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

BIRMINGHAM, Ala., Oct. 21, 2019 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three and nine months ended September 30, 2019.

Third Quarter 2019 Highlights:

Deposits increased 17%, annualized, on a linked quarter basis and 19% year-over-year, respectively
Loans increased 10% year-over-year
Diluted EPS was $0.69 for the third quarter of 2019 compared to $0.64 for the third quarter of 2018
Efficiency ratio of 33.44% through the first nine months of 2019

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

		Period Ending September 30, 2019			Period Ending June 30, 2019			% Change From Period Ending June 30, 2019 to Period Ending September 30, 2019		Period Ending September 30, 2018			% Change From Period Ending September 30, 2018 to Period Ending September 30, 2019
QUARTERLY OPERATING RESULTS
Net Income		$	37,563		$	35,633		5	%	$	34,560		9	%
Net Income Available to Common Stockholders		$	37,563		$	35,602		6	%	$	34,560		9	%
Diluted Earnings Per Share		$	0.69		$	0.66		5	%	$	0.64		8	%
Return on Average Assets			1.67	%		1.69	%				1.87	%
Return on Average Common Stockholders' Equity			18.69	%		18.72	%				20.42	%
Average Diluted Shares Outstanding			54,096,368			54,089,107					54,191,222

Net income - adjusted for FDIC assessment credit*		$	36,315		$	35,633		2	%	$	34,560		5	%
Net Income Available to Common Stockholders - adjusted
	for FDIC assessment credit*	$	36,315		$	35,602		2	%	$	34,560		5	%
Diluted Earnings Per Share - adjusted for FDIC assessment
	credit*	$	0.67		$	0.66		2	%	$	0.64		5	%
Return on Average Assets - adjusted for FDIC assessment
	credit*		1.62	%		1.69	%				1.87	%
Return on Average Common Stockholders' Equity -
	adjusted for FDIC assessment credit*		18.07	%		18.72	%				20.42	%

YEAR-TO-DATE OPERATING RESULTS
Net Income		$	108,206							$	100,703		7	%
Net Income Available to Common Stockholders		$	108,175							$	100,672		7	%
Diluted Earnings Per Share		$	2.00							$	1.86		8	%
Return on Average Assets			1.70	%							1.90	%
Return on Average Common Stockholders' Equity			18.93	%							20.88	%
Average Diluted Shares Outstanding			54,087,410								54,190,244

Net income - adjusted for FDIC assessment credit*		$	106,958							$	100,703		6	%
Net Income Available to Common Stockholders - adjusted
	for FDIC assessment credit*	$	106,927							$	100,672		6	%
Diluted Earnings Per Share - adjusted for FDIC assessment
	credit*	$	1.98							$	1.86		6	%
Return on Average Assets - adjusted for FDIC assessment
	credit*		1.68	%							1.90	%
Return on Average Common Stockholders' Equity -
	adjusted for FDIC assessment credit*		18.71	%							20.88	%

BALANCE SHEET
Total Assets		$	9,005,112		$	8,740,237		3	%	$	7,517,833		20	%
Loans			7,022,069			6,967,886		1	%		6,363,531		10	%
Non-interest-bearing Demand Deposits			1,678,672			1,576,959		6	%		1,504,447		12	%
Total Deposits			7,724,158			7,404,794		4	%		6,505,351		19	%
Stockholders' Equity			810,537			778,957		4	%		681,510		19	%

* 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 $37.6 million for the quarter ended September 30, 2019, compared to net income and net income available to common stockholders of $34.6 million for the same quarter in 2018. Basic and diluted earnings per common share were $0.70 and $0.69, respectively, for the third quarter of 2019, compared to $0.65 and $0.64, respectively, for the third quarter of 2018.

Annualized return on average assets was 1.67% and annualized return on average common stockholders’ equity was 18.69% for the third quarter of 2019, compared to 1.87% and 20.42%, respectively, for the third quarter of 2018.

Net interest income was $73.0 million for the third quarter of 2019, compared to $70.1 million for the second quarter of 2019 and $66.9 million for the third quarter of 2018. The net interest margin in the third quarter of 2019 was 3.36% compared to 3.44% in the second quarter of 2019 and 3.77% in the third 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 and equity drove favorable volume change. Increases in average balances in interest-bearing deposits in excess of increases in average balances in loans drove an unfavorable mix change as this excess was invested in lower yielding interest-bearing balances with other banks.

Average loans for the third quarter of 2019 were $6.96 billion, an increase of $172.2 million, or 10% annualized, over average loans of $6.79 billion for the second quarter of 2019, and an increase of $727.9 million, or 12%, over average loans of $6.23 billion for the third quarter of 2018.

Average total deposits for the third quarter of 2019 were $7.58 billion, an increase of $399.0 million, or 22% annualized, over average total deposits of $7.18 billion for the second quarter of 2019, and an increase of $1.25 billion, or 20%, over average total deposits of $6.33 billion for the third quarter of 2018.

Non-performing assets to total assets were 0.52% for the third quarter of 2019, an increase of 9 basis points compared to 0.43% for the second quarter of 2019 and an increase of 25 basis points compared to 0.27% for the third quarter of 2018. Net charge-offs to average loans were 0.49%, a 27 basis point increase compared to 0.22% for the second quarter of 2019 and an increase of 24 basis points compared to 0.25% for the third quarter of 2018. We recorded a $7.0 million provision for loan losses in the third quarter of 2019 compared to $4.9 million in the second quarter of 2019 and $6.6 million in the third quarter of 2018. We recognized a $7.4 million close-out payment resulting from the termination of a state-operated loan guarantee program during the third quarter of 2019. The allowance for loan loss as a percentage of total loans was 1.10% at September 30, 2019, an increase of eight basis points compared to 1.02% at June 30, 2019 and an increase of five basis points compared to 1.05% as of September 30, 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 third quarter of 2019 increased $1.1 million, or 23%, to $6.2 million from $5.1 million in the third quarter of 2018. Deposit service charges increased $140,000 in the third quarter of 2019, or 9%, compared to the third quarter of 2018. The number of transaction deposit accounts increased approximately 11% from September 30, 2018 to September 30, 2019. Mortgage banking revenue increased $544,000, or 69%, from the third quarter of 2018 to the third quarter of 2019. Mortgage loan originations increased approximately 64% during the third quarter of 2019 when compared to the same quarter in 2018. Credit card revenue increased $454,000, or 32%, to $1.9 million during the third quarter of 2019, compared to $1.4 million during the third quarter of 2018. The number of accounts increased approximately 35% and the aggregate amount of sales on all accounts increased 41% during the third quarter of 2019. Other income for the third quarter of 2019 increased $159,000, or 54%, to $453,000 from $294,000 in the third quarter of 2018.

Non-interest expense for the third quarter of 2019 increased $2.5 million, or 11%, to $25.2 million from $22.6 million in the third quarter of 2018, and decreased $861,000, or 3%, 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 third quarter of 2019 increased $2.4 million, or 19%, to $15.5 million from $13.1 million in the third quarter of 2018, and increased $1.2 million, or 8%, on a linked quarter basis. The number of FTE employees increased from 456 at September 30, 2018 to 506 at September 30, 2019, or 11%. Equipment and occupancy expense increased $194,000, or 9%, to $2.4 million in the third quarter of 2019, from $2.2 million in the third quarter of 2018, and increased $100,000 on a linked-quarter basis. Professional services expense increased $34,000, or 4%, to $887,000 in the third quarter of 2019, from $853,000 in the third quarter of 2018, and decreased $304,000, or 26%, from $1.2 million on a linked-quarter basis. FDIC and other regulatory assessments decreased $971,000 to a credit amount of $296,000 in the third quarter of 2019, from $675,000 in the third quarter of 2018. As mentioned above, we recognized an assessment credit during the third quarter of 2019. Expenses associated with other real estate owned decreased $211,000, or 73%, to $78,000 in the third quarter of 2019, from $289,000 in the third quarter of 2018. We had one write-down of a commercial warehouse building in 2018. Other operating expenses for the third quarter of 2019 increased $1.1 million, or 19%, to $6.6 million from $5.5 million in the third quarter of 2018, and decreased $306,000, or 4%, on a linked-quarter basis. Increases in data processing and Federal Reserve Bank service charges contributed to this increase in other operating expenses for the year-over-year comparison. Decreases in business development expenses contributed to the decrease in the linked-quarter comparison. The efficiency ratio was 31.76% during the third quarter of 2019 compared to 31.45% during the third quarter of 2018 and compared to 34.30% during the second quarter of 2019.

Income tax expense increased $1.4 million, or 17%, to $9.5 million in the third quarter of 2019, compared to $8.1 million in the third quarter of 2018. Our effective tax rate was 20.20% for the third quarter of 2019 compared to 19.03% for the third 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 third quarters of 2019 and 2018 of $231,000 and $539,000, 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. 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			Nine Months Ended September 30, 2019
Net income - GAAP		$	37,563		$	108,206
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669			1,669
	Tax on adjustment		421			421
Adjusted net income - non-GAAP		$	36,315		$	106,958

Net income available to common stockholders - GAAP		$	37,563		$	108,175
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669			1,669
	Tax on adjustment		421			421
Adjusted net income available to common stockholders -
	non-GAAP	$	36,315		$	106,927

Diluted earnings per share - GAAP		$	0.69		$	2.00
	Adjustments:
	FDIC Small Bank Assessment Credit		(0.03	)		(0.03	)
	Tax on adjustment		0.01			0.01
Adjusted diluted earnings per share - non-GAAP			0.67			1.98

Return on average assets - GAAP			1.67	%		1.70	%
Net income - GAAP		$	37,563		$	108,206
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669			1,669
	Tax on adjustment		421			421
Adjusted net income - non-GAAP		$	36,315		$	106,958
Average assets - GAAP		$	8,919,405		$	8,505,310
Adjusted return on average assets - non-GAAP			1.62	%		1.68	%

Return on average common stockholders' equity - GAAP			18.69	%		18.93	%
Net income - GAAP		$	37,563		$	108,206
	Adjustments:
	FDIC Small Bank Assessment Credit		1,669			1,669
	Tax on adjustment		421			421
Adjusted net income - non-GAAP		$	36,315		$	106,958
Average common stockholders' equity - GAAP		$	797,294		$	764,070
Adjusted return on average common stockholders' equity -
	non-GAAP		18.07	%		18.71	%

		At September 30, 2019			At June 30, 2019			At March 31, 2019			At December 31, 2018			At September 30, 2018
Book value per share - GAAP		$	15.13		$	14.55		$	13.94		$	13.40		$	12.81
Total common stockholders' equity - GAAP			810,537			778,957			745,586			715,203			681,510
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,246			14,314			14,381			14,449			14,517
Tangible common stockholders' equity - non-GAAP		$	796,291		$	764,643		$	731,205		$	700,754		$	666,993
Tangible book value per share - non-GAAP		$	14.86		$	14.29		$	13.67		$	13.13		$	12.54

Stockholders' equity to total assets - GAAP			9.00	%		8.91	%		8.97	%		8.93	%		9.07	%
Total assets - GAAP		$	9,005,112		$	8,740,237		$	8,310,836		$	8,007,382		$	7,517,833
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,246			14,314			14,381			14,449			14,517
Total tangible assets - non-GAAP		$	8,990,866		$	8,725,923		$	8,296,455		$	7,992,933		$	7,503,316
Tangible common equity to total tangible assets - non-GAAP			8.86	%		8.76	%		8.81	%		8.77	%		8.89	%

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)
	3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019			4th Quarter 2018			3rd Quarter 2018
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	101,130		$	97,787		$	93,699		$	90,164		$	84,058
Interest expense		28,125			27,702			24,921			21,306			17,195
Net interest income		73,005			70,085			68,778			68,858			66,863
Provision for loan losses		6,985			4,884			4,885			6,518			6,624
Net interest income after provision for loan losses		66,020			65,201			63,893			62,340			60,239
Non-interest income		6,210			5,778			4,942			5,019			5,065
Non-interest expense		25,161			26,022			25,326			22,701			22,624
Income before income tax		47,069			44,957			43,509			44,658			42,680
Provision for income tax		9,506			9,324			8,499			8,421			8,120
Net income		37,563			35,633			35,010			36,237			34,560
Preferred stock dividends		-			31			-			32			-
Net income available to common stockholders	$	37,563		$	35,602		$	35,010		$	36,205		$	34,560
Earnings per share - basic	$	0.70		$	0.66		$	0.65		$	0.68		$	0.65
Earnings per share - diluted	$	0.69		$	0.66		$	0.65		$	0.67		$	0.64
Average diluted shares outstanding		54,096,353			54,089,107			54,076,538			54,109,450			54,191,222

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	9,005,112		$	8,740,237		$	8,310,836		$	8,007,382		$	7,517,833
Loans		7,022,069			6,967,886			6,659,908			6,533,499			6,363,531
Debt securities		688,271			658,221			631,946			590,184			578,271
Non-interest-bearing demand deposits		1,678,672			1,576,959			1,572,703			1,557,341			1,504,447
Total deposits		7,724,158			7,404,794			7,083,666			6,915,708			6,505,351
Borrowings		64,693			64,684			64,675			64,666			64,657
Stockholders' equity	$	810,537		$	778,957		$	745,586		$	715,203		$	681,510

Shares outstanding		53,579,013			53,526,882			53,495,208			53,375,195			53,197,807
Book value per share	$	15.13		$	14.55		$	13.94		$	13.40		$	12.81
Tangible book value per share (1)	$	14.86		$	14.29		$	13.67		$	13.13		$	12.54

SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin		3.36	%		3.44	%		3.56	%		3.63	%		3.77	%
Return on average assets		1.67	%		1.69	%		1.75	%		1.85	%		1.87	%
Return on average common stockholders' equity		18.69	%		18.72	%		19.42	%		21.13	%		20.42	%
Efficiency ratio		31.76	%		34.30	%		34.35	%		30.73	%		31.45	%
Non-interest expense to average earning assets		1.16	%		1.28	%		1.31	%		1.20	%		1.27	%

CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		10.39	%		10.18	%		10.30	%		10.12	%		10.08	%
Tier 1 capital to risk-weighted assets		10.39	%		10.19	%		10.30	%		10.13	%		10.09	%
Total capital to risk-weighted assets		12.27	%		12.02	%		12.21	%		12.05	%		12.05	%
Tier 1 capital to average assets		8.88	%		9.00	%		9.03	%		9.07	%		9.28	%
Tangible common equity to total tangible assets (1)		8.86	%		8.76	%		8.81	%		8.77	%		8.89	%

(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, 2019			September 30, 2018			% Change
ASSETS
Cash and due from banks			$	108,804		$	77,692		40	%
Interest-bearing balances due from depository institutions				463,625			59,096		685	%
Federal funds sold				474,298			229,033		107	%
	Cash and cash equivalents			1,046,727			365,821		186	%
Available for sale debt securities, at fair value				688,021			578,021		19	%
Held to maturity debt securities (fair value of $250 at September 30, 2019 and 2018)				250			250		-	%
Mortgage loans held for sale				8,691			5,277		65	%
Loans				7,022,069			6,363,531		10	%
Less allowance for loan losses				(77,192	)		(66,879	)	15	%
	Loans, net			6,944,877			6,296,652		10	%
Premises and equipment, net				56,570			57,882		(2	)	%
Goodwill and other identifiable intangible assets				14,246			14,517		(2	)	%
Other assets				245,730			198,524		24	%
	Total assets		$	9,005,112		$	7,517,833		20	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing		$	1,678,672		$	1,504,447		12	%
	Interest-bearing			6,045,486			5,000,904		21	%
		Total deposits		7,724,158			6,505,351		19	%
Federal funds purchased				370,231			246,094		50	%
Other borrowings				64,693			64,657		-	%
Other liabilities				35,493			20,221		76	%
	Total liabilities			8,194,575			6,836,323		20	%
Stockholders' equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
		September 30, 2019 and September 30, 2018		-			-
	Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,579,113 shares
		issued and outstanding at September 30, 2019, and 53,197,807 shares issued and outstanding
		at September 30, 2018		54			53		2	%
	Additional paid-in capital			219,234			218,062		1	%
	Retained earnings			584,968			472,681		24	%
	Accumulated other comprehensive income (loss)			5,779			(9,788	)	NM
		Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		810,035			681,008		19	%
	Noncontrolling interest			502			502		-	%
		Total stockholders' equity		810,537			681,510		19	%
	Total liabilities and stockholders' equity		$	9,005,112		$	7,517,833		20	%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended September 30,					Nine Months Ended September 30,
		2019			2018		2019		2018
Interest income:
	Interest and fees on loans	$	90,767		$	78,991	$	264,901	$	222,285
	Taxable securities		4,367			3,276		12,306		9,148
	Nontaxable securities		316			583		1,155		1,862
	Federal funds sold		1,768			892		4,985		2,137
	Other interest and dividends		3,912			316		9,269		1,031
	Total interest income		101,130			84,058		292,616		236,463
Interest expense:
	Deposits		24,787			15,210		71,172		36,545
	Borrowed funds		3,338			1,985		9,576		6,097
	Total interest expense		28,125			17,195		80,748		42,642
	Net interest income		73,005			66,863		211,868		193,821
Provision for loan losses			6,985			6,624		16,754		14,884
	Net interest income after provision for loan losses		66,020			60,239		195,114		178,937
Non-interest income:
	Service charges on deposit accounts		1,735			1,595		5,223		4,833
	Mortgage banking		1,333			789		2,995		2,096
	Credit card income		1,868			1,414		5,185		4,030
	Securities gains		34			186		28		190
	Increase in cash surrender value life insurance		787			787		2,327		2,350
	Other operating income		453			294		1,172		922
	Total non-interest income		6,210			5,065		16,930		14,421
Non-interest expense:
	Salaries and employee benefits		15,499			13,070		44,103		39,464
	Equipment and occupancy expense		2,387			2,193		6,933		6,260
	Professional services		887			853		3,072		2,582
	FDIC and other regulatory (credits) assessments		(296	)		675		1,804		2,967
	Other real estate owned expense		78			289		312		765
	Other operating expense		6,606			5,544		20,285		17,136
	Total non-interest expense		25,161			22,624		76,509		69,174
	Income before income tax		47,069			42,680		135,535		124,184
Provision for income tax			9,506			8,120		27,329		23,481
	Net income		37,563			34,560		108,206		100,703
	Dividends on preferred stock		-			-		31		31
	Net income available to common stockholders	$	37,563		$	34,560	$	108,175	$	100,672
Basic earnings per common share		$	0.70		$	0.65	$	2.02	$	1.89
Diluted earnings per common share		$	0.69		$	0.64	$	2.00	$	1.86

LOANS BY TYPE (UNAUDITED)
(In thousands)

		3rd Quarter 2019		2nd Quarter 2019		1st Quarter 2019		4th Quarter 2018		3rd Quarter 2018
Commercial, financial and agricultural		$	2,653,934	$	2,633,529	$	2,522,136	$	2,513,225	$	2,478,788
Real estate - construction			550,871		603,779		556,219		533,192		543,611
Real estate - mortgage:
	Owner-occupied commercial		1,526,911		1,538,279		1,500,595		1,463,887		1,430,111
	1-4 family mortgage		632,346		630,963		629,285		621,634		610,460
	Other mortgage		1,592,072		1,496,512		1,394,611		1,337,068		1,236,954
Subtotal: Real estate - mortgage			3,751,329		3,665,754		3,524,491		3,422,589		3,277,525
Consumer			65,935		64,824		57,062		64,493		63,607
Total loans		$	7,022,069	$	6,967,886	$	6,659,908	$	6,533,499	$	6,363,531

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
			3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019			4th Quarter 2018			3rd Quarter 2018
Allowance for loan losses:
Beginning balance			$	71,386		$	70,207		$	68,600		$	66,879		$	64,239
Loans charged off:
	Commercial financial and agricultural			3,626			3,610			3,037			4,685			3,923
	Real estate - mortgage			4,974			169			50			173			48
	Consumer			172			63			218			72			76
		Total charge offs		8,772			3,842			3,305			4,930			4,047
Recoveries:
	Commercial financial and agricultural			126			117			12			120			52
	Real estate - construction			1			-			1			4			4
	Real estate - mortgage			-			4			7			1			1
	Consumer			60			16			7			8			6
		Total recoveries		187			137			27			133			63
	Net charge-offs			8,585			3,705			3,278			4,797			3,984
	Other transfer			7,406			-			-			-			-
	Provision for loan losses			6,985			4,884			4,885			6,518			6,624
	Ending balance		$	77,192		$	71,386		$	70,207		$	68,600		$	66,879

	Allowance for loan losses to total loans			1.10	%		1.02	%		1.05	%		1.05	%		1.05	%
	Allowance for loan losses to total average
		loans		1.11	%		1.05	%		1.06	%		1.07	%		1.07	%
	Net charge-offs to total average loans			0.49	%		0.22	%		0.20	%		0.30	%		0.25	%
	Provision for loan losses to total average
		loans		0.40	%		0.29	%		0.30	%		0.40	%		0.42	%
	Nonperforming assets:
		Nonaccrual loans	$	35,732		$	21,840		$	22,154		$	21,926		$	9,153
		Loans 90+ days past due and accruing		5,317			10,299			5,021			5,844			5,714
		Other real estate owned and
		repossessed assets		5,337			5,649			5,480			5,169			5,714
	Total		$	46,386		$	37,788		$	32,655		$	32,939		$	20,581

	Nonperforming loans to total loans			0.58	%		0.46	%		0.41	%		0.43	%		0.23	%
	Nonperforming assets to total assets			0.52	%		0.43	%		0.39	%		0.41	%		0.27	%
	Nonperforming assets to earning assets			0.53	%		0.44	%		0.40	%		0.43	%		0.28	%
	Reserve for loan losses to nonaccrual loans			216.03	%		326.86	%		316.90	%		312.87	%		730.68	%

	Restructured accruing loans		$	3,468		$	2,742		$	2,742		$	3,073		$	15,495

	Restructured accruing loans to total loans			0.05	%		0.04	%		0.04	%		0.04	%		0.24	%

	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
			3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019			4th Quarter 2018			3rd Quarter 2018
	Beginning balance:		$	11,284		$	12,289		$	14,555		$	16,584		$	17,257
		Additions		-			-			-			-			100
		Net (paydowns) / advances		714			(12	)		(766	)		(11	)		(177	)
		Charge-offs		(750	)		(993	)		(1,500	)		(2,018	)		(596	)
			$	11,248		$	11,284		$	12,289		$	14,555		$	16,584

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		3rd Quarter 2019			2nd Quarter 2019			1st Quarter 2019		4th Quarter 2018		3rd Quarter 2018
Interest income:
	Interest and fees on loans	$	90,767		$	88,610		$	85,524	$	83,085	$	78,991
	Taxable securities		4,367			4,193			3,746		3,506		3,276
	Nontaxable securities		316			393			446		544		583
	Federal funds sold		1,768			1,998			1,219		966		892
	Other interest and dividends		3,912			2,593			2,764		2,063		316
	Total interest income		101,130			97,787			93,699		90,164		84,058
Interest expense:
	Deposits		24,787			24,240			22,145		18,957		15,210
	Borrowed funds		3,338			3,462			2,776		2,349		1,985
	Total interest expense		28,125			27,702			24,921		21,306		17,195
	Net interest income		73,005			70,085			68,778		68,858		66,863
Provision for loan losses			6,985			4,884			4,885		6,518		6,624
	Net interest income after provision for loan losses		66,020			65,201			63,893		62,340		60,239
Non-interest income:
	Service charges on deposit accounts		1,735			1,786			1,702		1,714		1,595
	Mortgage banking		1,333			1,087			575		688		789
	Credit card income		1,868			1,741			1,576		1,521		1,414
	Securities gains (losses)		34			(6	)		-		-		186
	Increase in cash surrender value life insurance		787			778			762		780		787
	Other operating income		453			392			327		316		294
	Total non-interest income		6,210			5,778			4,942		5,019		5,065
Non-interest expense:
	Salaries and employee benefits		15,499			14,339			14,265		12,385		13,070
	Equipment and occupancy expense		2,387			2,287			2,259		2,163		2,193
	Professional services		887			1,191			994		1,064		853
	FDIC and other regulatory (credits) assessments		(296	)		1,081			1,019		902		675
	Other real estate owned expense		78			212			22		25		289
	Other operating expense		6,606			6,912			6,767		6,162		5,544
	Total non-interest expense		25,161			26,022			25,326		22,701		22,624
	Income before income tax		47,069			44,957			43,509		44,658		42,680
Provision for income tax			9,506			9,324			8,499		8,421		8,120
	Net income		37,563			35,633			35,010		36,237		34,560
	Dividends on preferred stock		-			31			-		32		-
	Net income available to common stockholders	$	37,563		$	35,602		$	35,010	$	36,205	$	34,560
Basic earnings per common share		$	0.70		$	0.67		$	0.65	$	0.68	$	0.65
Diluted earnings per common share		$	0.69		$	0.66		$	0.65	$	0.67	$	0.64

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

						3rd Quarter 2019				2nd Quarter 2019					1st Quarter 2019					4th Quarter 2018					3rd 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			$	6,927,075	5.18	%	$	6,756,927		5.24	%	$	6,570,920		5.26	%	$	6,403,139		5.13	%	$	6,203,372		5.03	%
			Tax-exempt (2)				34,195	3.98			32,124		3.83			30,577		3.81			29,656		3.26			30,005		3.94
				Total loans, net of
					unearned income		6,961,270	5.17			6,789,051		5.23			6,601,497		5.25			6,432,795		5.12			6,233,377		5.03
		Mortgage loans held for sale					6,482	2.45			5,208		3.85			1,614		6.53			3,364		3.30			3,538		4.15
		Debt securities:
			Taxable				595,405	2.93			565,491		2.97			518,955		2.89			498,138		2.82			482,571		2.72
			Tax-exempt (2)				59,992	2.21			77,364		2.10			87,537		2.12			98,027		2.34			105,592		2.45
				Total securities (3)			655,397	2.87			642,855		2.86			606,492		2.78			596,165		2.74			588,163		2.67
		Federal funds sold					312,968	2.24			323,714		2.48			192,690		2.57			156,884		2.44			163,453		2.17
		Interest-bearing balances with banks					690,973	2.25			411,481		2.53			438,099		2.56			334,065		2.45			61,867		2.03
		Total interest-earning assets				$	8,627,090	4.65	%	$	8,172,309		4.80	%	$	7,840,392		4.85	%	$	7,524,152		4.76	%	$	7,051,391		4.74	%
Non-interest-earning assets:
		Cash and due from banks					71,418				76,988					74,430					74,272					76,800
		Net premises and equipment					58,243				58,607					58,852					58,521					58,873
		Allowance for loan losses, accrued
			interest and other assets				162,654				156,264					149,941					128,933					128,843
				Total assets		$	8,919,405			$	8,464,168				$	8,123,615				$	7,784,999				$	7,314,914

Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	900,754	0.84	%	$	909,847		0.88	%	$	942,686		0.86	%	$	908,416		0.74	%	$	819,807		0.67	%
		Savings					57,431	0.60			54,391		0.57			54,086		0.55			52,443		0.54			53,835		0.52
		Money market					4,265,435	1.76			3,932,459		1.88			3,758,162		1.78			3,537,522		1.56			3,305,293		1.33
		Time deposits					703,278	2.20			694,414		2.16			698,976		2.06			687,361		1.92			643,260		1.65
			Total interest-bearing deposits				5,926,898	1.66			5,591,111		1.74			5,453,910		1.65			5,185,742		1.45			4,822,195		1.25
		Federal funds purchased					441,526	2.30			418,486		2.57			312,989		2.59			263,125		2.36			229,016		2.09
		Other borrowings					64,689	4.79			64,680		4.84			64,671		4.90			64,665		4.79			64,652		4.79
		Total interest-bearing liabilities				$	6,433,113	1.73	%	$	6,074,277		1.83	%	$	5,831,570		1.73	%	$	5,513,532		1.53	%	$	5,115,863		1.33	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			checking				1,654,928				1,591,722					1,524,502					1,551,366					1,511,410
		Other liabilities					34,070				35,161					36,362					40,185					16,333
		Stockholders' equity					792,284				763,742					735,611					689,525					678,839
		Accumulated other comprehensive
			income (loss)				5,010				(734	)				(4,430	)				(9,609	)				(7,531	)
				Total liabilities and
					stockholders' equity	$	8,919,405			$	8,464,168				$	8,123,615				$	7,784,999				$	7,314,914
Net interest spread								2.92	%				2.97	%				3.12	%				3.23	%				3.41	%
Net interest margin								3.36	%				3.44	%				3.56	%				3.63	%				3.77	%

(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 October 21, 2019

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

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