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

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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.