ServisFirst Bancshares, Inc. Announces Results for Second Quarter of 2017

BIRMINGHAM, Ala., July 17, 2017 (GLOBE NEWSWIRE) — ServisFirst Bancshares, Inc. (NASDAQ:SFBS), today announced earnings and operating results for the quarter and six months ended June 30, 2017.

SECOND QUARTER 2017 HIGHLIGHTS:

  • Net income of $24.2 million and diluted EPS of $0.45 for the second quarter of 2017, an increase of 28% and 25%, respectively, year over year
  • Diluted EPS of $0.86 for the six months ended June 30, 2017, an 18% increase year over year
  • Loans and deposits increased 18% and 16%, respectively, year over year
  • Loans increased 16% for the quarter on an annualized basis

Tom Broughton, President and CEO, said, “We are pleased that customer retention and new customer activity is very strong year to date, driving continued EPS growth.”  Bud Foshee, CFO, stated, “Higher interest rates have led to margin improvement in the second quarter, as well as a lower efficiency ratio.  Based on the June rate increase, we should see further margin improvement in the third quarter.”

FINANCIAL SUMMARY (UNAUDITED)   
(in Thousands except share and per share amounts)  
                                           
On December 20, 2016, the Company effected a two-for-one split of its common stock in the form of a stock dividend.  All shares and per share information for prior periods in this release   
has been adjusted to give effect to this stock split.  
   
        Period Ending
June 30, 2017
  Period Ending
March 31, 2017
  % Change
From Period
Ending March
31, 2017 to
Period Ending
June 30, 2017
  Period Ending
June 30, 2016
  % Change
From Period
Ending June
30, 2016 to
Period Ending
June 30, 2017
 
QUARTERLY OPERATING RESULTS                                      
Net Income   $ 24,164     $ 22,519     7 %   $ 18,876     28 %  
Net Income Available to Common Stockholders   $ 24,133     $ 22,519     7 %   $ 18,853     28 %  
Diluted Earnings Per Share   $ 0.45     $ 0.42     7 %   $ 0.36     25 %  
Return on Average Assets     1.55 %     1.45 %           1.37 %        
Return on Average Common Stockholders’ Equity     17.36 %     17.09 %           15.79 %        
Average Diluted Shares Outstanding     54,100,604       54,133,722             53,452,526          
                                           
YEAR-TO-DATE OPERATING RESULTS                                      
Net Income   $ 46,683                   $ 38,832     20 %  
Net Income Available to Common Stockholders   $ 46,652                   $ 38,809     20 %  
Diluted Earnings Per Share   $ 0.86                   $ 0.73     18 %  
Return on Average Assets     1.50 %                   1.45 %        
Return on Average Common Stockholders’ Equity     17.23 %                   16.57 %        
Average Diluted Shares Outstanding     54,117,072                     53,293,074          
                                           
BALANCE SHEET                                      
Total Assets   $ 6,329,599     $ 6,336,165     %   $ 5,646,055     12 %  
Loans     5,343,688       5,151,984     4 %     4,536,338     18 %  
Non-interest-bearing Demand Deposits     1,373,353       1,292,440     6 %     1,185,668     16 %  
Total Deposits     5,394,810       5,361,532     1 %     4,667,795     16 %  
Stockholders’ Equity     567,086       545,148     4 %     489,097     16 %  
                                       

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income of $24.2 million and net income available to common stockholders of $24.1 million for the quarter ended June 30, 2017, compared to net income and net income available to common stockholders of $18.9 million for the same quarter in 2016.  Basic and diluted earnings per common share were $0.46 and $0.45, respectively, for the second quarter of 2017, compared to $0.36 and $0.36, respectively, for the second quarter of 2016.

Return on average assets was 1.55% and return on average equity was 17.36% for the second quarter of 2017, compared to 1.37% and 15.79%, respectively, for the second quarter of 2016.

Net interest income was $55.6  million for the second quarter of 2017, compared to $52.1 million for the first quarter of 2017 and $45.9 million for the second quarter of 2016.  The net interest margin in the second quarter of 2017 was 3.77%, a 24 basis point increase from the first quarter of 2017 and a 26 basis point increase from the second quarter of 2016.  The increase in net interest income on a linked quarter basis is attributable to a $229.7 million increase in average loans outstanding, a $84.0 million increase in non-interest-bearing deposits and a $321.6 million decrease in average federal funds sold and interest-bearing balances with banks, all resulting in a positive mix change in our balance sheet.  The average yield on loans increased nine basis points to 4.60% on a linked quarter basis.

Average loans for the second quarter of 2017 were $5.23 billion, an increase of $229.7 million, or 5%, over average loans of $5.00 billion for the first quarter of 2017, and an increase of $811.5 million, or 18%, over average loans of $4.42 billion for the second quarter of 2016.

Average total deposits for the second quarter of 2017 were $5.27 billion, a decrease of $46.8 million, or 1%, over average total deposits of $5.32 billion for the first quarter of 2017, and an increase of $792.2 million, or 18%, over average total deposits of $4.48 billion for the second quarter of 2016.

Non-performing assets to total assets were 0.23% for the second quarter of 2017, a decrease of four basis points compared to 0.27% for the first quarter of 2017 and an increase of six basis points compared to 0.17% for the second quarter of 2016.  Net credit charge-offs to average loans were 0.25%, a one basis point increase compared to 0.24% for the first quarter of 2017 and a seven basis point increase compared to 0.18% for the second quarter of 2016.  We recorded a $4.4 million provision for loan losses in the second quarter of 2017 compared to $5.0 million in the first quarter of 2017 and $3.8 million in the second quarter of 2016.  The allowance for loan loss as a percentage of total loans was 1.03% at June 30, 2017 compared to 1.05% at March 31, 2017 and 1.04% at June 30, 2016.  In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.

Non-interest income increased by $958,000 during the second quarter of 2017, or 25%, compared to the second quarter of 2016.  Mortgage banking revenue increased by $163,000 in the second quarter of 2017, or 18%, compared to the second quarter of 2016.  Cash surrender value of life insurance increased to $785,000 during the second quarter of 2017, compared to $655,000 during the second quarter of 2016.  Credit card revenue increased $617,000, or 108%, to $1.2 million during the second quarter of 2017, compared to $572,000 during the second quarter of 2016.

Non-interest expense for the second quarter of 2017 increased $2.4 million, or 12%, to $21.9 million from $19.5 million in the second quarter of 2016, and increased $608,000, or 3%, on a linked quarter basis.  Salary and benefit expense for the second quarter of 2017 increased $1.3 million, or 12%, to $12.0 million from $10.7 million in the second quarter of 2016, and increased $318,000, or 3%, on a linked quarter basis.  Equipment and Occupancy expense increased $242,000, or 12%, to $2.3 million in the second quarter of 2017, from $2.0 million in the second quarter of 2016.  This increase in equipment and occupancy expense was attributable to new offices in our Tampa Bay, Florida and Charleston, South Carolina regions, which were relocations from temporary facilities we previously occupied.  Other operating expense for the second quarter of 2017 increased $729,000, or 15%, to $5.6 million from $4.9 million in the second quarter of 2016.  This was primarily the result of higher credit card processing expenses and higher Federal Reserve Bank service charges related to increased correspondent banking activities.

Income tax expense increased $2.4 million, or 32%, to $10.0 million in the second quarter of 2017, compared to $7.6 million in the second quarter of 2016.  In the second quarter of 2016 we adopted the amendments in Accounting Standards Update 2016-09  using the modified retrospective method.  Accordingly, we recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $1.4 million in the second quarter of 2017, compared to $1.2 million in the second quarter of 2016.  Our effective tax rate for the second quarter of 2017 and 2016 was 29.2% and 28.6%, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures, including tangible common stockholders’ equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015.  We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations.  As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use.  The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures as of and for the comparative periods presented in this press release.  Dollars are in thousands, except share and per share data.

                         
      At June 30, 2017   At March 31,
2017
  At December
31, 2016
  At September
30, 2016
  At June 30, 2016  
Book value per share – GAAP   $ 10.72     $ 10.32     $ 9.93     $ 9.65     $ 9.32    
Total common stockholders’ equity – GAAP     567,086       545,148       522,889       507,886       489,097    
  Adjustments:                                          
  Adjusted for goodwill and core deposit intangible asset     14,855       14,924       14,996       15,073       15,154    
Tangible common stockholders’ equity – non-GAAP   $ 552,231     $ 530,224     $ 507,893     $ 492,813     $ 473,943    
Tangible book value per share – non-GAAP   $ 10.44     $ 10.04     $ 9.65     $ 9.37     $ 9.03    
                                             
Stockholders’ equity to total assets – GAAP     8.96 %     8.60 %     8.21 %     8.46 %     8.66 %  
Total assets – GAAP   $ 6,329,599     $ 6,336,165     $ 6,370,448     $ 6,002,621     $ 5,646,055    
  Adjustments:                                          
  Adjusted for goodwill and core deposit intangible asset     14,855       14,924       14,996       15,073       15,154    
Total tangible assets – non-GAAP   $ 6,314,744     $ 6,321,241     $ 6,355,452     $ 5,987,548     $ 5,630,901    
Tangible common equity to total tangible assets – non-GAAP     8.75 %     8.39 %     7.99 %     8.23 %     8.42 %  
                                           

About ServisFirst Bancshares, Inc.

ServisFirst Bancshares, Inc. is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, ServisFirst Bancshares, Inc. provides business and personal financial services from locations in Birmingham, Huntsville, Montgomery, Mobile and Dothan, Alabama, Pensacola and Tampa Bay, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee.

ServisFirst Bancshares, Inc. files periodic reports with the U.S. Securities and Exchange Commission (SEC).  Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at http://www.servisfirstbancshares.com/.

Statements in this press release that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933.  The words “believe,” “expect,” “anticipate,” “project,” “plan,” “intend,” “will,” “would,” “might” and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. ServisFirst Bancshares, Inc. cautions that such forward-looking statements, wherever they occur in this press release or in other statements attributable to ServisFirst Bancshares, Inc., are necessarily estimates reflecting the judgment of ServisFirst Bancshares, Inc.’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.  Such forward-looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, including: general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and non-bank financial institutions.  The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made.  ServisFirst Bancshares, Inc. assumes no obligation to update or revise any forward-looking statements that are made from time to time.

More information about ServisFirst Bancshares, Inc. may be obtained over the Internet at http://www.servisfirstbancshares.com/ or by calling (205) 949-0302.

                                             
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED) 
(In thousands except share and per share data) 
    2nd Quarter
2017
  1st Quarter 2017   4th Quarter 2016   3rd Quarter 2016   2nd Quarter 2016    
CONSOLIDATED STATEMENT OF INCOME                                          
Interest income   $ 63,538     $ 59,517     $ 56,200     $ 54,691     $ 52,050    
Interest expense     7,971       7,465       7,091       6,773       6,159    
Net interest income     55,567       52,052       49,109       47,918       45,891    
Provision for loan losses     4,381       4,986       4,075       3,464       3,800    
Net interest income after provision for loan losses     51,186       47,066       45,034       44,454       42,091    
Non-interest income     4,805       4,546       6,039       4,791       3,847    
Non-interest expense     21,875       21,267       22,037       20,162       19,504    
Income before income tax     34,116       30,345       29,036       29,083       26,434    
Provision for income tax     9,952       7,826       7,298       8,174       7,558    
Net income     24,164       22,519       21,738       20,909       18,876    
Preferred stock dividends     31             24             23    
Net income available to common stockholders   $ 24,133     $ 22,519     $ 21,714     $ 20,909     $ 18,853    
Earnings per share – basic   $ 0.46     $ 0.43     $ 0.41     $ 0.40     $ 0.36    
Earnings per share – diluted   $ 0.45     $ 0.42     $ 0.40     $ 0.39     $ 0.36    
Average diluted shares outstanding     54,100,604       54,133,722       53,961,160       53,879,328       53,452,526    
                                           
CONSOLIDATED BALANCE SHEET DATA                                          
Total assets   $ 6,329,599     $ 6,336,165     $ 6,370,448     $ 6,002,621     $ 5,646,055    
Loans     5,343,688       5,151,984       4,911,770       4,631,822       4,536,338    
Debt securities     518,065       526,023       447,427       377,270       347,706    
Non-interest-bearing demand deposits     1,373,353       1,292,440       1,281,605       1,269,726       1,185,668    
Total deposits     5,394,810       5,361,532       5,420,311       5,081,128       4,664,795    
Borrowings     55,075       55,169       55,262       55,356       55,450    
Stockholders’ equity   $ 567,086     $ 545,148     $ 522,889     $ 507,866     $ 489,097    
                                           
Shares outstanding     52,909,362       52,812,396       52,636,896       52,610,896       52,503,896    
Book value per share   $ 10.72     $ 10.32     $ 9.93     $ 9.65     $ 9.32    
Tangible book value per share (1)   $ 10.44     $ 10.04     $ 9.65     $ 9.37     $ 9.03    
                                           
SELECTED FINANCIAL RATIOS                                          
Net interest margin     3.77 %     3.53 %     3.30 %     3.35 %     3.51 %  
Return on average assets     1.55 %     1.45 %     1.39 %     1.39 %     1.37 %  
Return on average common stockholders’ equity     17.36 %     17.09 %     16.71 %     16.66 %     15.79 %  
Efficiency ratio     36.23 %     37.58 %     39.96 %     38.25 %     39.21 %  
Non-interest expense to average earning assets     1.47 %     1.43 %     1.46 %     1.39 %     1.50 %  
                                           
CAPITAL RATIOS (2)                                          
Common equity tier 1 capital to risk-weighted assets     9.72 %     9.67 %     9.78 %     9.91 %     9.83 %  
Tier 1 capital to risk-weighted assets     9.73 %     9.68 %     9.78 %     9.92 %     9.84 %  
Total capital to risk-weighted assets     11.67 %     11.66 %     11.84 %     12.03 %     11.98 %  
Tier 1 capital to average assets     8.88 %     8.46 %     8.22 %     8.20 %     8.52 %  
Tangible common equity to total tangible assets (1)     8.75 %     8.39 %     7.99 %     8.23 %     8.42 %  
                                           
(1) See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a discussion of these Non-GAAP financial measures.
(2) Regulatory capital ratios for most recent period are preliminary.    
     

CONSOLIDATED BALANCE SHEETS (UNAUDITED) 
(Dollars in thousands) 
        June 30, 2017   June 30, 2016   % Change  
ASSETS                    
Cash and due from banks   $ 71,181     $ 54,985     29   %  
Interest-bearing balances due from depository institutions     134,694       417,703     (68 ) %  
Federal funds sold     49,443       116,038     (57 ) %  
  Cash and cash equivalents     255,318       588,726     (57 ) %  
Available for sale debt securities, at fair value     438,808       321,044     37   %  
Held to maturity debt securities (fair value of $80,532 and $30,717 at                    
  June 30, 2017 and 2016, respectively)     79,257       29,662     167   %  
Restricted equity securities     1,037       5,671     (82 ) %  
Mortgage loans held for sale     5,673       7,933     (28 ) %  
Loans     5,343,688       4,536,338     18   %  
Less allowance for loan losses     (55,059 )     (46,998 )   17   %  
  Loans, net     5,288,629       4,489,340     18   %  
Premises and equipment, net     51,797       23,221     123   %  
Goodwill and other identifiable intangible assets     14,855       15,154     (2 ) %  
Other assets     194,225       165,304     17   %  
  Total assets   $ 6,329,599     $ 5,646,055     12   %  
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Liabilities:                    
Deposits:                    
  Non-interest-bearing   $ 1,373,353     $ 1,185,668     16   %  
  Interest-bearing     4,021,457       3,482,127     15   %  
    Total deposits     5,394,810       4,667,795     16   %  
Federal funds purchased     300,226       420,430     (29 ) %  
Other borrowings     55,075       55,450     (1 ) %  
Other liabilities     12,402       13,283     (7 ) %  
  Total liabilities     5,762,513       5,156,958     12   %  
Stockholders’ equity:                    
  Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001                    
    (liquidation preference $1,000), net of discount; no shares authorized,                    
    no shares issued or outstanding at June 30, 2017 and 2016                 %  
  Preferred stock, par value $0.001 per share; 1,000,000 shares authorized and                    
    undesignated at June 30, 2017 and 2016                 %  
  Common stock, par value $0.001 per share; 100,000,000 shares authorized;                    
    52,909,362 shares issued and outstanding at June 30, 2017 and 52,503,896                    
    shares issued and outstanding at June 30, 2016     53       52     2   %  
  Additional paid-in capital     217,271       214,525     1   %  
  Retained earnings     348,517       268,739     30   %  
  Accumulated other comprehensive income     743       5,404     (86 ) %  
  Noncontrolling interest     502       377     33   %  
    Total stockholders’ equity     567,086       489,097     16   %  
  Total liabilities and stockholders’ equity   $ 6,329,599     $ 5,646,055     12   %  

                     
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) 
(In thousands except per share data)   
        Three Months Ended June 30,   Six Months Ended June 30,  
        2017   2016     2017   2016    
Interest income:                          
  Interest and fees on loans   $ 59,912   $ 49,210     $ 115,468   $ 96,457    
  Taxable securities     2,274     1,238       4,361     2,507    
  Nontaxable securities     752     834       1,517     1,692    
  Federal funds sold     287     210       806     283    
  Other interest and dividends     313     558       903     1,072    
    Total interest income     63,538     52,050       123,055     102,011    
Interest expense:                          
  Deposits     6,321     4,633       12,303     8,994    
  Borrowed funds     1,650     1,526       3,133     2,947    
    Total interest expense     7,971     6,159       15,436     11,941    
    Net interest income     55,567     45,891       107,619     90,070    
Provision for loan losses     4,381     3,800       9,367     5,859    
    Net interest income after provision for loan losses     51,186     42,091       98,252     84,211    
Non-interest income:                          
  Service charges on deposit accounts     1,382     1,306       2,736     2,613    
  Mortgage banking     1,064     901       1,963     1,569    
  Credit card income       1,189     572       2,368     1,041    
  Securities gains       –     (3 )       –     (3 )  
  Increase in cash surrender value life insurance     785     655       1,509     1,279    
  Other operating income     385     416       775     783    
    Total non-interest income     4,805     3,847       9,351     7,282    
Non-interest expense:                          
  Salaries and employee benefits     12,031     10,733       23,744     21,800    
  Equipment and occupancy expense     2,265     2,023       4,505     4,008    
  Professional services     808     999       1,579     1,737    
  FDIC and other regulatory assessments     1,081     803       2,078     1,553    
  Other real estate owned expense     56     41       132     490    
  Other operating expense     5,634     4,905       11,104     9,206    
    Total non-interest expense     21,875     19,504       43,142     38,794    
    Income before income tax     34,116     26,434       64,461     52,699    
Provision for income tax     9,952     7,558       17,778     13,867    
    Net income     24,164     18,876       46,683     38,832    
  Dividends on preferred stock     31     23       31     23    
    Net income available to common stockholders   $ 24,133   $ 18,853     $ 46,652   $ 38,809    
Basic earnings per common share   $ 0.46   $ 0.36     $ 0.88   $ 0.74    
Diluted earnings per common share   $ 0.45   $ 0.36     $ 0.86   $ 0.73    

                               
LOANS BY TYPE (UNAUDITED) 
(In thousands) 
                                 
      2nd Quarter 2017   1st Quarter 2017   4th Quarter 2016   3rd Quarter 2016   2nd Quarter 2016
Commercial, financial and agricultural   $ 2,123,498   $ 2,061,503   $ 1,982,267   $ 1,885,315   $ 1,892,870
Real estate – construction     395,398     345,777     335,085     292,721     251,144
Real estate – mortgage:                              
  Owner-occupied commercial     1,272,659     1,262,578     1,171,719     1,138,308     1,117,514
  1-4 family mortgage     565,121     554,261     536,805     520,394     494,733
  Other mortgage     931,788     872,955     830,683     740,127     725,336
Subtotal: Real estate – mortgage     2,769,568     2,689,794     2,539,207     2,398,829     2,337,583
Consumer     55,224     54,910     55,211     54,957     54,741
Total loans   $ 5,343,688   $ 5,151,984   $ 4,911,770   $ 4,631,822   $ 4,536,338

                                     
SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED) 
(Dollars in thousands) 
          2nd Quarter 2017   1st Quarter 2017   4th Quarter 2016   3rd Quarter 2016   2nd Quarter 2016  
Allowance for loan losses:                                          
Beginning balance   $ 53,892       $ 51,893        $ 48,933      $ 46,998        $ 45,145      
Loans charged off:                                          
  Commercial, financial and agricultural     3,067         2,855         1,059       1,270         1,412      
  Real estate – construction     40                       79         355      
  Real estate – mortgage     106         266         45       144         191      
  Consumer     33         75         82       81         31      
    Total charge offs     3,246         3,196         1,186       1,574         1,989      
Recoveries:                                          
  Commercial, financial and agricultural     16         190         10       35         1      
  Real estate – construction     14         16         12       9         39      
  Real estate – mortgage     2         2         46       1         2      
  Consumer             1         3                    
    Total recoveries     32         209         71       45         42      
  Net charge-offs     3,214         2,987         1,115       1,529         1,947      
  Provision for loan losses     4,381         4,986         4,075       3,464         3,800      
  Ending balance   $ 55,059       $ 53,892       $ 51,893     $ 48,933       $ 46,998      
                                                 
  Allowance for loan losses to total loans     1.03   %     1.05    %     1.06  %     1.05    %     1.04   %  
  Allowance for loan losses to total average                                          
    loans     1.05   %     1.08    %     1.10  %     1.07    %     1.06   %  
  Net charge-offs to total average loans     0.25   %     0.24    %     0.09  %     0.13    %     0.18   %  
  Provision for loan losses to total average                                          
    loans     0.34   %     0.40    %     0.34  %     0.30    %     0.34   %  
  Nonperforming assets:                                          
    Nonaccrual loans   $ 9,963       $ 12,084        $ 10,624      $ 6,647        $ 4,730      
    Loans 90+ days past due and accruing     1,016         16         6,263       43         423      
    Other real estate owned and                                          
      repossessed assets     3,891         5,102         4,988       3,035         4,260      
  Total   $ 14,870       $ 17,202       $ 21,875     $ 9,725       $ 9,413      
                                                 
  Nonperforming loans to total loans     0.21   %     0.23    %     0.34  %     0.14    %     0.11   %  
  Nonperforming assets to total assets     0.23   %     0.27    %     0.34  %     0.16    %     0.17   %  
  Nonperforming assets to earning assets     0.24   %     0.28    %     0.35  %     0.16    %     0.17   %  
  Reserve for loan losses to nonaccrual loans     552.63   %     445.98    %     488.45  %     736.17    %     993.62   %  
                                                 
  Restructured accruing loans   $ 12,716       $ 536        $ 558      $ 6,738        $ 6,753      
                                                 
  Restructured accruing loans to total loans     0.24   %     0.01    %     0.01  %     0.14    %     0.15   %  
                                                 
  TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)                            
  (In thousands)                                  
          2nd Quarter 2017   1st Quarter 2017   4th Quarter 2016   3rd Quarter 2016   2nd Quarter 2016  
  Beginning balance:   $ 7,269       $ 7,292       $ 6,738     $ 6,753       $ 6,763      
    Additions     12,716                                    
    Removal from TDR     (535 )                                  
    Net (paydowns) / advances     (1,380 )       (23 )       554       (15 )       (10 )    
    Charge-offs     (1,700 )                                  
          $ 16,370       $ 7,269       $ 7,292     $ 6,738       $ 6,753      

                     
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                    
(In thousands except per share data)                    
        2nd Quarter
2017
  1st Quarter
2017
  4th Quarter
2016
  3rd Quarter
2016
  2nd Quarter
2016
 
Interest income:                                
  Interest and fees on loans   $ 59,912   $ 55,556   $ 52,533   $ 51,598   $ 49,210    
  Taxable securities     2,274     2,087     1,604     1,107     1,238    
  Nontaxable securities     752     765     785     823     834    
  Federal funds sold     287     519     377     347     210    
  Other interest and dividends     313     590     901     816     558    
    Total interest income     63,538     59,517     56,200     54,691     52,050    
Interest expense:                                
  Deposits     6,321     5,982     5,817     5,358     4,611    
  Borrowed funds     1,650     1,483     1,274     1,415     1,548    
    Total interest expense     7,971     7,465     7,091     6,773     6,159    
    Net interest income     55,567     52,052     49,109     47,918     45,891    
Provision for loan losses     4,381     4,986     4,075     3,464     3,800    
    Net interest income after provision for loan losses     51,186     47,066     45,034     44,454     42,091    
Non-interest income:                                
  Service charges on deposit accounts     1,382     1,354     1,375     1,367     1,306    
  Mortgage banking     1,064     899     1,044     1,112     901    
  Credit card income       1,189     1,179     1,052     1,114     572    
  Securities gains                     (3 )  
  Increase in cash surrender value life insurance     785     724     745     770     655    
  Other operating income     385     390     1,823     428     416    
    Total non-interest income     4,805     4,546     6,039     4,791     3,847    
Non-interest expense:                                
  Salaries and employee benefits     12,031     11,713     11,197     10,958     10,733    
  Equipment and occupancy expense     2,265     2,250     1,877     2,100     2,023    
  Professional services     808     771     1,058     1,182     999    
  FDIC and other regulatory assessments     1,081     997     1,072     775     803    
  Other real estate owned expense     56     76     91     178     41    
  Other operating expense     5,634     5,460     6,742     4,969     4,905    
    Total non-interest expense     21,875     21,267     22,037     20,162     19,504    
    Income before income tax     34,116     30,345     29,036     29,083     26,434    
Provision for income tax     9,952     7,826     7,298     8,174     7,558    
    Net income     24,164     22,519     21,738     20,909     18,876    
  Dividends on preferred stock     31         24         23    
    Net income available to common stockholders   $ 24,133   $ 22,519   $ 21,714   $ 20,909   $ 18,853    
Basic earnings per common share   $ 0.46   $ 0.43   $ 0.41   $ 0.40   $ 0.36    
Diluted earnings per common share   $ 0.45   $ 0.42   $ 0.40   $ 0.39   $ 0.36    

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)  
ON A FULLY TAXABLE-EQUIVALENT BASIS  
(Dollars in thousands)  
   
                                                                       
            2nd Quarter 2017   1st Quarter 2017   4th Quarter 2016   3rd Quarter 2016   2nd Quarter 2016  
            Average Balance   Yield /
Rate
  Average Balance   Yield /
Rate
  Average Balance   Yield /
Rate
  Average Balance   Yield /
Rate
  Average Balance   Yield /
Rate
 
Assets:                                                              
Interest-earning assets:                                                              
  Loans, net of unearned income (1)                                                              
    Taxable   $ 5,192,812   4.60 %   $ 4,976,933     4.50 %   $ 4,676,565   4.45 %   $ 4,554,900   4.47 %   $ 4,406,107   4.47 %  
    Tax-exempt (2)     41,143   4.92       27,322     4.72       26,344   4.74       21,939   4.37       16,315   4.54    
      Total loans, net of                                                              
        unearned income     5,233,955   4.60       5,004,255     4.51       4,702,909   4.45       4,576,839   4.47       4,422,422   4.47    
  Mortgage loans held for sale     5,958   3.90       5,637     4.10       6,271   3.36       6,724   3.79       7,323   3.62    
  Debt securities:                                                              
    Taxable     389,505   2.34       368,349     2.27       295,608   2.17       224,825   2.19       208,113   2.38    
    Tax-exempt (2)     133,590   3.38       132,578     3.45       134,748   3.54       135,272   3.73       135,954   3.73    
      Total securities (3)     523,095   2.60       500,927     2.58       430,356   2.60       360,097   2.77       344,067   2.91    
  Federal funds sold     98,598   1.17       234,460     0.90       242,211   0.62       217,158   0.64       144,206   0.59    
  Restricted equity securities     1,030   10.51       1,030     1.57       3,042   8.24       5,658   4.01       5,659   3.62    
  Interest-bearing balances with banks     109,909   1.04       295,648     0.80       601,143   0.55       590,675   0.51       393,782   0.52    
  Total interest-earning assets   $ 5,972,545   4.30 %   $ 6,041,957     4.03 %   $ 5,985,932   3.77 %   $ 5,757,151   3.81 %   $ 5,317,459   3.97 %  
Non-interest-earning assets:                                                              
  Cash and due from banks     68,894           59,697             55,593           58,809           65,318        
  Net premises and equipment     49,813           44,739             30,421           25,000           23,241        
  Allowance for loan losses, accrued                                                              
    interest and other assets     143,286           138,289             140,721           145,804           127,640        
      Total assets   $ 6,234,538         $ 6,284,682           $ 6,212,667         $ 5,986,764         $ 5,533,658        
                                                                       
Interest-bearing liabilities:                                                              
  Interest-bearing deposits:                                                              
  Checking   $ 779,916   0.39 %   $ 789,273     0.38 %   $ 735,115   0.37 %   $ 696,100   0.37 %   $ 691,776   0.36 %  
  Savings     48,150   0.30       50,461     0.33       51,845   0.32       43,569   0.30       41,546   0.30    
  Money market     2,567,817   0.64       2,694,225     0.58       2,669,513   0.56       2,471,829   0.55       2,105,420   0.52    
  Time deposits     537,220   1.06       530,000     1.02       527,100   1.00       519,653   0.99       498,151   1.01    
    Total interest-bearing deposits     3,933,103   0.64       4,063,959     0.60       3,983,573   0.58       3,731,151   0.57       3,336,893   0.56    
  Federal funds purchased     336,344   1.11       359,747     0.86       353,029   0.63       436,415   0.64       505,076   0.64    
  Other borrowings     55,130   5.22       55,239     5.26       55,315   5.16       55,410   5.15       55,521   5.20    
  Total interest-bearing liabilities   $ 4,324,577   0.74 %   $ 4,478,945     0.68 %   $ 4,391,917   0.64 %   $ 4,222,976   0.64 %   $ 3,897,490   0.64 %  
Non-interest-bearing liabilities:                                                              
  Non-interest-bearing                                                              
    demand     1,338,514           1,254,496             1,289,448           1,250,139           1,142,541        
  Other liabilities     13,739           16,809             14,399           14,376           13,301        
  Stockholders’ equity     556,521           535,232             514,245           494,248           475,917        
  Unrealized gains on securities and                                                              
    derivatives     1,187           (800 )           2,658           5,025           4,409        
      Total liabilities and                                                              
        stockholders’ equity   $ 6,234,538         $ 6,284,682           $ 6,212,667         $ 5,986,764         $ 5,533,658        
Net interest spread         3.56 %         3.35 %         3.13 %         3.17 %         3.33 %  
Net interest margin         3.77 %         3.53 %         3.30 %         3.35 %         3.51 %  
                                                                       

 

CONTACT: Contact: ServisFirst Bank
Davis Mange (205) 949-3420
dmange@servisfirstbank.com