ServisFirst Bancshares, Inc. Announces Results for Fourth Quarter of 2019

BIRMINGHAM, Ala., Jan. 21, 2020 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three months and year ended December 31, 2019.

Fourth Quarter 2019 Highlights:

Diluted EPS was $0.76 for the quarter, a 13% increase over the fourth quarter of 2018
Net interest margin improved to 3.47% in the fourth quarter from 3.36% in the third quarter
Diluted EPS was $2.76 for 2019, a 9% increase over 2018
Loan growth of 14% annualized for the fourth quarter
Loans increased 11% year-over-year
Non-interest-bearing demand deposits increased 12% and total deposits increased 9% year-over-year
Cash dividend increasing to 17 ½ cents per quarter, a 17% increase

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

	Period Ending December 31, 2019			Period Ending September 30, 2019			% Change From Period Ending September 30, 2019 to Period Ending December 31, 2019			Period Ending December 31, 2018			% Change From Period Ending December 31, 2018 to Period Ending December 31, 2019
QUARTERLY OPERATING RESULTS
Net Income	$	41,037		$	37,563		9		%	$	36,237		13	%
Net Income Available to Common Stockholders	$	41,005		$	37,563		9		%	$	36,205		13	%
Diluted Earnings Per Share	$	0.76		$	0.69		10		%	$	0.67		13	%
Return on Average Assets		1.80	%		1.67	%					1.85	%
Return on Average Common Stockholders' Equity		19.75	%		18.69	%					21.13	%
Average Diluted Shares Outstanding		54,149,554			54,096,368						54,109,450

YEAR-TO-DATE OPERATING RESULTS
Net Income	$	149,243								$	136,940		9	%
Net Income Available to Common Stockholders	$	149,180								$	136,877		9	%
Diluted Earnings Per Share	$	2.76								$	2.53		9	%
Return on Average Assets		1.73	%								1.88	%
Return on Average Common Stockholders' Equity		19.15	%								20.95	%
Average Diluted Shares Outstanding		54,103,074									54,169,879

Net income - adjusted for FDIC assessment credit*	$	147,995								$	136,940		8	%
Net Income Available to Common Stockholders - adjusted for FDIC assessment credit*	$	147,932								$	136,877		8	%
Diluted Earnings Per Share - adjusted for FDIC assessment credit*	$	2.74								$	2.53		8	%
Return on Average Assets - adjusted for FDIC assessment credit*		1.71	%								1.88	%
Return on Average Common Stockholders' Equity - adjusted for FDIC assessment credit*		18.99	%								20.95	%

BALANCE SHEET
Total Assets	$	8,947,653		$	9,005,112		(1	)	%	$	8,007,382		12	%
Loans		7,261,451			7,022,069		3		%		6,533,499		11	%
Non-interest-bearing Demand Deposits		1,749,879			1,678,672		4		%		1,557,341		12	%
Total Deposits		7,530,433			7,724,158		(3	)	%		6,915,708		9	%
Stockholders' Equity		842,682			810,537		4		%		715,203		18	%

* The adjustment for the FDIC assessment credit included in the comparative periods presented in this press release are more fully described in "Detailed Financials" and in "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $41.0 million for the quarter ended December 31, 2019, compared to net income and net income available to common stockholders of $36.2 million for the same quarter in 2018. Basic and diluted earnings per common share were $0.77 and $0.76, respectively, for the fourth quarter of 2019, compared to $0.68 and $0.67, respectively, for the fourth quarter of 2018.

Annualized return on average assets was 1.80% and annualized return on average common stockholders’ equity was 19.75% for the fourth quarter of 2019, compared to 1.85% and 21.13%, respectively, for the fourth quarter of 2018.

Net interest income was $75.8 million for the fourth quarter of 2019, compared to $73.0 million for the third quarter of 2019 and $68.9 million for the fourth quarter of 2018. The net interest margin in the fourth quarter of 2019 was 3.47% compared to 3.36% in the third quarter of 2019 and 3.63% in the fourth quarter of 2018. 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 fourth quarter of 2019 were $7.10 billion, an increase of $140.9 million, or 8% annualized, over average loans of $6.96 billion for the third quarter of 2019, and an increase of $669.3 million, or 10%, over average loans of $6.43 billion for the fourth quarter of 2018.

Average total deposits for the fourth quarter of 2019 were $7.68 billion, an increase of $102.9 million, or 5% annualized, over average total deposits of $7.58 billion for the third quarter of 2019, and an increase of $947.6 million, or 14%, over average total deposits of $6.74 billion for the fourth quarter of 2018.

Non-performing assets to total assets were 0.50% for the fourth quarter of 2019, a decrease of two basis points compared to 0.52% for the third quarter of 2019 and an increase of nine basis points compared to 0.41% for the fourth quarter of 2018. Annualized net charge-offs to average loans were 0.36%, a 13 basis point decrease compared to 0.49% for the third quarter of 2019 and an increase of six basis points compared to 0.30% for the fourth quarter of 2018. We recorded a $5.9 million provision for loan losses in the fourth quarter of 2019 compared to $7.0 million in the third quarter of 2019 and $6.5 million in the fourth quarter of 2018. The allowance for loan loss as a percentage of total loans was 1.05% at December 31, 2019, a decrease of five basis points compared to 1.10% at September 30, 2019 and unchanged compared to 1.05% as of December 31, 2018. 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 fourth quarter of 2019 increased $2.1 million, or 42%, to $7.1 million from $5.0 million in the fourth quarter of 2018. Deposit service charges increased $92,000 in the fourth quarter of 2019, or 5%, compared to the fourth quarter of 2018. Mortgage banking revenue almost doubled to $1.4 million from the fourth quarter of 2018 to the fourth quarter of 2019. Mortgage loan sales increased approximately 111% during the fourth quarter of 2019 when compared to the same quarter in 2018. Credit card revenue increased $370,000, or 25%, to $1.9 million during the fourth quarter of 2019, compared to $1.5 million during the fourth quarter of 2018. The number of credit card accounts increased approximately 36% and the aggregate amount of sales on all credit card accounts increased 20% during the fourth quarter of 2019. Cash surrender value of life insurance increased $638,000, or 82%, to $1.4 million during the fourth quarter of 2019, compared to $780,000 during the fourth quarter of 2018. We purchased $75.0 million of additional life insurance contracts during the third quarter of 2019. Other income for the fourth quarter of 2019 increased $256,000, or 81%, to $572,000 from $316,000 in the fourth quarter of 2018. Gain or loss on the sale of other real estate owned, included in other income, was a gain of $116,000 during the fourth quarter of 2019, compared to a loss $18,000 during the fourth quarter of 2018.

Non-interest expense for the fourth quarter of 2019 increased $2.9 million, or 13%, to $25.6 million from $22.7 million in the fourth quarter of 2018, and increased $458,000, or 2%, on a linked quarter basis. During the third quarter of 2019 we recognized a credit in the amount of $1.7 million to our FDIC and other regulatory assessments expense as a result of the Federal Deposit Insurance Corporation’s (“FDIC”) Small Bank Assessment Credit. This credit is discussed further below in “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures.” Salary and benefit expense for the fourth quarter of 2019 increased $1.3 million, or 10%, to $13.7 million from $12.4 million in the fourth quarter of 2018, and decreased $1.8 million, or 12%, 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 468 at December 31, 2018 to 500 at December 31, 2019, or 7%, and decreased by six from the end of the third quarter of 2019. Equipment and occupancy expense increased $176,000, or 8%, to $2.3 million in the fourth quarter of 2019, from $2.2 million in the fourth quarter of 2018, and decreased $48,000 on a linked-quarter basis. Professional services expense increased $99,000, or 9%, to $1.2 million in the fourth quarter of 2019, from $1.1 million in the fourth quarter of 2018, and increased $276,000, or 31%, from $887,000 on a linked-quarter basis. FDIC and other regulatory assessments increased $269,000 to $1.2 million in the fourth quarter of 2019, from $902,000 in the fourth quarter of 2018. As mentioned above, we recognized an assessment credit during the third quarter of 2019. Expenses associated with other real estate owned increased $78,000 to $103,000 in the fourth quarter of 2019, from $25,000 in the fourth quarter of 2018. Property taxes on a recently foreclosed property were attributable to the increase during the fourth quarter of 2019. Other operating expenses for the fourth quarter of 2019 increased $1.0 million, or 16%, to $7.2 million from $6.2 million in the fourth quarter of 2018, and increased $557,000, or 8%, on a linked-quarter basis. Increases in data processing expense, Federal Reserve Bank service charges, telecommunication expense and insurance expense contributed to this increase in other operating expenses for the year-over-year comparison. The efficiency ratio was 30.93% during the fourth quarter of 2019 compared to 30.73% during the fourth quarter of 2018 and compared to 31.76% during the third quarter of 2019.

Income tax expense increased $1.9 million, or 23%, to $10.3 million in the fourth quarter of 2019, compared to $8.4 million in the fourth quarter of 2018. Our effective tax rate was 20.05% for the fourth quarter of 2019 compared to 18.86% for the fourth quarter of 2018. 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 fourth quarters of 2019 and 2018 of $297,000 and $1.5 million, 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. 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.

		Year Ended December 31, 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 December 31, 2019				At September 30, 2019			At June 30, 2019			At March 31, 2019			At December 31, 2018
Book value per share - GAAP		$	15.71			$	15.13		$	14.55		$	13.94		$	13.40
Total common stockholders' equity - GAAP			842,682				810,537			778,957			745,586			715,203
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,179				14,246			14,314			14,381			14,449
Tangible common stockholders' equity - non-GAAP		$	828,503			$	796,291		$	764,643		$	731,205		$	700,754
Tangible book value per share - non-GAAP		$	15.45			$	14.86		$	14.29		$	13.67		$	13.13

Stockholders' equity to total assets - GAAP			9.42		%		9.00	%		8.91	%		8.97	%		8.93	%
Total assets - GAAP		$	8,947,653			$	9,005,112		$	8,740,237		$	8,310,836		$	8,007,382
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,179				14,246			14,314			14,381			14,449
Total tangible assets - non-GAAP		$	8,933,474			$	8,990,866		$	8,725,923		$	8,296,455		$	7,992,933
Tangible common equity to total tangible assets - non-GAAP			9.27		%		8.86	%		8.76	%		8.81	%		8.77	%

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: 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)
	4th Quarter 2019			3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019			4th Quarter 2018
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	98,187		$	101,130		$	97,787		$	93,699		$	90,164
Interest expense		22,410			28,125			27,702			24,921			21,306
Net interest income		75,777			73,005			70,085			68,778			68,858
Provision for loan losses		5,884			6,985			4,884			4,885			6,518
Net interest income after provision for loan losses		69,893			66,020			65,201			63,893			62,340
Non-interest income		7,052			6,210			5,778			4,942			5,019
Non-interest expense		25,619			25,161			26,022			25,326			22,701
Income before income tax		51,326			47,069			44,957			43,509			44,658
Provision for income tax		10,289			9,506			9,324			8,499			8,421
Net income		41,037			37,563			35,633			35,010			36,237
Preferred stock dividends		32			-			31			-			32
Net income available to common stockholders	$	41,005		$	37,563		$	35,602		$	35,010		$	36,205
Earnings per share - basic	$	0.77		$	0.70		$	0.66		$	0.65		$	0.68
Earnings per share - diluted	$	0.76		$	0.69		$	0.66		$	0.65		$	0.67
Average diluted shares outstanding		54,149,554			54,096,368			54,089,107			54,076,538			54,109,450

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	8,947,653		$	9,005,112		$	8,740,237		$	8,310,836		$	8,007,382
Loans		7,261,451			7,022,069			6,967,886			6,659,908			6,533,499
Debt securities		759,649			688,271			658,221			631,946			590,184
Non-interest-bearing demand deposits		1,749,879			1,678,672			1,576,959			1,572,703			1,557,341
Total deposits		7,530,433			7,724,158			7,404,794			7,083,666			6,915,708
Borrowings		64,703			64,693			64,684			64,675			64,666
Stockholders' equity	$	842,682		$	810,537		$	778,957		$	745,586		$	715,203

Shares outstanding		53,623,740			53,579,013			53,526,882			53,495,208			53,375,195
Book value per share	$	15.71		$	15.13		$	14.55		$	13.94		$	13.40
Tangible book value per share (1)	$	15.45		$	14.86		$	14.29		$	13.67		$	13.13

SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin		3.47	%		3.36	%		3.44	%		3.56	%		3.63	%
Return on average assets		1.80	%		1.67	%		1.69	%		1.75	%		1.85	%
Return on average common stockholders' equity		19.75	%		18.69	%		18.72	%		19.42	%		21.13	%
Efficiency ratio		30.93	%		31.76	%		34.30	%		34.35	%		30.73	%
Non-interest expense to average earning assets		1.17	%		1.16	%		1.28	%		1.31	%		1.20	%

CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		10.50	%		10.39	%		10.18	%		10.30	%		10.12	%
Tier 1 capital to risk-weighted assets		10.50	%		10.39	%		10.19	%		10.30	%		10.13	%
Total capital to risk-weighted assets		12.31	%		12.27	%		12.02	%		12.21	%		12.05	%
Tier 1 capital to average assets		9.13	%		8.88	%		9.00	%		9.03	%		9.07	%
Tangible common equity to total tangible assets (1)		9.27	%		8.86	%		8.76	%		8.81	%		8.77	%

(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)
			December 31, 2019			December 31, 2018			% Change
ASSETS
Cash and due from banks			$	78,618		$	97,516		(19	)	%
Interest-bearing balances due from depository institutions				451,509			360,534		25		%
Federal funds sold				100,473			223,845		(55	)	%
	Cash and cash equivalents			630,600			681,895		(8	)	%
Available for sale debt securities, at fair value				759,399			590,184		29		%
Held to maturity debt securities (fair value of $250 at December 31, 2019)				250			-		NM
Mortgage loans held for sale				6,312			120		5,160		%
Loans				7,261,451			6,533,499		11		%
Less allowance for loan losses				(76,584	)		(68,600	)	12		%
	Loans, net			7,184,867			6,464,899		11		%
Premises and equipment, net				56,496			57,822		(2	)	%
Goodwill and other identifiable intangible assets				14,179			14,449		(2	)	%
Other assets				295,552			198,013		49		%
	Total assets		$	8,947,653		$	8,007,382		12		%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing		$	1,749,879		$	1,557,341		12		%
	Interest-bearing			5,780,554			5,358,367		8		%
		Total deposits		7,530,433			6,915,708		9		%
Federal funds purchased				470,749			288,725		63		%
Other borrowings				64,703			64,666		-		%
Other liabilities				39,086			23,080		69		%
	Total liabilities			8,104,971			7,292,179		11		%
Stockholders' equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
		December 31, 2019 and December 31, 2018		-			-
	Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,623,740 shares
		issued and outstanding at December 31, 2019, and 53,375,195 shares issued and outstanding
		at December 31, 2018		54			53		2		%
	Additional paid-in capital			219,766			218,521		1		%
	Retained earnings			616,611			500,868		23		%
	Accumulated other comprehensive income (loss)			5,749			(4,741	)	NM
		Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		842,180			714,701		18		%
	Noncontrolling interest			502			502		-		%
		Total stockholders' equity		842,682			715,203		18		%
	Total liabilities and stockholders' equity		$	8,947,653		$	8,007,382		12		%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended December 31,					Year Ended December 31,
		2019			2018		2019		2018
Interest income:
	Interest and fees on loans	$	89,407		$	83,085	$	354,308	$	305,370
	Taxable securities		4,702			3,506		17,008		12,654
	Nontaxable securities		274			544		1,429		2,406
	Federal funds sold		1,053			966		6,038		3,103
	Other interest and dividends		2,751			2,063		12,020		3,094
	Total interest income		98,187			90,164		390,803		326,627
Interest expense:
	Deposits		19,786			18,957		90,958		55,502
	Borrowed funds		2,624			2,349		12,200		8,446
	Total interest expense		22,410			21,306		103,158		63,948
	Net interest income		75,777			68,858		287,645		262,679
Provision for loan losses			5,884			6,518		22,638		21,402
	Net interest income after provision for loan losses		69,893			62,340		265,007		241,277
Non-interest income:
	Service charges on deposit accounts		1,806			1,714		7,029		6,547
	Mortgage banking		1,366			688		4,361		2,784
	Credit card income		1,891			1,521		7,076		5,550
	Securities (losses) gains		(1	)		-		27		190
	Increase in cash surrender value life insurance		1,418			780		3,745		3,130
	Other operating income		572			316		1,744		1,239
	Total non-interest income		7,052			5,019		23,982		19,440
Non-interest expense:
	Salaries and employee benefits		13,680			12,385		57,783		51,849
	Equipment and occupancy expense		2,339			2,163		9,272		8,423
	Professional services		1,163			1,064		4,235		3,646
	FDIC and other regulatory assessments		1,171			902		2,975		3,869
	Other real estate owned expense		103			25		415		790
	Other operating expense		7,163			6,162		27,448		23,298
	Total non-interest expense		25,619			22,701		102,128		91,875
	Income before income tax		51,326			44,658		186,861		168,842
Provision for income tax			10,289			8,421		37,618		31,902
	Net income		41,037			36,237		149,243		136,940
	Dividends on preferred stock		32			32		63		63
	Net income available to common stockholders	$	41,005		$	36,205	$	149,180	$	136,877
Basic earnings per common share		$	0.77		$	0.68	$	2.79	$	2.57
Diluted earnings per common share		$	0.76		$	0.67	$	2.76	$	2.53

LOANS BY TYPE (UNAUDITED)
(In thousands)

		4th Quarter 2019		3rd Quarter 2019		2nd Quarter 2019		1st Quarter 2019		4th Quarter 2018
Commercial, financial and agricultural		$	2,696,210	$	2,653,934	$	2,633,529	$	2,522,136	$	2,513,225
Real estate - construction			521,392		550,871		603,779		556,219		533,192
Real estate - mortgage:
	Owner-occupied commercial		1,587,478		1,526,911		1,538,279		1,500,595		1,463,887
	1-4 family mortgage		644,188		632,346		630,963		629,285		621,634
	Other mortgage		1,747,394		1,592,072		1,496,512		1,394,611		1,337,068
Subtotal: Real estate - mortgage			3,979,060		3,751,329		3,665,754		3,524,491		3,422,589
Consumer			64,789		65,935		64,824		57,062		64,493
Total loans		$	7,261,451	$	7,022,069	$	6,967,886	$	6,659,908	$	6,533,499

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
			4th Quarter 2019				3rd Quarter 2019				2nd Quarter 2019				1st Quarter 2019				4th Quarter 2018
Allowance for loan losses:
Beginning balance			$	77,192			$	71,386			$	70,207			$	68,600			$	66,879
Loans charged off:
	Commercial financial and agricultural			4,742				3,626				3,610				3,037				4,685
	Real estate - mortgage			1,689				4,974				169				50				173
	Consumer			139				172				63				218				72
		Total charge offs		6,570				8,772				3,842				3,305				4,930
Recoveries:
	Commercial financial and agricultural			51				126				117				12				120
	Real estate - construction			1				1				-				1				4
	Real estate - mortgage			2				-				4				7				1
	Consumer			24				60				16				7				8
		Total recoveries		78				187				137				27				133
	Net charge-offs			6,492				8,585				3,705				3,278				4,797
	Allocation from Loan Guarantee Program			-				7,406				-				-				-
	Provision for loan losses			5,884				6,985				4,884				4,885				6,518
	Ending balance		$	76,584			$	77,192			$	71,386			$	70,207			$	68,600

	Allowance for loan losses to total loans			1.05		%		1.10		%		1.02		%		1.05		%		1.05		%
	Allowance for loan losses to total average loans			1.08		%		1.11		%		1.05		%		1.06		%		1.07		%
	Net charge-offs to total average loans			0.36		%		0.49		%		0.22		%		0.20		%		0.30		%
	Provision for loan losses to total average loans			0.33		%		0.40		%		0.29		%		0.30		%		0.40		%
	Nonperforming assets:
		Nonaccrual loans	$	30,091			$	35,732			$	21,840			$	22,154			$	21,926
		Loans 90+ days past due and accruing		6,021				5,317				10,299				5,021				5,844
		Other real estate owned and repossessed assets		8,178				5,337				5,649				5,480				5,169
	Total		$	44,290			$	46,386			$	37,788			$	32,655			$	32,939

	Nonperforming loans to total loans			0.50		%		0.58		%		0.46		%		0.41		%		0.43		%
	Nonperforming assets to total assets			0.50		%		0.52		%		0.43		%		0.39		%		0.41		%
	Nonperforming assets to earning assets			0.50		%		0.53		%		0.44		%		0.40		%		0.43		%
	Reserve for loan losses to nonaccrual loans			254.51		%		216.03		%		326.86		%		316.90		%		312.87		%

	Restructured accruing loans		$	375			$	3,468			$	2,742			$	2,742			$	3,043

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

	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
			4th Quarter 2019				3rd Quarter 2019				2nd Quarter 2019				1st Quarter 2019				4th Quarter 2018
	Beginning balance:		$	11,248			$	11,284			$	12,289			$	14,555			$	16,584
		Net (paydowns) / advances		(3,481	)			714				(12	)			(766	)			(11	)
		Charge-offs		(1,333	)			(750	)			(993	)			(1,500	)			(2,018	)
		Transfer to OREO		(3,354	)			-				-				-				-
			$	3,080			$	11,248			$	11,284			$	12,289			$	14,555

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		4th Quarter 2019			3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019		4th Quarter 2018
Interest income:
	Interest and fees on loans	$	89,407		$	90,767		$	88,610		$	85,524	$	83,085
	Taxable securities		4,702			4,367			4,193			3,746		3,506
	Nontaxable securities		274			316			393			446		544
	Federal funds sold		1,053			1,768			1,998			1,219		966
	Other interest and dividends		2,751			3,912			2,593			2,764		2,063
	Total interest income		98,187			101,130			97,787			93,699		90,164
Interest expense:
	Deposits		19,786			24,787			24,240			22,145		18,957
	Borrowed funds		2,624			3,338			3,462			2,776		2,349
	Total interest expense		22,410			28,125			27,702			24,921		21,306
	Net interest income		75,777			73,005			70,085			68,778		68,858
Provision for loan losses			5,884			6,985			4,884			4,885		6,518
	Net interest income after provision for loan losses		69,893			66,020			65,201			63,893		62,340
Non-interest income:
	Service charges on deposit accounts		1,806			1,735			1,786			1,702		1,714
	Mortgage banking		1,366			1,333			1,087			575		688
	Credit card income		1,891			1,868			1,741			1,576		1,521
	Securities (losses) gains		(1	)		34			(6	)		-		-
	Increase in cash surrender value life insurance		1,418			787			778			762		780
	Other operating income		572			453			392			327		316
	Total non-interest income		7,052			6,210			5,778			4,942		5,019
Non-interest expense:
	Salaries and employee benefits		13,680			15,499			14,339			14,265		12,385
	Equipment and occupancy expense		2,339			2,387			2,287			2,259		2,163
	Professional services		1,163			887			1,191			994		1,064
	FDIC and other regulatory assessments (credits)		1,171			(296	)		1,081			1,019		902
	Other real estate owned expense		103			78			212			22		25
	Other operating expense		7,163			6,606			6,912			6,767		6,162
	Total non-interest expense		25,619			25,161			26,022			25,326		22,701
	Income before income tax		51,326			47,069			44,957			43,509		44,658
Provision for income tax			10,289			9,506			9,324			8,499		8,421
	Net income		41,037			37,563			35,633			35,010		36,237
	Dividends on preferred stock		32			-			31			-		32
	Net income available to common stockholders	$	41,005		$	37,563		$	35,602		$	35,010	$	36,205
Basic earnings per common share		$	0.77		$	0.70		$	0.67		$	0.65	$	0.68
Diluted earnings per common share		$	0.76		$	0.69		$	0.66		$	0.65	$	0.67

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

						4th Quarter 2019				3rd Quarter 2019				2nd Quarter 2019					1st Quarter 2019					4th Quarter 2018
						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			$	7,066,576	5.00	%	$	6,927,075	5.18	%	$	6,756,927		5.24	%	$	6,570,920		5.26	%	$	6,403,139		5.13	%
			Tax-exempt (2)				35,563	4.06			34,195	3.98			32,124		3.83			30,577		3.81			29,656		3.26
				Total loans, net of
					unearned income		7,102,139	5.00			6,961,270	5.17			6,789,051		5.23			6,601,497		5.25			6,432,795		5.12
		Mortgage loans held for sale					6,505	2.44			6,482	2.45			5,208		3.85			1,614		6.53			3,364		3.30
		Debt securities:
			Taxable				670,732	2.81			595,405	2.93			565,491		2.97			518,955		2.89			498,138		2.82
			Tax-exempt (2)				50,825	2.20			59,992	2.21			77,364		2.10			87,537		2.12			98,027		2.34
				Total securities (3)			721,557	2.76			655,397	2.87			642,855		2.86			606,492		2.78			596,165		2.74
		Federal funds sold					238,927	1.75			312,968	2.24			323,714		2.48			192,690		2.57			156,884		2.44
		Interest-bearing balances with banks					602,755	1.81			690,973	2.25			411,481		2.53			438,099		2.56			334,065		2.45
		Total interest-earning assets				$	8,671,883	4.49	%	$	8,627,090	4.65	%	$	8,172,309		4.80	%	$	7,840,392		4.85	%	$	7,524,152		4.76	%
Non-interest-earning assets:
		Cash and due from banks					70,381				71,418				76,988					74,430					74,272
		Net premises and equipment					57,986				58,243				58,607					58,852					58,521
		Allowance for loan losses, accrued interest and other assets					233,885				162,654				156,264					149,941					128,933
				Total assets		$	9,034,135			$	8,919,405			$	8,464,168				$	8,123,615				$	7,784,999

Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	961,258	0.69	%	$	900,754	0.84	%	$	909,847		0.88	%	$	942,686		0.86	%	$	908,416		0.74	%
		Savings					62,311	0.53			57,431	0.60			54,391		0.57			54,086		0.55			52,443		0.54
		Money market					4,189,283	1.34			4,265,435	1.76			3,932,459		1.88			3,758,162		1.78			3,537,522		1.56
		Time deposits					712,155	2.15			703,278	2.20			694,414		2.16			698,976		2.06			687,361		1.92
			Total interest-bearing deposits				5,925,007	1.32			5,926,898	1.66			5,591,111		1.74			5,453,910		1.65			5,185,742		1.45
		Federal funds purchased					420,066	1.74			441,526	2.30			418,486		2.57			312,989		2.59			263,125		2.36
		Other borrowings					64,698	4.79			64,689	4.79			64,680		4.84			64,671		4.90			64,665		4.79
		Total interest-bearing liabilities				$	6,409,771	1.39	%	$	6,433,113	1.73	%	$	6,074,277		1.83	%	$	5,831,570		1.73	%	$	5,513,532		1.53	%
Non-interest-bearing liabilities:
		Non-interest-bearing demand deposits					1,759,671				1,654,928				1,591,722					1,524,502					1,551,366
		Other liabilities					41,112				34,070				35,161					36,362					40,185
		Stockholders' equity					818,320				792,284				763,742					735,611					689,525
		Accumulated other comprehensive income (loss)					5,261				5,010				(734	)				(4,430	)				(9,609	)
			Total liabilities and stockholders' equity			$	9,034,135			$	8,919,405			$	8,464,168				$	8,123,615				$	7,784,999
Net interest spread								3.10	%			2.92	%				2.97	%				3.12	%				3.23	%
Net interest margin								3.47	%			3.36	%				3.44	%				3.56	%				3.63	%

(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 January 21, 2020

ServisFirst Bancshares, Inc. Announces Results for Fourth Quarter of 2019

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