ServisFirst Bancshares, Inc. Announces Results For Second Quarter of 2020
BIRMINGHAM, Ala., July 20, 2020 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three and six months ended June 30, 2020.
Second Quarter 2020 Highlights:
Diluted EPS for the second quarter increased 14% to $0.75 year over year
Record deposit growth of $1.5 billion during the second quarter
Funded approximately 4,800 Payroll Protection Program (“PPP”) loans totaling over $1.0 billion, with 68% less than $150,000 in size
Asset quality improved, with nonperforming loans to total loans improving to 26 basis points during the second quarter
Total assets exceed $11.0 billion
FINANCIAL SUMMARY (UNAUDITED) | ||||||||||||||||||
(in Thousands except share and per share amounts) | ||||||||||||||||||
Period Ending June 30, 2020 | Period Ending March 31, 2020 | % Change From Period Ending March 31, 2020 to Period Ending June 30, 2020 | Period Ending June 30, 2019 | % Change From Period Ending June 30, 2019 to Period Ending June 30, 2020 | ||||||||||||||
QUARTERLY OPERATING RESULTS | ||||||||||||||||||
Net Income | $ | 40,448 | $ | 34,778 | 16 | % | $ | 35,633 | 14 | % | ||||||||
Net Income Available to Common Stockholders | $ | 40,417 | $ | 34,778 | 16 | % | $ | 35,602 | 14 | % | ||||||||
Diluted Earnings Per Share | $ | 0.75 | $ | 0.64 | 17 | % | $ | 0.66 | 14 | % | ||||||||
Return on Average Assets | 1.55 | % | 1.54 | % | 1.69 | % | ||||||||||||
Return on Average Common Stockholders' Equity | 18.40 | % | 16.23 | % | 18.72 | % | ||||||||||||
Average Diluted Shares Outstanding | 54,194,506 | 54,167,414 | 54,089,107 | |||||||||||||||
YEAR-TO-DATE OPERATING RESULTS | ||||||||||||||||||
Net Income | $ | 75,226 | $ | 70,643 | 6 | % | ||||||||||||
Net Income Available to Common Stockholders | $ | 75,195 | $ | 70,612 | 6 | % | ||||||||||||
Diluted Earnings Per Share | $ | 1.39 | $ | 1.31 | 6 | % | ||||||||||||
Return on Average Assets | 1.54 | % | 1.72 | % | ||||||||||||||
Return on Average Common Stockholders' Equity | 17.31 | % | 19.06 | % | ||||||||||||||
Average Diluted Shares Outstanding | 54,180,960 | 54,082,857 | ||||||||||||||||
BALANCE SHEET | ||||||||||||||||||
Total Assets | $ | 11,012,195 | $ | 9,364,882 | 18 | % | $ | 8,740,237 | 26 | % | ||||||||
Loans | 8,315,375 | 7,568,836 | 10 | % | 6,967,886 | 19 | % | |||||||||||
Non-interest-bearing Demand Deposits | 2,678,893 | 1,925,626 | 39 | % | 1,576,959 | 70 | % | |||||||||||
Total Deposits | 9,342,918 | 7,832,655 | 19 | % | 7,404,794 | 26 | % | |||||||||||
Stockholders' Equity | 914,588 | 881,885 | 4 | % | 778,957 | 17 | % | |||||||||||
DETAILED FINANCIALS
ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $40.4 million for the quarter ended June 30, 2020, compared to net income and net income available to common stockholders of $35.6 million for the same quarter in 2019. Basic and diluted earnings per common share were $0.75 and $0.75, respectively, for the second quarter of 2020, compared to $0.67 and $0.66, respectively, for the second quarter of 2019.
Annualized return on average assets was 1.55% and annualized return on average common stockholders’ equity was 18.40% for the second quarter of 2020, compared to 1.69% and 18.72%, respectively, for the second quarter of 2019.
Net interest income was $83.2 million for the second quarter of 2020, compared to $77.6 million for the first quarter of 2020 and $70.1 million for the second quarter of 2019. The net interest margin in the second quarter of 2020 was 3.32% compared to 3.58% in the first quarter of 2020 and 3.44% in the second quarter of 2019. Origination of PPP loans and increased excess liquidity drove unfavorable rate and mix changes while lower deposit rates and increases in noninterest bearing demand balances drove favorable rate and mix changes, respectively. Accretion of net fees on PPP loans of $2.6 million during the second quarter of 2020 offset the decrease in loan yield by approximately 12 basis points.
Average loans for the second quarter of 2020 were $8.33 billion, an increase of $972.6 million, or 52% annualized, over average loans of $7.36 billion for the first quarter of 2020, and an increase of $1.54 billion, or 23%, over average loans of $6.79 billion for the second quarter of 2019. We originated over 4,800 PPP loans during the second quarter of 2020 for a total of $1.05 billion. Average total balances of PPP loans for the second quarter of 2020 were $885.5 million. Excluding PPP loans, average loans for the second quarter of 2020 were $7.45 billion, an increase of $87.0 million over average loans for the first quarter of 2020, and an increase of $659.1 million, or 10%, over average loans for the second quarter of 2019.
Average total deposits for the second quarter of 2020 were $8.87 billion, an increase of $1.23 billion, or 64% annualized, over average total deposits of $7.64 billion for the first quarter of 2020, and an increase of $1.69 billion, or 24%, over average total deposits of $7.18 billion for the second quarter of 2019.
Nonperforming assets to total assets were 0.26% for the second quarter of 2020, a decrease of 18 basis points compared to 0.44% for the first quarter of 2020 and a decrease of 17 basis points compared to 0.43% for the second quarter of 2019. Annualized net charge-offs to average loans were 0.20%, a six basis-point decrease compared to 0.26% for the first quarter of 2020 and a decrease of two basis points compared to 0.22% for the second quarter of 2019. We recorded a $10.3 million provision for loan losses in the second quarter of 2020 compared to $13.6 million in the first quarter of 2020 and $4.9 million in the second quarter of 2019. The allowance for loan loss as a percentage of total loans was 1.10% at June 30, 2020, a decrease of 3 basis points compared to 1.13% at March 31, 2020 and an increase of 8 basis points compared to 1.02% at June 30, 2019. Excluding PPP loans, the allowance for loan loss as a percentage of total loans was 1.26% at June 30, 2020. The CARES Act, passed into law on March 27, 2020 as a result of the COVID-19 outbreak, allows companies to delay their adoption of Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments (CECL), including the current expected credit losses methodology for estimating allowances for credit losses. We have elected to delay adoption of ASU 2016-13 until the date on which the national emergency concerning the COVID-19 outbreak terminates or December 31, 2020, with an effective retrospective implementation date of January 1, 2020. In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.
Noninterest income for the second quarter of 2020 increased $1.2 million, or 22%, to $7.0 million from $5.8 million in the second quarter of 2019. Mortgage banking revenue increased $1.0 million, or 94%, from the second quarter of 2019 to the second quarter of 2020. Mortgage loan origination volumes increased approximately 65% during the second quarter of 2020 when compared to the same quarter in 2019. Additionally, more of the originations in 2020 were sellable loans, driving higher gains on sale. Credit card revenue decreased $343,000, or 20%, to $1.4 million during the second quarter of 2020, compared to $1.7 million during the second quarter of 2019. The amount of spend on purchase cards increased $20.5 million while the amount of spend on business credit cards decreased $14.3 million during the second quarter of 2020 when compared to the second quarter of 2019. Purchase card spend carries lower profit margins than credit cards due to their higher rebates. Income on life insurance policies increased $686,000, or 88%, to $1.5 million during the second quarter of 2020, compared to $778,000 during the second quarter of 2019. We purchased an additional $75.0 million in BOLI contracts during the third quarter of 2019. Other income for the second quarter of 2020 decreased $151,000, or 39%, to $241,000 from $392,000 in the second quarter of 2019. On May 4, 2020 we bought an interest rate cap with a term of three years and a notional amount of $300 million. The cap is tied to one-month LIBOR with a strike rate of 0.50%. We wrote down the value of the cap by $252,000 during the second quarter of 2020 through other income and are amortizing the fee paid to our counterparty over the life of the cap.
Noninterest expense for the second quarter of 2020 increased $2.8 million, or 11%, to $28.8 million from $26.0 million in the second quarter of 2019, and increased $896,000, or 3%, on a linked quarter basis. Salary and benefit expense for the second quarter of 2020 increased $1.5 million, or 10%, to $15.8 million from $14.3 million in the second quarter of 2019, and increased $134,000, or 1%, on a linked quarter basis. Costs to originate PPP loans totaling $2.4 million were incurred during the second quarter of 2020. These costs were credited against salary and benefits as a deferred expense and will be amortized over the life of the loans by netting them against accretion of deferred origination fees. Bonuses of approximately $2.5 million were paid during the second quarter of 2020 related to work performed on the PPP. Additional bonuses of $71,000 were paid to front-line employees who continued to assist customers during the peak of the pandemic. Equipment and occupancy expense increased $147,000, or 6%, to $2.4 million in the second quarter of 2020, from $2.3 million in the second quarter of 2019. Third party processing expenses increased $789,000, or 29%, to $3.5 million in the second quarter of 2020, from $2.7 million in the second quarter of 2019. Limited-term licenses were added to our loan origination systems to enable more employees to assist customers with their PPP loans. These licenses added $514,000 to third party processing expenses during the second quarter of 2020. Professional services expense decreased $100,000, or 8%, to $1.1 million in the second quarter of 2020, from $1.2 million in the second quarter of 2019, and increased $143,000, or 15%, from $948,000 on a linked-quarter basis. FDIC and other regulatory assessments decreased $486,000, or 45%, to $595,000 in the second quarter of 2020, from $1.1 million in the second quarter of 2019. Lower growth in assets during the second quarter of 2020, excluding PPP loans, resulted in us adjusting our accrual for assessments to be paid at the end of the third quarter of 2020. Expenses associated with other real estate owned increased $1.1 million to $1.3 million in the second quarter of 2020, from $212,000 in the second quarter of 2019. Updated appraisals resulted in write-downs in values on two properties in our Birmingham, Alabama market. Other operating expenses for the second quarter of 2020 decreased $100,000, or 2%, to $4.1 million from $4.2 million in the second quarter of 2019, and increased $452,000, or 12%, on a linked-quarter basis. The efficiency ratio was 31.92% during the second quarter of 2020 compared to 34.30% during the second quarter of 2019 and compared to 33.11% during the first quarter of 2020.
Income tax expense increased $1.4 million, or 15%, to $10.7 million in the second quarter of 2020, compared to $9.3 million in the second quarter of 2019. Our effective tax rate was 20.95% for the second quarter of 2020 compared to 20.74% for the second quarter of 2019. State of Alabama tax credit investments matured at the end of 2019, causing our state credit amounts to decrease from $497,000 during the second quarter of 2019 to $132,000 during the second quarter of 2020. We recognized a reduction in provision for income taxes resulting from excess tax benefits from the exercise and vesting of stock options and restricted stock during the second quarters of 2020 and 2019 of $136,000 and $186,000, respectively.
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures, including tangible common stockholders’ equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures as of and for the comparative periods presented in this press release. Dollars are in thousands, except share and per share data.
At June 30, | At March 31, | At December 31, | At September 30, | At June 30, | ||||||||||||||||
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 | 1st Quarter | 4th Quarter | 3rd Quarter | 2nd Quarter | ||||||||||||||||
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 / | Average Balance | Yield / | Average Balance | Yield / | Average Balance | Yield / | Average Balance | Yield / | ||||||||||||||||||||||
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. | |||||||||||||||||||||||||||||||
