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ServisFirst Bancshares, Inc. Announces Results for Third Quarter of 2020

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BIRMINGHAM, Ala., Oct. 19, 2020 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three and nine months ended September 30, 2020.

Third Quarter 2020 Highlights:

  • Diluted EPS for the third quarter increased 16% to $0.80 year over year

  • Deposits grew 14% annualized during the third quarter

  • Loans, excluding Paycheck Protection Program (PPP) loans, grew 10% annualized during the third quarter

  • Efficiency ratio improved to 28.50% during the third quarter 2020

  • Liquidity remains strong with liquid assets to total deposits of 22%

  • Our $34.5 million of 5% Subordinated Notes due July 15, 2025 are being refinanced with a $37 million offering of subordinated notes with an interest rate of 4% during the fourth quarter of 2020

Tom Broughton, Chairman, President and CEO, said, I am pleased to see a rebound in loan demand from the early months of the pandemic. This is a very positive sign for the Southeastern US economy.

Bud Foshee, CFO, said, We continue to have a strong balance sheet with good credit quality and strong liquidity. This strong balance sheet has enabled us to perform above our peers during the pandemic.

FINANCIAL SUMMARY (UNAUDITED)

(in Thousands except share and per share amounts)

 

 

 

Period Ending
September 30,
2020

 

Period Ending
June 30, 2020

 

% Change
From Period
Ending June
30, 2020 to
Period Ending
September 30, 2020

 

Period Ending
September 30,
2019

 

% Change
From Period
Ending
September 30,
2019 to Period
Ending
September 30,
2020

QUARTERLY OPERATING RESULTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

43,362

 

 

$

40,448

 

 

7

%

 

$

37,563

 

 

15

%

Net Income Available to Common Stockholders

 

$

43,362

 

 

$

40,417

 

 

7

%

 

$

37,563

 

 

15

%

Diluted Earnings Per Share

 

$

0.80

 

 

$

0.75

 

 

7

%

 

$

0.69

 

 

16

%

Return on Average Assets

 

 

1.54

%

 

 

1.55

%

 

 

 

 

 

1.67

%

 

 

 

Return on Average Common Stockholders' Equity

 

 

18.43

%

 

 

18.40

%

 

 

 

 

 

18.69

%

 

 

 

Average Diluted Shares Outstanding

 

 

54,232,965

 

 

 

54,194,506

 

 

 

 

 

 

54,096,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YEAR-TO-DATE OPERATING RESULTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

118,588

 

 

 

 

 

 

 

 

 

$

108,206

 

 

10

%

Net Income Available to Common Stockholders

 

$

118,557

 

 

 

 

 

 

 

 

 

$

108,175

 

 

10

%

Diluted Earnings Per Share

 

$

2.19

 

 

 

 

 

 

 

 

 

$

2.00

 

 

9

%

Return on Average Assets

 

 

1.54

%

 

 

 

 

 

 

 

 

 

1.70

%

 

 

 

Return on Average Common Stockholders' Equity

 

 

17.73

%

 

 

 

 

 

 

 

 

 

18.93

%

 

 

 

Average Diluted Shares Outstanding

 

 

54,198,422

 

 

 

 

 

 

 

 

 

 

54,087,410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

11,394,874

 

 

$

11,012,195

 

 

3

%

 

$

9,005,112

 

 

27

%

Loans

 

 

8,508,554

 

 

 

8,315,375

 

 

2

%

 

 

7,022,069

 

 

21

%

Non-interest-bearing Demand Deposits

 

 

2,762,814

 

 

 

2,678,893

 

 

3

%

 

 

1,678,672

 

 

65

%

Total Deposits

 

 

9,673,783

 

 

 

9,342,918

 

 

4

%

 

 

7,724,158

 

 

25

%

Stockholders' Equity

 

 

949,589

 

 

 

914,588

 

 

4

%

 

 

810,537

 

 

17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $43.4 million for the quarter ended September 30, 2020, compared to net income and net income available to common stockholders of $37.6 million for the same quarter in 2019. Basic and diluted earnings per common share were $0.80 and $0.80, respectively, for the third quarter of 2020, compared to $0.70 and $0.69, respectively, for the third quarter of 2019.

Annualized return on average assets was 1.54% and annualized return on average common stockholders equity was 18.43% for the third quarter of 2020, compared to 1.67% and 18.69%, respectively, for the third quarter of 2019.

Net interest income was $85.1 million for the third quarter of 2020, compared to $83.2 million for the second quarter of 2020 and $73.0 million for the third quarter of 2019. The net interest margin in the third quarter of 2020 was 3.14% compared to 3.32% in the second quarter of 2020 and 3.36% in the third 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 $4.0 million during the third quarter of 2020 offset the decrease in loan yield by approximately 19 basis points.

Average loans for the third quarter of 2020 were $8.36 billion, an increase of $31.5 million, or 2% annualized, over average loans of $8.33 billion for the second quarter of 2020, and an increase of $1.40 billion, or 20%, over average loans of $6.96 billion for the third quarter of 2019. We originated over 4,900 PPP loans during 2020 for a total of $1.05 billion. Excluding PPP loans, average loans for the third quarter of 2020 were $7.31 billion, a decrease of $136.0 million compared to the second quarter of 2020, and an increase of $350.6 million, or 5%, over average loans for the third quarter of 2019.

Average total deposits for the third quarter of 2020 were $9.47 billion, an increase of $595.4 million, or 27% annualized, over average total deposits of $8.87 billion for the second quarter of 2020, and an increase of $1.89 billion, or 25%, over average total deposits of $7.58 billion for the third quarter of 2019.

Nonperforming assets to total assets were 0.29% for the third quarter of 2020, an increase of three basis points compared to 0.26% for the second quarter of 2020 and a decrease of 23 basis points compared to 0.52% for the third quarter of 2019. Annualized net charge-offs to average loans were 0.54%, a 34 basis-point increase compared to 0.20% for the second quarter of 2020 and an increase of five basis points compared to 0.49% for the third quarter of 2019. The increase in net charge-offs for the third quarter of 2020 was due to a $7.2 million loan charge-off on a borrower severely impacted by the COVID-19 pandemic. We recorded a $12.3 million provision for loan losses in the third quarter of 2020 compared to $10.3 million in the second quarter of 2020 and $7.0 million in the third quarter of 2019. The allowance for loan loss as a percentage of total loans was 1.09% at September 30, 2020, a decrease of one basis point compared to 1.10% at June 30, 2020 and September 30, 2019, respectively. Excluding PPP loans, for all periods discussed, the allowance for loan loss as a percentage of total loans was 1.24% at September 30, 2020, a decrease of two basis points compared to 1.26% at June 30, 2020 and an increase of 14 basis points compared to 1.10% at September 30, 2019. 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 managements opinion, the allowance is adequate and was determined by consistent application of ServisFirst Banks methodology for calculating its allowance for loan losses.

Noninterest income for the third quarter of 2020 increased $2.0 million, or 32%, to $8.2 million from $6.2 million in the third quarter of 2019. Mortgage banking revenue increased $1.2 million, or 89%, from the third quarter of 2019 to the third quarter of 2020. Mortgage loan origination volumes increased approximately 96% during the third quarter of 2020 when compared to the same quarter in 2019. Credit card revenue decreased $28,000, or 2%, to $1.8 million during the third quarter of 2020, compared to the third quarter of 2019. The amount of spend on purchase cards increased $23.0 million while the amount of spend on business credit cards decreased $8.0 million during the third quarter of 2020 when compared to the third quarter of 2019. Purchase card spend carries lower profit margins than credit cards due to their higher rebates. Income on life insurance policies increased $946,000, or 120%, to $1.7 million during the third quarter of 2020, compared to $787,000 during the third quarter of 2019. We purchased $75.0 million in BOLI contracts at the end of the third quarter of 2019 and another $40.0 million in July 2020. Other income for the third quarter of 2020 decreased $191,000, or 42%, to $262,000 from $453,000 in the third 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 $342,000 during the third quarter of 2020 and by $595,000 year-to-date through other income and are amortizing the fee paid to our counterparty over the life of the cap.

Noninterest expense for the third quarter of 2020 increased $1.4 million, or 6%, to $26.6 million from $25.2 million in the third quarter of 2019, and decreased $2.2 million, or 8%, on a linked quarter basis. Salary and benefit expense for the third quarter of 2020 decreased $505,000, or 3%, to $15.0 million from $15.5 million in the third quarter of 2019, and decreased $798,000, or 5%, 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. The number of FTE employees decreased to 486 as of September 30, 2020 compared to 492 as of June 30, 2020 and 506 as of September 30, 2019. Equipment and occupancy expense increased $169,000, or 7%, to $2.6 million in the third quarter of 2020, from $2.4 million in the third quarter of 2019. Third party processing expenses increased $358,000, or 12%, to $3.3 million in the third quarter of 2020, from $2.9 million in the third quarter of 2019. Professional services expense increased $68,000, or 8%, to $955,000 in the third quarter of 2020, from $887,000 in the third quarter of 2019, and decreased $136,000, or 12%, from $1.1 million on a linked-quarter basis. FDIC and other regulatory assessments were $1.1 million in the third quarter of 2020 compared to a credit of $296,000 in the third quarter of 2019. The net assessment credit for the third quarter of 2019 resulted from the FDICs Small Bank Assessment Credit recorded by the Bank. Expenses associated with other real estate owned increased $41,000 to $119,000 in the third quarter of 2020, from $78,000 in the third quarter of 2019. Other operating expenses for the third quarter of 2020 decreased $76,000, or 2%, to $3.6 million from $3.7 million in the third quarter of 2019, and decreased $481,000, or 12%, on a linked-quarter basis. The efficiency ratio was 28.50% during the third quarter of 2020 compared to 31.76% during the third quarter of 2019 and compared to 31.92% during the second quarter of 2020.

Income tax expense increased $1.5 million, or 16%, to $11.0 million in the third quarter of 2020, compared to $9.5 million in the third quarter of 2019. Our effective tax rate was 20.29% for the third quarter of 2020 compared to 20.20% for the third 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 third quarter of 2019 to $132,000 during the third 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 third quarters of 2020 and 2019 of $180,000 and $231,000, respectively.

The Companys 5% Subordinated Notes due July 15, 2025 became redeemable in July 2020. Those Notes are being redeemed in the fourth quarter of 2020 and replaced with up to $37 million in 4% subordinated notes to be offered to holders of the redeemed Notes.

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.

 

 

September 30,
2020

 

June 30, 2020

 

March 31, 2020

 

December 31,
2019

 

September 30,
2019

Book value per share - GAAP

$

17.61

 

 

$

16.98

 

 

$

16.38

 

 

$

15.71

 

 

$

15.13

 

Total common stockholders' equity - GAAP

 

949,589

 

 

 

914,588

 

 

 

881,885

 

 

 

842,682

 

 

 

810,537

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted for goodwill and core deposit intangible asset

 

13,976

 

 

 

14,043

 

 

 

14,111

 

 

 

14,179

 

 

 

14,246

 

Tangible common stockholders' equity - non-GAAP

$

935,613

 

 

$

900,545

 

 

$

867,775

 

 

$

828,503

 

 

$

796,291

 

Tangible book value per share - non-GAAP

$

17.35

 

 

$

16.72

 

 

$

16.12

 

 

$

15.45

 

 

$

14.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity to total assets - GAAP

 

8.33

%

 

 

8.31

%

 

 

9.42

%

 

 

9.42

%

 

 

9.00

%

Total assets - GAAP

$

11,394,874

 

 

$

11,012,195

 

 

$

9,364,882

 

 

$

8,947,653

 

 

$

9,005,112

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted for goodwill and core deposit intangible asset

 

13,976

 

 

 

14,043

 

 

 

14,111

 

 

 

14,179

 

 

 

14,246

 

Total tangible assets - non-GAAP

$

11,380,898

 

 

$

10,998,152

 

 

$

9,350,771

 

 

$

8,933,474

 

 

$

8,990,866

 

Tangible common equity to total tangible assets - non-GAAP

 

8.22

%

 

 

8.19

%

 

 

9.28

%

 

 

9.27

%

 

 

8.86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

About Servi s First 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 SECs 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 collect a bility 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)

 

3rd Quarter 2020

 

2nd Quarter 2020

 

1st Quarter 2020

 

4th Quarter 2019

 

3rd Quarter 2019

CONSOLIDATED STATEMENT OF INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

$

96,110

 

 

$

95,080

 

 

$

96,767

 

 

$

98,187

 

 

$

101,130

 

Interest expense

 

11,028

 

 

 

11,846

 

 

 

19,127

 

 

 

22,410

 

 

 

28,125

 

Net interest income

 

85,082

 

 

 

83,234

 

 

 

77,640

 

 

 

75,777

 

 

 

73,005

 

Provision for loan losses

 

12,284

 

 

 

10,283

 

 

 

13,584

 

 

 

5,884

 

 

 

6,985

 

Net interest income after provision for loan losses

 

72,798

 

 

 

72,951

 

 

 

64,056

 

 

 

69,893

 

 

 

66,020

 

Non-interest income

 

8,172

 

 

 

7,033

 

 

 

6,674

 

 

 

6,936

 

 

 

6,202

 

Non-interest expense

 

26,573

 

 

 

28,816

 

 

 

27,920

 

 

 

25,503

 

 

 

25,153

 

Income before income tax

 

54,397

 

 

 

51,168

 

 

 

42,810

 

 

 

51,326

 

 

 

47,069

 

Provision for income tax

 

11,035

 

 

 

10,720

 

 

 

8,032

 

 

 

10,289

 

 

 

9,506

 

Net income

 

43,362

 

 

 

40,448

 

 

 

34,778

 

 

 

41,037

 

 

 

37,563

 

Preferred stock dividends

 

-

 

 

 

31

 

 

 

-

 

 

 

32

 

 

 

-

 

Net income available to common stockholders

$

43,362

 

 

$

40,417

 

 

$

34,778

 

 

$

41,005

 

 

$

37,563

 

Earnings per share - basic

$

0.80

 

 

$

0.75

 

 

$

0.65

 

 

$

0.77

 

 

$

0.70

 

Earnings per share - diluted

$

0.80

 

 

$

0.75

 

 

$

0.64

 

 

$

0.76

 

 

$

0.69

 

Average diluted shares outstanding

 

54,232,965

 

 

 

54,194,506

 

 

 

54,167,414

 

 

 

54,149,554

 

 

 

54,096,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

11,394,874

 

 

$

11,012,195

 

 

$

9,364,882

 

 

$

8,947,653

 

 

$

9,005,112

 

Loans

 

8,508,554

 

 

 

8,315,375

 

 

 

7,568,836

 

 

 

7,261,451

 

 

 

7,022,069

 

Debt securities

 

913,299

 

 

 

856,378

 

 

 

827,032

 

 

 

759,649

 

 

 

688,271

 

Non-interest-bearing demand deposits

 

2,762,814

 

 

 

2,678,893

 

 

 

1,925,626

 

 

 

1,749,879

 

 

 

1,678,672

 

Total deposits

 

9,673,783

 

 

 

9,342,918

 

 

 

7,832,655

 

 

 

7,530,433

 

 

 

7,724,158

 

Borrowings

 

64,719

 

 

 

64,715

 

 

 

64,707

 

 

 

64,703

 

 

 

64,693

 

Stockholders' equity

$

949,589

 

 

$

914,588

 

 

$

881,885

 

 

$

842,682

 

 

$

810,537

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

53,915,245

 

 

 

53,874,276

 

 

 

53,844,009

 

 

 

53,623,740

 

 

 

53,579,013

 

Book value per share

$

17.61

 

 

$

16.98

 

 

$

16.38

 

 

$

15.71

 

 

$

15.13

 

Tangible book value per share (1)

$

17.35

 

 

$

16.72

 

 

$

16.12

 

 

$

15.45

 

 

$

14.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELECTED FINANCIAL RATIOS (Annualized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.14

%

 

 

3.32

%

 

 

3.58

%

 

 

3.47

%

 

 

3.36

%

Return on average assets

 

1.54

%

 

 

1.55

%

 

 

1.54

%

 

 

1.80

%

 

 

1.67

%

Return on average common stockholders' equity

 

18.43

%

 

 

18.40

%

 

 

16.23

%

 

 

19.75

%

 

 

18.69

%

Efficiency ratio

 

28.50

%

 

 

31.92

%

 

 

33.11

%

 

 

30.83

%

 

 

31.76

%

Non-interest expense to average earning assets

 

0.98

%

 

 

1.15

%

 

 

1.29

%

 

 

1.17

%

 

 

1.16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL RATIOS (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital to risk-weighted assets

 

11.24

%

 

 

11.26

%

 

 

10.68

%

 

 

10.50

%

 

 

10.39

%

Tier 1 capital to risk-weighted assets

 

11.25

%

 

 

11.27

%

 

 

10.68

%

 

 

10.50

%

 

 

10.39

%

Total capital to risk-weighted assets

 

13.10

%

 

 

13.27

%

 

 

12.54

%

 

 

12.31

%

 

 

12.27

%

Tier 1 capital to average assets

 

8.22

%

 

 

8.46

%

 

 

9.56

%

 

 

9.13

%

 

 

8.88

%

Tangible common equity to total tangible assets (1)

 

8.22

%

 

 

8.19

%

 

 

9.28

%

 

 

9.27

%

 

 

8.86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

 

September 30,
2020

 

September 30,
2019

 

% Change

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

$

70,472

 

 

$

108,804

 

 

(35

)

%

Interest-bearing balances due from depository institutions

 

1,551,597

 

 

 

463,625

 

 

235

 

%

Federal funds sold

 

1,302

 

 

 

474,298

 

 

(100

)

%

 

Cash and cash equivalents

 

1,623,371

 

 

 

1,046,727

 

 

55

 

%

Available for sale debt securities, at fair value

 

913,049

 

 

 

688,021

 

 

33

 

%

Held to maturity debt securities (fair value of $250 at September 30, 2020 and 2019)

 

250

 

 

 

250

 

 

-

 

%

Mortgage loans held for sale

 

21,472

 

 

 

8,691

 

 

147

 

%

Loans

 

8,508,554

 

 

 

7,022,069

 

 

21

 

%

Less allowance for loan losses

 

(92,440

)

 

 

(77,192

)

 

20

 

%

 

Loans, net

 

8,416,114

 

 

 

6,944,877

 

 

21

 

%

Premises and equipment, net

 

55,273

 

 

 

56,570

 

 

(2

)

%

Goodwill and other identifiable intangible assets

 

13,976

 

 

 

14,246

 

 

(2

)

%

Other assets

 

351,369

 

 

 

245,730

 

 

43

 

%

 

Total assets

$

11,394,874

 

 

$

9,005,112

 

 

27

 

%

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Non-interest-bearing

$

2,762,814

 

 

$

1,678,672

 

 

65

 

%

 

Interest-bearing

 

6,910,969

 

 

 

6,045,486

 

 

14

 

%

 

 

Total deposits

 

9,673,783

 

 

 

7,724,158

 

 

25

 

%

Federal funds purchased

 

669,350

 

 

 

370,231

 

 

81

 

%

Other borrowings

 

64,719

 

 

 

64,693

 

 

-

 

%

Other liabilities

 

37,433

 

 

 

35,493

 

 

5

 

%

 

Total liabilities

 

10,445,285

 

 

 

8,194,575

 

 

27

 

%

Stockholders' equity:

 

 

 

 

 

 

 

 

 

Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at

 

 

 

 

 

 

 

 

 

 

September 30, 2020 and September 30, 2019

 

-

 

 

 

-

 

 

 

 

 

Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,915,245 shares

 

 

 

 

 

 

 

 

 

 

issued and outstanding at September 30, 2020, and 53,579,113 shares issued and outstanding

 

 

 

 

 

 

 

 

 

 

at September 30, 2019

 

54

 

 

 

54

 

 

-

 

%

 

Additional paid-in capital

 

223,280

 

 

 

219,234

 

 

2

 

%

 

Retained earnings

 

706,924

 

 

 

584,968

 

 

21

 

%

 

Accumulated other comprehensive income

 

18,831

 

 

 

5,779

 

 

226

 

%

 

 

Total stockholders' equity attributable to ServisFirst Bancshares, Inc.

 

949,089

 

 

 

810,035

 

 

17

 

%

 

Noncontrolling interest

 

500

 

 

 

502

 

 

-

 

%

 

 

Total stockholders' equity

 

949,589

 

 

 

810,537

 

 

17

 

%

 

Total liabilities and stockholders' equity

$

11,394,874

 

 

$

9,005,112

 

 

27

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

 

2020

 

2019

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

89,564

 

$

90,767

 

 

$

268,332

 

$

264,901

 

Taxable securities

 

5,858

 

 

4,367

 

 

 

16,104

 

 

12,306

 

Nontaxable securities

 

166

 

 

316

 

 

 

610

 

 

1,155

 

Federal funds sold

 

16

 

 

1,768

 

 

 

327

 

 

4,985

 

Other interest and dividends

 

506

 

 

3,912

 

 

 

2,584

 

 

9,269

 

Total interest income

 

96,110

 

 

101,130

 

 

 

287,957

 

 

292,616

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

9,876

 

 

24,787

 

 

 

37,377

 

 

71,172

 

Borrowed funds

 

1,152

 

 

3,338

 

 

 

4,624

 

 

9,576

 

Total interest expense

 

11,028

 

 

28,125

 

 

 

42,001

 

 

80,748

 

Net interest income

 

85,082

 

 

73,005

 

 

 

245,956

 

 

211,868

Provision for loan losses

 

12,284

 

 

6,985

 

 

 

36,151

 

 

16,754

 

Net interest income after provision for loan losses

 

72,798

 

 

66,020

 

 

 

209,805

 

 

195,114

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

1,818

 

 

1,735

 

 

 

5,557

 

 

5,223

 

Mortgage banking

 

2,519

 

 

1,333

 

 

 

5,697

 

 

2,995

 

Credit card income

 

1,840

 

 

1,868

 

 

 

5,003

 

 

5,185

 

Securities gains

 

-

 

 

34

 

 

 

-

 

 

28

 

Increase in cash surrender value life insurance

 

1,733

 

 

787

 

 

 

4,650

 

 

2,327

 

Other operating income

 

262

 

 

453

 

 

 

972

 

 

1,172

 

Total non-interest income

 

8,172

 

 

6,210

 

 

 

21,879

 

 

16,930

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

14,994

 

 

15,499

 

 

 

46,444

 

 

44,103

 

Equipment and occupancy expense

 

2,556

 

 

2,387

 

 

 

7,390

 

 

6,933

 

Third party processing and other services

 

3,281

 

 

2,923

 

 

 

10,360

 

 

8,058

 

Professional services

 

955

 

 

887

 

 

 

2,994

 

 

3,072

 

FDIC and other regulatory assessments (credits)

 

1,061

 

 

(296

)

 

 

2,988

 

 

1,804

 

Other real estate owned expense

 

119

 

 

78

 

 

 

2,023

 

 

312

 

Other operating expense

 

3,607

 

 

3,683

 

 

 

11,110

 

 

12,227

 

Total non-interest expense

 

26,573

 

 

25,161

 

 

 

83,309

 

 

76,509

 

Income before income tax

 

54,397

 

 

47,069

 

 

 

148,375

 

 

135,535

Provision for income tax

 

11,035

 

 

9,506

 

 

 

29,787

 

 

27,329

 

Net income

 

43,362

 

 

37,563

 

 

 

118,588

 

 

108,206

 

Dividends on preferred stock

 

-

 

 

-

 

 

 

31

 

 

31

 

Net income available to common stockholders

$

43,362

 

$

37,563

 

 

$

118,557

 

$

108,175

Basic earnings per common share

$

0.80

 

$

0.70

 

 

$

2.20

 

$

2.02

Diluted earnings per common share

$

0.80

 

$

0.69

 

 

$

2.19

 

$

2.00

 

 

 

 

 

 

 

 

 

 

 

 

 


LOANS BY TYPE (UNAUDITED)

(In thousands)

 

 

 

 

3rd Quarter 2020

 

2nd Quarter 2020

 

1st Quarter 2020

 

4th Quarter 2019

 

3rd Quarter 2019

Commercial, financial and agricultural

$

3,466,189

 

$

3,498,627

 

$

2,771,307

 

$

2,696,210

 

$

2,653,934

Real estate - construction

 

530,919

 

 

544,586

 

 

548,578

 

 

521,392

 

 

550,871

Real estate - mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied commercial

 

1,725,222

 

 

1,634,495

 

 

1,678,532

 

 

1,587,478

 

 

1,526,911

 

1-4 family mortgage

 

671,841

 

 

665,883

 

 

675,870

 

 

644,188

 

 

632,346

 

Other mortgage

 

2,056,549

 

 

1,911,384

 

 

1,834,137

 

 

1,747,394

 

 

1,592,072

Subtotal: Real estate - mortgage

 

4,453,612

 

 

4,211,762

 

 

4,188,539

 

 

3,979,060

 

 

3,751,329

Consumer

 

57,834

 

 

60,400

 

 

60,412

 

 

64,789

 

 

65,935

Total loans

$

8,508,554

 

$

8,315,375

 

$

7,568,836

 

$

7,261,451

 

$

7,022,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)

(Dollars in thousands)

 

 

 

3rd Quarter 2020

 

2nd Quarter 2020

 

1st Quarter 2020

 

4th Quarter 2019

 

3rd Quarter 2019

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

$

91,507

 

 

 

$

85,414

 

 

 

$

76,584

 

 

 

$

77,192

 

 

 

$

71,386

 

 

Loans charged off:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial, financial and agricultural

 

11,146

 

 

 

 

1,358

 

 

 

 

2,640

 

 

 

 

4,742

 

 

 

 

3,626

 

 

 

Real estate - construction

 

-

 

 

 

 

376

 

 

 

 

454

 

 

 

 

-

 

 

 

 

-

Real estate - mortgage 200 2,520 1,678 1,689 4,974 Consumer 44 62 58 139 172 Total charge offs 11,390 4,316 4,830 6,570 8,772 Recoveries: Commercial, financial and agricultural 12 84 62 51 126 Real estate - construction - 1 1 1 1 Real estate - mortgage 12 13 1 2 - Consumer 15 28 12 24 60 Total recoveries 39 126 76 78 187 Net charge-offs 11,351 4,190 4,754 6,492 8,585 Allocation from Loan Guarantee Program - - - - 7,406 Provision for loan losses 12,284 10,283 13,584 5,884 6,985 Ending balance$92,440 $91,507 $85,414 $76,584 $77,192 Allowance for loan losses to total loans 1.09 % 1.10 % 1.13 % 1.05 % 1.10 % Allowance for loan losses to total average loans 1.11 % 1.10 % 1.16 % 1.08 % 1.11 % Net charge-offs to total average loans 0.54 % 0.20 % 0.26 % 0.36 % 0.49 % Provision for loan losses to total average loans 0.58 % 0.50 % 0.74 % 0.33 % 0.40 % Nonperforming assets: Nonaccrual loans$21,675 $16,881 $28,914 $30,091 $35,732 Loans 90+ days past due and accruing 4,898 5,133 4,954 6,021 5,317 Other real estate owned and repossessed assets 6,976 6,537 7,448 8,178 5,337 Total$33,549 $28,551 $41,316 $44,290 $46,386 Nonperforming loans to total loans 0.31 % 0.26 % 0.45 % 0.50 % 0.58 % Nonperforming assets to total assets 0.29 % 0.26 % 0.44 % 0.50 % 0.52 % Nonperforming assets to earning assets 0.30 % 0.26 % 0.45 % 0.50 % 0.53 % Reserve for loan losses to nonaccrual loans 426.48 % 542.07 % 295.41 % 254.51 % 216.03 % Restructured accruing loans$1,800 $975 $975 $625 $3,468 Restructured accruing loans to total loans 0.02 % 0.01 % 0.01 % 0.01 % 0.05 % TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED) (In thousands) 3rd Quarter 2020 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019 Beginning balance:$1,568 $2,367 $3,330 $11,248 $11,284 Additions 1,182 - 350 250 - Net (paydowns) / advances (12) (12) (232) (3,481) 714 Charge-offs - (412) (1,081) (1,333) (750) Transfer to OREO - (375) - (3,354) - Ending balance$2,738 $1,568 $2,367 $3,330 $11,248


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

3rd Quarter 2020

2nd Quarter 2020

1st Quarter 2020

4th Quarter 2019

3rd Quarter 2019

Interest income:

Interest and fees on loans

$

89,564

$

89,383

$

89,385

$

89,407

$

90,767

Taxable securities

5,858

5,092

5,154

4,702

4,367

Nontaxable securities

166

211

233

274

316

Federal funds sold

16

34

277

1,053

1,768

Other interest and dividends

506

360

1,718

2,751

3,912

Total interest income

96,110

95,080

96,767

98,187

101,130

Interest expense:

Deposits

9,876

10,756

16,745

19,786

24,787

Borrowed funds

1,152

1,090

2,382

2,624

3,338

Total interest expense

11,028

11,846

19,127

22,410

28,125

Net interest income

85,082

83,234

77,640

75,777

73,005

Provision for loan losses

12,284

10,283

13,584

5,884

6,985

Net interest income after provision for loan losses

72,798

72,951

64,056

69,893

66,020

Non-interest income:

Service charges on deposit accounts

1,818

1,823

1,916

1,806

1,735

Mortgage banking

2,519

2,107

1,071

1,366

1,333

Credit card income

1,840

1,398

1,765

1,891

1,868

Securities (losses) gains

-

-

-

(1

)

34

Increase in cash surrender value life insurance

1,733

1,464

1,453

1,419

787

Other operating income

262

241

469

455

445

Total non-interest income

8,172

7,033

6,674

6,936

6,202

Non-interest expense:

Salaries and employee benefits

14,994

15,792

15,658

13,680

15,499

Equipment and occupancy expense

2,556

2,434

2,400

2,339

2,387

Third party processing and other services

3,281

3,513

3,345

3,176

2,923

Professional services

955

1,091

948

1,163

887

FDIC and other regulatory assessments (credits)

1,061

595

1,332

1,171

(296

)

Other real estate owned expense

119

1,303

601

103

78

Other operating expense

3,607

4,088

3,636

3,871

3,675

Total non-interest expense

26,573

28,816

27,920

25,503

25,153

Income before income tax

54,397

51,168

42,810

51,326

47,069

Provision for income tax

11,035

10,720

8,032

10,289

9,506

Net income

43,362

40,448

34,778

41,037

37,563

Dividends on preferred stock

-

31

-

32

-

Net income available to common stockholders

$

43,362

$

40,417

$

34,778

$

41,005

$

37,563

Basic earnings per common share

$

0.80

$

0.75

$

0.65

$

0.77

$

0.70

Diluted earnings per common share

$

0.80

$

0.75

$

0.64

$

0.76

$

0.69


AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

3rd Quarter 2020

2nd Quarter 2020

1st Quarter 2020

4th Quarter 2019

3rd 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

$

8,335,087

4.26

%

$

8,301,775

4.31

%

$

7,328,594

4.89

%

$

7,066,576

5.00

%

$

6,927,075

5.18

%

Tax-exempt (2)

30,068

4.14

31,929

4.12

32,555

4.04

35,563

4.00

34,195

3.98

Total loans, net of

unearned income

8,365,155

4.26

8,333,704

4.31

7,361,149

4.88

7,102,139

4.99

6,961,270

5.17

Mortgage loans held for sale

20,053

1.41

13,278

2.09

4,282

2.16

6,505

2.44

6,482

2.45

Debt securities:

Taxable

820,526

2.86

761,575

2.67

750,413

2.75

670,732

2.81

595,405

2.93

Tax-exempt (2)

31,880

2.51

38,201

2.62

44,029

2.33

50,825

2.17

59,992

2.21

Total securities (3)

852,406

2.84

799,776

2.67

794,442

2.72

721,557

2.76

655,397

2.87

Federal funds sold

41,884

0.15

83,274

0.16

105,423

1.06

238,927

1.75

312,968

2.24

Interest-bearing balances with banks

1,500,563

0.13

849,549

0.17

469,199

1.47

602,755

1.81

690,973

2.25

Total interest-earning assets

$

10,780,061

3.55

%

$

10,079,581

3.80

%

$

8,734,495

4.46

%

$

8,671,883

4.49

%

$

8,627,090

4.65

%

Non-interest-earning assets:

Cash and due from banks

75,065

76,212

66,140

70,381

71,418

Net premises and equipment

56,799

57,446

58,066

57,986

58,243

Allowance for loan losses, accrued

interest and other assets

281,196

248,702

241,479

233,885

162,654

Total assets

$

11,193,121

$

10,461,941

$

9,100,180

$

9,034,135

$

8,919,405

Interest-bearing liabilities:

Interest-bearing deposits:

Checking

$

1,077,595

0.31

%

$

992,848

0.35

%

$

956,803

0.57

%

$

961,258

0.69

%

$

900,754

0.84

%

Savings

82,671

0.36

72,139

0.42

67,380

0.50

62,311

0.53

57,431

0.60

Money market

4,739,566

0.44

4,285,907

0.52

4,061,286

1.10

4,189,283

1.34

4,265,435

1.76

Time deposits

841,378

1.78

877,448

1.95

805,924

2.09

712,155

2.15

703,278

2.20

Total interest-bearing deposits

6,741,210

0.58

6,228,342

0.69

5,891,393

1.14

5,925,007

1.32

5,926,898

1.66

Federal funds purchased

682,971

0.22

572,990

0.22

492,638

1.31

420,066

1.74

441,526

2.30

Other borrowings

64,717

4.77

64,711

4.85

64,707

4.85

64,698

4.79

64,689

4.79

Total interest-bearing liabilities

$

7,488,898

0.59

%

$

6,866,043

0.69

%

$

6,448,738

1.19

%

$

6,409,771

1.39

%

$

6,433,113

1.73

%

Non-interest-bearing liabilities:

Non-interest-bearing

checking

2,118,889

2,646,030

1,749,671

1,759,671

1,654,928

Other liabilities

649,161

69,061

39,801

41,112

34,070

Stockholders' equity

917,626

862,500

853,800

818,320

792,284

Accumulated other comprehensive

income

18,547

18,307

8,170

5,261

5,010

Total liabilities and

stockholders' equity

$

11,193,121

$

10,461,941

$

9,100,180

$

9,034,135

$

8,919,405

Net interest spread

2.96

%

3.11

%

3.27

%

3.10

%

2.92

%

Net interest margin

3.14

%

3.32

%

3.58

%

3.47

%

3.36

%

(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.