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

BIRMINGHAM, Ala., April 20, 2020 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the quarter ended March 31, 2020.

First Quarter 2020 Highlights:

Net income of $34.8 million for the quarter
Net interest margin increased to 3.58% compared to 3.47% in the fourth quarter of 2019
Diluted earnings per share were $0.64 for the quarter
Deposits grew 16% annualized during the quarter
Loan loss reserves were enhanced during the quarter in light of current economic conditions
Non-interest income increased by $1.7 million, or 35%, year-over-year

Tom Broughton, Chairman, President and CEO, said, “Our current focus is on serving our client needs during the current pandemic and our team has done an outstanding job. I could not be more proud of our hard working bankers who have gone above and beyond. They are what makes our company a standout in our industry for customer service.”

Bud Foshee, CFO, said, “We are pleased to have a strong balance sheet and solid profitability that positions us well during the current pandemic and beyond. Our return on average assets was 1.54% during the first quarter. Our pre-tax, pre-provision return on average assets was 2.49% during the first quarter, which is among the best in the banking industry.”

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

	Period Ending March 31, 2020			Period Ending December 31, 2019			% Change From Period Ending December 31, 2019 to Period Ending March 31, 2020			Period Ending March 31, 2019			% Change From Period Ending March 31, 2019 to Period Ending March 31, 2020
QUARTERLY OPERATING RESULTS
Net Income	$	34,778		$	41,037		(15	)	%	$	35,010		(1	)	%
Net Income Available to Common Stockholders	$	34,778		$	41,005		(15	)	%	$	35,010		(1	)	%
Diluted Earnings Per Share	$	0.64		$	0.76		(16	)	%	$	0.65		(2	)	%
Return on Average Assets		1.54	%		1.80	%					1.75	%
Return on Average Common Stockholders' Equity		16.23	%		19.75	%					19.42	%
Average Diluted Shares Outstanding		54,167,414			54,149,554						54,076,538

BALANCE SHEET
Total Assets	$	9,364,882		$	8,947,653		5		%	$	8,310,836		13		%
Loans		7,568,836			7,261,451		4		%		6,659,908		14		%
Non-interest-bearing Demand Deposits		1,925,626			1,749,879		10		%		1,572,703		22		%
Total Deposits		7,832,655			7,530,433		4		%		7,083,666		11		%
Stockholders' Equity		881,885			842,682		5		%		745,586		18		%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $34.8 million for the quarter ended March 31, 2020, compared to net income and net income available to common stockholders of $35.0 million for the same quarter in 2019. Basic and diluted earnings per common share were $0.65 and $0.64, respectively, for the first quarter of 2020, compared to $0.65 and $0.65, respectively, for the first quarter of 2019.

Annualized return on average assets was 1.54% and annualized return on average common stockholders’ equity was 16.23% for the first quarter of 2020, compared to 1.75% and 19.42%, respectively, for the first quarter of 2019.

Net interest income was $77.6 million for the first quarter of 2020, compared to $75.8 million for the fourth quarter of 2019 and $68.8 million for the first quarter of 2019. The net interest margin in the first quarter of 2020 was 3.58% compared to 3.47% in the fourth quarter of 2019 and 3.56% in the first quarter of 2019. Linked quarter decreases in average rates paid on deposits in excess of decreases in loan yields drove a favorable rate change and increases in average balances in loans, non-interest-bearing demand deposits and equity drove favorable volume change.

Average loans for the first quarter of 2020 were $7.36 billion, an increase of $259.0 million, or 15% annualized, over average loans of $7.10 billion for the fourth quarter of 2019, and an increase of $759.7 million, or 12%, over average loans of $6.60 billion for the first quarter of 2019.

Average total deposits for the first quarter of 2020 were $7.64 billion, a decrease of $44,000, from average total deposits of $7.68 billion for the fourth quarter of 2019, and an increase of $662.7 million, or 10%, over average total deposits of $6.98 billion for the first quarter of 2019.

Non-performing assets to total assets were 0.44% for the first quarter of 2020, a decrease of six basis points compared to 0.50% for the fourth quarter of 2019 and an increase of three basis points compared to 0.41% for the first quarter of 2019. Annualized net charge-offs to average loans were 0.26%, a 10 basis point decrease compared to 0.36% for the fourth quarter of 2019 and an increase of six basis points compared to 0.20% for the first quarter of 2019. We recorded a $13.6 million provision for loan losses in the first quarter of 2020 compared to $5.9 million in the fourth quarter of 2019 and $4.9 million in the first quarter of 2019. We have added a new pandemic qualitative factor to our allowance for loan loss calculation and have increased qualitative factors related to macroeconomic conditions; these changes resulted in the need for an additional loan loss provision during the quarter. The allowance for loan loss as a percentage of total loans was 1.13% at March 31, 2020, an increase of eight basis points compared to 1.05% at December 31, 2019 and an increase of 11 basis points compared to 1.02% as of March 31, 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 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 first quarter of 2020 increased $1.8 million, or 36%, to $6.7 million from $4.9 million in the first quarter of 2019. Deposit service charges increased $214,000 in the first quarter of 2020, or 13%, compared to the first quarter of 2019. Mortgage banking revenue almost doubled to $1.1 million from the first quarter of 2019 to the first quarter of 2020. Mortgage loan sales increased approximately 96% during the first quarter of 2020 when compared to the same quarter in 2019. Credit card revenue increased $189,000, or 12%, to $1.8 million during the first quarter of 2020, compared to $1.6 million during the first quarter of 2019. The number of credit card accounts increased approximately 43% and the aggregate amount of sales on all credit card accounts increased 29% during the first quarter of 2020. Cash surrender value of life insurance increased $691,000, or 91%, to $1.5 million during the first quarter of 2020, compared to $762,000 during the first quarter of 2019. We purchased $75.0 million of additional life insurance contracts during the third quarter of 2019. Other income for the first quarter of 2020 increased $140,000, or 43%, to $469,000 from $329,000 in the first quarter of 2019.

Non-interest expense for the first quarter of 2020 increased $2.6 million, or 10%, to $27.9 million from $25.3 million in the first quarter of 2019, and increased $2.3 million, or 9%, on a linked quarter basis. Salary and benefit expense for the first quarter of 2020 increased $1.4 million, or 10%, to $15.7 million from $14.3 million in the first quarter of 2019, and increased $2.0 million, or 15%, on a linked quarter basis. We adjusted accrued incentives downward by $1.0 million in December based on actual year-end production in 2019. The number of FTE employees increased from 485 at March 31, 2019 to 492 at March 31, 2020, or 1%, and decreased by eight from the end of the fourth quarter of 2019. Equipment and occupancy expense increased $141,000, or 6%, to $2.4 million in the first quarter of 2020, from $2.3 million in the first quarter of 2019, and decreased $61,000 on a linked-quarter basis. Third party processing and other services expense increased $934,000, or 39%, to $3.3 million in the first quarter of 2020, from $2.4 million in the first quarter of 2019. Professional services expense decreased $46,000, or 5%, to $948,000 in the first quarter of 2020, from $994,000 in the first quarter of 2019, and decreased $215,000 on a linked-quarter basis. FDIC and other regulatory assessments increased $313,000 to $1.3 million in the first quarter of 2020, from $1.0 million in the first quarter of 2019. Growth in our assessment base was partially offset by a decrease in our assessment rate. Expenses associated with other real estate owned increased $579,000 to $601,000 in the first quarter of 2020, from $22,000 in the first quarter of 2019. This increase was the result of write-downs in value of property based on updated appraisals related to one foreclosed loan relationship in our Nashville region. Other operating expenses for the first quarter of 2020 decreased $722,000, or 17%, to $3.6 million from $4.4 million in the first quarter of 2019, and decreased $235,000 on a linked-quarter basis. Write-downs in tax credit investments decreased significantly as our New Market Tax Credit partnerships terminated at the end of 2019. Decreases in travel and entertainment expenses also contributed to the decrease in other operating expenses. We accrued $250,000 for a pending legal matter during the first quarter of 2020. The efficiency ratio was 33.11% during the first quarter of 2020 compared to 34.36% during the first quarter of 2019 and compared to 30.83% during the fourth quarter of 2019.

Income tax expense decreased $467,000, or 6%, to $8.0 million in the first quarter of 2020, compared to $8.5 million in the first quarter of 2019. Our effective tax rate was 18.76% for the first quarter of 2020 compared to 19.53% for the first quarter of 2019. 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 first quarters of 2020 and 2019 of $1.1 million and $772,000, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

During the third quarter of 2019, we recorded a $1.7 million credit to our FDIC and other regulatory assessments expense as a result of the FDIC’s Small Bank Assessment Credit. Financial measures included in this press release that are presented adjusted for this credit are net income, net income available to common stockholders, diluted earnings per share, return on average assets and return on average common stockholders’ equity. Each of these five financial measures excludes the impact of this item, net of tax, attributable to the FDIC Small Bank Assessment Credit and are all considered non-GAAP financial measures. This press release also 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 and pre-tax, pre-provision return on average assets. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation tables provide a more detailed analysis of the non-GAAP financial measures as of and for the comparative periods presented in this press release. Dollars are in thousands, except share and per share data.

		Three Months Ended September 30, 2019
Net income - GAAP		$	149,243
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669
	Tax on adjustment		421
Adjusted net income - non-GAAP		$	147,995

Net income available to common stockholders - GAAP		$	149,180
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669
	Tax on adjustment		421
Adjusted net income available to common stockholders -
	non-GAAP	$	147,932

Diluted earnings per share - GAAP		$	2.76
	Adjustments:
	FDIC Small Bank Assessment Credit		(0.03	)
	Tax on adjustment		0.01
Adjusted diluted earnings per share - non-GAAP		$	2.74

Return on average assets - GAAP			1.73		%
Net income - GAAP		$	149,243
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669
	Tax on adjustment		421
Adjusted net income - non-GAAP		$	147,995
Average assets - GAAP		$	8,638,604
Adjusted return on average assets - non-GAAP			1.71		%

Return on average common stockholders' equity - GAAP			19.15		%
Net income - GAAP		$	149,243
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669
	Tax on adjustment		421
Adjusted net income - non-GAAP		$	147,995
Average common stockholders' equity - GAAP		$	779,071
Adjusted return on average common stockholders' equity -
	non-GAAP		18.99		%

		At March 31, 2020				At December 31, 2019			At September 30, 2019			At June 30, 2019			At March 31, 2019
Book value per share - GAAP		$	16.38			$	15.71		$	15.13		$	14.55		$	13.94
Total common stockholders' equity - GAAP			881,886				842,682			810,537			778,957			745,586
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,111				14,179			14,246			14,314			14,381
Tangible common stockholders' equity - non-GAAP		$	867,775			$	828,503		$	796,291		$	764,643		$	731,205
Tangible book value per share - non-GAAP		$	16.12			$	15.45		$	14.86		$	14.29		$	13.67

Stockholders' equity to total assets - GAAP			9.42		%		9.42	%		9.00	%		8.91	%		8.97	%
Total assets - GAAP		$	9,364,882			$	8,947,653		$	9,005,112		$	8,740,237		$	8,310,836
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,111				14,179			14,246			14,314			14,381
Total tangible assets - non-GAAP		$	9,350,771			$	8,933,474		$	8,990,866		$	8,725,923		$	8,296,455
Tangible common equity to total tangible assets - non-GAAP			9.28		%		9.27	%		8.86	%		8.76	%		8.81	%

Return on average assets - GAAP			1.54		%
Net income		$	34,778
	Adjustments:
	Provision for loan losses		13,584
	Provision for income taxes		8,032
Net income before provision for loan losses and provision
	for income taxes	$	56,394
Pre-tax, Pre-Provision return on average assets - non-GAAP			2.49		%

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,” “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: 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 crises and associated credit issues in industries most impacted by the COVID-19 outbreak, including 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 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)
	1st Quarter 2020			4th Quarter 2019			3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	96,767		$	98,187		$	101,130		$	97,787		$	93,699
Interest expense		19,127			22,410			28,125			27,702			24,921
Net interest income		77,640			75,777			73,005			70,085			68,778
Provision for loan losses		13,584			5,884			6,985			4,884			4,885
Net interest income after provision for loan losses		64,056			69,893			66,020			65,201			63,893
Non-interest income		6,674			6,936			6,202			5,778			4,944
Non-interest expense		27,920			25,503			25,153			26,022			25,328
Income before income tax		42,810			51,326			47,069			44,957			43,509
Provision for income tax		8,032			10,289			9,506			9,324			8,499
Net income		34,778			41,037			37,563			35,633			35,010
Preferred stock dividends		-			32			-			31			-
Net income available to common stockholders	$	34,778		$	41,005		$	37,563		$	35,602		$	35,010
Earnings per share - basic	$	0.65		$	0.76		$	0.70		$	0.66		$	0.65
Earnings per share - diluted	$	0.64		$	0.76		$	0.69		$	0.66		$	0.65
Average diluted shares outstanding		54,167,414			54,149,554			54,096,368			54,089,107			54,076,538

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	9,364,882		$	8,947,653		$	9,005,112		$	8,740,237		$	8,310,836
Loans		7,568,836			7,261,451			7,022,069			6,967,886			6,659,908
Debt securities		827,032			759,649			688,271			658,221			631,946
Non-interest-bearing demand deposits		1,925,626			1,749,879			1,678,672			1,576,959			1,572,703
Total deposits		7,832,655			7,530,433			7,724,158			7,404,794			7,083,666
Borrowings		64,707			64,703			64,693			64,684			64,675
Stockholders' equity	$	881,885		$	842,682		$	810,537		$	778,957		$	745,586

Shares outstanding		53,844,009			53,623,740			53,579,013			53,526,882			53,495,208
Book value per share	$	16.38		$	15.71		$	15.13		$	14.55		$	13.94
Tangible book value per share (1)	$	16.12		$	15.45		$	14.86		$	14.29		$	13.67

SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin		3.58	%		3.47	%		3.36	%		3.44	%		3.56	%
Return on average assets		1.54	%		1.80	%		1.67	%		1.69	%		1.75	%
Return on average common stockholders' equity		16.23	%		19.75	%		18.69	%		18.72	%		19.42	%
Efficiency ratio		33.11	%		30.83	%		31.76	%		34.30	%		34.36	%
Non-interest expense to average earning assets		1.29	%		1.17	%		1.16	%		1.28	%		1.31	%

CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		10.68	%		10.50	%		10.39	%		10.18	%		10.30	%
Tier 1 capital to risk-weighted assets		10.68	%		10.50	%		10.39	%		10.19	%		10.30	%
Total capital to risk-weighted assets		12.54	%		12.31	%		12.27	%		12.02	%		12.21	%
Tier 1 capital to average assets		9.56	%		9.13	%		8.88	%		9.00	%		9.03	%
Tangible common equity to total tangible assets (1)		9.28	%		9.27	%		8.86	%		8.76	%		8.81	%

(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)
			March 31, 2020			March 31, 2019			% Change
ASSETS
Cash and due from banks			$	80,461		$	71,058		13		%
Interest-bearing balances due from depository institutions				297,943			547,036		(46	)	%
Federal funds sold				306,127			181,435		69		%
	Cash and cash equivalents			684,531			799,529		(14	)	%
Available for sale debt securities, at fair value				826,782			631,696		31		%
Held to maturity debt securities (fair value of $250 at March 31, 2020 and 2019)				250			250		-
Mortgage loans held for sale				6,747			1,223		452		%
Loans				7,568,836			6,659,908		14		%
Less allowance for loan losses				(85,414	)		(70,207	)	22		%
	Loans, net			7,483,422			6,589,701		14		%
Premises and equipment, net				55,992			57,664		(3	)	%
Goodwill and other identifiable intangible assets				14,111			14,381		(2	)	%
Other assets				293,047			216,392		35		%
	Total assets		$	9,364,882		$	8,310,836		13		%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing		$	1,925,626		$	1,572,703		22		%
	Interest-bearing			5,907,029			5,510,963		7		%
		Total deposits		7,832,655			7,083,666		11		%
Federal funds purchased				543,623			373,378		46		%
Other borrowings				64,707			64,675		-		%
Other liabilities				42,012			43,531		(3	)	%
	Total liabilities			8,482,997			7,565,250		12		%
Stockholders' equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
		March 31, 2020 and March 31, 2019		-			-
	Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,844,009 shares
		issued and outstanding at March 31, 2020, and 53,495,208 shares issued and outstanding
		at March 31, 2019		54			54		-		%
	Additional paid-in capital			221,901			218,147		2		%
	Retained earnings			641,980			527,853		22		%
	Accumulated other comprehensive income (loss)			17,448			(969	)	NM
		Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		881,383			745,084		18		%
	Noncontrolling interest			502			502		-		%
		Total stockholders' equity		881,885			745,586		18		%
	Total liabilities and stockholders' equity		$	9,364,882		$	8,310,836		13		%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended March 31,
		2020		2019
Interest income:
	Interest and fees on loans	$	89,385	$	85,524
	Taxable securities		5,154		3,746
	Nontaxable securities		233		446
	Federal funds sold		277		1,219
	Other interest and dividends		1,718		2,764
	Total interest income		96,767		93,699
Interest expense:
	Deposits		16,745		22,145
	Borrowed funds		2,382		2,776
	Total interest expense		19,127		24,921
	Net interest income		77,640		68,778
Provision for loan losses			13,584		4,885
	Net interest income after provision for loan losses		64,056		63,893
Non-interest income:
	Service charges on deposit accounts		1,916		1,702
	Mortgage banking		1,071		575
	Credit card income		1,765		1,576
	Increase in cash surrender value life insurance		1,453		762
	Other operating income		469		329
	Total non-interest income		6,674		4,944
Non-interest expense:
	Salaries and employee benefits		15,658		14,265
	Equipment and occupancy expense		2,400		2,259
	Third party processing and other services		3,345		2,411
	Professional services		948		994
	FDIC and other regulatory assessments		1,332		1,019
	Other real estate owned expense		601		22
	Other operating expense		3,636		4,358
	Total non-interest expense		27,920		25,328
	Income before income tax		42,810		43,509
Provision for income tax			8,032		8,499
	Net income		34,778		35,010
	Dividends on preferred stock		-		-
	Net income available to common stockholders	$	34,778	$	35,010
Basic earnings per common share		$	0.65	$	0.65
Diluted earnings per common share		$	0.64	$	0.65

LOANS BY TYPE (UNAUDITED)
(In thousands)

		1st Quarter 2020		4th Quarter 2019		3rd Quarter 2019		2nd Quarter 2019		1st Quarter 2019
Commercial, financial and agricultural		$	2,771,307	$	2,696,210	$	2,653,934	$	2,633,529	$	2,522,136
Real estate - construction			548,578		521,392		550,871		603,779		556,219
Real estate - mortgage:
	Owner-occupied commercial		1,678,532		1,587,478		1,526,911		1,538,279		1,500,595
	1-4 family mortgage		675,870		644,188		632,346		630,963		629,285
	Other mortgage		1,834,137		1,747,394		1,592,072		1,496,512		1,394,611
Subtotal: Real estate - mortgage			4,188,539		3,979,060		3,751,329		3,665,754		3,524,491
Consumer			60,412		64,789		65,935		64,824		57,062
Total loans		$	7,568,836	$	7,261,451	$	7,022,069	$	6,967,886	$	6,659,908

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
			1st Quarter 2020				4th Quarter 2019				3rd Quarter 2019				2nd Quarter 2019				1st Quarter 2019
Allowance for loan losses:
Beginning balance			$	76,584			$	77,192			$	71,386			$	70,207			$	68,600
Loans charged off:
	Commercial financial and agricultural			2,640				4,742				3,626				3,610				3,037
	Real estate - construction			454				-				-				-				-
	Real estate - mortgage			1,678				1,689				4,974				169				50
	Consumer			58				139				172				63				218
		Total charge offs		4,830				6,570				8,772				3,842				3,305
Recoveries:
	Commercial financial and agricultural			62				51				126				117				12
	Real estate - construction			1				1				1				-				1
	Real estate - mortgage			1				2				-				4				7
	Consumer			12				24				60				16				7
		Total recoveries		76				78				187				137				27
	Net charge-offs			4,754				6,492				8,585				3,705				3,278
	Allocation from Loan Guarantee Program			-				-				7,406				-				-
	Provision for loan losses			13,584				5,884				6,985				4,884				4,885
	Ending balance		$	85,414			$	76,584			$	77,192			$	71,386			$	70,207

	Allowance for loan losses to total loans			1.13	%			1.05	%			1.10	%			1.02	%			1.05	%
	Allowance for loan losses to total average
		loans		1.16	%			1.08	%			1.11	%			1.05	%			1.06	%
	Net charge-offs to total average loans			0.26	%			0.36	%			0.49	%			0.22	%			0.20	%
	Provision for loan losses to total average
		loans		0.74	%			0.33	%			0.40	%			0.29	%			0.30	%
	Nonperforming assets:
		Nonaccrual loans	$	28,914			$	30,091			$	35,732			$	21,840			$	22,154
		Loans 90+ days past due and accruing		4,954				6,021				5,317				10,299				5,021
		Other real estate owned and
		repossessed assets		7,448				8,178				5,337				5,649				5,480
	Total		$	41,316			$	44,290			$	46,386			$	37,788			$	32,655

	Nonperforming loans to total loans			0.45	%			0.50	%			0.58	%			0.46	%			0.41	%
	Nonperforming assets to total assets			0.44	%			0.50	%			0.52	%			0.43	%			0.39	%
	Nonperforming assets to earning assets			0.45	%			0.50	%			0.53	%			0.44	%			0.40	%
	Reserve for loan losses to nonaccrual loans			295.41	%			254.51	%			216.03	%			326.86	%			316.90	%

	Restructured accruing loans		$	975			$	625			$	3,468			$	2,742			$	2,742

	Restructured accruing loans to total loans			0.01	%			0.01	%			0.05	%			0.04	%			0.04	%

	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
			1st Quarter 2020				4th Quarter 2019				3rd Quarter 2019				2nd Quarter 2019				1st Quarter 2019
	Beginning balance:		$	3,330			$	11,248			$	11,284			$	12,289			$	14,555
		Additions		350				250				-				-				-
		Net (paydowns) / advances		(232		)		(3,481		)		714				(12		)		(766		)
		Charge-offs		(1,081		)		(1,333		)		(750		)		(993		)		(1,500		)
		Transfer to OREO		-				(3,354		)		-				-				-
			$	2,367			$	3,330			$	11,248			$	11,284			$	12,289

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		1st Quarter 2020		4th Quarter 2019			3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019
Interest income:
	Interest and fees on loans	$	89,385	$	89,407		$	90,767		$	88,610		$	85,524
	Taxable securities		5,154		4,702			4,367			4,193			3,746
	Nontaxable securities		233		274			316			393			446
	Federal funds sold		277		1,053			1,768			1,998			1,219
	Other interest and dividends		1,718		2,751			3,912			2,593			2,764
	Total interest income		96,767		98,187			101,130			97,787			93,699
Interest expense:
	Deposits		16,745		19,786			24,787			24,240			22,145
	Borrowed funds		2,382		2,624			3,338			3,462			2,776
	Total interest expense		19,127		22,410			28,125			27,702			24,921
	Net interest income		77,640		75,777			73,005			70,085			68,778
Provision for loan losses			13,584		5,884			6,985			4,884			4,885
	Net interest income after provision for loan losses		64,056		69,893			66,020			65,201			63,893
Non-interest income:
	Service charges on deposit accounts		1,916		1,806			1,735			1,786			1,702
	Mortgage banking		1,071		1,366			1,333			1,087			575
	Credit card income		1,765		1,891			1,868			1,741			1,576
	Securities (losses) gains		-		(1	)		34			(6	)		-
	Increase in cash surrender value life insurance		1,453		1,419			787			778			762
	Other operating income		469		455			445			392			329
	Total non-interest income		6,674		6,936			6,202			5,778			4,944
Non-interest expense:
	Salaries and employee benefits		15,658		13,680			15,499			14,339			14,265
	Equipment and occupancy expense		2,400		2,339			2,387			2,287			2,259
	Third party processing and other services		3,345		3,176			2,923			2,724			2,411
	Professional services		948		1,163			887			1,191			994
	FDIC and other regulatory assessments (credits)		1,332		1,171			(296	)		1,081			1,019
	Other real estate owned expense		601		103			78			212			22
	Other operating expense		3,636		3,871			3,675			4,188			4,358
	Total non-interest expense		27,920		25,503			25,153			26,022			25,328
	Income before income tax		42,810		51,326			47,069			44,957			43,509
Provision for income tax			8,032		10,289			9,506			9,324			8,499
	Net income		34,778		41,037			37,563			35,633			35,010
	Dividends on preferred stock		-		32			-			31			-
	Net income available to common stockholders	$	34,778	$	41,005		$	37,563		$	35,602		$	35,010
Basic earnings per common share		$	0.65	$	0.77		$	0.70		$	0.67		$	0.65
Diluted earnings per common share		$	0.64	$	0.76		$	0.69		$	0.66		$	0.65

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

						1st Quarter 2020				4th Quarter 2019				3rd Quarter 2019				2nd Quarter 2019					1st 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			$	7,328,594	4.89	%	$	7,066,576	5.00	%	$	6,927,075	5.18	%	$	6,756,927		5.24	%	$	6,570,920		5.26	%
			Tax-exempt (2)				32,555	4.04			35,563	4.00			34,195	3.98			32,124		3.83			30,577		3.81
				Total loans, net of
					unearned income		7,361,149	4.88			7,102,139	4.99			6,961,270	5.17			6,789,051		5.23			6,601,497		5.25
		Mortgage loans held for sale					4,282	2.16			6,505	2.44			6,482	2.45			5,208		3.85			1,614		6.53
		Debt securities:
			Taxable				750,413	2.75			670,732	2.81			595,405	2.93			565,491		2.97			518,955		2.89
			Tax-exempt (2)				44,029	2.33			50,825	2.17			59,992	2.21			77,364		2.10			87,537		2.12
				Total securities (3)			794,442	2.72			721,557	2.76			655,397	2.87			642,855		2.86			606,492		2.78
		Federal funds sold					105,423	1.06			238,927	1.75			312,968	2.24			323,714		2.48			192,690		2.57
		Interest-bearing balances with banks					469,199	1.47			602,755	1.81			690,973	2.25			411,481		2.53			438,099		2.56
		Total interest-earning assets				$	8,734,495	4.46	%	$	8,671,883	4.49	%	$	8,627,090	4.65	%	$	8,172,309		4.80	%	$	7,840,392		4.85	%
Non-interest-earning assets:
		Cash and due from banks					66,140				70,381				71,418				76,988					74,430
		Net premises and equipment					58,066				57,986				58,243				58,607					58,852
		Allowance for loan losses, accrued
			interest and other assets				241,479				233,885				162,654				156,264					149,941
				Total assets		$	9,100,180			$	9,034,135			$	8,919,405			$	8,464,168				$	8,123,615

Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	956,803	0.57	%	$	961,258	0.69	%	$	900,754	0.84	%	$	909,847		0.88	%	$	942,686		0.86	%
		Savings					67,380	0.50			62,311	0.53			57,431	0.60			54,391		0.57			54,086		0.55
		Money market					4,061,286	1.10			4,189,283	1.34			4,265,435	1.76			3,932,459		1.88			3,758,162		1.78
		Time deposits					805,924	2.09			712,155	2.15			703,278	2.20			694,414		2.16			698,976		2.06
			Total interest-bearing deposits				5,891,393	1.14			5,925,007	1.32			5,926,898	1.66			5,591,111		1.74			5,453,910		1.65
		Federal funds purchased					492,638	1.31			420,066	1.74			441,526	2.30			418,486		2.57			312,989		2.59
		Other borrowings					64,707	4.85			64,698	4.79			64,689	4.79			64,680		4.84			64,671		4.90
		Total interest-bearing liabilities				$	6,448,738	1.19	%	$	6,409,771	1.39	%	$	6,433,113	1.73	%	$	6,074,277		1.83	%	$	5,831,570		1.73	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			demand deposits				1,749,671				1,759,671				1,654,928				1,591,722					1,524,502
		Other liabilities					39,801				41,112				34,070				35,161					36,362
		Stockholders' equity					853,800				818,320				792,284				763,742					735,611
		Accumulated other comprehensive
			income (loss)				8,170				5,261				5,010				(734	)				(4,430	)
				Total liabilities and
					stockholders' equity	$	9,100,180			$	9,034,135			$	8,919,405			$	8,464,168				$	8,123,615
Net interest spread								3.27	%			3.10	%			2.92	%				2.97	%				3.12	%
Net interest margin								3.58	%			3.47	%			3.36	%				3.44	%				3.56	%

(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.

Source: ServisFirst Bancshares, Inc.

Released April 20, 2020

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

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