Exhibit 99.1

 

 

SERVISFIRST BANCSHARES, INC.

Announces Results For Third Quarter of 2016

 

Birmingham, Ala. – (PR Newswire) – October 17, 2016 – ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the quarter and nine months ended September 30, 2016.

 

THIRD Quarter 2016 Highlights:

 

§Diluted EPS of $0.78 for third quarter of 2016, a 28% increase year over year
§Net income of $59.7 million and diluted EPS of $2.23 for the nine months ended September 30, 2016
§Core diluted EPS* for the nine months ended September 30, 2016 increased 30% year over year as 2015 results were impacted by acquisition expenses
§Loans and deposits increased 15% and 26%, respectively, year over year
§Loans and deposits increased 10% and 36%, respectively, for the third quarter on an annualized basis

 

*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” below.

 

Tom Broughton, President and CEO, said, “We are pleased to report a solid quarter of growth in net income, loans and deposits with excellent credit quality.” Bud Foshee, CFO, stated, “Net income in our Nashville, Tennessee region has continued to grow and net operating losses in our newer regions in Atlanta, Georgia, Charleston, South Carolina and Tampa Bay, Florida decreased in the third quarter.”

 

FINANCIAL SUMMARY (UNAUDITED)

(in Thousands except share and per share amounts)

  

   Period Ending
September 30,
2016
   Period Ending
June 30,
2016
   % Change From
Period Ending
June 30,
2016 to
Period Ending
September 30,
2016
   Period Ending
September 30,
2015
   % Change From
Period Ending
September 30,
2015 to
Period Ending
September 30,
2016
 
QUARTERLY OPERATING RESULTS                         
Net Income  $20,909   $18,876    11%  $16,266    29%
Net Income Available to Common Stockholders  $20,909   $18,853    11%  $16,233    29%
Diluted Earnings Per Share  $0.78   $0.71    10%  $0.61    28%
Return on Average Assets   1.39%   1.37%        1.38%     
Return on Average Common Stockholders' Equity   16.66%   15.79%        15.52%     
Average Diluted Shares Outstanding   26,939,664    26,726,284         26,506,334      
                          
YEAR-TO-DATE OPERATING RESULTS                         
Net Income  $59,741   $38,832        $43,790    36%
Net Income Available to Common Stockholders  $59,718   $38,809        $43,534    37%
Diluted Earnings Per Share  $2.23   $1.46        $1.65    35%
Return on Average Assets   1.43%   1.45%        1.32%     
Return on Average Common Stockholders' Equity   16.60%   16.57%        14.40%     
Average Diluted Shares Outstanding   26,744,959    26,646,547         26,391,100      
                          
Core Net Income*  $59,741             $45,557    31%
Core Net Income Available to Common Stockholders*  $59,718             $45,301    32%
Core Diluted Earnings Per Share*  $2.23             $1.72    30%
Core Return on Average Assets*   1.43%             1.37%     
Core Return on Average Common Stockholders' Equity*   16.60%             14.99%     
                          
BALANCE SHEET                         
Total Assets  $6,002,621   $5,646,055    6%  $4,772,601    26%
Loans   4,657,284    4,539,338    3%   4,044,242    15%
Non-interest-bearing Demand Deposits   1,269,726    1,185,668    7%   1,029,354    23%
Total Deposits   5,081,128    4,664,795    9%   4,044,634    26%
Stockholders' Equity   507,866    489,097    4%   431,194    18%

 

* 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" below.

 

 

 

DETAILED FINANCIALS

 

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $20.9 million for the quarter ended September 30, 2016, compared to net income of $16.3 million and net income available to common stockholders of $16.2 million for the same quarter in 2015. Basic and diluted earnings per common share were $0.80 and $0.78, respectively, for the third quarter of 2016, compared to $0.63 and $0.61, respectively, for the third quarter of 2015.

 

Return on average assets was 1.39% and return on average equity was 16.66% for the third quarter of 2016, compared to 1.38% and 15.52%, respectively, for the third quarter of 2015.

 

Net interest income was $47.9 million for the third quarter of 2016, compared to $45.9 million for the second quarter of 2016 and $41.9 million for the third quarter of 2015. The increase in net interest income on a linked quarter basis is attributable to a $164.0 million increase in average loans outstanding, a $107.6 million increase in non-interest-bearing deposits and a $20.0 million increase in average stockholders’ equity and other liabilities, all resulting in a positive mix change in our balance sheet. The average yield on loans increased one basis point to 4.48% on a linked quarter basis. The net interest margin in the third quarter of 2016 was 3.35%, a 16 basis point decrease from the second quarter of 2016 and 42 basis point decrease from the third quarter of 2015. The decrease in the net interest margin is primarily the result of excess liquidity in the form of large amounts in federal funds sold and funds on deposit at the Federal Reserve Bank. Average balances in these accounts increased $269.8 million on a linked quarter basis and $614.4 million when compared to the third quarter of 2015.

 

Average loans for the third quarter of 2016 were $4.59 billion, an increase of $164.0 million, or 4%, over average loans of $4.42 billion for the second quarter of 2016, and an increase of $660.8 million, or 17%, over average loans of $3.93 billion for the third quarter of 2015.

 

Average total deposits for the third quarter of 2016 were $4.98 billion, an increase of $501.9 million, or 11%, over average total deposits of $4.48 billion for the second quarter of 2016, and an increase of $1.06 billion, or 27%, over average total deposits of $3.92 billion for the third quarter of 2015.

 

Non-performing assets to total assets were 0.16% for the third quarter of 2016, a decrease of one basis point compared to 0.17% for the second quarter of 2016 and a decrease of 18 basis points compared to 0.34% for the third quarter of 2015. Net credit charge-offs to average loans were 0.13%, a 5 basis point decrease compared to 0.18% for the second quarter of 2016 and an eight basis point increase compared to 0.05% for the third quarter of 2015. We recorded a $3.5 million provision for loan losses in the third quarter of 2016 compared to $3.8 million in the second quarter of 2016 and $3.1 million in the third quarter of 2015. The allowance for loan loss as a percentage of total loans increased one basis point to 1.05% at September 30, 2016, compared to 1.04% at June 30, 2016 and was flat compared to 1.05% at September 30, 2015. 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 increased $1.1 million during the third quarter of 2016, or 28%, compared to the third quarter of 2015. Mortgage banking revenue increased by $239,000 in the third quarter of 2016, or 27%, compared to the third quarter of 2015, resulting from improved operations, translating to increased net gains on sales. Credit card income increased $593,000 in the third quarter of 2016, or 99%, compared to the third quarter of 2015, resulting from a 58% increase in the volume of spending and a 62% increase in the number of credit card accounts. We introduced a purchase card product in the fourth quarter of 2015. This new product also contributed to our increase in credit card income.

 

Non-interest expense for the third quarter of 2016 increased $1.9 million, or 10%, to $20.2 million from $18.2 million in the third quarter of 2015, and increased $658,000, or 3%, on a linked quarter basis. Salary and benefit expense for the third quarter of 2016 increased $363,000, or 3%, to $11.0 million from $10.6 million in the third quarter of 2015, and increased $225,000, or 2%, on a linked quarter basis. Equipment and Occupancy expense increased $525,000, or 33%, to $2.1 million in the third quarter of 2016, from $1.6 million in the third quarter of 2015. This increase in equipment and occupancy expense was attributable to new offices in our Charleston, South Carolina and Nashville, Tennessee regions, each of which were relocations from temporary facilities we previously occupied. We also accelerated depreciation of leasehold improvements in our Birmingham, Alabama headquarters building to coincide with our anticipated move date to our new headquarters building, which we anticipate will be in the second half of 2017. Professional services expense increased $514,000, or 77%, to $1.2 million in the third quarter of 2016, from $668,000 in the third quarter of 2015, primarily the result of accruals for current pending litigation. Other operating expense for the third quarter of 2016 increased $640,000, or 15%, to $5.0 million from $4.3 million in the third quarter of 2015. This was primarily the result of higher data processing expenses related to increased online banking transaction volumes and an upgrade of our correspondent banking platform, increased Federal Reserve Bank charges from our correspondent bank clearing activities and increased credit card processing expenses. We also contributed $113,000 to a Birmingham-based charitable organization as part of an investment in a new markets tax credit partnership. These increases were offset by lower costs incurred related to nonperforming loans.

 

 

 

Income tax expense increased $160,000, or 2%, to $8.2 million in the third quarter of 2016, compared to $8.0 million in the third quarter of 2015, and increased $1.2 million, or 6%, to $22.0 million in the nine month period ended September 30, 2016, compared to $20.9 million in the nine month period ended September 30, 2015. In the second quarter of 2016 we adopted the amendments in Accounting Standards Update 2016-09 using the modified retrospective method. We have recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $421,000 in the third quarter of 2015 and $4.7 million in the nine months ended September 30, 2016. Previously under generally accepted accounting principles, such credits were reflected within additional paid-in capital.

 

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

 

We recorded expenses of $2.1 million for the first quarter of 2015 related to the acquisition of Metro Bancshares, Inc. and the merger of Metro Bank with and into the Bank, and recorded an expense of $500,000 resulting from the initial funding of reserves for unfunded loan commitments for the first quarter of 2015, consistent with guidance provided in the Federal Reserve Bank’s Inter-agency Policy Statement SR 06-17. 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 merger expenses, the initial funding of reserves for unfunded loan commitments, and are all considered non-GAAP financial measures. Other non-GAAP financial measures included in this press release are “tangible common stockholders’ equity,” “total tangible assets,” “tangible book value per share,” and “tangible common equity to total tangible assets.” All non-GAAP financial measures are more fully explained below.

 

“Core net income” is defined as net income, adjusted by the net effect of the non-routine expense.

 

“Core net income available to common stockholders” is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense.

 

“Core diluted earnings per share” is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense, divided by weighted average diluted shares outstanding.

 

“Core return on average assets” is defined as net income, adjusted by the net effect of the non-routine expense, divided by average total assets.

 

“Core return of average common stockholders’ equity” is defined as net income, adjusted by the net effect of the non-routine expense, divided by average common stockholders’ equity.

 

“Tangible common stockholders’ equity” is defined as common stockholders’ equity, adjusted by the total of goodwill and other identifiable intangible assets.

 

“Total tangible assets” is defined as total assets, adjusted by the total of goodwill and other identifiable intangible assets.

 

“Tangible book value per share” is defined as tangible common stockholders’ equity divided by the number of common shares outstanding.

 

“Tangible common equity to total tangible assets” is defined as tangible common equity divided by total tangible assets.

 

We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures as of and for the nine month comparative periods ended September 30, 2016 and 2015 included in this press release. Dollars are in thousands, except share and per share data.

 

 

 

   As Of
September 30, 2016
   As Of and For the
Nine Months Ended
September 30, 2015
 
Return on average assets - GAAP        1.32%
Net income - GAAP       $43,790 
Adjustments:          
Merger expenses - Metro Bancshares, Inc.        2,096 
Initial reserve for unfunded loan commitments        500 
Tax (benefit) of adjustments        (829)
Core net income - non-GAAP*       $45,557 
Average assets - GAAP       $4,430,226 
Core return on average assets - non-GAAP*        1.37%
           
Return on average common stockholders' equity - GAAP        14.40%
Net income available to common stockholders - GAAP       $43,534 
Adjustments:          
Merger expenses - Metro Bancshares, Inc.        2,096 
Initial reserve for unfunded loan commitments        500 
Tax (benefit) of adjustments        (829)
Core net income available to common stockholders - non-GAAP*       $45,301 
Average common stockholders' equity - GAAP       $404,177 
Core return on average common stockholders' equity - non-GAAP*        14.99%
           
Diluted earnings per share - GAAP       $1.65 
Weighted average shares outstanding, diluted - GAAP        26,391,100 
Core diluted earnings per share - non-GAAP*       $1.72 
           
Book value per share - GAAP  $19.31   $16.65 
Total common stockholders' equity - GAAP   507,866    431,194 
Adjustments:          
Goodwill and other identifiable intangible assets   15,073    17,756 
Tangible common stockholders' equity - non-GAAP  $492,793   $413,438 
Tangible book value per share - non-GAAP  $18.73   $15.96 
           
Stockholders' equity to total assets - GAAP   8.46%   9.03%
Total assets - GAAP  $6,002,621   $4,772,601 
Adjustments:          
Goodwill and other identifiable intangible assets   15,073    17,756 
Total tangible assets - non-GAAP  $5,987,548   $4,754,845 
Tangible common equity to total tangible assets - non-GAAP   8.23%   8.70%

 

* 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" above.

 

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 http://servisfirstbancshares.investorroom.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 http://servisfirstbancshares.investorroom.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 2016   2nd Quarter 2016   1st Quarter 2016   4th Quarter 2015   3rd Quarter 2015 
CONSOLIDATED STATEMENT OF INCOME                         
Interest income  $54,691   $52,050   $49,961   $48,451   $46,532 
Interest expense   6,773    6,159    5,782    5,290    4,670 
Net interest income   47,918    45,891    44,179    43,161    41,862 
Provision for loan losses   3,464    3,800    2,059    3,308    3,072 
Net interest income after provision for loan losses   44,454    42,091    42,120    39,853    38,790 
Non-interest income   4,791    3,847    3,435    3,475    3,738 
Non-interest expense   20,162    19,504    19,290    19,002    18,248 
Income before income tax   29,083    26,434    26,265    24,326    24,280 
Provision for income tax   8,174    7,558    6,309    4,576    8,014 
Net income   20,909    18,876    19,956    19,750    16,266 
Preferred stock dividends   -    23    -    24    33 
Net income available to common stockholders  $20,909   $18,853   $19,956   $19,726   $16,233 
Earnings per share - basic  $0.80   $0.72   $0.76   $0.76   $0.63 
Earnings per share - diluted  $0.78   $0.71   $0.75   $0.74   $0.61 
Average diluted shares outstanding   26,939,664    26,726,284    26,566,810    26,595,239    26,506,334 
                          
CONSOLIDATED BALANCE SHEET DATA                         
Total assets  $6,002,621   $5,646,055   $5,378,599   $5,095,509   $4,772,601 
Loans   4,657,284    4,539,338    4,340,900    4,216,375    4,044,242 
Debt securities   377,270    347,706    362,106    370,364    334,635 
Non-interest-bearing demand deposits   1,269,726    1,185,668    1,070,275    1,053,467    1,029,354 
Total deposits   5,081,128    4,664,795    4,339,747    4,223,888    4,044,634 
Borrowings   55,356    55,450    55,543    55,637    55,728 
Stockholders' equity  $507,866   $489,097   $470,940   $449,147   $431,194 
                          
Shares outstanding   26,305,448    26,251,948    26,182,698    25,972,698    25,903,698 
Book value per share  $19.31   $18.63   $17.99   $17.29   $16.65 
Tangible book value per share (1)  $18.73   $18.05   $17.40   $16.70   $15.96 
                          
SELECTED FINANCIAL RATIOS                         
Net interest margin   3.35%   3.51%   3.57%   3.56%   3.77%
Return on average assets   1.39%   1.37%   1.53%   1.55%   1.38%
Return on average common stockholders' equity   16.66%   15.79%   17.39%   17.75%   15.52%
Efficiency ratio   38.25%   39.21%   40.51%   40.75%   40.02%
Non-interest expense to average earning assets   1.39%   1.50%   1.56%   1.56%   1.63%
                          
CAPITAL RATIOS (2)                         
Common equity tier 1 capital to risk-weighted assets (3)   9.91%   9.83%   9.90%   9.72%   9.59%
Tier 1 capital to risk-weighted assets   9.92%   9.84%   9.91%   9.73%   9.60%
Total capital to risk-weighted assets   12.03%   11.98%   12.12%   11.95%   11.89%
Tier 1 capital to average assets   8.20%   8.52%   8.65%   8.55%   8.83%
Tangible common equity to total tangible assets (1)   8.23%   8.42%   8.50%   8.54%   8.70%

 

(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.

(3) Basel III final capital rules, including the new Common Equity Tier 1 Capital to Risk-Weighted Assets ratio, became effective for the Company on January 1, 2015.

 

 

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

 

   September 30, 2016   September 30, 2015   % Change 
ASSETS               
Cash and due from banks  $57,221   $50,481    13%
Interest-bearing balances due from depository institutions   553,392    165,982    233%
Federal funds sold   181,644    26,229    593%
Cash and cash equivalents   792,257    242,692    226%
Available for sale debt securities, at fair value   351,417    306,666    15%
Held to maturity debt securities (fair value of $26,912 and $28,511 at September 30, 2016 and 2015, respectively)   25,853    27,969    (8)%
Restricted equity securities   5,668    4,954    14%
Mortgage loans held for sale   6,026    5,387    12%
Loans   4,657,284    4,044,242    15%
Less allowance for loan losses   (48,933)   (42,574)   15%
Loans, net   4,608,351    4,001,668    15%
Premises and equipment, net   25,033    18,989    32%
Goodwill and other identifiable intangible assets   15,073    17,756    (15)%
Other assets   172,943    146,520    18%
Total assets  $6,002,621   $4,772,601    26%
LIABILITIES AND STOCKHOLDERS' EQUITY               
Liabilities:               
Deposits:               
Non-interest-bearing  $1,269,726   $1,029,354    23%
Interest-bearing   3,811,402    3,015,280    26%
Total deposits   5,081,128    4,044,634    26%
Federal funds purchased   344,390    228,415    51%
Other borrowings   55,356    55,728    (1)%
Other liabilities   13,881    12,630    10%
Total liabilities   5,494,755    4,341,407    27%
Stockholders' equity:               
Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001 (liquidation preference $1,000), net of discount; no shares authorized or outstanding at September 30, 2016, and 40,000 authorized, no shares issued and outstanding at September 30, 2015   -    -      
Preferred stock, par value $0.001 per share; 1,000,000 shares authorized and undesignated at September 30, 2016, and 1,000,000 shares authorized and 960,000 shares undesignated at September 30, 2015   -    -      
Common stock, par value $0.001 per share; 100,000,000 shares authorized and 26,305,448 shares issued and outstanding at September 30, 2016 and 50,000,000 authorized and 25,903,698 shares issued and outstanding at September 30, 2015   26    26    -%
Additional paid-in capital   215,262    210,331    2%
Retained earnings   287,568    215,982    33%
Accumulated other comprehensive income   4,633    4,478    3%
Noncontrolling interest   377    377    -%
Total stockholders' equity   507,866    431,194    18%
Total liabilities and stockholders' equity  $6,002,621   $4,772,601    26%

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2016   2015   2016   2015 
Interest income:                    
Interest and fees on loans  $51,598   $44,401   $148,055   $125,152 
Taxable securities   1,107    1,041    3,614    3,273 
Nontaxable securities   823    890    2,515    2,624 
Federal funds sold   347    32    630    81 
Other interest and dividends   816    168    1,888    394 
Total interest income   54,691    46,532    156,702    131,524 
Interest expense:                    
Deposits   5,358    3,818    14,352    10,600 
Borrowed funds   1,415    852    4,362    1,814 
Total interest expense   6,773    4,670    18,714    12,414 
Net interest income   47,918    41,862    137,988    119,110 
Provision for loan losses   3,464    3,072    9,323    9,539 
Net interest income after provision for loan losses   44,454    38,790    128,665    109,571 
Non-interest income:                    
Service charges on deposit accounts   1,367    1,279    3,980    3,762 
Mortgage banking   1,112    873    2,681    2,062 
Securities gains   -    -    (3)   29 
Increase in cash surrender value life insurance   770    683    2,049    1,991 
Other operating income   1,542    903    3,366    2,258 
Total non-interest income   4,791    3,738    12,073    10,102 
Non-interest expense:                    
Salaries and employee benefits   10,958    10,595    32,758    30,029 
Equipment and occupancy expense   2,100    1,575    6,108    4,870 
Professional services   1,182    668    2,919    1,901 
FDIC and other regulatory assessments   775    681    2,328    1,927 
Other real estate owned expense   178    400    668    903 
Merger expense   -    -    -    2,100 
Other operating expense   4,969    4,329    14,175    13,264 
Total non-interest expense   20,162    18,248    58,956    54,994 
Income before income tax   29,083    24,280    81,782    64,679 
Provision for income tax   8,174    8,014    22,041    20,889 
Net income   20,909    16,266    59,741    43,790 
Dividends on preferred stock   -    33    23    256 
Net income available to common stockholders  $20,909   $16,233   $59,718   $43,534 
Basic earnings per common share  $0.80   $0.63   $2.27   $1.70 
Diluted earnings per common share  $0.78   $0.61   $2.23   $1.65 

 

LOANS BY TYPE (UNAUDITED)

(In thousands)

 

   3rd Quarter 2016   2nd Quarter 2016   1st Quarter 2016   4th Quarter 2015   3rd Quarter 2015 
Commercial, financial and agricultural  $1,910,777   $1,895,870   $1,799,132   $1,760,479   $1,683,819 
Real estate - construction   292,721    251,144    254,254    243,267    232,895 
Real estate - mortgage:                         
Owner-occupied commercial   1,138,308    1,117,514    1,055,852    1,014,669    978,721 
1-4 family mortgage   520,394    494,733    458,032    444,134    417,012 
Other mortgage   740,127    725,336    723,542    698,779    677,822 
Subtotal: Real estate - mortgage   2,398,829    2,337,583    2,237,426    2,157,582    2,073,555 
Consumer   54,957    54,741    50,088    55,047    53,973 
Total loans  $4,657,284   $4,539,338   $4,340,900   $4,216,375   $4,044,242 

 

 

 

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)

(Dollars in thousands)

 

   3rd Quarter 2016   2nd Quarter 2016   1st Quarter 2016   4th Quarter 2015   3rd Quarter 2015 
Allowance for loan losses:                         
Beginning balance  $46,998   $45,145   $43,419   $42,574   $40,020 
Loans charged off:                         
Commercial financial and agricultural   1,270    1,412    50    2,186    388 
Real estate - construction   79    355    381    161    31 
Real estate - mortgage   144    191    -    463    - 
Consumer   81    31    18    21    126 
Total charge offs   1,574    1,989    449    2,831    545 
Recoveries:                         
Commercial financial and agricultural   35    1    3    241    13 
Real estate - construction   9    39    16    61    13 
Real estate - mortgage   1    2    97    65    1 
Consumer   -    -    -    1    - 
Total recoveries   45    42    116    368    27 
Net charge-offs   1,529    1,947    333    2,463    518 
Provision for loan losses   3,464    3,800    2,059    3,308    3,072 
Ending balance  $48,933   $46,998   $45,145   $43,419   $42,574 
                          
Allowance for loan losses to total loans   1.05%   1.04%   1.04%   1.03%   1.05%
Allowance for loan losses to total average loans   1.07%   1.06%   1.06%   1.05%   1.08%
Net charge-offs to total average loans   0.13%   0.18%   0.03%   0.24%   0.05%
Provision for loan losses to total average loans   0.30%   0.34%   0.20%   0.32%   0.31%
Nonperforming assets:                         
Nonaccrual loans  $6,647   $4,730   $6,133   $7,767   $9,850 
Loans 90+ days past due and accruing   43    423    417    1    524 
Other real estate owned and repossessed assets   3,035    4,260    4,044    5,392    6,068 
Total  $9,725   $9,413   $10,594   $13,160   $16,442 
                          
Nonperforming loans to total loans   0.14%   0.11%   0.15%   0.18%   0.26%
Nonperforming assets to total assets   0.16%   0.17%   0.20%   0.26%   0.34%
Nonperforming assets to earning assets   0.16%   0.17%   0.20%   0.26%   0.35%
Reserve for loan losses to nonaccrual loans   736.17%   993.62%   736.10%   559.02%   432.22%
                          
Restructured accruing loans  $6,738   $6,753   $6,763   $6,782   $8,266 
                          
Restructured accruing loans to total loans   0.14%   0.15%   0.16%   0.16%   0.20%

  

TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)

(In thousands)

 

   3rd Quarter 2016   2nd Quarter 2016   1st Quarter 2016   4th Quarter 2015   3rd Quarter 2015 
Beginning balance:  $6,753   $6,763   $7,736   $8,266   $8,279 
Net (paydowns) / advances   (15)   (10)   (19)   (83)   (13)
Transfers to other real estate owned   -    -    (954)   -    - 
Charge-offs   -    -    -    (447)   - 
   $6,738   $6,753   $6,763   $7,736   $8,266 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

   3rd Quarter 2016   2nd Quarter 2016   1st Quarter 2016   4th Quarter 2015   3rd Quarter 2015 
Interest income:                         
Interest and fees on loans  $51,598   $49,210   $47,247   $46,150   $44,401 
Taxable securities   1,107    1,238    1,269    1,058    1,041 
Nontaxable securities   823    834    858    875    890 
Federal funds sold   347    210    73    46    32 
Other interest and dividends   816    558    514    322    168 
Total interest income   54,691    52,050    49,961    48,451    46,532 
Interest expense:                         
Deposits   5,358    4,611    4,361    4,294    3,818 
Borrowed funds   1,415    1,548    1,421    996    852 
Total interest expense   6,773    6,159    5,782    5,290    4,670 
Net interest income   47,918    45,891    44,179    43,161    41,862 
Provision for loan losses   3,464    3,800    2,059    3,308    3,072 
Net interest income after provision for loan losses   44,454    42,091    42,120    39,853    38,790 
Non-interest income:                         
Service charges on deposit accounts   1,367    1,306    1,307    1,326    1,279 
Mortgage banking   1,112    901    668    620    873 
Securities gains   -    (3)   -    -    - 
Increase in cash surrender value life insurance   770    655    624    630    683 
Other operating income   1,542    988    836    899    903 
Total non-interest income   4,791    3,847    3,435    3,475    3,738 
Non-interest expense:                         
Salaries and employee benefits   10,958    10,733    11,067    8,884    10,595 
Equipment and occupancy expense   2,100    2,023    1,985    1,519    1,575 
Professional services   1,182    999    738    706    668 
FDIC and other regulatory assessments   775    803    750    733    681 
Other real estate owned expense   178    41    449    324    400 
Other operating expense   4,969    4,905    4,301    6,836    4,329 
Total non-interest expense   20,162    19,504    19,290    19,002    18,248 
Income before income tax   29,083    26,434    26,265    24,326    24,280 
Provision for income tax   8,174    7,558    6,309    4,576    8,014 
Net income   20,909    18,876    19,956    19,750    16,266 
Dividends on preferred stock   -    23    -    24    33 
Net income available to common stockholders  $20,909   $18,853   $19,956   $19,726   $16,233 
Basic earnings per common share  $0.80   $0.72   $0.76   $0.76   $0.63 
Diluted earnings per common share  $0.78   $0.71   $0.75   $0.74   $0.61 

 

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

 

   3rd Quarter 2016   2nd Quarter 2016   1st Quarter 2016   4th Quarter 2015   3rd Quarter 2015 
   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  $4,564,475    4.48%  $4,406,107    4.47%  $4,230,057    4.48%  $4,113,044    4.44%  $3,915,778    4.48%
Tax-exempt (2)   21,939    4.39    16,315    4.51    10,281    5.56    9,639    4.98    9,802    4.98 
Total loans, net of unearned income   4,586,414    4.48    4,422,422    4.47    4,240,338    4.48    4,122,683    4.44    3,925,580    4.48 
Mortgage loans held for sale   6,724    3.79    7,323    3.62    6,084    4.63    4,362    4.27    7,714    4.32 
Debt securities:                                                  
Taxable   215,250    2.06    208,113    2.38    221,722    2.29    193,982    2.16    189,941    2.17 
Tax-exempt (2)   135,272    3.73    135,954    3.73    137,763    3.79    139,435    3.85    139,543    3.91 
Total securities (3)   350,522    2.70    344,067    2.91    359,485    2.86    333,417    2.87    329,484    2.91 
Federal funds sold   217,158    0.64    144,206    0.59    48,390    0.60    33,255    0.55    24,860    0.51 
Restricted equity securities   5,658    4.01    5,659    3.62    4,962    3.81    4,954    4.24    4,954    4.16 
Interest-bearing balances with banks   590,675    0.51    393,782    0.52    373,339    0.51    366,771    0.29    168,548    0.27 
Total interest-earning assets   5,757,151    3.81%   5,317,459    3.97%   5,032,598    4.03%   4,865,442    3.99%   4,461,140    4.18%
Non-interest-earning assets:                                                  
Cash and due from banks   58,809         65,318         61,578         62,037         63,259      
Net premises and equipment   25,000         23,241         21,023         19,609         18,961      
Allowance for loan losses, accrued interest and other assets   145,804         127,640         126,491         124,241         127,778      
Total assets  $5,986,764        $5,533,658        $5,241,690        $5,071,329        $4,671,136      
                                                   
Interest-bearing liabilities:                                                  
Interest-bearing deposits:                                                  
Checking  $696,100    0.37%  $691,776    0.36%  $665,039    0.35%  $611,521    0.30%  $593,550    0.28%
Savings   43,569    0.30    41,546    0.30    41,055    0.29    39,590    0.29    37,281    0.30 
Money market   2,471,829    0.55    2,105,420    0.52    1,979,727    0.51    2,048,453    0.49    1,817,997    0.47 
Time deposits   519,653    0.99    498,151    1.01    507,605    1.00    503,217    1.00    485,137    0.99 
Total interest-bearing deposits   3,731,151    0.57    3,336,893    0.56    3,193,426    0.55    3,202,781    0.54    2,933,965    0.52 
Federal funds purchased   436,415    0.64    505,076    0.64    441,309    0.64    295,530    0.37    246,168    0.31 
Other borrowings   55,410    5.15    55,521    5.20    55,630    5.19    55,805    5.11    50,509    5.18 
Total interest-bearing liabilities   4,222,976    0.64%   3,897,490    0.64%   3,690,365    0.63%   3,554,116    0.59%   3,230,642    0.57%
Non-interest-bearing liabilities:                                                  
Non-interest-bearing demand   1,250,139         1,142,541         1,077,613         1,062,795         988,756      
Other liabilities   14,376         13,301         12,194         13,469         23,714      
Stockholders' equity   494,248         475,917         457,218         436,928         424,113      
Unrealized gains on securities and derivatives   5,025         4,409         4,300         4,021         3,911      
Total liabilities and stockholders' equity  $5,986,764        $5,533,658        $5,241,690        $5,071,329        $4,671,136      
Net interest spread        3.17%        3.33%        3.40%        3.40%        3.61%
Net interest margin        3.35%        3.51%        3.57%        3.56%        3.77%

 

(1)Average loans include loans on which the accrual of interest has been discontinued.