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

Birmingham, Ala., Jan. 22, 2018 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ:SFBS), today announced earnings and operating results for the quarter and year ended December 31, 2017.

Fourth Quarter 2017 Highlights:

Diluted EPS increased 13.2% from $1.52 to $1.72 year over year, while core diluted EPS increased 17.1% from $1.52 to $1.78
Additional tax provision from the revaluation of net deferred tax assets resulting from Tax Cuts and Jobs Act reduced diluted EPS by $0.06 in the fourth quarter of 2017
Loans and deposits increased 19% and 12%, respectively, year over year
Loans and deposits increased 16% and 20%, respectively, for the fourth quarter on an annualized basis

Tom Broughton, President and CEO, said, “We are pleased to report a year of strong growth in net income and loan and deposit growth. Our business model continues to resonate with our clients because of its focus on service.” Bud Foshee, CFO, stated, “We believe we took advantage of tax law changes to the maximum advantage for our stockholders in the fourth quarter of 2017. We also continued our cost control efforts, evidenced by a consistently low efficiency ratio.”


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

	Period Ending December 31, 2017			Period Ending September 30, 2017			% Change From Period Ending September 30, 2017 to Period Ending December 31, 2017			Period Ending December 31, 2016			% Change From Period Ending December 31, 2016 to Period Ending December 31, 2017
QUARTERLY OPERATING RESULTS
Net Income	$	21,150		$	25,259			(16	)%	$	21,738			(3	)%
Net Income Available to Common Stockholders	$	21,119		$	25,259			(16	)%	$	21,714			(3	)%
Diluted Earnings Per Share	$	0.39		$	0.47			(17	)%	$	0.40			(3	)%
Return on Average Assets		1.20	%		1.55	%					1.39	%
Return on Average Common Stockholders' Equity		13.97	%		17.28	%					16.71	%
Average Diluted Shares Outstanding		54,161,788			54,099,672						53,961,160

Core Net Income*	$	24,424		$	25,259			(3	)%	$	21,738			12	%
Core Net Income Available to Common Stockholders*	$	24,393		$	25,259			(3	)%	$	21,714			12	%
Core Diluted Earnings Per Share*	$	0.45		$	0.47			(4	)%	$	0.40			13	%
Core Return on Average Assets*		1.39	%		1.55	%					1.39	%
Core Return on Average Common Stockholders' Equity*		16.13	%		17.28	%					16.71	%

YEAR-TO-DATE OPERATING RESULTS
Net Income	$	93,092								$	81,479			14	%
Net Income Available to Common Stockholders	$	93,030								$	81,432			14	%
Diluted Earnings Per Share	$	1.72								$	1.52			13	%
Return on Average Assets		1.43	%								1.42	%
Return on Average Common Stockholders' Equity		16.37	%								16.63	%
Average Diluted Shares Outstanding		54,123,957									53,608,372

Core Net Income*	$	96,366								$	81,479			18	%
Core Net Income Available to Common Stockholders*	$	96,304								$	81,432			18	%
Core Diluted Earnings Per Share*	$	1.78								$	1.52			17	%
Core Return on Average Assets*		1.48	%								1.42	%
Core Return on Average Common Stockholders' Equity*		16.95	%								16.63	%

BALANCE SHEET
Total Assets	$	7,082,384		$	6,712,103			6	%	$	6,370,448			11	%
Loans		5,851,261			5,628,765			4	%		4,911,770			19	%
Non-interest-bearing Demand Deposits		1,440,326			1,405,965			2	%		1,281,605			12	%
Total Deposits		6,091,674			5,796,901			5	%		5,420,311			12	%
Stockholders' Equity		607,604			590,213			3	%		522,889			16	%

* Core measures exclude non-routine expenses during the comparative periods presented in this press release as more fully described in “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” below.

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income $21.2 million and net income available to common stockholders of $21.1 million for the quarter ended December 31, 2017, compared to net income and net income available to common stockholders of $21.7 million for the same quarter in 2016. Basic and diluted earnings per common share were $0.40 and $0.39, respectively, for the fourth quarter of 2017, compared to $0.41 and $0.40, respectively, for the fourth quarter of 2016.

In December 2017, we revalued our net deferred tax assets and recorded additional income tax expense of $3.1 million as a result of the reduction in the corporate income tax rate under the recently enacted Tax Cuts and Jobs Act of 2017. We also incurred $347,000 of non-routine expenses associated with moving into our new headquarters building in Birmingham, Alabama. The additional tax provision and non-routine expenses totaled $3.3 million, net of taxes, and are considered non-core components of our earnings in this press release. Excluding such non-core components, core net income and core net income available to common stockholders was $24.4 for the quarter ended December 31, 2017.

Return on average assets was 1.20% and return on average equity was 13.97% for the fourth quarter of 2017, compared to 1.39% and 16.71%, respectively, for the fourth quarter of 2016. Core return on average assets was 1.39% and core return on average equity was 16.13% for the fourth quarter of 2017.

Net interest income was $61.4 million for the fourth quarter of 2017, compared to $58.4 million for the third quarter of 2017 and $49.1 million for the fourth quarter of 2016. The net interest margin in the fourth quarter of 2017 was 3.66%, a decrease of 11 basis points from the third quarter of 2017 and an increase of 36 basis points from the fourth quarter of 2016. The decrease in net interest income on a linked quarter basis is attributable to a $224.5 million increase in excess liquidity and a five basis point increase in average rates paid on deposits.

The Company’s held-to-maturity investment portfolio was transferred to available-for-sale during the fourth quarter of 2017 to provide the Company more flexibility managing its portfolio.

Average loans for the fourth quarter of 2017 were $5.72 billion, an increase of $276.8 million, or 5%, over average loans of $5.44 billion for the third quarter of 2017, and an increase of $1.01 billion, or 22%, over average loans of $4.70 billion for the fourth quarter of 2016.

Average total deposits for the fourth quarter of 2017 were $6.03 billion, an increase of $502.6 million, or 9%, over average total deposits of $5.53 billion for the third quarter of 2017, and an increase of $761.7 million, or 14%, over average total deposits of $5.27 billion for the fourth quarter of 2016.

Non-performing assets to total assets were 0.25% for the fourth quarter of 2017, a decrease of three basis points compared to 0.28% for the third quarter of 2017 and a decrease of nine basis points compared to 0.34% for the fourth quarter of 2016. Net credit charge-offs to average loans for the fourth quarter of 2017 were 0.56%, a 46 basis point increase compared to 0.10% for the third quarter of 2017 and a 47 basis point increase compared to 0.09% for the fourth quarter of 2016. Net credit charge-offs to average loans for the year ended December 31, 2017 were 0.29% compared to 0.11% in 2016. The increase in net credit charge-offs for the fourth quarter and full year of 2017 was primarily attributable to a $5.8 million charge-off on one commercial relationship. Accordingly, we recorded a $9.1 million provision for loan losses in the fourth quarter of 2017 compared to $4.8 million in the third quarter of 2017 and $4.1 million in the fourth quarter of 2016. The allowance for loan losses as a percentage of total loans was 1.02% at December 31, 2017 compared to 1.04% at September 30, 2017 and 1.06% at December 31, 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 for the fourth quarter of 2017 was $4.9 million, a decrease of $1.1 million, or 18%, from the fourth quarter of 2016. During the fourth quarter of 2016 we recognized a $1.3 million gain on the sale of fixed assets. Service charges on deposit accounts increased $124,000 while mortgage banking revenue decreased by approximately $150,000 in the fourth quarter of 2017 compared to the fourth quarter of 2016. Credit card income increased approximately $246,000, or 23%, during the fourth quarter of 2017 compared to the fourth quarter of 2016. Purchases on credit cards increased by 36% year over year.

Non-interest expense for the fourth quarter of 2017 decreased $782,000, or 4%, to $21.3 million from $22.0 million in the fourth quarter of 2016, and decreased $242,000, or 1%, on a linked quarter basis. Salary and benefit expense for the fourth quarter of 2017 increased $235,000, or 2%, to $11.4 million from $11.2 million in the fourth quarter of 2016, and decreased $1.0 million, or 8%, on a linked quarter basis. The linked-quarter decrease resulted from a $786,000 reversal of incentive bonuses accrued during the first three quarters of 2017. Equipment and occupancy expense decreased $311,000, or 16%, to $1.6 million for the fourth quarter of 2017 compared to $1.9 million for the fourth quarter of 2016. We accelerated depreciation on our remaining tenant improvements of our previous headquarters building in Birmingham starting at the beginning of 2016 up to June of 2017 in anticipation of our move to our new headquarters building. Professional service expenses decreased by $225,000, or 21%, to $833,000 for the fourth quarter of 2017 compared to $1.1 million for the fourth quarter of 2016, a result of lower legal expenses. Other operating expense for the fourth quarter of 2017 decreased $508,000, or 7%, to $6.2 million from $6.7 million in the fourth quarter of 2016. Included in the fourth quarter of 2016 other operating expense is a $1.2 million write-down of a tax credit investment.

Income tax expense increased $7.6 million to $14.9 million in the fourth quarter of 2017, compared to $7.3 million in the fourth quarter of 2016. We recognized $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets as of December 31, 2017 in connection with the Tax Cuts and Jobs Act passed into law in December 2017. We also recognized a $2.5 million federal tax credit during the fourth quarter of 2016. We recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $351,000 in the fourth quarter of 2017, compared to $54,000 in the fourth quarter of 2016.

Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 2017, and may differ materially from the results and disclosures in this press release due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

We recorded $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets at December 31, 2017 due to lower corporate income tax rates provided by the Tax Cuts and Jobs Act passed into law in December 2017. We also recorded expenses of $347,000 related to terminating the lease agreement on our previous headquarters building in Birmingham, Alabama and expenses of moving into our new headquarters building. Core financial measures included in this press release are “core net income,” “core net income available to common stockholders,” “core diluted earnings per share,” “core return on average assets,” and “core return on average common stockholders’ equity.” Each of these five core financial measures excludes the impact of the non-routine expenses attributable to our net deferred tax asset revaluation, lease termination and moving expenses, and are all considered non-GAAP financial measures. In addition to these financial measures adjusting for non-routine expenses, 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 tables provide 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.


			Three Months Ended December 31, 2017			Year Ended December 31, 2017
Return on average assets - GAAP				1.20	%		1.43	%
Net income - GAAP			$	21,150		$	93,092
	Adjustments:
	Revaluation of net deferred tax assets			3,059			3,059
	Lease termination and moving expenses			347			347
		Tax (benefit) of adjustments		(132)			(132)
Core net income - non-GAAP*			$	24,424		$	96,366
Average assets			$	6,988,731		$	6,495,067
Core return on average assets - non-GAAP*				1.39	%		1.48	%

Return on average common stockholders' equity - GAAP				13.97	%		16.37	%
Net income available to common stockholders - GAAP			$	21,119		$	93,030
	Adjustments:
	Revaluation of net deferred tax assets			3,059			3,059
	Lease termination and moving expenses			347			347
		Tax (benefit) of adjustments		(132)			(132)
Core net income available to common stockholders - non-GAAP*			$	24,393		$	96,304
Average common stockholders' equity			$	599,947		$	568,228
Core return on average common stockholders' equity - non-GAAP*				16.13	%		16.95	%

Diluted earnings per share - GAAP			$	0.39		$	1.72
Weighted average shares outstanding, diluted - GAAP				54,161,788			54,123,957
Core diluted earnings per share - non-GAAP*			$	0.45		$	1.78


		At December 31, 2017			At September 30, 2017			At June 30, 2017			At March 31, 2017			At December 31, 2016
Book value per share - GAAP		$	11.47		$	11.14		$	10.72		$	10.32		$	9.93
Total common stockholders' equity - GAAP			607,604			590,213			567,086			545,148			522,889
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,719			14,787			14,855			14,924			14,996
Tangible common stockholders' equity - non-GAAP		$	592,885		$	575,426		$	552,231		$	530,224		$	507,893
Tangible book value per share - non-GAAP		$	11.19		$	10.86		$	10.44		$	10.04		$	9.65

Stockholders' equity to total assets - GAAP			8.58	%		8.79	%		8.96	%		8.60	%		8.21	%
Total assets - GAAP		$	7,082,384		$	6,712,103		$	6,329,599		$	6,336,165		$	6,370,448
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,719			14,787			14,855			14,924			14,996
Total tangible assets - non-GAAP		$	7,067,665		$	6,697,316		$	6,314,744		$	6,321,241		$	6,355,452
Tangible common equity to total tangible assets - non-GAAP			8.39	%		8.59	%		8.75	%		8.39	%		7.99	%

Conference Call

ServisFirst Bancshares, Inc. will host a live audio webcast to discuss earnings and results on Monday, January 22, 2018 beginning at 5:15 p.m. ET. You may access the webcast at https://services.choruscall.com/links/sfbs180122.html. The webcast will be available until February 2, 2018.

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 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 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)
	4th Quarter 2017			3rd Quarter 2017			2nd Quarter 2017			1st Quarter 2017			4th Quarter 2016
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	72,060		$	67,641		$	63,538		$	59,517		$	56,200
Interest expense		10,652			9,245			7,971			7,465			7,091
Net interest income		61,408			58,396			55,567			52,052			49,109
Provision for loan losses		9,055			4,803			4,381			4,986			4,075
Net interest income after provision for loan losses		52,353			53,593			51,186			47,066			45,034
Non-interest income		4,905			4,790			4,805			4,546			6,039
Non-interest expense		21,255			21,497			21,875			21,267			22,037
Income before income tax		36,003			36,886			34,116			30,345			29,036
Provision for income tax		14,853			11,627			9,952			7,826			7,298
Net income		21,150			25,259			24,164			22,519			21,738
Preferred stock dividends		31			-			31			-			24
Net income available to common stockholders	$	21,119		$	25,259		$	24,133		$	22,519		$	21,714
Earnings per share - basic	$	0.40		$	0.48		$	0.46		$	0.43		$	0.41
Earnings per share - diluted	$	0.39		$	0.47		$	0.45		$	0.42		$	0.40
Average diluted shares outstanding		54,161,788			54,099,672			54,100,604			54,133,722			53,961,160

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	7,082,384		$	6,712,103		$	6,329,599		$	6,336,165		$	6,370,448
Loans		5,851,261			5,628,765			5,343,688			5,151,984			4,911,770
Debt securities		538,330			522,724			518,065			526,023			484,939
Non-interest-bearing demand deposits		1,440,326			1,405,965			1,373,353			1,292,440			1,281,605
Total deposits		6,091,674			5,796,901			5,394,810			5,361,532			5,420,311
Borrowings		64,832			54,975			55,075			55,169			55,262
Stockholders' equity	$	607,604		$	590,213		$	567,086		$	545,148		$	522,889

Shares outstanding		52,992,586			52,970,310			52,909,362			52,812,396			52,636,896
Book value per share	$	11.47		$	11.14		$	10.72		$	10.32		$	9.93
Tangible book value per share (1)	$	11.19		$	10.86		$	10.44		$	10.04		$	9.65

SELECTED FINANCIAL RATIOS
Net interest margin		3.66	%		3.77	%		3.77	%		3.53	%		3.30	%
Return on average assets		1.20	%		1.55	%		1.55	%		1.45	%		1.39	%
Return on average common stockholders' equity		13.97	%		17.28	%		17.36	%		17.09	%		16.71	%
Efficiency ratio		32.05	%		34.02	%		36.23	%		37.58	%		39.96	%
Non-interest expense to average earning assets		1.26	%		1.38	%		1.47	%		1.43	%		1.46	%

CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		9.51	%		9.60	%		9.72	%		9.67	%		9.78	%
Tier 1 capital to risk-weighted assets		9.52	%		9.61	%		9.73	%		9.68	%		9.78	%
Total capital to risk-weighted assets		11.52	%		11.51	%		11.67	%		11.66	%		11.84	%
Tier 1 capital to average assets		8.51	%		8.91	%		8.88	%		8.46	%		8.22	%
Tangible common equity to total tangible assets (1)		8.39	%		8.59	%		8.75	%		8.39	%		7.99	%

(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)
			December 31, 2017			December 31, 2016			% Change
ASSETS
Cash and due from banks			$	86,213		$	56,855		52	%
Interest-bearing balances due from depository institutions				151,849			566,707		(73	)%
Federal funds sold				239,524			160,435		49	%
	Cash and cash equivalents			477,586			783,997		(39	)%
Available for sale debt securities, at fair value				538,080			422,375		27	%
Held to maturity debt securities (fair value of $250 and $63,302 at
	December 31, 2017 and 2016, respectively)			250			62,564		(100	)%
Restricted equity securities				1,034			1,024		1	%
Mortgage loans held for sale				4,459			4,675		(5	)%
Loans				5,851,261			4,911,770		19	%
Less allowance for loan losses				(59,406	)		(51,893	)	14	%
	Loans, net			5,791,855			4,859,877		19	%
Premises and equipment, net				58,900			40,314		46	%
Goodwill and other identifiable intangible assets				14,719			14,996		(2	)%
Other assets				195,501			180,626		8	%
	Total assets		$	7,082,384		$	6,370,448		11	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing		$	1,440,326		$	1,281,605		12	%
	Interest-bearing			4,651,348			4,138,706		12	%
		Total deposits		6,091,674			5,420,311		12	%
Federal funds purchased				301,797			355,944		(15	)%
Other borrowings				64,832			55,262		17	%
Other liabilities				16,477			16,042		3	%
	Total liabilities			6,474,780			5,847,559		11	%
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 December 31, 2017 and 2016		-			-		-	%
	Preferred stock, par value $0.001 per share; 1,000,000 shares authorized and
		undesignated at December 31, 2017 and 2016		-			-		-	%
	Common stock, par value $0.001 per share; 100,000,000 shares authorized;
		52,992,586 shares issued and outstanding at December 31, 2017 and
		52,636,896 shares issued and outstanding at December 31, 2016		53			53		-	%
	Additional paid-in capital			217,693			215,932		1	%
	Retained earnings			389,597			307,151		27	%
	Accumulated other comprehensive income			(241	)		(624	)	(61	)%
	Noncontrolling interest			502			377		33	%
		Total stockholders' equity		607,604			522,889		16	%
	Total liabilities and stockholders' equity		$	7,082,384		$	6,370,448		11	%


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended December 31,				Year Ended December 31,
		2017		2016		2017		2016
Interest income:
	Interest and fees on loans	$	67,357	$	52,533	$	246,682	$	200,463
	Taxable securities		2,468		1,604		9,117		5,343
	Nontaxable securities		702		785		2,948		3,300
	Federal funds sold		508		377		1,693		1,007
	Other interest and dividends		1,025		901		2,316		2,789
	Total interest income		72,060		56,200		262,756		212,902
Interest expense:
	Deposits		8,954		5,817		28,831		20,169
	Borrowed funds		1,698		1,274		6,502		5,636
	Total interest expense		10,652		7,091		35,333		25,805
	Net interest income		61,408		49,109		227,423		187,097
Provision for loan losses			9,055		4,075		23,225		13,398
	Net interest income after provision for loan losses		52,353		45,034		204,198		173,699
Non-interest income:
	Service charges on deposit accounts		1,499		1,375		5,702		5,355
	Mortgage banking		894		1,044		3,835		3,725
	Credit card income		1,298		1,052		4,815		3,207
	Securities gains (losses)		-		-		-		(3	)
	Increase in cash surrender value life insurance		797		745		3,131		2,794
	Other operating income		417		1,823		1,563		3,034
	Total non-interest income		4,905		6,039		19,046		18,112
Non-interest expense:
	Salaries and employee benefits		11,432		11,197		47,604		43,955
	Equipment and occupancy expense		1,566		1,877		8,018		7,985
	Professional services		833		1,058		3,217		3,977
	FDIC and other regulatory assessments		1,030		1,072		3,918		3,400
	Other real estate owned expense		160		91		323		759
	Other operating expense		6,234		6,742		22,814		20,917
	Total non-interest expense		21,255		22,037		85,894		80,993
	Income before income tax		36,003		29,036		137,350		110,818
Provision for income tax			14,853		7,298		44,258		29,339
	Net income		21,150		21,738		93,092		81,479
	Dividends on preferred stock		31		24		62		47
	Net income available to common stockholders	$	21,119	$	21,714	$	93,030	$	81,432
Basic earnings per common share		$	0.40	$	0.41	$	1.76	$	1.55
Diluted earnings per common share		$	0.39	$	0.40	$	1.72	$	1.52


LOANS BY TYPE (UNAUDITED)
(In thousands)

		4th Quarter 2017		3rd Quarter 2017		2nd Quarter 2017		1st Quarter 2017		4th Quarter 2016
Commercial, financial and agricultural		$	2,279,366	$	2,223,910	$	2,123,498	$	2,061,503	$	1,982,267
Real estate - construction			580,874		467,838		395,398		345,777		335,085
Real estate - mortgage:
	Owner-occupied commercial		1,328,666		1,323,383		1,272,659		1,262,578		1,171,719
	1-4 family mortgage		603,063		593,180		565,121		554,261		536,805
	Other mortgage		997,079		962,690		931,788		872,955		830,683
Subtotal: Real estate - mortgage			2,928,808		2,879,253		2,769,568		2,689,794		2,539,207
Consumer			62,213		57,764		55,224		54,910		55,211
Total loans		$	5,851,261	$	5,628,765	$	5,343,688	$	5,151,984	$	4,911,770


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
			4th Quarter 2017			3rd Quarter 2017			2nd Quarter 2017			1st Quarter 2017			4th Quarter 2016
Allowance for loan losses:
Beginning balance			$	58,459		$	55,059		$	53,892		$	51,893		$	48,933
Loans charged off:
	Commercial, financial and agricultural			7,064			924			3,067			2,855			1,059
	Real estate - construction			-			16			40			-			-
	Real estate - mortgage			1,134			550			106			266			45
	Consumer			137			65			33			75			82
		Total charge offs		8,335			1,555			3,246			3,196			1,186
Recoveries:
	Commercial, financial and agricultural			64			67			16			190			10
	Real estate - construction			126			12			14			16			12
	Real estate - mortgage			26			59			2			2			46
	Consumer			11			14			-			1			3
		Total recoveries		227			152			32			209			71
	Net charge-offs			8,108			1,403			3,214			2,987			1,115
	Provision for loan losses			9,055			4,803			4,381			4,986			4,075
	Ending balance		$	59,406		$	58,459		$	55,059		$	53,892		$	51,893

	Allowance for loan losses to total loans			1.02	%		1.04	%		1.03	%		1.05	%		1.06	%
	Allowance for loan losses to total average
		loans		1.04	%		1.07	%		1.05	%		1.08	%		1.10	%
	Net charge-offs to total average loans			0.56	%		0.10	%		0.25	%		0.24	%		0.09	%
	Provision for loan losses to total average
		loans		0.63	%		0.35	%		0.34	%		0.40	%		0.34	%
	Nonperforming assets:
		Nonaccrual loans	$	10,765		$	12,356		$	9,963		$	12,084		$	10,624
		Loans 90+ days past due and accruing		60			2,506			1,016			16			6,263
		Other real estate owned and
		repossessed assets		6,701			3,888			3,891			5,102			4,988
	Total		$	17,526		$	18,750		$	14,870		$	17,202		$	21,875

	Nonperforming loans to total loans			0.19	%		0.26	%		0.21	%		0.23	%		0.34	%
	Nonperforming assets to total assets			0.25	%		0.28	%		0.23	%		0.27	%		0.34	%
	Nonperforming assets to earning assets			0.25	%		0.29	%		0.24	%		0.28	%		0.35	%
	Reserve for loan losses to nonaccrual loans			551.84	%		473.12	%		552.63	%		445.98	%		488.45	%

	Restructured accruing loans		$	16,919		$	12,700		$	12,716		$	536		$	558

	Restructured accruing loans to total loans			0.29	%		0.23	%		0.24	%		0.01	%		0.01	%

	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
			4th Quarter 2017			3rd Quarter 2017			2nd Quarter 2017			1st Quarter 2017			4th Quarter 2016
	Beginning balance:		$	16,354		$	16,370		$	7,269		$	7,292		$	6,738
		Additions		4,233			-			12,716			-			-
		Removal from TDR		-			-			(535	)		-			-
		Net (paydowns) / advances		(15	)		(16	)		(1,380	)		(23	)		554
		Charge-offs		-			-			(1,700	)		-			-
			$	20,572		$	16,354		$	16,370		$	7,269		$	7,292


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		4th Quarter 2017		3rd Quarter 2017		2nd Quarter 2017		1st Quarter 2017		4th Quarter 2016
Interest income:
	Interest and fees on loans	$	67,357	$	63,857	$	59,912	$	55,556	$	52,533
	Taxable securities		2,468		2,288		2,274		2,087		1,604
	Nontaxable securities		702		729		752		765		785
	Federal funds sold		508		379		287		519		377
	Other interest and dividends		1,025		388		313		590		901
	Total interest income		72,060		67,641		63,538		59,517		56,200
Interest expense:
	Deposits		8,954		7,574		6,321		5,982		5,817
	Borrowed funds		1,698		1,671		1,650		1,483		1,274
	Total interest expense		10,652		9,245		7,971		7,465		7,091
	Net interest income		61,408		58,396		55,567		52,052		49,109
Provision for loan losses			9,055		4,803		4,381		4,986		4,075
	Net interest income after provision for loan losses		52,353		53,593		51,186		47,066		45,034
Non-interest income:
	Service charges on deposit accounts		1,499		1,467		1,382		1,354		1,375
	Mortgage banking		894		978		1,064		899		1,044
	Credit card income		1,298		1,149		1,189		1,179		1,052
	Increase in cash surrender value life insurance		797		825		785		724		745
	Other operating income		417		371		385		390		1,823
	Total non-interest income		4,905		4,790		4,805		4,546		6,039
Non-interest expense:
	Salaries and employee benefits		11,432		12,428		12,031		11,713		11,197
	Equipment and occupancy expense		1,566		1,947		2,265		2,250		1,877
	Professional services		833		805		808		771		1,058
	FDIC and other regulatory assessments		1,030		810		1,081		997		1,072
	Other real estate owned expense		160		31		56		76		91
	Other operating expense		6,234		5,476		5,634		5,460		6,742
	Total non-interest expense		21,255		21,497		21,875		21,267		22,037
	Income before income tax		36,003		36,886		34,116		30,345		29,036
Provision for income tax			14,853		11,627		9,952		7,826		7,298
	Net income		21,150		25,259		24,164		22,519		21,738
	Dividends on preferred stock		31		-		31		-		24
	Net income available to common stockholders	$	21,119	$	25,259	$	24,133	$	22,519	$	21,714
Basic earnings per common share		$	0.40	$	0.48	$	0.46	$	0.43	$	0.41
Diluted earnings per common share		$	0.39	$	0.47	$	0.45	$	0.42	$	0.40


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


						4th Quarter 2017				3rd Quarter 2017				2nd Quarter 2017				1st Quarter 2017					4th 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			$	5,680,227	4.68	%	$	5,407,109	4.66	%	$	5,192,812	4.60	%	$	4,976,933		4.50	%	$	4,676,565	4.45	%
			Tax-exempt (2)				36,992	4.95			33,357	5.17			41,143	4.92			27,322		4.72			26,344	4.74
				Total loans, net of
					unearned income		5,717,219	4.68			5,440,466	4.66			5,233,955	4.60			5,004,255		4.51			4,702,909	4.45
		Mortgage loans held for sale					6,199	3.52			4,862	3.51			5,958	3.90			5,637		4.10			6,271	3.36
		Debt securities:
			Taxable				406,488	2.43			385,431	2.37			389,505	2.34			368,349		2.27			295,608	2.17
			Tax-exempt (2)				128,201	3.27			131,478	3.34			133,590	3.38			132,578		3.45			134,748	3.54
				Total securities (3)			534,689	2.63			516,909	2.62			523,095	2.60			500,927		2.58			430,356	2.60
		Federal funds sold					143,905	1.40			111,175	1.35			98,598	1.17			234,460		0.90			242,211	0.62
		Restricted equity securities					1,030	1.93			1,030	3.47			1,030	10.51			1,030		1.57			3,042	8.24
		Interest-bearing balances with banks					310,289	1.31			118,510	1.27			109,909	1.04			295,648		0.80			601,143	0.55
		Total interest-earning assets				$	6,713,331	4.29	%	$	6,192,952	4.37	%	$	5,972,545	4.30	%	$	6,041,957		4.03	%	$	5,985,932	3.77	%
Non-interest-earning assets:
		Cash and due from banks					68,444				65,457				68,894				59,697					55,593
		Net premises and equipment					57,320				54,727				49,813				44,739					30,421
		Allowance for loan losses, accrued
			interest and other assets				149,636				151,786				143,286				138,289					140,721
				Total assets		$	6,988,731			$	6,464,922			$	6,234,538			$	6,284,682				$	6,212,667

Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	899,334	0.46	%	$	800,437	0.42	%	$	779,916	0.39	%	$	789,273		0.38	%	$	735,115	0.37	%
		Savings					49,697	0.31			48,313	0.30			48,150	0.30			50,461		0.33			51,845	0.32
		Money market					3,065,298	0.80			2,774,061	0.74			2,567,817	0.64			2,694,225		0.58			2,669,513	0.56
		Time deposits					576,010	1.16			546,020	1.10			537,220	1.06			530,000		1.02			527,100	1.00
			Total interest-bearing deposits				4,590,339	0.77			4,168,831	0.72			3,933,103	0.64			4,063,959		0.60			3,983,573	0.58
		Federal funds purchased					271,248	1.37			282,806	1.34			336,344	1.11			359,747		0.86			353,029	0.63
		Other borrowings					60,829	4.98			55,034	5.17			55,130	5.22			55,239		5.26			55,315	5.16
		Total interest-bearing liabilities				$	4,922,416	0.86	%	$	4,506,671	0.81	%	$	4,324,577	0.74	%	$	4,478,945		0.68	%	$	4,391,917	0.64	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			demand				1,444,338				1,363,207				1,338,514				1,254,496					1,289,448
		Other liabilities					22,030				15,070				13,739				16,809					14,399
		Stockholders' equity					599,754				578,626				556,521				535,232					514,245
		Unrealized gains on securities and
			derivatives				193				1,348				1,187				(800	)				2,658
				Total liabilities and
					stockholders' equity	$	6,988,731			$	6,464,922			$	6,234,538			$	6,284,682				$	6,212,667
Net interest spread								3.43	%			3.56	%			3.56	%				3.35	%			3.13	%
Net interest margin								3.66	%			3.77	%			3.77	%				3.53	%			3.30	%

(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 35%.
(3	)	Average net unrealized gains or losses on available-for-sale debt securities are excluded from the yield calculation.

Source: ServisFirst Bancshares, Inc.

Released January 22, 2018

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

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