Press Releases

ServisFirst Bancshares, Inc. Announces Results For Second Quarter of 2020

BIRMINGHAM, Ala., July 20, 2020 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three and six months ended June 30, 2020.

Second Quarter 2020 Highlights:

  • Diluted EPS for the second quarter increased 14% to $0.75 year over year
  • Record deposit growth of $1.5 billion during the second quarter
  • Funded approximately 4,800 Payroll Protection Program (“PPP”) loans totaling over $1.0 billion, with 68% less than $150,000 in size
  • Asset quality improved, with nonperforming loans to total loans improving to 26 basis points during the second quarter
  • Total assets exceed $11.0 billion
 
FINANCIAL SUMMARY (UNAUDITED) 
(in Thousands except share and per share amounts) 
                                     
    Period Ending June 30, 2020   Period Ending March 31, 2020   % Change From Period Ending March 31, 2020 to Period Ending June 30, 2020   Period Ending June 30, 2019   % Change From Period Ending June 30, 2019 to Period Ending June 30, 2020
QUARTERLY OPERATING RESULTS                                    
Net Income   $ 40,448     $ 34,778     16 %   $ 35,633     14 %
Net Income Available to Common Stockholders   $ 40,417     $ 34,778     16 %   $ 35,602     14 %
Diluted Earnings Per Share   $ 0.75     $ 0.64     17 %   $ 0.66     14 %
Return on Average Assets     1.55 %     1.54 %           1.69 %      
Return on Average Common Stockholders' Equity     18.40 %     16.23 %           18.72 %      
Average Diluted Shares Outstanding     54,194,506       54,167,414             54,089,107        
                                     
YEAR-TO-DATE OPERATING RESULTS                                    
Net Income   $ 75,226                   $ 70,643     6 %
Net Income Available to Common Stockholders   $ 75,195                   $ 70,612     6 %
Diluted Earnings Per Share   $ 1.39                   $ 1.31     6 %
Return on Average Assets     1.54 %                   1.72 %      
Return on Average Common Stockholders' Equity     17.31 %                   19.06 %      
Average Diluted Shares Outstanding     54,180,960                     54,082,857        
                                     
BALANCE SHEET                                    
Total Assets   $ 11,012,195     $ 9,364,882     18 %   $ 8,740,237     26 %
Loans     8,315,375       7,568,836     10 %     6,967,886     19 %
Non-interest-bearing Demand Deposits     2,678,893       1,925,626     39 %     1,576,959     70 %
Total Deposits     9,342,918       7,832,655     19 %     7,404,794     26 %
Stockholders' Equity     914,588       881,885     4 %     778,957     17 %
                                     

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $40.4 million for the quarter ended June 30, 2020, compared to net income and net income available to common stockholders of $35.6 million for the same quarter in 2019.  Basic and diluted earnings per common share were $0.75 and $0.75, respectively, for the second quarter of 2020, compared to $0.67 and $0.66, respectively, for the second quarter of 2019.

Annualized return on average assets was 1.55% and annualized return on average common stockholders’ equity was 18.40% for the second quarter of 2020, compared to 1.69% and 18.72%, respectively, for the second quarter of 2019.

Net interest income was $83.2 million for the second quarter of 2020, compared to $77.6 million for the first quarter of 2020 and $70.1 million for the second quarter of 2019.  The net interest margin in the second quarter of 2020 was 3.32% compared to 3.58% in the first quarter of 2020 and 3.44% in the second quarter of 2019.  Origination of PPP loans and increased excess liquidity drove unfavorable rate and mix changes while lower deposit rates and increases in noninterest bearing demand balances drove favorable rate and mix changes, respectively.  Accretion of net fees on PPP loans of $2.6 million during the second quarter of 2020 offset the decrease in loan yield by approximately 12 basis points.

Average loans for the second quarter of 2020 were $8.33 billion, an increase of $972.6 million, or 52% annualized, over average loans of $7.36 billion for the first quarter of 2020, and an increase of $1.54 billion, or 23%, over average loans of $6.79 billion for the second quarter of 2019.  We originated over 4,800 PPP loans during the second quarter of 2020 for a total of $1.05 billion.  Average total balances of PPP loans for the second quarter of 2020 were $885.5 million.  Excluding PPP loans, average loans for the second quarter of 2020 were $7.45 billion, an increase of $87.0 million over average loans for the first quarter of 2020, and an increase of $659.1 million, or 10%, over average loans for the second quarter of 2019.

Average total deposits for the second quarter of 2020 were $8.87 billion, an increase of $1.23 billion, or 64% annualized, over average total deposits of $7.64 billion for the first quarter of 2020, and an increase of $1.69 billion, or 24%, over average total deposits of $7.18 billion for the second quarter of 2019.

Nonperforming assets to total assets were 0.26% for the second quarter of 2020, a decrease of 18 basis points compared to 0.44% for the first quarter of 2020 and a decrease of 17 basis points compared to 0.43% for the second quarter of 2019.  Annualized net charge-offs to average loans were 0.20%, a six basis-point decrease compared to 0.26% for the first quarter of 2020 and a decrease of two basis points compared to 0.22% for the second quarter of 2019.  We recorded a $10.3 million provision for loan losses in the second quarter of 2020 compared to $13.6 million in the first quarter of 2020 and $4.9 million in the second quarter of 2019.  The allowance for loan loss as a percentage of total loans was 1.10% at June 30, 2020, a decrease of 3 basis points compared to 1.13% at March 31, 2020 and an increase of 8 basis points compared to 1.02% at June 30, 2019.  Excluding PPP loans, the allowance for loan loss as a percentage of total loans was 1.26% at June 30, 2020.  The CARES Act, passed into law on March 27, 2020 as a result of the COVID-19 outbreak, allows companies to delay their adoption of Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments (CECL), including the current expected credit losses methodology for estimating allowances for credit losses. We have elected to delay adoption of ASU 2016-13 until the date on which the national emergency concerning the COVID-19 outbreak terminates or December 31, 2020, with an effective retrospective implementation date of January 1, 2020.  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.

Noninterest income for the second quarter of 2020 increased $1.2 million, or 22%, to $7.0 million from $5.8 million in the second quarter of 2019.  Mortgage banking revenue increased $1.0 million, or 94%, from the second quarter of 2019 to the second quarter of 2020.  Mortgage loan origination volumes increased approximately 65% during the second quarter of 2020 when compared to the same quarter in 2019.  Additionally, more of the originations in 2020 were sellable loans, driving higher gains on sale.  Credit card revenue decreased $343,000, or 20%, to $1.4 million during the second quarter of 2020, compared to $1.7 million during the second quarter of 2019.  The amount of spend on purchase cards increased $20.5 million while the amount of spend on business credit cards decreased $14.3 million during the second quarter of 2020 when compared to the second quarter of 2019.  Purchase card spend carries lower profit margins than credit cards due to their higher rebates.  Income on life insurance policies increased $686,000, or 88%, to $1.5 million during the second quarter of 2020, compared to $778,000 during the second quarter of 2019.  We purchased an additional $75.0 million in BOLI contracts during the third quarter of 2019.  Other income for the second quarter of 2020 decreased $151,000, or 39%, to $241,000 from $392,000 in the second quarter of 2019.  On May 4, 2020 we bought an interest rate cap with a term of three years and a notional amount of $300 million.  The cap is tied to one-month LIBOR with a strike rate of 0.50%.  We wrote down the value of the cap by $252,000 during the second quarter of 2020 through other income and are amortizing the fee paid to our counterparty over the life of the cap.

Noninterest expense for the second quarter of 2020 increased $2.8 million, or 11%, to $28.8 million from $26.0 million in the second quarter of 2019, and increased $896,000, or 3%, on a linked quarter basis.  Salary and benefit expense for the second quarter of 2020 increased $1.5 million, or 10%, to $15.8 million from $14.3 million in the second quarter of 2019, and increased $134,000, or 1%, on a linked quarter basis.  Costs to originate PPP loans totaling $2.4 million were incurred during the second quarter of 2020.  These costs were credited against salary and benefits as a deferred expense and will be amortized over the life of the loans by netting them against accretion of deferred origination fees.  Bonuses of approximately $2.5 million were paid during the second quarter of 2020 related to work performed on the PPP.  Additional bonuses of $71,000 were paid to front-line employees who continued to assist customers during the peak of the pandemic.  Equipment and occupancy expense increased $147,000, or 6%, to $2.4 million in the second quarter of 2020, from $2.3 million in the second quarter of 2019.  Third party processing expenses increased $789,000, or 29%, to $3.5 million in the second quarter of 2020, from $2.7 million in the second quarter of 2019.  Limited-term licenses were added to our loan origination systems to enable more employees to assist customers with their PPP loans.  These licenses added $514,000 to third party processing expenses during the second quarter of 2020.  Professional services expense decreased $100,000, or 8%, to $1.1 million in the second quarter of 2020, from $1.2 million in the second quarter of 2019, and increased $143,000, or 15%, from $948,000 on a linked-quarter basis.  FDIC and other regulatory assessments decreased $486,000, or 45%, to $595,000 in the second quarter of 2020, from $1.1 million in the second quarter of 2019.  Lower growth in assets during the second quarter of 2020, excluding PPP loans, resulted in us adjusting our accrual for assessments to be paid at the end of the third quarter of 2020.  Expenses associated with other real estate owned increased $1.1 million to $1.3 million in the second quarter of 2020, from $212,000 in the second quarter of 2019.  Updated appraisals resulted in write-downs in values on two properties in our Birmingham, Alabama market.  Other operating expenses for the second quarter of 2020 decreased $100,000, or 2%, to $4.1 million from $4.2 million in the second quarter of 2019, and increased $452,000, or 12%, on a linked-quarter basis.  The efficiency ratio was 31.92% during the second quarter of 2020 compared to 34.30% during the second quarter of 2019 and compared to 33.11% during the first quarter of 2020.

Income tax expense increased $1.4 million, or 15%, to $10.7 million in the second quarter of 2020, compared to $9.3 million in the second quarter of 2019.  Our effective tax rate was 20.95% for the second quarter of 2020 compared to 20.74% for the second quarter of 2019.  State of Alabama tax credit investments matured at the end of 2019, causing our state credit amounts to decrease from $497,000 during the second quarter of 2019 to $132,000 during the second quarter of 2020.  We recognized a reduction in provision for income taxes resulting from excess tax benefits from the exercise and vesting of stock options and restricted stock during the second quarters of 2020 and 2019 of $136,000 and $186,000, 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,
2020
  At March 31,
2020
  At December 31,
2019
  At September 30,
2019
  At June 30,
2019
Book value per share - GAAP   $ 16.98     $ 16.38     $ 15.71     $ 15.13     $ 14.55  
Total common stockholders' equity - GAAP     914,588       881,886       842,682       810,537       778,957  
Adjustments:                                        
Adjusted for goodwill and core deposit intangible asset     14,043       14,111       14,179       14,246       14,314  
Tangible common stockholders' equity - non-GAAP   $ 900,545     $ 867,775     $ 828,503     $ 796,291     $ 764,643  
Tangible book value per share - non-GAAP   $ 16.72     $ 16.12     $ 15.45     $ 14.86     $ 14.29  
                                         
Stockholders' equity to total assets - GAAP     8.31 %     9.42 %     9.42 %     9.00 %     8.91 %
Total assets - GAAP   $ 11,012,195     $ 9,364,882     $ 8,947,653     $ 9,005,112     $ 8,740,237  
Adjustments:                                        
Adjusted for goodwill and core deposit intangible asset     14,043       14,111       14,179       14,246       14,314  
Total tangible assets - non-GAAP   $ 10,998,152     $ 9,350,771     $ 8,933,474     $ 8,990,866     $ 8,725,923  
Tangible common equity to total tangible assets - non-GAAP     8.19 %     9.28 %     9.27 %     8.86 %     8.76 %

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, Sarasota 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 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,” “could,” “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, but not limited to: the global health and economic crisis precipitated by the COVID-19 outbreak; 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; economic crisis and associated credit issues in industries most impacted by the COVID-19 outbreak, including but not limited to, the restaurant, hospitality and retail sectors; 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, in our Quarterly Reports on Form 10-Q for fiscal year 2020, 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 www.servisfirstbancshares.com  or by calling (205) 949-0302.

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

                                         
SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
 
(In thousands except share and per share data)
 
    2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019   2nd Quarter 2019
CONSOLIDATED STATEMENT OF INCOME                                        
Interest income   $ 95,080     $ 96,767     $ 98,187     $ 101,130     $ 97,787  
Interest expense     11,846       19,127       22,410       28,125       27,702  
Net interest income     83,234       77,640       75,777       73,005       70,085  
Provision for loan losses     10,283       13,584       5,884       6,985       4,884  
Net interest income after provision for loan losses     72,951       64,056       69,893       66,020       65,201  
Non-interest income     7,033       6,674       6,936       6,202       5,778  
Non-interest expense     28,816       27,920       25,503       25,153       26,022  
Income before income tax     51,168       42,810       51,326       47,069       44,957  
Provision for income tax     10,720       8,032       10,289       9,506       9,324  
Net income     40,448       34,778       41,037       37,563       35,633  
Preferred stock dividends     31       -       32       -       31  
Net income available to common stockholders   $ 40,417     $ 34,778     $ 41,005     $ 37,563     $ 35,602  
Earnings per share - basic   $ 0.75     $ 0.65     $ 0.77     $ 0.70     $ 0.67  
Earnings per share - diluted   $ 0.75     $ 0.64     $ 0.76     $ 0.69     $ 0.66  
Average diluted shares outstanding     54,194,506       54,167,414       54,149,554       54,096,368       54,089,107  
                                         
CONSOLIDATED BALANCE SHEET DATA                                        
Total assets   $ 11,012,195     $ 9,364,882     $ 8,947,653     $ 9,005,112     $ 8,740,237  
Loans     8,315,375       7,568,836       7,261,451       7,022,069       6,967,886  
Debt securities     856,378       827,032       759,649       688,271       658,221  
Non-interest-bearing demand deposits     2,678,893       1,925,626       1,749,879       1,678,672       1,576,959  
Total deposits     9,342,918       7,832,655       7,530,433       7,724,158       7,404,794  
Borrowings     64,715       64,707       64,703       64,693       64,684  
Stockholders' equity   $ 914,588     $ 881,885     $ 842,682     $ 810,537     $ 778,957  
                                         
Shares outstanding     53,874,276       53,844,009       53,623,740       53,579,013       53,526,882  
Book value per share   $ 16.98     $ 16.38     $ 15.71     $ 15.13     $ 14.55  
Tangible book value per share (1)   $ 16.72     $ 16.12     $ 15.45     $ 14.86     $ 14.29  
                                         
SELECTED FINANCIAL RATIOS (Annualized)                                        
Net interest margin     3.32 %     3.58 %     3.47 %     3.36 %     3.44 %
Return on average assets     1.55 %     1.54 %     1.80 %     1.67 %     1.69 %
Return on average common stockholders' equity     18.40 %     16.23 %     19.75 %     18.69 %     18.72 %
Efficiency ratio     31.92 %     33.11 %     30.83 %     31.76 %     34.30 %
Non-interest expense to average earning assets     1.15 %     1.29 %     1.17 %     1.16 %     1.28 %
                                         
CAPITAL RATIOS (2)                                        
Common equity tier 1 capital to risk-weighted assets     11.26 %     10.68 %     10.50 %     10.39 %     10.18 %
Tier 1 capital to risk-weighted assets     11.27 %     10.68 %     10.50 %     10.39 %     10.19 %
Total capital to risk-weighted assets     13.27 %     12.54 %     12.31 %     12.27 %     12.02 %
Tier 1 capital to average assets     9.24 %     9.56 %     9.13 %     8.88 %     9.00 %
Tangible common equity to total tangible assets (1)     8.19 %     9.28 %     9.27 %     8.86 %     8.76 %
                                         
(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, 2020   June 30, 2019   % Change
ASSETS                  
Cash and due from banks   $ 102,282     $ 68,841     49 %
Interest-bearing balances due from depository institutions     1,444,293       409,052     253 %
Federal funds sold     2,352       408,289     (99 )%
Cash and cash equivalents     1,548,927       886,182     75 %
Available for sale debt securities, at fair value     856,128       657,971     30 %
Held to maturity debt securities (fair value of $250 at June 30, 2020 and 2019)     250       250     - %
Mortgage loans held for sale     14,491       9,446     53 %
Loans     8,315,375       6,967,886     19 %
Less allowance for loan losses     (91,507 )     (71,386 )   28 %
Loans, net     8,223,868       6,896,500     19 %
Premises and equipment, net     55,588       57,195     (3 )%
Goodwill and other identifiable intangible assets     14,043       14,314     (2 )%
Other assets     298,900       218,379     37 %
Total assets   $ 11,012,195     $ 8,740,237     26 %
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Liabilities:                  
Deposits:                  
Non-interest-bearing   $ 2,678,893     $ 1,576,959     70 %
Interest-bearing     6,664,025       5,827,835     14 %
Total deposits     9,342,918       7,404,794     26 %
Federal funds purchased     635,606       459,449     38 %
Other borrowings     64,715       64,684     - %
Other liabilities     54,368       32,353     68 %
Total liabilities     10,097,607       7,961,280     27 %
Stockholders' equity:                  
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at                  
June 30, 2020 and June 30, 2019     -       -        
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,874,276 shares                  
issued and outstanding at June 30, 2020, and 53,526,882 shares issued and outstanding                  
at June 30, 2019     54       54     - %
Additional paid-in capital     222,437       218,658     2 %
Retained earnings     672,984       555,425     21 %
Accumulated other comprehensive income     18,611       4,318     331 %
Total stockholders' equity attributable to ServisFirst Bancshares, Inc.     914,086       778,455     17 %
Noncontrolling interest     502       502     - %
Total stockholders' equity     914,588       778,957     17 %
Total liabilities and stockholders' equity   $ 11,012,195     $ 8,740,237     26 %


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
    Three Months Ended June 30,   Six Months Ended June 30,
    2020   2019   2020   2019
Interest income:                        
Interest and fees on loans   $ 89,383   $ 88,610     $ 178,768   $ 174,134  
Taxable securities     5,092     4,193       10,246     7,939  
Nontaxable securities     211     393       444     839  
Federal funds sold     34     1,998       311     3,217  
Other interest and dividends     360     2,593       2,078     5,357  
Total interest income     95,080     97,787       191,847     191,486  
Interest expense:                        
Deposits     10,756     24,240       27,501     46,385  
Borrowed funds     1,090     3,462       3,472     6,238  
Total interest expense     11,846     27,702       30,973     52,623  
Net interest income     83,234     70,085       160,874     138,863  
Provision for loan losses     10,283     4,884       23,867     9,769  
Net interest income after provision for loan losses     72,951     65,201       137,007     129,094  
Non-interest income:                        
Service charges on deposit accounts     1,823     1,786       3,739     3,488  
Mortgage banking     2,107     1,087       3,178     1,662  
Credit card income     1,398     1,741       3,163     3,317  
Securities losses     -     (6 )     -     (6 )
Increase in cash surrender value life insurance     1,464     778       2,917     1,540  
Other operating income     241     392       710     721  
Total non-interest income     7,033     5,778       13,707     10,722  
Non-interest expense:                        
Salaries and employee benefits     15,792     14,339       31,450     28,604  
Equipment and occupancy expense     2,434     2,287       4,834     4,546  
Third party processing and other services     3,513     2,724       6,858     5,135  
Professional services     1,091     1,191       2,039     2,185  
FDIC and other regulatory assessments     595     1,081       1,927     2,100  
Other real estate owned expense     1,303     212       1,904     234  
Other operating expense     4,088     4,188       7,724     8,546  
Total non-interest expense     28,816     26,022       56,736     51,350  
Income before income tax     51,168     44,957       93,978     88,466  
Provision for income tax     10,720     9,324       18,752     17,823  
Net income     40,448     35,633       75,226     70,643  
Dividends on preferred stock     31     31       31     31  
Net income available to common stockholders   $ 40,417   $ 35,602     $ 75,195   $ 70,612  
Basic earnings per common share   $ 0.75   $ 0.67     $ 1.40   $ 1.32  
Diluted earnings per common share   $ 0.75   $ 0.66     $ 1.39   $ 1.31  


LOANS BY TYPE (UNAUDITED)
               
(In thousands)
               
                                         
    2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019   2nd Quarter 2019
Commercial, financial and agricultural   $ 3,498,627     $ 2,771,307     $ 2,696,210     $ 2,653,934     $ 2,633,529  
Real estate - construction     544,586       548,578       521,392       550,871       603,779  
Real estate - mortgage:                                        
Owner-occupied commercial     1,634,495       1,678,532       1,587,478       1,526,911       1,538,279  
1-4 family mortgage     665,883       675,870       644,188       632,346       630,963  
Other mortgage     1,911,384       1,834,137       1,747,394       1,592,072       1,496,512  
Subtotal: Real estate - mortgage     4,211,762       4,188,539       3,979,060       3,751,329       3,665,754  
Consumer     60,400       60,412       64,789       65,935       64,824  
Total loans   $ 8,315,375     $ 7,568,836     $ 7,261,451     $ 7,022,069     $ 6,967,886  


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)                                  
(Dollars in thousands)                                  
    2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019   2nd Quarter 2019
Allowance for loan losses:                                        
Beginning balance   $ 85,414     $ 76,584     $ 77,192     $ 71,386     $ 70,207  
Loans charged off:                                        
Commercial, financial and agricultural     1,358       2,640       4,742       3,626       3,610  
Real estate - construction     376       454       -       -       -  
Real estate - mortgage     2,520       1,678       1,689       4,974       169  
Consumer     62       58       139       172       63  
Total charge offs     4,316       4,830       6,570       8,772       3,842  
Recoveries:                                        
Commercial, financial and agricultural     84       62       51       126       117  
Real estate - construction     1       1       1       1       -  
Real estate - mortgage     13       1       2       -       4  
Consumer     28       12       24       60       16  
Total recoveries     126       76       78       187       137  
Net charge-offs     4,190       4,754       6,492       8,585       3,705  
Allocation from Loan Guarantee Program     -       -       -       7,406       -  
Provision for loan losses     10,283       13,584       5,884       6,985       4,884  
Ending balance   $ 91,507     $ 85,414     $ 76,584     $ 77,192     $ 71,386  
                                         
Allowance for loan losses to total loans     1.10 %     1.13 %     1.05 %     1.10 %     1.02 %
Allowance for loan losses to total average loans     1.10 %     1.16 %     1.08 %     1.11 %     1.05 %
Net charge-offs to total average loans     0.20 %     0.26 %     0.36 %     0.49 %     0.22 %
Provision for loan losses to total average loans     0.50 %     0.74 %     0.33 %     0.40 %     0.29 %
Nonperforming assets:                                        
Nonaccrual loans   $ 16,881     $ 28,914     $ 30,091     $ 35,732     $ 21,840  
Loans 90+ days past due and accruing     5,133       4,954       6,021       5,317       10,299  
Other real estate owned and repossessed assets     6,537       7,448       8,178       5,337       5,649  
Total   $ 28,551     $ 41,316     $ 44,290     $ 46,386     $ 37,788  
                                         
Nonperforming loans to total loans     0.26 %     0.45 %     0.50 %     0.58 %     0.46 %
Nonperforming assets to total assets     0.26 %     0.44 %     0.50 %     0.52 %     0.43 %
Nonperforming assets to earning assets     0.26 %     0.45 %     0.50 %     0.53 %     0.44 %
Reserve for loan losses to nonaccrual loans     542.07 %     295.41 %     254.51 %     216.03 %     326.86 %
                                         
Restructured accruing loans   $ 975     $ 975     $ 625     $ 3,468     $ 2,742  
                                         
Restructured accruing loans to total loans     0.01 %     0.01 %     0.01 %     0.05 %     0.04 %
                                         
TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)                          
(In thousands)                                
    2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019   2nd Quarter 2019
Beginning balance:   $ 2,367     $ 3,330     $ 11,248     $ 11,284     $ 12,289  
Additions     -       350       250       -       -  
Net (paydowns) / advances     (12 )     (232 )     (3,481 )     714       (12 )
Charge-offs     (412 )     (1,081 )     (1,333 )     (750 )     (993 )
Transfer to OREO     (375 )     -       (3,354 )     -       -  
Ending balance   $ 1,568     $ 2,367     $ 3,330     $ 11,248     $ 11,284  


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                  
(In thousands except per share data)                  
    2nd Quarter
2020
  1st Quarter
2020
  4th Quarter
2019
  3rd Quarter
2019
  2nd Quarter
2019
Interest income:                                  
Interest and fees on loans   $ 89,383     $ 89,385     $ 89,407     $ 90,767     $ 88,610  
Taxable securities     5,092       5,154       4,702       4,367       4,193  
Nontaxable securities     211       233       274       316       393  
Federal funds sold     34       277       1,053       1,768       1,998  
Other interest and dividends     360       1,718       2,751       3,912       2,593  
Total interest income     95,080       96,767       98,187       101,130       97,787  
Interest expense:                                  
Deposits     10,756       16,745       19,786       24,787       24,240  
Borrowed funds     1,090       2,382       2,624       3,338       3,462  
Total interest expense     11,846       19,127       22,410       28,125       27,702  
Net interest income     83,234       77,640       75,777       73,005       70,085  
Provision for loan losses     10,283       13,584       5,884       6,985       4,884  
Net interest income after provision for loan losses     72,951       64,056       69,893       66,020       65,201  
Non-interest income:                                  
Service charges on deposit accounts     1,823       1,916       1,806       1,735       1,786  
Mortgage banking     2,107       1,071       1,366       1,333       1,087  
Credit card income     1,398       1,765       1,891       1,868       1,741  
Securities (losses) gains     -       -       (1 )     34       (6 )
Increase in cash surrender value life insurance     1,464       1,453       1,419       787       778  
Other operating income     241       469       455       445       392  
Total non-interest income     7,033       6,674       6,936       6,202       5,778  
Non-interest expense:                                  
Salaries and employee benefits     15,792       15,658       13,680       15,499       14,339  
Equipment and occupancy expense     2,434       2,400       2,339       2,387       2,287  
Third party processing and other services     3,513       3,345       3,176       2,923       2,724  
Professional services     1,091       948       1,163       887       1,191  
FDIC and other regulatory assessments     595       1,332       1,171       (296 )     1,081  
Other real estate owned expense     1,303       601       103       78       212  
Other operating expense     4,088       3,636       3,871       3,675       4,188  
Total non-interest expense     28,816       27,920       25,503       25,153       26,022  
Income before income tax     51,168       42,810       51,326       47,069       44,957  
Provision for income tax     10,720       8,032       10,289       9,506       9,324  
Net income     40,448       34,778       41,037       37,563       35,633  
Dividends on preferred stock     31       -       32       -       31  
Net income available to common stockholders   $ 40,417     $ 34,778     $ 41,005     $ 37,563     $ 35,602  
Basic earnings per common share   $ 0.75     $ 0.65     $ 0.77     $ 0.70     $ 0.67  
Diluted earnings per common share   $ 0.75     $ 0.64     $ 0.76     $ 0.69     $ 0.66  


                                                               
AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
                                                             
    2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019   2nd Quarter 2019
    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   $ 8,301,775   4.31 %   $ 7,328,594   4.89 %   $ 7,066,576   5.00 %   $ 6,927,075   5.18 %   $ 6,756,927     5.24 %
Tax-exempt (2)     31,929   4.12       32,555   4.04       35,563   4.00       34,195   3.98       32,124     3.83  
Total loans, net of unearned income     8,333,704   4.31       7,361,149   4.88       7,102,139   4.99       6,961,270   5.17       6,789,051     5.23  
Mortgage loans held for sale     13,278   2.09       4,282   2.16       6,505   2.44       6,482   2.45       5,208     3.85  
Debt securities:                                                            
Taxable     761,575   2.67       750,413   2.75       670,732   2.81       595,405   2.93       565,491     2.97  
Tax-exempt (2)     38,201   2.62       44,029   2.33       50,825   2.17       59,992   2.21       77,364     2.10  
Total securities (3)     799,776   2.67       794,442   2.72       721,557   2.76       655,397   2.87       642,855     2.86  
Federal funds sold     83,274   0.16       105,423   1.06       238,927   1.75       312,968   2.24       323,714     2.48  
Interest-bearing balances with banks     849,549   0.17       469,199   1.47       602,755   1.81       690,973   2.25       411,481     2.53  
Total interest-earning assets   $ 10,079,581   3.80 %   $ 8,734,495   4.46 %   $ 8,671,883   4.49 %   $ 8,627,090   4.65 %   $ 8,172,309     4.80 %
Non-interest-earning assets:                                                            
Cash and due from banks     76,212           66,140           70,381           71,418           76,988        
Net premises and equipment     57,446           58,066           57,986           58,243           58,607        
Allowance for loan losses, accrued interest and other assets     248,702           241,479           233,885           162,654           156,264        
Total assets   $ 10,461,941         $ 9,100,180         $ 9,034,135         $ 8,919,405         $ 8,464,168        
                                                             
Interest-bearing liabilities:                                                            
Interest-bearing deposits:                                                            
Checking   $ 992,848   0.35 %   $ 956,803   0.57 %   $ 961,258   0.69 %   $ 900,754   0.84 %   $ 909,847     0.88 %
Savings     72,139   0.42       67,380   0.50       62,311   0.53       57,431   0.60       54,391     0.57  
Money market     4,285,907   0.52       4,061,286   1.10       4,189,283   1.34       4,265,435   1.76       3,932,459     1.88  
Time deposits     877,448   1.95       805,924   2.09       712,155   2.15       703,278   2.20       694,414     2.16  
Total interest-bearing deposits     6,228,342   0.69       5,891,393   1.14       5,925,007   1.32       5,926,898   1.66       5,591,111     1.74  
Federal funds purchased     572,990   0.22       492,638   1.31       420,066   1.74       441,526   2.30       418,486     2.57  
Other borrowings     64,711   4.85       64,707   4.85       64,698   4.79       64,689   4.79       64,680     4.84  
Total interest-bearing liabilities   $ 6,866,043   0.69 %   $ 6,448,738   1.19 %   $ 6,409,771   1.39 %   $ 6,433,113   1.73 %   $ 6,074,277     1.83 %
Non-interest-bearing liabilities:                                                            
Non-interest-bearing checking     2,646,030           1,749,671           1,759,671           1,654,928           1,591,722        
Other liabilities     69,061           39,801           41,112           34,070           35,161        
Stockholders' equity     862,500           853,800           818,320           792,284           763,742        
Accumulated other comprehensive income (loss)     18,307           8,170           5,261           5,010           (734 )      
Total liabilities and stockholders' equity   $ 10,461,941         $ 9,100,180         $ 9,034,135         $ 8,919,405         $ 8,464,168        
Net interest spread         3.11 %         3.27 %         3.10 %         2.92 %         2.97 %
Net interest margin         3.32 %         3.58 %         3.47 %         3.36 %         3.44 %
                                                             
(1)  Average loans include loans on which the accrual of interest has been discontinued.
(2)  Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%.
(3)  Unrealized losses on available-for-sale debt securities are excluded from the yield calculation.



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Source: ServisFirst Bancshares, Inc.