ServisFirst Bancshares, Inc. Announces Results for First Quarter 2018

BIRMINGHAM, Ala., April 16, 2018 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS) today announced earnings and operating results for the quarter ended March 31, 2018.

First Quarter Highlights:

Diluted EPS increased 43% from $0.42 to $0.60 year over year
Loans and deposits increased 15% and 11%, respectively, year over year
Quarterly cash dividend increased 120% as previously announced
Return on average equity exceeded 20% for the first time in the thirteen year history of the bank
First quarter net interest margin improved to 3.81% from 3.66% in the previous quarter

Tom Broughton, President and CEO, said, “Our strong asset quality and solid financial performance, coupled with our focus on serving client needs, continues to attract new clients.” Bud Foshee, CFO, stated, “Even though our financial results were enhanced by lower federal corporate tax rates, our pre-tax income in the first quarter increased 31% year over year, pointing to continued improvement in our financial metrics.”

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

	Period Ending March 31, 2018			Period Ending December 31, 2017			% Change From Period Ending December 31, 2017 to Period Ending March 31, 2018			Period Ending March 31, 2017			% Change From Period Ending March 31, 2017 to Period Ending March 31, 2018
QUARTERLY OPERATING RESULTS
Net Income	$	32,603		$	21,150		54		%	$	22,519		45	%
Net Income Available to Common Stockholders	$	32,603		$	21,119		54		%	$	22,519		45	%
Diluted Earnings Per Share	$	0.60		$	0.39		54		%	$	0.42		43	%
Return on Average Assets		1.91	%		1.20	%					1.45	%
Return on Average Common Stockholders' Equity		21.40	%		13.97	%					17.09	%
Average Diluted Shares Outstanding		54,183,400			54,161,788						54,133,722

Core Net Income*	$	32,603		$	24,424		33		%
Core Net Income Available to Common Stockholders*	$	32,603		$	24,393		34		%
Core Diluted Earnings Per Share*	$	0.60		$	0.45		34		%
Core Return on Average Assets*		1.91	%		1.39	%
Core Return on Average Common Stockholders' Equity*		21.40	%		16.13	%

BALANCE SHEET
Total Assets	$	7,011,735		$	7,082,384		(1	)	%	$	6,336,165		11	%
Loans		5,928,327			5,851,261		1		%		5,151,984		15	%
Non-interest-bearing Demand Deposits		1,407,592			1,440,326		(2	)	%		1,292,440		9	%
Total Deposits		5,977,387			6,091,674		(2	)	%		5,361,532		11	%
Stockholders' Equity		629,297			607,604		4		%		545,148		15	%

* Core measures exclude non-routine expenses during the comparative periods presented in this press release as more fully described in "GAAP Reconciliation and Management Explanation on Non-GAAP Financial Measures."

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $32.6 million for the quarter ended March 31, 2018, compared to net income and net income available to common stockholders of $22.5 million for the same quarter in 2017. Basic and diluted earnings per common share were $0.61 and $0.60, respectively, for the first quarter of 2018, compared to $0.43 and $0.42, respectively, for the first quarter of 2017.

Return on average assets was 1.91% and return on average equity was 21.40% for the first quarter of 2018, compared to 1.45% and 17.09%, respectively, for the first quarter of 2017.

Net interest income was $62.4 million for the first quarter of 2018, compared to $61.4 million for the fourth quarter of 2017 and $52.1 million for the first quarter of 2017. The net interest margin in the first quarter of 2018 was 3.81%, an increase of 15 basis points from the fourth quarter of 2017 and an increase of 28 basis points from the first quarter of 2017. The increase in net interest income on a linked quarter basis is attributable to a $166.6 million increase in average loans outstanding and an $18.0 million increase in average stockholders’ equity, all resulting in a positive mix change in our balance sheet. A $55.1 million decrease in average non-interest-bearing deposits offset the positive mix change caused by increases in loans and stockholders’ equity, while a $226.7 million decrease in federal funds sold and interest-bearing balances with banks added to the positive mix change. The average yield on loans increased by 12 basis points to 4.80% on a linked quarter basis, boosted by the Federal Reserve Bank’s recent increases of interest rates.

Average loans for the first quarter of 2018 were $5.88 billion, an increase of $166.6 million, or 2.9%, over average loans of $5.72 billion for the fourth quarter of 2017, and an increase of $879.5 million, or 17.6%, over average loans of $5.00 billion for the first quarter of 2017.

Average total deposits for the first quarter of 2018 were $5.95 billion, a decrease of $88.8 million, or 1.5%, from average total deposits of $6.03 billion for the fourth quarter of 2017, and an increase of $627.4 million, or 11.8%, over average total deposits of $5.32 billion for the first quarter of 2017.

Non-performing assets to total assets were 0.22% for the first quarter of 2018, a decrease of three basis points compared to 0.25% for the fourth quarter of 2017 and a decrease of five basis points compared to 0.27% for the first quarter of 2017. Net credit charge-offs to average loans were 0.10%, a 46 basis point decrease compared to 0.56% for the fourth quarter of 2017 and a 14 basis point decrease compared to 0.24% for the first quarter of 2017. We recorded a $4.1 million provision for loan losses in the first quarter of 2018 compared to $9.1 million in the fourth quarter of 2017 and $5.0 million in the first quarter of 2017. The allowance for loan losses as a percentage of total loans was 1.05% at March 31, 2018 compared to 1.02% at December 31, 2017 and 1.05% at March 31, 2017. 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 2018 increased $323,000, or 7%, to $4.9 million compared to the first quarter of 2017. Service charges on deposit accounts increased $231,000 during the first quarter of 2018, or 17%, compared to the first quarter of 2017, primarily the result of increased non-sufficient funds charges. Mortgage revenue decreased $381,000, or 42%, to $518,000 during the first quarter of 2018, compared to $899,000 during the first quarter of 2017, as origination volumes slowed by $12.6 million, or 30%, for the first quarter of 2018 compared to the same quarter in 2017. Credit card revenue increased 33% to $1.6 million during the first quarter of 2018, compared to $1.2 million during the first quarter of 2017. Spending on credit cards increased 38% for the same comparative period.

Non-interest expense for the first quarter of 2018 increased $2.2 million, or 10%, to $23.5 million from $21.3 million in the first quarter of 2017, and increased $2.3 million, or 11%, on a linked quarter basis. Salary and benefit expense for the first quarter of 2018 increased $1.6 million, or 14%, to $13.3 million from $11.7 million in the first quarter of 2017, and increased $1.9 million, or 17%, on a linked quarter basis. We had 437 FTE employees at the end of March 2018 compared to 417 at the end of March 2017, an increase of 5%. Equipment and occupancy expense decreased $296,000, or 13%, to $2.0 million in the first quarter of 2018, from $2.3 million in the first quarter of 2017. A decrease in rental payments more than offset increased depreciation expense resulting from our fourth quarter 2017 move from our previous headquarters building, which was leased, to our new headquarters building, which is owned. FDIC insurance assessments increased from $1.0 million during the first quarter of 2017 to $1.1 million during the first quarter of 2018, resulting primarily from asset growth which impacts our assessment base. Our efficiency ratio for the first quarter of 2018, fourth quarter of 2017 and first quarter of 2017 was 34.93%, 32.05% and 37.58%, respectively.

Income tax expense decreased $775,000, or 10%, to $7.1 million in the first quarter of 2018, compared to $7.8 million in the first quarter of 2017. Lower corporate income tax rates resulting from the passage of the Tax Cuts and Jobs Act in December 2017 has resulted in lower effective tax rates. Excess tax benefits from the exercise of stock options and vesting of restricted stock were $1.5 million for the first quarter of 2018 compared to $2.1 million for the first quarter of 2017. Our effective tax rate for the first quarter of 2018 and the first quarter of 2017 was 17.8% and 25.8%, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

We recorded $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets at December 31, 2017 due to lower corporate income tax rates provided by the Tax Cuts and Jobs Act passed into law in December 2017. We also recorded expenses of $347,000 related to terminating the lease agreement on our previous headquarters building in Birmingham, Alabama and expenses of moving into our new headquarters building. Core financial measures included in this press release are “core net income,” “core net income available to common stockholders,” “core diluted earnings per share,” “core return on average assets,” and “core return on average common stockholders’ equity.” Each of these five core financial measures excludes the impact of the non-routine expenses attributable to our net deferred tax asset revaluation, lease termination and moving expenses, and are all considered non-GAAP financial measures. In addition to these financial measures adjusting for non-routine expenses, this press release contains certain non-GAAP financial measures, including tangible common stockholders’ equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation 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 December 31, 2017
Return on average assets - GAAP				1.20	%
Net income - GAAP			$	21,150
	Adjustments:
	Revaluation of net deferred tax assets			3,059
	Lease termination and moving expenses			347
		Tax (benefit) of adjustments		(132	)
Core net income - non-GAAP*			$	24,424
Average assets			$	6,988,731
Core return on average assets - non-GAAP*				1.39	%

Return on average common stockholders' equity - GAAP				13.97	%
Net income available to common stockholders - GAAP			$	21,119
	Adjustments:
	Revaluation of net deferred tax assets			3,059
	Lease termination and moving expenses			347
		Tax (benefit) of adjustments		(132	)
Core net income available to common stockholders - non-GAAP*			$	24,393
Average common stockholders' equity			$	599,947
Core return on average common stockholders' equity - non-GAAP*				16.13	%

Diluted earnings per share - GAAP			$	0.39
Weighted average shares outstanding, diluted - GAAP				54,161,788
Core diluted earnings per share - non-GAAP*			$	0.45

		At March 31, 2018			At December 31, 2017			At September 30, 2017			At June 30, 2017			At March 31, 2017
Book value per share - GAAP		$	11.84		$	11.47		$	11.14		$	10.72		$	10.32
Total common stockholders' equity - GAAP			629,297			607,604			590,213			567,086			545,148
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,652			14,719			14,787			14,855			14,924
Tangible common stockholders' equity - non-GAAP *		$	614,645		$	592,885		$	575,426		$	552,231		$	530,224
Tangible book value per share - non-GAAP *		$	11.56		$	11.19		$	10.86		$	10.44		$	10.04

Stockholders' equity to total assets - GAAP			8.98	%		8.58	%		8.79	%		8.96	%		8.60	%
Total assets - GAAP		$	7,011,735		$	7,082,384		$	6,712,103		$	6,329,599		$	6,336,165
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,652			14,719			14,787			14,855			14,924
Total tangible assets - non-GAAP *		$	6,997,083		$	7,067,665		$	6,697,316		$	6,314,744		$	6,321,241
Tangible common equity to total tangible assets - non-GAAP *			8.78	%		8.39	%		8.59	%		8.75	%		8.39	%

*	Core measures exclude non-routine expenses during the comparative periods presented in this press release, as more fully described in "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" above.

Conference Call

ServisFirst Bancshares, Inc. will host a live audio webcast to discuss earnings and results on Monday, April 16, 2018 beginning at 5:15 p.m. ET. You may access the webcast at https://services.choruscall.com/links/sfbs180122.html. The webcast will be available until April 27, 2018.

About ServisFirst Bancshares, Inc.

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

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

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

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

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


SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except share and per share data)
	1st Quarter 2018			4th Quarter 2017			3rd Quarter 2017			2nd Quarter 2017			1st Quarter 2017
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	74,009		$	72,060		$	67,641		$	63,538		$	59,517
Interest expense		11,573			10,652			9,245			7,971			7,465
Net interest income		62,436			61,408			58,396			55,567			52,052
Provision for loan losses		4,139			9,055			4,803			4,381			4,986
Net interest income after provision for loan losses		58,297			52,353			53,593			51,186			47,066
Non-interest income		4,869			4,905			4,790			4,805			4,546
Non-interest expense		23,512			21,255			21,497			21,875			21,267
Income before income tax		39,654			36,003			36,886			34,116			30,345
Provision for income tax		7,051			14,853			11,627			9,952			7,826
Net income		32,603			21,150			25,259			24,164			22,519
Dividends paid on preferred stock		-			31			-			31			-
Net income available to common stockholders	$	32,603		$	21,119		$	25,259		$	24,133		$	22,519
Earnings per share - basic	$	0.61		$	0.40		$	0.48		$	0.46		$	0.43
Earnings per share - diluted	$	0.60		$	0.39		$	0.47		$	0.45		$	0.42
Average diluted shares outstanding		54,183,400			54,161,788			54,099,672			54,100,604			54,133,722

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	7,011,735		$	7,082,384		$	6,712,103		$	6,329,599		$	6,336,165
Loans		5,928,327			5,851,261			5,628,765			5,343,688			5,151,984
Debt securities		560,885			538,330			522,724			518,065			526,023
Non-interest-bearing demand deposits		1,407,592			1,440,326			1,405,965			1,373,353			1,292,440
Total deposits		5,977,387			6,091,674			5,796,901			5,394,810			5,361,532
Borrowings		64,739			64,832			54,975			55,075			55,169
Stockholders' equity	$	629,297		$	607,604		$	590,213		$	567,086		$	545,148

Shares outstanding		53,147,169			52,992,586			52,970,310			52,909,362			52,812,396
Book value per share	$	11.84		$	11.47		$	11.14		$	10.72		$	10.32
Tangible book value per share (1)	$	11.56		$	11.19		$	10.86		$	10.44		$	10.04

SELECTED FINANCIAL RATIOS
Net interest margin		3.81	%		3.66	%		3.77	%		3.77	%		3.53	%
Return on average assets		1.91	%		1.20	%		1.55	%		1.55	%		1.45	%
Return on average common stockholders' equity		21.40	%		13.97	%		17.28	%		17.36	%		17.09	%
Efficiency ratio		34.93	%		32.05	%		34.02	%		36.23	%		37.58	%
Non-interest expense to average earning assets		1.43	%		1.26	%		1.38	%		1.47	%		1.43	%

CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		9.88	%		9.51	%		9.60	%		9.72	%		9.67	%
Tier 1 capital to risk-weighted assets		9.88	%		9.52	%		9.61	%		9.73	%		9.68	%
Total capital to risk-weighted assets		11.91	%		11.52	%		11.51	%		11.67	%		11.66	%
Tier 1 capital to average assets		8.95	%		8.51	%		8.91	%		8.88	%		8.46	%
Tangible common equity to total tangible assets (1)		8.78	%		8.39	%		8.59	%		8.42	%		8.39	%

(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, 2018			March 31, 2017			% Change
			(Unaudited)			(Unaudited)
ASSETS
Cash and due from banks			$	64,912		$	54,993		18		%
Interest-bearing balances due from depository institutions				53,311			283,181		(81	)	%
Federal funds sold				197,882			127,390		55		%
	Cash and cash equivalents			316,105			465,564		(32	)	%
Available for sale debt securities, at fair value				560,635			453,956		23		%
Held to maturity debt securities (fair value of $250 and $73,180 at
	March 31, 2018 and 2017, respectively)			250			72,057		(100	)	%
Restricted equity securities				1,026			1,034		(1	)	%
Mortgage loans held for sale				4,522			6,599		(31	)	%
Loans				5,928,327			5,151,984		15		%
Less allowance for loan losses				(62,050	)		(53,892	)	15		%
	Loans, net			5,866,277			5,098,092		15		%
Premises and equipment, net				58,624			46,407		26		%
Goodwill and other identifiable intangible assets				14,652			14,924		(2	)	%
Other assets				189,644			177,532		7		%
	Total assets		$	7,011,735		$	6,336,165		11		%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing		$	1,407,592		$	1,292,440		9		%
	Interest-bearing			4,569,795			4,069,092		12		%
		Total deposits		5,977,387			5,361,532		11		%
Federal funds purchased				326,399			358,241		(9	)	%
Other borrowings				64,739			55,169		17		%
Other liabilities				13,913			16,075		(13	)	%
	Total liabilities			6,382,438			5,791,017		10		%
Stockholders' equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
		March 31, 2018 and March 31, 2017		-			-
	Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,147,169 shares
		issued and outstanding at March 31, 2018, and 52,812,396 shares issued and outstanding
		at March 31, 2017		53			53
	Additional paid-in capital			217,536			217,195		-		%
	Retained earnings			416,311			327,029		27		%
	Accumulated other comprehensive income			(5,105	)		369		NM
		Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		628,795			544,646		15		%
	Noncontrolling interest			502			502		-		%
		Total stockholders' equity		629,297			545,148		15		%
	Total liabilities and stockholders' equity		$	7,011,735			6,336,165		11		%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended March 31,
		2018		2017
Interest income:
	Interest and fees on loans	$	69,674	$	55,556
	Taxable securities		2,745		2,087
	Nontaxable securities		656		765
	Federal funds sold		551		519
	Other interest and dividends		383		590
	Total interest income		74,009		59,517
Interest expense:
	Deposits		9,621		5,982
	Borrowed funds		1,952		1,483
	Total interest expense		11,573		7,465
	Net interest income		62,436		52,052
Provision for loan losses			4,139		4,986
	Net interest income after provision for loan losses		58,297		47,066
Non-interest income:
	Service charges on deposit accounts		1,585		1,354
	Mortgage banking		518		899
	Credit card income		1,578		1,179
	Securities (losses) gains		4		-
	Increase in cash surrender value life insurance		777		724
	Other operating income		407		390
	Total non-interest income		4,869		4,546
Non-interest expense:
	Salaries and employee benefits		13,296		11,713
	Equipment and occupancy expense		1,954		2,250
	Professional services		805		771
	FDIC and other regulatory assessments		1,133		997
	Other real estate owned expense		316		76
	Other operating expense		6,008		5,460
	Total non-interest expense		23,512		21,267
	Income before income tax		39,654		30,345
Provision for income tax			7,051		7,826
	Net income		32,603		22,519
	Dividends on preferred stock		-		-
	Net income available to common stockholders	$	32,603	$	22,519
Basic earnings per common share		$	0.61	$	0.43

Diluted earnings per common share		$	0.60	$	0.42

LOANS BY TYPE (UNAUDITED)
(In thousands)

		1st Quarter 2018		4th Quarter 2017		3rd Quarter 2017		2nd Quarter 2017		1st Quarter 2017
Commercial, financial and agricultural		$	2,329,904	$	2,279,366	$	2,223,910	$	2,123,498	$	2,061,503
Real estate - construction			506,050		580,874		467,838		395,398		345,777
Real estate - mortgage:
	Owner-occupied commercial		1,349,679		1,328,666		1,323,383		1,272,659		1,262,578
	1-4 family mortgage		581,498		603,063		593,180		565,121		554,261
	Other mortgage		1,099,482		997,079		962,690		931,788		872,955
Subtotal: Real estate - mortgage			3,030,659		2,928,808		2,879,253		2,769,568		2,689,794
Consumer			61,714		62,213		57,764		55,224		54,910
Total loans		$	5,928,327	$	5,851,261	$	5,628,765	$	5,343,688	$	5,151,984

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
			1st Quarter 2018				4th Quarter 2017				3rd Quarter 2017				2nd Quarter 2017				1st Quarter 2017
Allowance for loan losses:
Beginning balance			$	59,406			$	58,459			$	55,059			$	53,892			$	51,893
Loans charged off:
	Commercial financial and agricultural			1,088				7,064				924				3,067				2,855
	Real estate - construction			-				-				16				40				-
	Real estate - mortgage			381				1,134				550				106				266
	Consumer			88				137				65				33				75
		Total charge offs		1,557				8,335				1,555				3,246				3,196
Recoveries:
	Commercial financial and agricultural			4				64				67				16				190
	Real estate - construction			7				126				12				14				16
	Real estate - mortgage			42				26				59				2				2
	Consumer			9				11				14				-				1
		Total recoveries		62				227				152				32				209
	Net charge-offs			1,495				8,108				1,403				3,214				2,987
	Provision for loan losses			4,139				9,055				4,803				4,381				4,986
	Ending balance		$	62,050			$	59,406			$	58,459			$	55,059			$	53,892

	Allowance for loan losses to total loans			1.05		%		1.02		%		1.04		%		1.03		%		1.05		%
	Allowance for loan losses to total average
		loans		1.05		%		1.04		%		1.07		%		1.05		%		1.08		%
	Net charge-offs to total average loans			0.10		%		0.56		%		0.10		%		0.25		%		0.24		%
	Provision for loan losses to total average
		loans		0.29		%		0.63		%		0.35		%		0.34		%		0.40		%
	Nonperforming assets:
		Nonaccrual loans	$	9,271			$	10,765			$	12,356			$	9,963			$	12,084
		Loans 90+ days past due and accruing		678				60				2,506				1,016				16
		Other real estate owned and
		repossessed assets		5,748				6,701				3,888				3,891				5,102
	Total		$	15,697			$	17,526			$	18,750			$	14,870			$	17,202

	Nonperforming loans to total loans			0.17		%		0.19		%		0.26		%		0.21		%		0.23		%
	Nonperforming assets to total assets			0.22		%		0.25		%		0.28		%		0.23		%		0.27		%
	Nonperforming assets to earning assets			0.23		%		0.25		%		0.29		%		0.24		%		0.28		%
	Reserve for loan losses to nonaccrual loans			669.29		%		551.84		%		473.12		%		552.63		%		445.98		%

	Restructured accruing loans		$	15,838			$	16,919			$	12,700			$	12,716			$	536

	Restructured accruing loans to total loans			0.27		%		0.29		%		0.23		%		0.24		%		0.01		%

	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
			1st Quarter 2018				4th Quarter 2017				3rd Quarter 2017				2nd Quarter 2017				1st Quarter 2017
	Beginning balance:		$	20,572			$	16,354			$	16,370			$	7,269			$	7,292
		Additions		-				4,233				-				12,716				-
		Removal from TDR		-				-				-				(535	)			-
		Net (paydowns) / advances		(1,080	)			(15	)			(16	)			(1,380	)			(23	)
		Charge-offs		(700	)			-				-				(1,700	)			-
			$	18,792			$	20,572			$	16,354			$	16,370			$	7,269

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		1st Quarter 2018		4th Quarter 2017		3rd Quarter 2017		2nd Quarter 2017		1st Quarter 2017
Interest income:
	Interest and fees on loans	$	69,674	$	67,357	$	63,857	$	59,912	$	55,556
	Taxable securities		2,745		2,468		2,288		2,274		2,087
	Nontaxable securities		656		702		729		752		765
	Federal funds sold		551		508		379		287		519
	Other interest and dividends		383		1,025		388		313		590
	Total interest income		74,009		72,060		67,641		63,538		59,517
Interest expense:
	Deposits		9,621		8,954		7,574		6,321		5,982
	Borrowed funds		1,952		1,698		1,671		1,650		1,483
	Total interest expense		11,573		10,652		9,245		7,971		7,465
	Net interest income		62,436		61,408		58,396		55,567		52,052
Provision for loan losses			4,139		9,055		4,803		4,381		4,986
	Net interest income after provision for loan losses		58,297		52,353		53,593		51,186		47,066
Non-interest income:
	Service charges on deposit accounts		1,585		1,499		1,467		1,382		1,354
	Mortgage banking		518		894		978		1,064		899
	Credit card income		1,578		1,298		1,149		1,189		1,179
	Securities gains		4		-		-		-		-
	Increase in cash surrender value life insurance		777		797		825		785		724
	Other operating income		407		417		371		385		390
	Total non-interest income		4,869		4,905		4,790		4,805		4,546
Non-interest expense:
	Salaries and employee benefits		13,296		11,432		12,428		12,031		11,713
	Equipment and occupancy expense		1,954		1,566		1,947		2,265		2,250
	Professional services		805		833		805		808		771
	FDIC and other regulatory assessments		1,133		1,030		810		1,081		997
	Other real estate owned expense		316		160		31		56		76
	Other operating expense		6,008		6,234		5,476		5,634		5,460
	Total non-interest expense		23,512		21,255		21,497		21,875		21,267
	Income before income tax		39,654		36,003		36,886		34,116		30,345
Provision for income tax			7,051		14,853		11,627		9,952		7,826
	Net income		32,603		21,150		25,259		24,164		22,519
	Dividends on preferred stock		-		31		-		31		-
	Net income available to common stockholders	$	32,603	$	21,119	$	25,259	$	24,133	$	22,519
Basic earnings per common share		$	0.61	$	0.40	$	0.48	$	0.46	$	0.43

Diluted earnings per common share		$	0.60	$	0.39	$	0.47	$	0.45	$	0.42

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

						1st Quarter 2018					4th Quarter 2017				3rd Quarter 2017				2nd Quarter 2017				1st Quarter 2017
						Average Balance			Yield / Rate		Average Balance		Yield / Rate		Average Balance		Yield / Rate		Average Balance		Yield / Rate		Average Balance			Yield / Rate
Assets:
Interest-earning assets:
		Loans, net of unearned income (1)
			Taxable			$	5,847,443		4.81	%	$	5,680,227	4.68	%	$	5,407,109	4.66	%	$	5,192,812	4.60	%	$	4,976,933		4.50	%
			Tax-exempt (2)				36,357		4.06			36,992	4.95			33,357	5.17			41,143	4.92			27,322		4.72
				Total loans, net of
					unearned income		5,883,800		4.80			5,717,219	4.68			5,440,466	4.66			5,233,955	4.60			5,004,255		4.51
		Mortgage loans held for sale					3,698		4.50			6,199	3.52			4,862	3.51			5,958	3.90			5,637		4.10
		Debt securities:
			Taxable				435,747		2.52			406,488	2.43			385,431	2.37			389,505	2.34			368,349		2.27
			Tax-exempt (2)				120,270		2.56			128,201	3.27			131,478	3.34			133,590	3.38			132,578		3.45
				Total securities (3)			556,017		2.53			534,689	2.63			516,909	2.62			523,095	2.60			500,927		2.58
		Federal funds sold					131,472		1.70			143,905	1.40			111,175	1.35			98,598	1.17			234,460		0.90
		Restricted equity securities					1,030		1.57			1,030	1.93			1,030	3.47			1,030	10.51			1,030		1.57
		Interest-bearing balances with banks					96,012		1.60			310,289	1.31			118,510	1.27			109,909	1.04			295,648		0.80
		Total interest-earning assets					6,672,029		4.51	%		6,713,331	4.29	%		6,192,952	4.37	%		5,972,545	4.30	%		6,041,957		4.03	%
Non-interest-earning assets:
		Cash and due from banks					68,309					68,444				65,457				68,894				59,697
		Net premises and equipment					59,709					57,320				54,727				49,813				44,739
		Allowance for loan losses, accrued
			interest and other assets				140,558					149,636				151,786				143,286				138,289
				Total assets		$	6,940,605				$	6,988,731			$	6,464,922			$	6,234,538			$	6,284,682

Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	899,311		0.52	%	$	899,334	0.46	%	$	800,437	0.42	%	$	779,916	0.39	%	$	789,273		0.38	%
		Savings					53,269		0.31			49,697	0.31			48,313	0.30			48,150	0.30			50,461		0.33
		Money market					3,027,176		0.90			3,065,298	0.80			2,774,061	0.74			2,567,817	0.64			2,694,225		0.58
		Time deposits					576,857		1.21			576,010	1.16			546,020	1.10			537,220	1.06			530,000		1.02
			Total interest-bearing deposits				4,556,613		0.86			4,590,339	0.77			4,168,831	0.72			3,933,103	0.64			4,063,959		0.60
		Federal funds purchased					297,051		1.60			271,248	1.37			282,806	1.34			336,344	1.11			359,747		0.86
		Other borrowings					64,805		4.89			60,829	4.98			55,034	5.17			55,130	5.22			55,239		5.26
		Total interest-bearing liabilities					4,918,469		0.95	%		4,922,416	0.86	%		4,506,671	0.81	%		4,324,577	0.74	%		4,478,945		0.68	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			demand deposits				1,389,217					1,444,338				1,363,207				1,338,514				1,254,496
		Other liabilities					15,007					22,029				15,070				13,739				16,809
		Stockholders' equity					621,004					599,754				578,626				556,521				535,232
		Unrealized (losses) gains on securities
			and derivatives				(3,092	)				194				1,348				1,187				(800	)
				Total liabilities and
					stockholders' equity	$	6,940,605				$	6,988,731			$	6,464,922			$	6,234,538			$	6,284,682
Net interest spread									3.56	%			3.43	%			3.56	%			3.56	%				3.35	%
Net interest margin									3.81	%			3.66	%			3.77	%			3.77	%				3.53	%

(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% for the 1st quarter of 2018 and 35% for the quarters in 2017.
(3	)	Unrealized (losses) gains on available-for-sale debt securities are excluded from the yield calculation.

Source: ServisFirst Bancshares, Inc.

Released April 16, 2018

ServisFirst Bancshares, Inc. Announces Results for First Quarter 2018

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