10 years. All furniture and equipment is fully depreciated at December 31, 2022 and 2021.

- 10 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 1. Summary of Significant Accounting Policies (continued)

# Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

# Income Taxes

The Company accounts for income tax under applicable guidance contained in the Accounting Standards Codification (ASC). Accordingly, the Company also applies this guidance pursuant to the tax sharing agreement described in Note 3. Pursuant to the applicable ASC, an asset liability approach requires the recognition of deferred tax assets and liabilities for the expected tax consequences that have been recognized in the Company's financial statement or tax returns. In estimating future tax consequences, applicable guidance contained in the accounting standards generally considers all expected future events other than enactments of changes in tax law or rates. The amount of current taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. Deferred tax assets or liabilities are recognized based on the rates expected to apply when these assets or liabilities are expected to be realized or settled. Deferred tax expenses or benefits are recognized in the financial statements for the changes in deferred tax liabilities or assets between years.

The Company adopted the accounting guidance related to accounting for uncertainty in income taxes, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions. In management's judgment, the Company does not have any tax positions that would result in a loss contingency considering the facts, circumstances, and information available at the reporting date.

# Concentration of Credit Risk

The Company is engaged in various trading and brokerage activities in which counterparties primarily include broker-dealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counterparty.

# Fair Value

Cash and required clearing deposit are considered short-term instruments, the carrying amounts are a reasonable estimate of fair value.

- 11 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 1. Summary of Significant Accounting Policies (continued)

# Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASC 606"). This ASU implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity is required to identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies a performance obligation. ASC 606 further requires that companies disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. (See Note 2 for further information.)

# Receivables and Credit Policies

Commissions receivable are uncollateralized clearing broker obligations due under normal trade terms requiring payments within 30 days. The Company generally collects receivables within 30 days and does not charge interest on commissions receivable with invoice dates over 30 days old.

Receivables from brokers consist of commissions and fees earned on the sale of retirement products, insurance and general securities.

Commissions receivable, net of trading costs, are stated at the amount billed. Payments of commissions receivable are allocated to the specific transactions identified on the clearing broker statement, carrier statements or, if unspecified, are applied to the earliest unpaid amounts.

The carrying amount of commissions receivable is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected.

Management individually reviews all commissions receivable balances that exceed 30 days from the invoice date and based on an assessment of current creditworthiness, writes off the portion, if any, of the balance that will not be collected. Additionally, management estimates an allowance for the aggregate remaining commissions receivable based on historical collectability. In the opinion of management, at December 31, 2022 and 2021, all commissions were considered collectible and no allowance was necessary.

- 12 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 2. Revenue from Contracts with Customers

# Revenue Recognition

In adopting ASC 606 on January 1, 2018, the Company elected to use the practical expedient related to the portfolio approach. The portfolio approach is used to assess collectively contracts with similar characteristics to evaluate risk over the impact of ASC 606. This approach is used for revenues from trade of securities as well as mutual funds, retirement products, and advisory fees. The Company evaluates the effects of ASC 606 on revenue recognition from insurance commissions on a contract basis.

# Significant Judgments

Revenue from contracts with customers includes commissions, marketing and distribution fees, and asset management fees. Significant judgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events.

# Brokerage Commissions (Securities)

The Company employs a clearing broker in order to buy and sell securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to/from the customer.

# Distribution Fees (12b-1 fees) from Mutual Funds and Retirement Products (Investment Company Shares)

The Company enters into arrangements with managed accounts or other pooled vehicles (funds) to distribute shares to investors. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date, and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Distribution fees recognized in the current period are related to performance obligations that in some instances have been satisfied in prior periods.

- 13 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 2. Revenue from Contracts with Customers (continued)

# Insurance Commissions

The Company acts as broker in the sale of life insurance policies to its customers. The Company may receive commissions paid by the carrier at the inception of the policy or over time for as long as the policy remains active, on a monthly or annual basis. The Company believes that its performance obligation is the sale of new policies and as such is fulfilled on the date of issuance. Any initial up-front (first year) commissions are known fixed amounts and are recognized on the issuance date. Annual renewal commissions, which are variable amounts, are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved (typically, the cancellation of a policy prior to a certain period or the determination of a policy asset value at a particular point in time that cannot be determined in advance). In addition, the uncertainty of these variable recurring amounts is dependent on the value of the assets at future points in time and are influenced by market conditions.

# Investment Advisory Fees

The Company provides investment advisory services for retirement products on a continuous basis. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consuming the benefits as they are provided by the Company. Fee arrangements are based on a percentage applied to the customers' assets under management. Fees are received monthly and quarterly and are recognized as revenue to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the assets under management at future points in time as well as the length of time the participants remain in the plan, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the plan assets and the participant activities are known, which are usually monthly or quarterly.

Advisory fees recognized in the current period are related to performance obligations that in some instances have been satisfied in prior periods.

- 14 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 2. Revenue from Contracts with Customers (continued)

Costs to Obtain or Fulfill a Contract with a Customer

The Company incurs costs to obtain revenue contracts with its customers, such as sales commissions paid to employees for obtaining new contracts with clients. These costs do not meet the criteria for capitalization under ASC 606.

The Company has recorded as a liability certain estimated costs incurred but not paid associated with providing services where the performance obligation has been met. As of December 31, 2022 and 2021, the amount of the liability for costs incurred but not paid was $23,120 and $23,266. During the years 2022 and 2021, the Company recognized payroll expense of $617,467 and $678,802, respectively, directly related to obtaining revenue from contracts.

Accrual of Revenue from Contracts with Customers

Revenue from contracts is accrued in circumstances where the Company believes the performance obligation has been met. The Company estimates revenue based on historical data and has recorded as an asset estimated revenue earned but not paid. As of December 31, 2022, 2021 and 2020, the amount of the asset for revenue earned but not paid was $107,984, $105,207, and $92,554.

Disaggregated Revenue from Contracts with Customers

The following table presents revenue by major source:

|  | 2022 | 2021 |
| --- | --- | --- |
| Revenue from contracts with customers |  |  |
| Brokerage commissions | $127,864 | $88,735 |
| Distribution fees (12b-1 fees) from mutual funds and retirement products | 461,833 | 578,044 |
| Insurance commissions | 513,310 | 565,680 |
| Investment advisory fees (overtime) | 103,884 | 121,103 |
| Total Revenue from contracts with customers | $1,206,891 | $1,353,562 |

- 15 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 3. Income taxes

Pursuant to a tax-sharing agreement (the "Agreement") with the Parent, the Company's tax expense is determined on a separate return basis; and therefore, the Company is required to recognize an allocation of income taxes in its separate financial statements in accordance with the Agreement. For the years ended December 31, 2022 and 2021, the income tax expense recorded is $77,231 and $94,781 respectively. In accordance with the terms of the Agreement, the Parent made estimated tax payments on behalf of the Company for the estimated tax expense during 2022 and 2021 totaling $23,200 and $75,250 respectively. Amounts due to affiliates relating to income tax totaled $76,844 and $21,901 as of December 31, 2022 and 2021, respectively. Amounts due from affiliates relating to income tax totaled $8,343 and $0 as of December 31, 2022 and 2021, respectively.

# 4. Related party transactions

The Company operates in facilities that are owned by the Parent. During 2022 and 2021, the Company was charged with certain operating expenses relating to salaries and benefits, rent, and insurance totaling $759,184 and $818,506, respectively, by the Parent. In addition, certain other operating expenses, including telephone, utilities, and other overhead costs were allocated to the Company by the Company's Parent in 2022 and 2021. The Company has amounts due to the Parent at December 31, 2022 and 2021, of $99,964 and $45,167 respectively, relating to income taxes (see Note 3) and salaries and employee benefits expenses. The Company has amounts due from the Parent at December 31, 2022 and 2021, of $8,343 and $0 respectively, relating to income taxes (see Note 3).

# 5. Regulatory requirements

The Company, as a registered broker/dealer in securities, is subject to the uniform Net Capital Rule (SEC Rule 15c3 - 1 under the Securities Exchange Act of 1934), which requires the maintenance of minimum net capital, as defined in the Rule of $50,000, or 6.67% of aggregate indebtedness, whichever is greater. Also, the Uniform Net Capital Rule precludes the withdrawal of equity capital if the ratio of aggregate indebtedness to net capital exceeds 10 to 1. At December 31, 2022, the Company had net capital of $1,549,593, which was $1,499,593 in excess of its required net capital of $50,000. The Company had aggregate indebtedness of $105,504 at December 31, 2022. The Company's ratio of aggregate indebtedness to net capital ratio was .07 to 1 at December 31, 2022.

The Company is required to maintain a blanket fidelity bond, in a form substantially similar to the standard form of Brokers Blanket Bond promulgated by the Surety Association of America, covering officers and employees which provides against loss. The Financial Industry Regulatory Authority has allowed the Company to use the Parent's fidelity bond in the amount of $100,000.

- 16 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# NOTES TO FINANCIAL STATEMENTS

# 5. Regulatory requirements (continued)

The Company acts as an introducing broker or dealer, promptly transmitting all funds and delivering all securities received in connection with its activities as a broker or dealer and does not otherwise hold funds or securities for or owe money or securities to customers. The Company operates under Section (k) (2) (ii) of Rule 15c3-3 of the Securities Exchange Act of 1934 and is therefore exempt from the requirement of Rule 15c3-3.

# 6. Contingencies

In the normal course of business activities, the Company is subject to regulatory examinations or other inquiries. These matters could result in censures, fines or other sanctions. Management believes that outcome of any resulting actions will not be material to the Company's Statement of Financial Condition. However, the Company is unable to predict the outcome of these matters.

# 7. Subsequent Events

Management has evaluated subsequent events through the date that the financial statements were available to be issued February 14, 2023 and determined no subsequent events that require disclosure have occurred as of this date.

- 17 -

# FNBB CAPITAL MARKETS, LLC

# BIRMINGHAM, AL

# SCHEDULE I

# COMPUTATION OF NET CAPITAL UNDER SEC RULE 15C3-1

# DECEMBER 31, 2022

NET CAPITAL

| Total member's equity | $1,696,941 |
| --- | --- |
| Less nonallowable assets: |  |
| Limited commissions receivable | $(98,207) |
| Prepaid expenses | $(49,141) |
| Other assets | $ - |

| NET CAPITAL | $1,549,593 |
| --- | --- |

COMPUTATION OF NET CAPITAL REQUIREMENT

| Minimum net capital required | $50,000 |
| --- | --- |

| EXCESS NET CAPITAL | $1,499,593 |
| --- | --- |

AGGREGATE INDEBTEDNESS

| Total Liabilities | $105,504 |
| --- | --- |
| Less nonallowable liabilities: |  |
| Deferred income taxes payable | - |

| AGGREGATE INDEBTEDNESS | $105,504 |
| --- | --- |

| RATIO OF AGGREGATE INDEBTEDNESS TO NET CAPITAL | 0.07 to 1 |
| --- | --- |

There are no differences between the audited Computation of Net Capital above and the Company's corresponding Calculation of Net Capital in the Unaudited Part II Focus Report, other than a one dollar rounding difference.

See report of independent registered public accounting firm on supplemental information.

- 18 -

# **FNBB CAPITAL MARKETS, LLC**  
**BIRMINGHAM, AL**

# **SCHEDULE II**

# **COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS**  
**UNDER SEC RULE 15C3-3**

**DECEMBER 31, 2022**

The Company has claimed exemption from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, in that the Company’s activities are limited to those set forth in the conditions for exemption appearing in paragraph (k)(2)(ii) of the Rule.

See report of independent registered public accounting firm on supplemental information.

- 19 -

# **FNBB CAPITAL MARKETS, LLC**  
**BIRMINGHAM, AL**

# **SCHEDULE III**

# **INFORMATION FOR POSSESSION OR CONTROL REQUIREMENTS**  
**UNDER SEC RULE 15C3-3**

**DECEMBER 31, 2022**

The Company has claimed exemption from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, in that the Company’s activities are limited to those set forth in the conditions for exemption appearing in paragraph (k)(2)(ii) of the Rule.

See report of independent registered public accounting firm on supplemental information.

- 20 -

**P&N**  
Postlethwaite & Netterville

8550 United Plaza Blvd., Ste. 1001 - Baton Rouge, LA 70809  
225-922-4600 Phone - 225-922-4611 Fax - pncpa.com

*A Professional Accounting Corporation*

# **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors of FNBB Capital Markets, LLC

We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) FNBB Capital Markets, LLC (the “Company”) identified the following provision of 17 C.F.R. §15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. §240.15c3-3:(k)(2)(ii) (exemption provision) and (2) the Company stated that the identified exemption provision throughout the most recent fiscal year were met, without exception. Additionally, we have reviewed management’s statements, included in the accompanying Exemption Report, in which, FNBB Capital Markets, LLC (the “Company”) is also filing the Exemption relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240. 17a-5, because the Company limits its business activities to acting as the broker in the sale of life insurance policies and providing investment advisory services for retirement products, and the Company (i) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where funds are payable to the issuer or its agent and not to the Company); (ii) did not carry accounts of or for customers; and (iii) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception.

FNBB Capital Markets, LLC’s management is responsible for compliance with the exemption provisions and its statements.

Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about FNBB Capital Markets, LLC’s compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management’s statements. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to management’s statements referred to above for them to be fairly stated, in all material respects, based on the provision set forth in paragraph (k)(2)(ii) under the Securities Exchange

- 21 -

P&N
Postlethwaite & Netterville

Act of 1934. Further, based on the provisions set forth in Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17 a-5, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects.

Baton Rouge, Louisiana

February 17, 2023

- 22 -

# **FNBB CAPITAL MARKETS, LLC**
**BIRMINGHAM, AL**

# **EXEMPTION REPORT**

**FNBB Capital Markets, LLC** (the “Company”) is a registered broker-dealer subject to SEC Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, “Reports to be made by certain brokers and dealers”). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following:

1) The Company claimed an exemption from 17 C.F.R. §240.15c3-3 under the following provisions of 17 C.F.R. §240.15c3-3(k)(2)(ii).

2) The Company met the identified exemption provisions in 17 C.F.R. §240.15c3-3(k)(2)(ii) throughout the most recent fiscal year without exception.

3) The Company is also filing an Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Company limits its other business activities to acting as the broker in the sale of life insurance policies and providing investment advisory services for retirement products and the Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception.

FNBB Capital Markets, LLC

I, Laura Boudreaux, affirm that, to my best knowledge and belief, this Exemption Report is true and correct.

By:

Laura Boudreaux

Title: Chief Compliance Officer and FINOP

**February 14, 2023**

- 23 -

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM X-17A-5

### ANNUAL AUDITED REPORT

### Filer Information

**Filer CIK:** 0001293537

**Filer CCC:** XXXXXXXX

**Is this a LIVE or TEST filing?:** LIVE

**Would you like a Return Copy?:** No

### Submission Information

**Report Period Begin Date:** 01-01-2022

**Report Period End Date:** 12-31-2022

**Type of Registrant:** Broker-dealer

**Any material weaknesses identified?:** No

### Registrant Identification

**Name of Broker-Dealer:** FNBB CAPITAL MARKETS, LLC

**Business Address:** 600 UNIVERSITY PARK PLACE, SUITE 380, BIRMINGHAM, AL, 35209

**Contact Person:** Laura Boudreaux

**Contact Phone:** 225-231-5011

### Independent Public Accountant Identification

**Accountant Name:** Postlethwaite & Netterville

**Accountant Address:** 8550 United Plaza, Suite 1001, Baton Rouge, LA, 70809

**Accountant Type:** Certified Public Accountant

### OATH OR AFFIRMATION

I, **Laura Boudreaux**, swear (or affirm) that, to the best of my knowledge and belief, the accompanying financial statements and supporting schedules pertaining to the firm of **FNBB CAPITAL MARKETS, LLC**, as of **12-31-2022**, are true and correct.

**Signature:** Laura Boudreaux

**Title:** Chief Financial Officer

**Notarized:** Yes