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

BIRMINGHAM, Ala., Oct. 16, 2017 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ:SFBS), today announced earnings and operating results for the quarter and nine months ended September 30, 2017.

THIRD QUARTER 2017 HIGHLIGHTS:

  • Net income of $25.3 million and diluted EPS of $0.47 for the third quarter of 2017, an increase of 21% year over year
  • Diluted EPS of $1.33 for the nine months ended September 30, 2017, a 19% increase year over year
  • Loans and deposits increased 21% and 30%, respectively, for the quarter on an annualized basis
  • Loans and deposits increased 22% and 14%, respectively, year over year

Tom Broughton, President and CEO, said, “We continue to see strong loan and deposit growth throughout our southeastern footprint while continuing to increase our market share.” Bud Foshee, CFO, stated, “We are pleased with our improvement in all key financial metrics in the quarter and are pleased that our ROAA exceeded 1.50% and our efficiency ratio reached 34% in the third quarter.”

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
On December 20, 2016, the Company effected a two-for-one split of its common stock in the form of a stock dividend. All shares and per share information for prior periods in this release have been adjusted to give effect to this stock split.
Period Ending
September 30,
2017
Period Ending June
30, 2017
% Change
From Period
Ending June
30, 2017 to
Period Ending
September 30,
2017
Period Ending
September 30,
2016
% Change
From Period
Ending
September 30,
2016 to Period
Ending
September 30,
2017
QUARTERLY OPERATING RESULTS
Net Income $25,259 $24,164 5% $20,909 21%
Net Income Available to Common Stockholders $25,259 $24,133 5% $20,909 21%
Diluted Earnings Per Share $0.47 $0.45 4% $0.39 21%
Return on Average Assets 1.55% 1.55% 1.39%
Return on Average Common Stockholders' Equity 17.28% 17.36% 16.66%
Average Diluted Shares Outstanding 54,099,672 54,100,604 53,879,328
YEAR-TO-DATE OPERATING RESULTS
Net Income $71,942 $59,741 20%
Net Income Available to Common Stockholders $71,911 $59,718 20%
Diluted Earnings Per Share $1.33 $1.12 19%
Return on Average Assets 1.52% 1.43%
Return on Average Common Stockholders' Equity 17.24% 16.60%
Average Diluted Shares Outstanding 54,111,208 53,489,918
BALANCE SHEET
Total Assets $6,712,103 $6,329,599 6% $6,002,621 12%
Loans 5,628,765 5,343,688 5% 4,631,822 22%
Non-interest-bearing Demand Deposits 1,405,965 1,373,353 2% 1,269,726 11%
Total Deposits 5,796,901 5,394,810 7% 5,081,128 14%
Stockholders' Equity 590,213 567,086 4% 507,866 16%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $25.3 million for the quarter ended September 30, 2017, compared to net income and net income available to common stockholders of $20.9 million for the same quarter in 2016. Basic and diluted earnings per common share were $0.48 and $0.47, respectively, for the third quarter of 2017, compared to $0.40 and $0.39, respectively, for the third quarter of 2016.

Return on average assets was 1.55% and return on average equity was 17.28% for the third quarter of 2017, compared to 1.39% and 16.66%, respectively, for the third quarter of 2016.

Net interest income was $58.4 million for the third quarter of 2017, compared to $55.6 million for the second quarter of 2017 and $47.9 million for the third quarter of 2016. The net interest margin in the third quarter of 2017 was 3.77%, flat from the second quarter of 2017 and an increase of 42 basis points from the third quarter of 2016. The increase in net interest income on a linked quarter basis is attributable to a $206.5 million increase in average loans outstanding, a $24.7 million increase in non-interest-bearing deposits and a $22.3 million increase in average equity, together resulting in a positive mix change in our balance sheet. The average yield on loans increased by six basis points to 4.66% and the average rate paid on deposits increased by eight basis points to 0.72% on a linked quarter basis.

Average loans for the third quarter of 2017 were $5.44 billion, an increase of $206.5 million, or 4%, over average loans of $5.23 billion for the second quarter of 2017, and an increase of $863.7 million, or 19%, over average loans of $4.58 billion for the third quarter of 2016.

Average total deposits for the third quarter of 2017 were $5.53 billion, an increase of $260.4 million, or 5%, over average total deposits of $5.27 billion for the second quarter of 2017, and an increase of $550.7 million, or 11%, over average total deposits of $4.98 billion for the third quarter of 2016.

Non-performing assets to total assets were 0.28% for the third quarter of 2017, an increase of five basis points compared to 0.23% for the second quarter of 2017 and an increase of 12 basis points compared to 0.16% for the third quarter of 2016. Net credit charge-offs to average loans were 0.10%, a 15 basis point decrease compared to 0.25% for the second quarter of 2017 and a three basis point decrease compared to 0.13% for the third quarter of 2016. We recorded a $4.8 million provision for loan losses in the third quarter of 2017 compared to $4.4 million in the second quarter of 2017 and $3.5 million in the third quarter of 2016. The allowance for loan loss as a percentage of total loans was 1.04% at September 30, 2017 compared to 1.03% at June 30, 2017 and 1.05% at September 30, 2016. In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.

Non-interest income for the third quarter of 2017 was $4.8 million, flat with the third quarter of 2016. Service charges on deposit accounts increased $100,000 while mortgage banking revenue decreased by approximately $134,000 in the third quarter of 2017 compared to the third quarter of 2016. Credit card income was flat at $1.1 million due to higher accruals for awards during the third quarter of 2017 compared to the third quarter of 2016.

Non-interest expense for the third quarter of 2017 increased $1.3 million, or 7%, to $21.5 million from $20.2 million in the third quarter of 2016, and decreased $378,000, or 2%, on a linked quarter basis. Salary and benefit expense for the third quarter of 2017 increased $1.4 million, or 13%, to $12.4 million from $11.0 million in the third quarter of 2016, and increased $397,000, or 3%, on a linked quarter basis. Professional service expenses decreased by $377,000, or 32%, to $805,000 for the third quarter of 2017 compared to $1.2 million for the third quarter of 2016, a result of lower legal expenses. Other operating expense for the third quarter of 2017 increased $507,000, or 10%, to $5.5 million from $5.0 million in the third quarter of 2016.

Income tax expense increased $3.4 million, or 42%, to $11.6 million in the third quarter of 2017, compared to $8.2 million in the third quarter of 2016. We recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $757,000 in the third quarter of 2017, compared to $1.2 million in the third quarter of 2016. Our effective tax rate for the third quarter of 2017 and 2016 was 31.5% and 28.1%, 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 September 30,
2017
At June 30, 2017 At March 31,
2017
At December
31, 2016
At September
30, 2016
Book value per share - GAAP $11.14 $10.72 $10.32 $9.93 $9.65
Total common stockholders' equity - GAAP 590,213 567,086 545,148 522,889 507,866
Adjustments:
Adjusted for goodwill and core deposit intangible asset 14,787 14,855 14,924 14,996 15,073
Tangible common stockholders' equity - non-GAAP $575,426 $552,231 $530,224 $507,893 $492,793
Tangible book value per share - non-GAAP $10.86 $10.44 $10.04 $9.65 $9.37
Stockholders' equity to total assets - GAAP 8.79% 8.96% 8.60% 8.21% 8.46%
Total assets - GAAP $6,712,103 $6,329,599 $6,336,165 $6,370,448 $6,002,621
Adjustments:
Adjusted for goodwill and core deposit intangible asset 14,787 14,855 14,924 14,996 15,073
Total tangible assets - non-GAAP $6,697,316 $6,314,744 $6,321,241 $6,355,452 $5,987,548
Tangible common equity to total tangible assets - non-GAAP 8.59% 8.75% 8.39% 7.99% 8.23%

About ServisFirst Bancshares, Inc.

ServisFirst Bancshares, Inc. is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, ServisFirst Bancshares, Inc. provides business and personal financial services from locations in Birmingham, Huntsville, Montgomery, Mobile and Dothan, Alabama, Pensacola and Tampa Bay, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee.

ServisFirst Bancshares, Inc. files periodic reports with the U.S. Securities and Exchange Commission (SEC). Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.servisfirstbancshares.com.

Statements in this press release that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The words "believe," "expect," "anticipate," "project," “plan,” “intend,” “will,” “would,” “might” and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. ServisFirst Bancshares, Inc. cautions that such forward-looking statements, wherever they occur in this press release or in other statements attributable to ServisFirst Bancshares, Inc., are necessarily estimates reflecting the judgment of ServisFirst Bancshares, Inc.’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, including: general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and non-bank financial institutions. The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. ServisFirst Bancshares, Inc. assumes no obligation to update or revise any forward-looking statements that are made from time to time.

More information about ServisFirst Bancshares, Inc. may be obtained over the Internet at www.servisfirstbancshares.com or by calling (205) 949-0302.

Contact: ServisFirst Bank
Davis Mange (205) 949-3420
dmange@servisfirstbank.com

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except share and per share data)
3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
CONSOLIDATED STATEMENT OF INCOME
Interest income $67,641 $63,538 $59,517 $56,200 $54,691
Interest expense 9,245 7,971 7,465 7,091 6,773
Net interest income 58,396 55,567 52,052 49,109 47,918
Provision for loan losses 4,803 4,381 4,986 4,075 3,464
Net interest income after provision for loan losses 53,593 51,186 47,066 45,034 44,454
Non-interest income 4,790 4,805 4,546 6,039 4,791
Non-interest expense 21,497 21,875 21,267 22,037 20,162
Income before income tax 36,886 34,116 30,345 29,036 29,083
Provision for income tax 11,627 9,952 7,826 7,298 8,174
Net income 25,259 24,164 22,519 21,738 20,909
Preferred stock dividends - 31 - 24 -
Net income available to common stockholders $25,259 $24,133 $22,519 $21,714 $20,909
Earnings per share - basic $0.48 $0.46 $0.43 $0.41 $0.40
Earnings per share - diluted $0.47 $0.45 $0.42 $0.40 $0.39
Average diluted shares outstanding 54,099,672 54,100,604 54,133,722 53,961,160 53,879,328
CONSOLIDATED BALANCE SHEET DATA
Total assets $6,712,103 $6,329,599 $6,336,165 $6,370,448 $6,002,621
Loans 5,628,765 5,343,688 5,151,984 4,911,770 4,631,822
Debt securities 522,724 518,065 526,023 447,427 402,733
Non-interest-bearing demand deposits 1,405,965 1,373,353 1,292,440 1,281,605 1,269,726
Total deposits 5,796,901 5,394,810 5,361,532 5,420,311 5,081,128
Borrowings 54,975 55,075 55,169 55,262 55,356
Stockholders' equity $590,213 $567,086 $545,148 $522,889 $507,866
Shares outstanding 52,970,310 52,909,362 52,812,396 52,636,896 52,610,896
Book value per share $11.14 $10.72 $10.32 $9.93 $9.65
Tangible book value per share (1) $10.86 $10.44 $10.04 $9.65 $9.37
SELECTED FINANCIAL RATIOS
Net interest margin 3.77% 3.77% 3.53% 3.30% 3.35%
Return on average assets 1.55% 1.55% 1.45% 1.39% 1.39%
Return on average common stockholders' equity 17.28% 17.36% 17.09% 16.71% 16.66%
Efficiency ratio 34.02% 36.23% 37.58% 39.96% 38.25%
Non-interest expense to average earning assets 1.38% 1.47% 1.43% 1.46% 1.39%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets 9.60% 9.72% 9.67% 9.78% 9.91%
Tier 1 capital to risk-weighted assets 9.61% 9.73% 9.68% 9.78% 9.92%
Total capital to risk-weighted assets 11.51% 11.67% 11.66% 11.84% 12.03%
Tier 1 capital to average assets 8.91% 8.88% 8.46% 8.22% 8.20%
Tangible common equity to total tangible assets (1) 8.59% 8.75% 8.39% 7.99% 8.23%
(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, 2017 September 30, 2016 % Change
ASSETS
Cash and due from banks $79,431 $57,221 39 %
Interest-bearing balances due from depository institutions 86,719 553,392 (84)%
Federal funds sold 182,841 181,644 1 %
Cash and cash equivalents 348,991 792,257 (56)%
Available for sale debt securities, at fair value 435,325 351,417 24 %
Held to maturity debt securities (fair value of $89,329 and $26,912 at
September 30, 2017 and 2016, respectively) 87,399 51,316 70 %
Restricted equity securities 1,038 5,668 (82)%
Mortgage loans held for sale 4,971 6,026 (18)%
Loans 5,628,765 4,631,822 22 %
Less allowance for loan losses (58,459) (48,933) 19 %
Loans, net 5,570,306 4,582,889 22 %
Premises and equipment, net 55,104 25,033 120 %
Goodwill and other identifiable intangible assets 14,787 15,073 (2)%
Other assets 194,182 172,942 12 %
Total assets $6,712,103 $6,002,621 12 %
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing $1,405,965 $1,269,726 11 %
Interest-bearing 4,390,936 3,811,402 15 %
Total deposits 5,796,901 5,081,128 14 %
Federal funds purchased 254,880 344,390 (26)%
Other borrowings 54,975 55,356 (1)%
Other liabilities 15,134 13,881 9 %
Total liabilities 6,121,890 5,494,755 11 %
Stockholders' equity:
Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001
(liquidation preference $1,000), net of discount; no shares authorized,
no shares issued or outstanding at September 30, 2017 and 2016 - - - %
Preferred stock, par value $0.001 per share; 1,000,000 shares authorized and
undesignated at September 30, 2017 and 2016 - - - %
Common stock, par value $0.001 per share; 100,000,000 shares authorized;
52,970,310 shares issued and outstanding at September 30, 2017 and
52,610,896 shares issued and outstanding at September 30, 2016 53 53 - %
Additional paid-in capital 217,483 215,235 1 %
Retained earnings 371,127 287,568 29 %
Accumulated other comprehensive income 1,048 4,633 (77)%
Noncontrolling interest 502 377 33 %
Total stockholders' equity 590,213 507,866 16 %
Total liabilities and stockholders' equity $6,712,103 $6,002,621 12 %


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Interest income:
Interest and fees on loans $63,857 $51,598 $179,325 $148,055
Taxable securities 2,288 1,107 6,649 3,614
Nontaxable securities 729 823 2,246 2,515
Federal funds sold 379 347 1,185 630
Other interest and dividends 388 816 1,291 1,888
Total interest income 67,641 54,691 190,696 156,702
Interest expense:
Deposits 7,574 5,358 19,877 14,352
Borrowed funds 1,671 1,415 4,804 4,362
Total interest expense 9,245 6,773 24,681 18,714
Net interest income 58,396 47,918 166,015 137,988
Provision for loan losses 4,803 3,464 14,170 9,323
Net interest income after provision for loan losses 53,593 44,454 151,845 128,665
Non-interest income:
Service charges on deposit accounts 1,467 1,367 4,203 3,980
Mortgage banking 978 1,112 2,941 2,681
Credit card income 1,149 1,114 3,517 2,159
Securities gains (losses) - - - (3)
Increase in cash surrender value life insurance 825 770 2,334 2,049
Other operating income 371 428 1,146 1,207
Total non-interest income 4,790 4,791 14,141 12,073
Non-interest expense:
Salaries and employee benefits 12,428 10,958 36,172 32,758
Equipment and occupancy expense 1,947 2,100 6,452 6,108
Professional services 805 1,182 2,384 2,919
FDIC and other regulatory assessments 810 775 2,888 2,328
Other real estate owned expense 31 178 163 668
Other operating expense 5,476 4,969 16,580 14,175
Total non-interest expense 21,497 20,162 64,639 58,956
Income before income tax 36,886 29,083 101,347 81,782
Provision for income tax 11,627 8,174 29,405 22,041
Net income 25,259 20,909 71,942 59,741
Dividends on preferred stock - - 31 23
Net income available to common stockholders $25,259 $20,909 $71,911 $59,718
Basic earnings per common share $0.48 $0.40 $1.36 $1.14
Diluted earnings per common share $0.47 $0.39 $1.33 $1.12


LOANS BY TYPE (UNAUDITED)
(In thousands)
3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
Commercial, financial and agricultural $2,223,910 $2,123,498 $2,061,503 $1,982,267 $1,885,315
Real estate - construction 467,838 395,398 345,777 335,085 292,721
Real estate - mortgage:
Owner-occupied commercial 1,323,383 1,272,659 1,262,578 1,171,719 1,138,308
1-4 family mortgage 593,180 565,121 554,261 536,805 520,394
Other mortgage 962,690 931,788 872,955 830,683 740,127
Subtotal: Real estate - mortgage 2,879,253 2,769,568 2,689,794 2,539,207 2,398,829
Consumer 57,764 55,224 54,910 55,211 54,957
Total loans $5,628,765 $5,343,688 $5,151,984 $4,911,770 $4,631,822


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
Allowance for loan losses:
Beginning balance $55,059 $53,892 $51,893 $48,933 $46,998
Loans charged off:
Commercial, financial and agricultural 924 3,067 2,855 1,059 1,270
Real estate - construction 16 40 - - 79
Real estate - mortgage 550 106 266 45 144
Consumer 65 33 75 82 81
Total charge offs 1,555 3,246 3,196 1,186 1,574
Recoveries:
Commercial, financial and agricultural 67 16 190 10 35
Real estate - construction 12 14 16 12 9
Real estate - mortgage 59 2 2 46 1
Consumer 14 - 1 3 -
Total recoveries 152 32 209 71 45
Net charge-offs 1,403 3,214 2,987 1,115 1,529
Provision for loan losses 4,803 4,381 4,986 4,075 3,464
Ending balance $58,459 $55,059 $53,892 $51,893 $48,933
Allowance for loan losses to total loans 1.04 % 1.03 % 1.05 % 1.06 % 1.05 %
Allowance for loan losses to total average
loans 1.07 % 1.05 % 1.08 % 1.10 % 1.07 %
Net charge-offs to total average loans 0.10 % 0.25 % 0.24 % 0.09 % 0.13 %
Provision for loan losses to total average
loans 0.35 % 0.34 % 0.40 % 0.34 % 0.30 %
Nonperforming assets:
Nonaccrual loans $12,356 $9,963 $12,084 $10,624 $6,647
Loans 90+ days past due and accruing 2,506 1,016 16 6,263 43
Other real estate owned and
repossessed assets 3,888 3,891 5,102 4,988 3,035
Total $18,750 $14,870 $17,202 $21,875 $9,725
Nonperforming loans to total loans 0.26 % 0.21 % 0.23 % 0.34 % 0.14 %
Nonperforming assets to total assets 0.28 % 0.23 % 0.27 % 0.34 % 0.16 %
Nonperforming assets to earning assets 0.29 % 0.24 % 0.28 % 0.35 % 0.16 %
Reserve for loan losses to nonaccrual loans 473.12 % 552.63 % 445.98 % 488.45 % 736.17 %
Restructured accruing loans $12,700 $12,716 $536 $558 $6,738
Restructured accruing loans to total loans 0.23 % 0.24 % 0.01 % 0.01 % 0.14 %
TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
(In thousands)
3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
Beginning balance: $16,370 $7,269 $7,292 $6,738 $6,753
Additions - 12,716 - - -
Removal from TDR - (535) - - -
Net (paydowns) / advances (16) (1,380) (23) 554 (15)
Charge-offs - (1,700) - - -
$16,354 $16,370 $7,269 $7,292 $6,738


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
Interest income:
Interest and fees on loans $63,857 $59,912 $55,556 $52,533 $51,598
Taxable securities 2,288 2,274 2,087 1,604 1,107
Nontaxable securities 729 752 765 785 823
Federal funds sold 379 287 519 377 347
Other interest and dividends 388 313 590 901 816
Total interest income 67,641 63,538 59,517 56,200 54,691
Interest expense:
Deposits 7,574 6,321 5,982 5,817 5,358
Borrowed funds 1,671 1,650 1,483 1,274 1,415
Total interest expense 9,245 7,971 7,465 7,091 6,773
Net interest income 58,396 55,567 52,052 49,109 47,918
Provision for loan losses 4,803 4,381 4,986 4,075 3,464
Net interest income after provision for loan losses 53,593 51,186 47,066 45,034 44,454
Non-interest income:
Service charges on deposit accounts 1,467 1,382 1,354 1,375 1,367
Mortgage banking 978 1,064 899 1,044 1,112
Credit card income 1,149 1,189 1,179 1,052 1,114
Increase in cash surrender value life insurance 825 785 724 745 770
Other operating income 371 385 390 1,823 428
Total non-interest income 4,790 4,805 4,546 6,039 4,791
Non-interest expense:
Salaries and employee benefits 12,428 12,031 11,713 11,197 10,958
Equipment and occupancy expense 1,947 2,265 2,250 1,877 2,100
Professional services 805 808 771 1,058 1,182
FDIC and other regulatory assessments 810 1,081 997 1,072 775
Other real estate owned expense 31 56 76 91 178
Other operating expense 5,476 5,634 5,460 6,742 4,969
Total non-interest expense 21,497 21,875 21,267 22,037 20,162
Income before income tax 36,886 34,116 30,345 29,036 29,083
Provision for income tax 11,627 9,952 7,826 7,298 8,174
Net income 25,259 24,164 22,519 21,738 20,909
Dividends on preferred stock - 31 - 24 -
Net income available to common stockholders $25,259 $24,133 $22,519 $21,714 $20,909
Basic earnings per common share $0.48 $0.46 $0.43 $0.41 $0.40
Diluted earnings per common share $0.47 $0.45 $0.42 $0.40 $0.39


AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
Average Balance Yield /
Rate
Average Balance Yield /
Rate
Average Balance Yield /
Rate
Average Balance Yield /
Rate
Average Balance Yield /
Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)
Taxable $5,407,109 4.66% $5,192,812 4.60% $4,976,933 4.50% $4,676,565 4.45% $4,554,900 4.47%
Tax-exempt (2) 33,357 5.17 41,143 4.92 27,322 4.72 26,344 4.74 21,939 4.37
Total loans, net of
unearned income 5,440,466 4.66 5,233,955 4.60 5,004,255 4.51 4,702,909 4.45 4,576,839 4.47
Mortgage loans held for sale 4,862 3.51 5,958 3.90 5,637 4.10 6,271 3.36 6,724 3.79
Debt securities:
Taxable 385,431 2.37 389,505 2.34 368,349 2.27 295,608 2.17 224,825 2.19
Tax-exempt (2) 131,478 3.34 133,590 3.38 132,578 3.45 134,748 3.54 135,272 3.73
Total securities (3) 516,909 2.62 523,095 2.60 500,927 2.58 430,356 2.60 360,097 2.77
Federal funds sold 111,175 1.35 98,598 1.17 234,460 0.90 242,211 0.62 217,158 0.64
Restricted equity securities 1,030 3.47 1,030 10.51 1,030 1.57 3,042 8.24 5,658 4.01
Interest-bearing balances with banks 118,510 1.27 109,909 1.04 295,648 0.80 601,143 0.55 590,675 0.51
Total interest-earning assets $6,192,952 4.37% $5,972,545 4.30% $6,041,957 4.03% $5,985,932 3.77% $5,757,151 3.81%
Non-interest-earning assets:
Cash and due from banks 65,457 68,894 59,697 55,593 58,809
Net premises and equipment 54,727 49,813 44,739 30,421 25,000
Allowance for loan losses, accrued
interest and other assets 151,786 143,286 138,289 140,721 145,804
Total assets $6,464,922 $6,234,538 $6,284,682 $6,212,667 $5,986,764
Interest-bearing liabilities:
Interest-bearing deposits:
Checking $800,437 0.42% $779,916 0.39% $789,273 0.38% $735,115 0.37% $696,100 0.37%
Savings 48,313 0.30 48,150 0.30 50,461 0.33 51,845 0.32 43,569 0.30
Money market 2,774,061 0.74 2,567,817 0.64 2,694,225 0.58 2,669,513 0.56 2,471,829 0.55
Time deposits 546,020 1.10 537,220 1.06 530,000 1.02 527,100 1.00 519,653 0.99
Total interest-bearing deposits 4,168,831 0.72 3,933,103 0.64 4,063,959 0.60 3,983,573 0.58 3,731,151 0.57
Federal funds purchased 282,806 1.34 336,344 1.11 359,747 0.86 353,029 0.63 436,415 0.64
Other borrowings 55,034 5.17 55,130 5.22 55,239 5.26 55,315 5.16 55,410 5.15
Total interest-bearing liabilities $4,506,671 0.81% $4,324,577 0.74% $4,478,945 0.68% $4,391,917 0.64% $4,222,976 0.64%
Non-interest-bearing liabilities:
Non-interest-bearing
demand 1,363,207 1,338,514 1,254,496 1,289,448 1,250,139
Other liabilities 15,070 13,739 16,809 14,399 14,376
Stockholders' equity 578,626 556,521 535,232 514,245 494,248
Unrealized gains on securities and
derivatives 1,348 1,187 (800) 2,658 5,025
Total liabilities and
stockholders' equity $6,464,922 $6,234,538 $6,284,682 $6,212,667 $5,986,764
Net interest spread 3.56% 3.56% 3.35% 3.13% 3.17%
Net interest margin 3.77% 3.77% 3.53% 3.30% 3.35%
(1)Average loans include loans on which the accrual of interest has been discontinued.
(2)Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 35%.
(3)Average net unrealized gains or losses on available-for-sale debt securities are excluded from the yield calculation.


Source:ServisFirst Bancshares, Inc.