ServisFirst Bancshares, Inc. Announces Results for Second Quarter of 2018

BIRMINGHAM, Ala., July 19, 2018 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ:SFBS), today announced earnings and operating results for the quarter and six months ended June 30, 2018.

SECOND QUARTER 2018 HIGHLIGHTS:

Net income of $33.5 million for the second quarter of 2018 compared to $24.2 million in the second quarter of 2017, a 39% increase
Diluted EPS of $0.62 for the second quarter of 2018 compared to $0.45 for the second quarter of 2017, a 38% increase
Loans increased 14% for the quarter on an annualized basis

Tom Broughton, President and CEO, said, “We saw good activity in loan demand in the second quarter and our pipeline remains strong.” Bud Foshee, CFO, stated, “Our pretax income is up over 26% for YTD 2018 over 2017, reflective of our continued growth and improved profitability.”


FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)

	Period Ending June 30, 2018			Period Ending March 31, 2018			% Change From Period Ending March 31, 2018 to Period Ending June 30, 2018	Period Ending June 30, 2017			% Change From Period Ending June 30, 2017 to Period Ending June 30, 2018
QUARTERLY OPERATING RESULTS
Net Income	$	33,540		$	32,603		3%	$	24,164		39%
Net Income Available to Common Stockholders	$	33,509		$	32,603		3%	$	24,133		39%
Diluted Earnings Per Share	$	0.62		$	0.60		3%	$	0.45		38%
Return on Average Assets		1.91	%		1.91	%			1.55	%
Return on Average Common Stockholders' Equity		20.89	%		21.40	%			17.36	%
Average Diluted Shares Outstanding		54,196,023			54,183,400				54,100,604

YEAR-TO-DATE OPERATING RESULTS
Net Income	$	66,143						$	46,683		42%
Net Income Available to Common Stockholders	$	66,112						$	46,652		42%
Diluted Earnings Per Share	$	1.22						$	0.86		42%
Return on Average Assets		1.91	%						1.50	%
Return on Average Common Stockholders' Equity		21.13	%						17.23	%
Average Diluted Shares Outstanding		54,189,746							54,117,072

BALANCE SHEET
Total Assets	$	7,084,562		$	7,011,735		1%	$	6,329,599		12%
Loans		6,129,649			5,928,327		3%		5,343,688		15%
Non-interest-bearing Demand Deposits		1,481,447			1,407,592		5%		1,373,353		8%
Total Deposits		6,085,682			5,977,387		2%		5,394,810		13%
Stockholders' Equity		655,114			629,297		4%		567,086		16%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $33.5 million for the quarter ended June 30, 2018, compared to net income of $24.2 million and net income available to common stockholders of $24.1 million for the same quarter in 2017. Basic and diluted earnings per common share were $0.63 and $0.62, respectively, for the second quarter of 2018, compared to $0.46 and $0.45, respectively, for the second quarter of 2017.

Return on average assets was 1.91% and return on average common stockholders’ equity was 20.89% for the second quarter of 2018, compared to 1.55% and 17.36%, respectively, for the second quarter of 2017.

Net interest income was $64.5 million for the second quarter of 2018, compared to $62.4 million for the first quarter of 2018 and $55.6 million for the second quarter of 2017. The net interest margin in the second quarter of 2018 was 3.82%, a one basis point increase from the first quarter of 2018 and five basis point increase from the second quarter of 2017. The increase in net interest income on a linked quarter basis is attributable to a $104.8 million increase in average loans outstanding, an $80.0 million increase in average non-interest-bearing deposits and a $25.4 million increase in average stockholders’ equity, all resulting in a positive mix change in our balance sheet. The average yield on loans increased 13 basis points to 4.93% on a linked quarter basis, while the average rate paid on deposits increased by 17 basis points to 1.03% on a linked quarter basis.

Average loans for the second quarter of 2018 were $5.99 billion, an increase of $104.8 million, or 2%, over average loans of $5.88 billion for the first quarter of 2018, and an increase of $754.7 million, or 14%, over average loans of $5.23 billion for the second quarter of 2017.

Average total deposits for the second quarter of 2018 were $6.04 billion, an increase of $91.8 million, or 2%, over average total deposits of $5.95 billion for the first quarter of 2018, and an increase of $766.0 million, or 15%, over average total deposits of $5.27 billion for the second quarter of 2017.

Non-performing assets to total assets were 0.28% for the second quarter of 2018, an increase of six basis points compared to 0.22% for the first quarter of 2018 and an increase of five basis points compared to 0.23% for the second quarter of 2017. Net credit charge-offs to average loans were 0.13%, a three basis point increase compared to 0.10% for the first quarter of 2018 and a 12 basis point decrease compared to 0.25% for the second quarter of 2017. We recorded a $4.1 million provision for loan losses in the second quarter of 2018 compared to $4.1 million in the first quarter of 2018 and $4.4 million in the second quarter of 2017. The allowance for loan loss as a percentage of total loans was 1.05% at June 30, 2018 compared to 1.05% at March 31, 2018 and 1.03% at June 30, 2017. 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 $654,000 during the second quarter of 2018, or 14%, compared to the second quarter of 2017. Deposit service charges increased $271,000 in the second quarter of 2018, or 20%, compared to the second quarter of 2017. The number of transaction deposit accounts increased approximately 9% from June 30, 2017 to June 30, 2018, and the amount of overdraft fees increased $120,000, or 34%, from the second quarter of 2017 to the second quarter of 2018. Credit card revenue increased $567,000, or 48%, to $1.8 million during the second quarter of 2018, compared to $1.2 million during the second quarter of 2017, driven by increased numbers of accounts and increased purchases per account. Mortgage banking revenue decreased by $275,000 in the second quarter of 2018, or 26%, compared to the second quarter of 2017. The number of loans originated during the second quarter of 2018 decreased approximately 10% from the same quarter in 2017. Also, a larger percentage of loans originated during the second quarter of 2018 were placed into the Bank’s portfolio instead of being sold into the secondary market.

Non-interest expense for the second quarter of 2018 increased $2.1 million, or 10%, to $24.0 million from $21.9 million in the second quarter of 2017, and increased $498,000, or 2%, on a linked quarter basis. Salary and benefit expense for the second quarter of 2018 increased $1.1 million, or 9%, to $13.1 million from $12.0 million in the second quarter of 2017, and decreased $198,000, or 2%, on a linked quarter basis. The number of FTE employees increased from 428 at June 30, 2017 to 447 at June 30, 2018. Equipment and occupancy expense decreased $152,000, or 7%, to $2.1 million in the second quarter of 2018, from $2.3 million in the second quarter of 2017. Ownership costs of our new headquarters building in Birmingham for the second quarter of 2018 were approximately $85,000 less than rental payments and amortization of leasehold improvements during the second quarter of 2017. Other operating expense for the second quarter of 2018 increased $922,000, or 16%, to $6.6 million from $5.6 million in the second quarter of 2017.

Income tax expense decreased $1.7 million, or 17%, to $8.3 million in the second quarter of 2018, compared to $10.0 million in the second quarter of 2017. Lower corporate income tax rates resulting from the passage of the Tax Cuts and Jobs Act in December 2017 has resulted in lower effective tax rates. We also 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 quarter of 2018 and 2017 of $457,000 and $1.4 million, respectively. Our effective tax rate for the second quarter of 2018 and 2017 was 19.9% and 29.2%, 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, 2018			At March 31, 2018			At December 31, 2017			At September 30, 2017			At June 30, 2017
Book value per share - GAAP		$	12.33		$	11.84		$	11.47		$	11.14		$	10.72
Total common stockholders' equity - GAAP			655,114			629,297			607,604			590,213			567,086
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,584			14,652			14,719			14,787			14,855
Tangible common stockholders' equity - non-GAAP		$	640,530		$	614,645		$	592,885		$	575,426		$	552,231
Tangible book value per share - non-GAAP		$	12.05		$	11.56		$	11.19		$	10.86		$	10.44

Stockholders' equity to total assets - GAAP			9.25	%		8.98	%		8.58	%		8.79	%		8.96	%
Total assets - GAAP		$	7,084,562		$	7,011,735		$	7,082,384		$	6,712,103		$	6,329,599
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,584			14,652			14,719			14,787			14,855
Total tangible assets - non-GAAP		$	7,069,978		$	6,997,083		$	7,067,665		$	6,697,316		$	6,314,744
Tangible common equity to total tangible assets - non-GAAP			9.06	%		8.78	%		8.39	%		8.59	%		8.75	%

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 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 tornadoes, 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 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 2018			1st Quarter 2018			4th Quarter 2017			3rd Quarter 2017			2nd Quarter 2017
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	78,396		$	74,009		$	72,060		$	67,641		$	63,538
Interest expense		13,874			11,573			10,652			9,245			7,971
Net interest income		64,522			62,436			61,408			58,396			55,567
Provision for loan losses		4,121			4,139			9,055			4,803			4,381
Net interest income after provision for loan losses		60,401			58,297			52,353			53,593			51,186
Non-interest income		5,459			4,869			4,905			4,790			4,805
Non-interest expense		24,010			23,512			21,255			21,497			21,875
Income before income tax		41,850			39,654			36,003			36,886			34,116
Provision for income tax		8,310			7,051			14,853			11,627			9,952
Net income		33,540			32,603			21,150			25,259			24,164
Preferred stock dividends		31			-			31			-			31
Net income available to common stockholders	$	33,509		$	32,603		$	21,119		$	25,259		$	24,133
Earnings per share - basic	$	0.63		$	0.61		$	0.40		$	0.48		$	0.46
Earnings per share - diluted	$	0.62		$	0.60		$	0.39		$	0.47		$	0.45
Average diluted shares outstanding		54,196,023			54,183,400			54,161,788			54,099,672			54,100,604

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	7,084,562		$	7,011,735		$	7,082,384		$	6,712,103		$	6,329,599
Loans		6,129,649			5,928,327			5,851,261			5,628,765			5,343,688
Debt securities		583,799			560,885			538,330			522,724			518,065
Non-interest-bearing demand deposits		1,481,447			1,407,592			1,440,326			1,405,965			1,373,353
Total deposits		6,085,682			5,977,387			6,091,674			5,796,901			5,394,810
Borrowings		64,648			64,739			64,832			54,975			55,075
Stockholders' equity	$	655,114		$	629,297		$	607,604		$	590,213		$	567,086

Shares outstanding		53,150,733			53,147,169			52,992,586			52,970,310			52,909,362
Book value per share	$	12.33		$	11.84		$	11.47		$	11.14		$	10.72
Tangible book value per share (1)	$	12.05		$	11.56		$	11.19		$	10.86		$	10.44

SELECTED FINANCIAL RATIOS
Net interest margin		3.82	%		3.81	%		3.66	%		3.77	%		3.77	%
Return on average assets		1.91	%		1.91	%		1.20	%		1.55	%		1.55	%
Return on average common stockholders' equity		20.89	%		21.40	%		13.97	%		17.28	%		17.36	%
Efficiency ratio		34.31	%		34.93	%		32.05	%		34.02	%		36.23	%
Non-interest expense to average earning assets		1.42	%		1.43	%		1.26	%		1.38	%		1.47	%

CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		10.08	%		9.88	%		9.51	%		9.60	%		9.72	%
Tier 1 capital to risk-weighted assets		10.08	%		9.88	%		9.52	%		9.61	%		9.73	%
Total capital to risk-weighted assets		12.10	%		11.91	%		11.52	%		11.51	%		11.67	%
Tier 1 capital to average assets		9.21	%		8.95	%		8.51	%		8.91	%		8.88	%
Tangible common equity to total tangible assets (1)		9.06	%		8.78	%		8.39	%		8.59	%		8.75	%

(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, 2018			June 30, 2017			% Change
ASSETS
Cash and due from banks			$	68,344		$	71,181		(4	)	%
Interest-bearing balances due from depository institutions				81,742			134,694		(39	)	%
Federal funds sold				15,585			49,443		(68	)	%
	Cash and cash equivalents			165,671			255,318		(35	)	%
Available for sale debt securities, at fair value				583,549			438,808		33		%
Held to maturity debt securities (fair value of $250 and $80,532 at
	June 30, 2018 and 2017, respectively)			250			79,257		(100	)	%
Restricted equity securities				993			1,037		(4	)	%
Mortgage loans held for sale				4,605			5,673		(19	)	%
Loans				6,129,649			5,343,688		15		%
Less allowance for loan losses				(64,239	)		(55,059	)	17		%
	Loans, net			6,065,410			5,288,629		15		%
Premises and equipment, net				58,299			51,797		13		%
Goodwill and other identifiable intangible assets				14,584			14,855		(2	)	%
Other assets				191,200			194,225		(2	)	%
	Total assets		$	7,084,562		$	6,329,599		12		%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing		$	1,481,447		$	1,373,353		8		%
	Interest-bearing			4,604,235			4,021,457		14		%
		Total deposits		6,085,682			5,394,810		13		%
Federal funds purchased				262,659			300,226		(13	)	%
Other borrowings				64,648			55,075		17		%
Other liabilities				16,459			12,402		33		%
	Total liabilities			6,429,448			5,762,513		12		%
Stockholders' equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
		June 30, 2018 and June 30, 2017		-			-		-		%
	Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,150,733 shares
		issued and outstanding at June 30, 2018, and 52,909,362 shares issued and outstanding
		at June 30, 2017		53			53		-		%
	Additional paid-in capital			217,765			217,271		-		%
	Retained earnings			443,972			348,517		27		%
	Accumulated other comprehensive income			(7,178	)		743		N/M
	Noncontrolling interest			502			502		-		%
		Total stockholders' equity		655,114			567,086		16		%
	Total liabilities and stockholders' equity		$	7,084,562		$	6,329,599		12		%


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended June 30,				Six Months Ended June 30,
		2018		2017		2018		2017
Interest income:
	Interest and fees on loans	$	73,620	$	59,912	$	143,294	$	115,468
	Taxable securities		3,127		2,274		5,872		4,361
	Nontaxable securities		623		752		1,279		1,517
	Federal funds sold		694		287		1,245		806
	Other interest and dividends		332		313		715		903
	Total interest income		78,396		63,538		152,405		123,055
Interest expense:
	Deposits		11,714		6,321		21,335		12,303
	Borrowed funds		2,160		1,650		4,112		3,133
	Total interest expense		13,874		7,971		25,447		15,436
	Net interest income		64,522		55,567		126,958		107,619
Provision for loan losses			4,121		4,381		8,260		9,367
	Net interest income after provision for loan losses		60,401		51,186		118,698		98,252
Non-interest income:
	Service charges on deposit accounts		1,653		1,382		3,238		2,736
	Mortgage banking		789		1,064		1,307		1,963
	Credit card income		1,756		1,189		3,334		2,368
	Securities gains		-		-		4		-
	Increase in cash surrender value life insurance		786		785		1,563		1,509
	Other operating income		475		385		882		775
	Total non-interest income		5,459		4,805		10,328		9,351
Non-interest expense:
	Salaries and employee benefits		13,098		12,031		26,394		23,744
	Equipment and occupancy expense		2,113		2,265		4,067		4,505
	Professional services		924		808		1,729		1,579
	FDIC and other regulatory assessments		1,159		1,081		2,292		2,078
	Other real estate owned expense		160		56		476		132
	Other operating expense		6,556		5,634		12,564		11,104
	Total non-interest expense		24,010		21,875		47,522		43,142
	Income before income tax		41,850		34,116		81,504		64,461
Provision for income tax			8,310		9,952		15,361		17,778
	Net income		33,540		24,164		66,143		46,683
	Dividends on preferred stock		31		31		31		31
	Net income available to common stockholders	$	33,509	$	24,133	$	66,112	$	46,652
Basic earnings per common share		$	0.63	$	0.46	$	1.24	$	0.88
Diluted earnings per common share		$	0.62	$	0.45	$	1.22	$	0.86


LOANS BY TYPE (UNAUDITED)
(In thousands)

		2nd Quarter 2018		1st Quarter 2018		4th Quarter 2017		3rd Quarter 2017		2nd Quarter 2017
Commercial, financial and agricultural		$	2,345,879	$	2,329,904	$	2,279,366	$	2,223,910	$	2,123,498
Real estate - construction			522,788		506,050		580,874		467,838		395,398
Real estate - mortgage:
	Owner-occupied commercial		1,383,882		1,349,679		1,328,666		1,323,383		1,272,659
	1-4 family mortgage		584,133		581,498		603,063		593,180		565,121
	Other mortgage		1,225,906		1,099,482		997,079		962,690		931,788
Subtotal: Real estate - mortgage			3,193,921		3,030,659		2,928,808		2,879,253		2,769,568
Consumer			67,061		61,714		62,213		57,764		55,224
Total loans		$	6,129,649	$	5,928,327	$	5,851,261	$	5,628,765	$	5,343,688


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
			2nd Quarter 2018				1st Quarter 2018				4th Quarter 2017				3rd Quarter 2017				2nd Quarter 2017
Allowance for loan losses:
Beginning balance			$	62,050			$	59,406			$	58,459			$	55,059			$	53,892
Loans charged off:
	Commercial, financial and agricultural			1,732				1,088				7,064				924				3,067
	Real estate - construction			-				-				-				16				40
	Real estate - mortgage			440				381				1,134				550				106
	Consumer			47				88				137				65				33
		Total charge offs		2,219				1,557				8,335				1,555				3,246
Recoveries:
	Commercial, financial and agricultural			173				4				64				67				16
	Real estate - construction			97				7				126				12				14
	Real estate - mortgage			2				42				26				59				2
	Consumer			15				9				11				14				-
		Total recoveries		287				62				227				152				32
	Net charge-offs			1,932				1,495				8,108				1,403				3,214
	Provision for loan losses			4,121				4,139				9,055				4,803				4,381
	Ending balance		$	64,239			$	62,050			$	59,406			$	58,459			$	55,059

	Allowance for loan losses to total loans			1.05		%		1.05		%		1.02		%		1.04		%		1.03		%
	Allowance for loan losses to total average
		loans		1.07		%		1.05		%		1.04		%		1.07		%		1.05		%
	Net charge-offs to total average loans			0.13		%		0.10		%		0.56		%		0.10		%		0.25		%
	Provision for loan losses to total average
		loans		0.28		%		0.29		%		0.63		%		0.35		%		0.34		%
	Nonperforming assets:
		Nonaccrual loans	$	8,022			$	9,271			$	10,765			$	12,356			$	9,963
		Loans 90+ days past due and accruing		6,081				678				60				2,506				1,016
		Other real estate owned and
		repossessed assets		5,937				5,748				6,701				3,888				3,891
	Total		$	20,040			$	15,697			$	17,526			$	18,750			$	14,870

	Nonperforming loans to total loans			0.23		%		0.17		%		0.19		%		0.26		%		0.21		%
	Nonperforming assets to total assets			0.28		%		0.22		%		0.25		%		0.28		%		0.23		%
	Nonperforming assets to earning assets			0.29		%		0.23		%		0.25		%		0.29		%		0.24		%
	Reserve for loan losses to nonaccrual loans			800.79		%		669.29		%		551.84		%		473.12		%		552.63		%

	Restructured accruing loans		$	15,572			$	15,838			$	16,919			$	12,700			$	12,716

	Restructured accruing loans to total loans			0.25		%		0.27		%		0.29		%		0.23		%		0.24		%

	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
			2nd Quarter 2018				1st Quarter 2018				4th Quarter 2017				3rd Quarter 2017				2nd Quarter 2017
	Beginning balance:		$	18,792			$	20,572			$	16,354			$	16,370			$	7,269
		Additions		-				-				4,233				-				12,716
		Removal from TDR		-				-				-				-				(535	)
		Net (paydowns) / advances		(267	)			(1,080	)			(15	)			(16	)			(1,380	)
		Charge-offs		(1,268	)			(700	)			-				-				(1,700	)
			$	17,257			$	18,792			$	20,572			$	16,354			$	16,370


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		2nd Quarter 2018		1st Quarter 2018		4th Quarter 2017		3rd Quarter 2017		2nd Quarter 2017
Interest income:
	Interest and fees on loans	$	73,620	$	69,674	$	67,357	$	63,857	$	59,912
	Taxable securities		3,127		2,745		2,468		2,288		2,274
	Nontaxable securities		623		656		702		729		752
	Federal funds sold		694		551		508		379		287
	Other interest and dividends		332		383		1,025		388		313
	Total interest income		78,396		74,009		72,060		67,641		63,538
	Deposits		11,714		9,621		8,954		7,574		6,321
	Borrowed funds		2,160		1,952		1,698		1,671		1,650
	Total interest expense		13,874		11,573		10,652		9,245		7,971
	Net interest income		64,522		62,436		61,408		58,396		55,567
Provision for loan losses			4,121		4,139		9,055		4,803		4,381
	Net interest income after provision for loan losses		60,401		58,297		52,353		53,593		51,186
	Service charges on deposit accounts		1,653		1,585		1,499		1,467		1,382
	Mortgage banking		789		518		894		978		1,064
	Credit card income		1,756		1,578		1,298		1,149		1,189
	Securities gains		-		4		-		-		-
	Increase in cash surrender value life insurance		786		777		797		825		785
	Other operating income		475		407		417		371		385
	Total non-interest income		5,459		4,869		4,905		4,790		4,805
	Salaries and employee benefits		13,098		13,296		11,432		12,428		12,031
	Equipment and occupancy expense		2,113		1,954		1,566		1,947		2,265
	Professional services		924		805		833		805		808
	FDIC and other regulatory assessments		1,159		1,133		1,030		810		1,081
	Other real estate owned expense		160		316		160		31		56
	Other operating expense		6,556		6,008		6,234		5,476		5,634
	Total non-interest expense		24,010		23,512		21,255		21,497		21,875
	Income before income tax		41,850		39,654		36,003		36,886		34,116
Provision for income tax			8,310		7,051		14,853		11,627		9,952
	Net income		33,540		32,603		21,150		25,259		24,164
	Dividends on preferred stock		31		-		31		-		31
	Net income available to common stockholders	$	33,509	$	32,603	$	21,119	$	25,259	$	24,133
Basic earnings per common share		$	0.63	$	0.61	$	0.40	$	0.48	$	0.46
Diluted earnings per common share		$	0.62	$	0.60	$	0.39	$	0.47	$	0.45


AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)


						2nd Quarter 2018					1st Quarter 2018					4th Quarter 2017				3rd Quarter 2017				2nd Quarter 2017
						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			$	5,958,377		4.94	%	$	5,847,443		4.81	%	$	5,680,227	4.68	%	$	5,407,109	4.66	%	$	5,192,812	4.60	%
			Tax-exempt (2)				30,246		3.94			36,357		4.06			36,992	4.95			33,357	5.17			41,143	4.92
				Total loans, net of
					unearned income		5,988,623		4.93			5,883,800		4.80			5,717,219	4.68			5,440,466	4.66			5,233,955	4.60
		Mortgage loans held for sale					3,770		4.26			3,698		4.50			6,199	3.52			4,862	3.51			5,958	3.90
		Debt securities:
			Taxable				475,777		2.63			435,747		2.52			406,488	2.43			385,431	2.37			389,505	2.34
			Tax-exempt (2)				112,145		2.60			120,270		2.56			128,201	3.27			131,478	3.34			133,590	3.38
				Total securities (3)			587,922		2.62			556,017		2.53			534,689	2.63			516,909	2.62			523,095	2.60
		Federal funds sold					141,915		1.96			131,472		1.70			143,905	1.40			111,175	1.35			98,598	1.17
		Restricted equity securities					1,022		1.57			1,030		1.57			1,030	1.93			1,030	3.47			1,030	10.51
		Interest-bearing balances with banks					73,714		1.80			96,012		1.60			310,289	1.31			118,510	1.27			109,909	1.04
		Total interest-earning assets				$	6,796,966		4.64	%	$	6,672,029		4.51	%	$	6,713,331	4.29	%	$	6,192,952	4.37	%	$	5,972,545	4.30	%
Non-interest-earning assets:
		Cash and due from banks					68,190					68,309					68,444				65,457				68,894
		Net premises and equipment					59,262					59,709					57,320				54,727				49,813
		Allowance for loan losses, accrued
			interest and other assets				129,585					140,558					149,636				151,786				143,286
				Total assets		$	7,054,003				$	6,940,605				$	6,988,731			$	6,464,922			$	6,234,538

Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	827,540		0.56	%	$	899,311		0.52	%	$	899,334	0.46	%	$	800,437	0.42	%	$	779,916	0.39	%
		Savings					54,842		0.34			53,269		0.31			49,697	0.31			48,313	0.30			48,150	0.30
		Money market					3,089,595		1.10			3,027,176		0.90			3,065,298	0.80			2,774,061	0.74			2,567,817	0.64
		Time deposits					596,450		1.36			576,857		1.21			576,010	1.16			546,020	1.10			537,220	1.06
			Total interest-bearing deposits				4,568,427		1.03			4,556,613		0.86			4,590,339	0.77			4,168,831	0.72			3,933,103	0.64
		Federal funds purchased					295,309		1.87			297,051		1.60			271,248	1.37			282,806	1.34			336,344	1.11
		Other borrowings					64,699		4.84			64,805		4.89			60,829	4.98			55,034	5.17			55,130	5.22
		Total interest-bearing liabilities				$	4,928,435		1.13	%	$	4,918,469		0.95	%	$	4,922,416	0.86	%	$	4,506,671	0.81	%	$	4,324,577	0.74	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			demand				1,469,194					1,389,217					1,444,338				1,363,207				1,338,514
		Other liabilities					13,079					15,007					22,029				15,070				13,739
		Stockholders' equity					650,641					621,004					599,754				578,626				556,521
		Unrealized gains on securities and
			derivatives				(7,346	)				(3,092	)				194				1,348				1,187
				Total liabilities and
					stockholders' equity	$	7,054,003				$	6,940,605				$	6,988,731			$	6,464,922			$	6,234,538
Net interest spread									3.51	%				3.56	%			3.43	%			3.56	%			3.56	%
Net interest margin									3.82	%				3.81	%			3.66	%			3.77	%			3.77	%

(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% for the quarters in 2018 and 35% for the quarters in 2017.
(3	)	Unrealized (losses) gains on available-for-sale debt securities are excluded from the yield calculation.

Source: ServisFirst Bancshares, Inc.

Released July 19, 2018

ServisFirst Bancshares, Inc. Announces Results for Second Quarter of 2018

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