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ServisFirst Bancshares, Inc. Announces Results For Second Quarter of 2023

ServisFirst Bancshares, Inc. (NYSE: SFBS), today announced earnings and operating results for the quarter ended June 30, 2023.

Second Quarter 2023 Highlights:

  • Net income of $53.5 million, or $0.98 per share.
  • Deposits grew $672.9 million on a linked-quarter basis, or 23.2% annualized.
  • Loans grew $987.6 million, or 9.3%, year-over-year.
  • Strong liquidity and significant available liquidity sources with no FHLB advances and no brokered deposits.
  • Consolidated Common Equity Tier 1 capital to risk-weighted asset increased from 9.64% to 10.37% year-over-year.
  • Bank level Tier 1 capital to average assets increased from 8.60% to 10.25% year-over-year.
  • An increase of 20% in new accounts opened year-over-year.
  • Book value per share increased 12% year-over-year.

Tom Broughton, Chairman, President and CEO, said, “Our best-in-class banking team delivered strong growth in core banking relationships during the quarter, and the outlook for growth in new relationships is very good.”

Bud Foshee, CFO, said, “Our strong balance sheet serves us well in attracting new clients looking for a well-capitalized bank with excellent liquidity that has no brokered deposits or FHLB advances.”

FINANCIAL SUMMARY (UNAUDITED)

(in Thousands except share and per share amounts)

 

 

 

 

 

 

 

Period Ending June 30, 2023

Period Ending March 31, 2023

% Change From Period Ending March 31, 2023 to Period Ending June 30, 2023

Period Ending June 30, 2022

% Change From Period Ending June 30, 2022 to Period Ending June 30, 2023

QUARTERLY OPERATING RESULTS

 

 

 

 

 

Net Income

$

53,468

 

$

57,971

 

(8

)%

$

62,136

 

(14

)%

Net Income Available to Common Stockholders

$

53,437

 

$

57,971

 

(8

)%

$

62,105

 

(14

)%

Diluted Earnings Per Share

$

0.98

 

$

1.06

 

(8

)%

$

1.14

 

(14

)%

Return on Average Assets

 

1.50

%

 

1.63

%

 

 

1.67

%

 

Return on Average Common Stockholders' Equity

 

15.85

%

 

17.83

%

 

 

20.93

%

 

Average Diluted Shares Outstanding

 

54,505,726

 

 

54,534,482

 

 

 

54,532,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YEAR-TO-DATE OPERATING RESULTS

 

 

 

 

 

Net Income

$

111,439

 

 

 

$

119,749

 

(7

)%

Net Income Available to Common Stockholders

$

111,408

 

 

 

$

119,718

 

(7

)%

Diluted Earnings Per Share

$

2.04

 

 

 

$

2.20

 

(7

)%

Return on Average Assets

 

1.57

%

 

 

 

1.60

%

 

Return on Average Common Stockholders' Equity

 

16.83

%

 

 

 

20.52

%

 

Average Diluted Shares Outstanding

 

54,520,025

 

 

 

 

54,527,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

Total Assets

$

15,072,808

 

$

14,566,559

 

3

%

$

14,494,317

 

4

%

Loans

 

11,604,894

 

 

11,629,802

 

-

%

 

10,617,320

 

9

%

Non-interest-bearing Demand Deposits

 

2,855,102

 

 

2,898,736

 

(2

)%

 

4,686,511

 

(39

)%

Total Deposits

 

12,288,219

 

 

11,615,317

 

6

%

 

11,772,337

 

4

%

Stockholders' Equity

 

1,363,471

 

 

1,339,817

 

2

%

 

1,211,918

 

13

%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income of $53.5 million and net income available to common stockholders of $53.4 million for the quarter ended June 30, 2023, compared to net income and net income available to common stockholders of $58.0 million for the first quarter of 2023 and $62.1 million on for the second quarter of 2022. Basic and diluted earnings per common share were both $0.98 in the second quarter of 2023, compared to $1.07 and $1.06, respectively, in the first quarter of 2023 and $1.14 for both in the second quarter of 2022.

Annualized return on average assets was 1.50% and annualized return on average common stockholders’ equity was 15.85% for the second quarter of 2023, compared to 1.67% and 20.93%, respectively, for the second quarter of 2022.

Net interest income was $101.3 million for the second quarter of 2023, compared to $108.3 million for the first quarter of 2023 and $116.4 million for the second quarter of 2022. Net interest income was negatively impacted by the continued narrowing in net interest spread due to Federal Reserve increases in interest rates over the last year. The net interest margin in the second quarter of 2023 was 2.93% compared to 3.15% in the first quarter of 2023 and 3.26% in the second quarter of 2022. Loan yields were 5.94% during the second quarter of 2023 compared to 5.70% during the first quarter of 2023 and 4.38% during the second quarter of 2022. Investment yields were 2.64% during the second quarter of 2023 compared to 2.54% during the first quarter of 2023 and 2.37% during the second quarter of 2022. The increases in loan and investment yields were offset by increases in interest-bearing deposit rates, a shift from non-interest-bearing demand deposits to interest-bearing deposits, and higher interest rates on federal funds purchased. Average interest-bearing deposit rates were 3.32% during the second quarter of 2023, compared to 2.68% during the first quarter of 2023 and 0.36% during the second quarter of 2022. Average federal funds purchased rates were 5.14% during second quarter of 2023, compared to 4.67% during the first quarter of 2023 and 0.79% during the second quarter of 2022.

Average loans for the second quarter of 2023 were $11.60 billion, a decrease of $52.1 million, or 1.8% annualized, from average loans of $11.65 billion for the first quarter of 2023, and an increase of $1.41 billion, or 13.8%, from average loans of $10.19 billion for the second quarter of 2022.

Average total deposits for the second quarter of 2023 were $11.58 billion, an increase of $78.4 million, or 2.7%, annualized, over average total deposits of $11.50 billion for the first quarter of 2023, and a decrease of $459.4 million, or 3.8%, from average total deposits of $12.04 billion for the second quarter of 2022.

Non-performing assets to total assets were 0.16% for the second quarter of 2023, an increase of four basis points compared to 0.12% for both first quarter of 2023 and the second quarter of 2022. Annualized net charge-offs to average loans were 0.11% for the second quarter of 2023, compared to 0.05% and 0.02% for the first quarter of 2023 and second quarter of 2022, respectively. The allowance for credit losses as a percentage of total loans at June 30, 2023, March 31, 2023 and June 30, 2022, was 1.31%, 1.28%, and 1.25%, respectively. We recorded a $6.7 million provision for credit losses in the second quarter of 2023 compared to $4.2 million in the first quarter of 2023, and $9.5 million in the second quarter of 2022.

Non-interest income decreased $924,000, or 9.7%, to $8.6 million for the second quarter of 2023 from $9.5 million in the second quarter of 2022, and increased $2.3 million, or 35.8%, on a linked quarter basis. Service charges on deposit accounts increased $9,000, or 0.4%, to $2.1 million from the second quarter of 2022 to the second quarter of 2023, and increased $208,000, or 10.8%, on a linked quarter basis. Mortgage banking revenue increased $82,000, or 13.4%, to $696,000 from the second quarter of 2022 to the second quarter of 2023, and increased $254,000, or 57.5%, on a linked quarter basis. Net credit card revenue decreased $266,000, or 10.0%, to $2.4 million during the second quarter of 2023, compared to $2.7 million during the second quarter of 2022, and increased $717,000, or 42.5%, on a linked quarter basis. The aggregate amount of spend on all credit card accounts increased 5.3% during the second quarter of 2023 compared to the second quarter of 2022. Bank-owned life insurance (“BOLI”) income decreased $1.2 million, or 33.1%, to $2.5 million during the second quarter of 2023, compared to $3.7 million during the second quarter of 2022, and increased $875,000, or 54.0%, on a linked quarter basis. During the second quarter of 2023, we recognized $890,000 of income primarily attributed to a death benefit related to a former employee in our BOLI program, compared to $2.1 million during the second quarter of 2022. Other operating income for the second quarter of 2023 decreased $2.3 million, or 73.6%, to $842,000 from $3.2 million in the second quarter of 2022, and increased $207,000, or 32.6%, on a linked quarter basis. We recognized $48,000 of income on an interest rate cap during the second quarter of 2023, compared to $2.2 million in the second quarter 2022. The interest rate cap matured during the second quarter of 2023. Merchant service revenue increased $110,000, or 23.5%, to $581,000 for the second quarter of 2023 from $471,000 in the second quarter of 2022. We recognized a $2.8 million loss on the sale of available for sale debt securities during the second quarter of 2022.

Non-interest expense for the second quarter of 2023 decreased $1.4 million, or 3.4%, to $38.5 million from $39.8 million in the second quarter of 2022, and decreased $1.2 million, or 3.0%, on a linked quarter basis. Salary and benefit expense for the second quarter of 2023 decreased $1.9 million, or 9.4%, to $18.8 million from $20.7 million in the second quarter of 2022, and decreased $271,000, or 1.4%, on a linked quarter basis. The number of FTE employees increased by 37 to 577 at June 30, 2023 compared to 540 at June 30, 2022, and increased by 4 from the end of the first quarter of 2023. The increased costs from the modest headcount expansion were offset by a reduction in incentive expense. Equipment and occupancy expense increased $438,000, or 14.7%, to $3.4 million in the second quarter of 2023, from $3.0 million in the second quarter of 2022, and decreased $14,000, or 0.4% on a linked-quarter basis. The year-over-year increase is primarily attributed to new leases that commenced after the second quarter of 2022. Third party processing and other services expense decreased $147,000, or 2.3%, to $6.2 million in the second quarter of 2023, from $6.3 million in the second quarter of 2022, and decreased $1.1 million, or 14.9%, on a linked-quarter basis. The decrease year-over-year in third party processing also includes Federal Reserve Bank charges related to correspondent bank settlement activities. Professional services expense increased $253,000, or 19.1%, to $1.6 million in the second quarter of 2023, from $1.3 million in the second quarter of 2022. FDIC and other regulatory assessments increased $1.1 million to $2.2 million in the second quarter of 2023, from $1.1 million in the second quarter of 2022, and increased $725,000, or 47.8%, on a linked quarter basis. The FDIC increased the assessment rate by two basis points beginning in the first quarter of 2023. Other operating expenses for the second quarter of 2023 decreased $1.0 million, or 14.2%, to $6.2 million from $7.3 million in the second quarter of 2022, and decreased $478,000 on a linked-quarter basis. The efficiency ratio was 35.02% during the second quarter of 2023 compared to 31.64% during the second quarter of 2022 and 34.60% during the first quarter of 2023.

Income tax expense decreased $3.2 million, or 22.0%, to $11.2 million in the second quarter of 2023, compared to $14.4 million in the second quarter of 2022, mostly due to lower pretax net income. Our effective tax rate was 17.38% for the second quarter of 2023 compared to 18.83% for the second quarter of 2022. We recognized an aggregate of $3.8 million in credits during the second quarter of 2023 related to investments in tax credit partnerships, compared to $3.1 million during the second quarter of 2022. 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 second quarters of 2023 and 2022 of $138,000 and $352,000, respectively.

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 Alabama, Florida, Georgia, North and South Carolina, Tennessee, and Virginia. We also operate loan production offices in Florida and North Carolina. Through the bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions.

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,” “could,” “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, but not limited to: 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 as a result of our reclassification as a large financial institution by the FDIC; changes in our loan portfolio and the deposit base; credit issues associated with the efficacy of return to office policies; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, the Federal Reserve policies in connection with continued inflationary pressures and the ability of the U.S. Congress to increase the U.S. statutory debt limit as needed; 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, in our Quarterly Reports on Form 10-Q for fiscal year 2023, 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.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands except share and per share data)

 

2nd Quarter 2023

1st Quarter 2023

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

CONSOLIDATED STATEMENT OF INCOME

 

 

 

 

 

Interest income

$

189,656

 

$

181,322

 

$

170,273

 

$

149,299

 

$

126,555

 

Interest expense

 

88,405

 

 

73,021

 

 

47,889

 

 

22,881

 

 

10,187

 

Net interest income

 

101,251

 

 

108,301

 

 

122,384

 

 

126,418

 

 

116,368

 

Provision for credit losses

 

6,654

 

 

4,197

 

 

7,135

 

 

15,603

 

 

9,507

 

Net interest income after provision for credit losses

 

94,597

 

 

104,104

 

 

115,249

 

 

110,815

 

 

106,861

 

Non-interest income

 

8,582

 

 

6,321

 

 

6,966

 

 

8,939

 

 

9,506

 

Non-interest expense

 

38,466

 

 

39,664

 

 

38,092

 

 

42,685

 

 

39,821

 

Income before income tax

 

64,713

 

 

70,761

 

 

84,123

 

 

77,069

 

 

76,546

 

Provision for income tax

 

11,245

 

 

12,790

 

 

16,399

 

 

13,038

 

 

14,410

 

Net income

 

53,468

 

 

57,971

 

 

67,724

 

 

64,031

 

 

62,136

 

Preferred stock dividends

 

31

 

 

-

 

 

31

 

 

-

 

 

31

 

Net income available to common stockholders

$

53,437

 

$

57,971

 

$

67,693

 

$

64,031

 

$

62,105

 

Earnings per share - basic

$

0.98

 

$

1.07

 

$

1.25

 

$

1.18

 

$

1.14

 

Earnings per share - diluted

$

0.98

 

$

1.06

 

$

1.24

 

$

1.17

 

$

1.14

 

Average diluted shares outstanding

 

54,505,726

 

 

54,534,482

 

 

54,537,716

 

 

54,528,554

 

 

54,532,385

 

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEET DATA

 

 

 

 

 

Total assets

$

15,072,808

 

$

14,566,559

 

$

14,595,753

 

$

13,890,030

 

$

14,494,317

 

Loans

 

11,604,894

 

 

11,629,802

 

 

11,687,968

 

 

11,278,614

 

 

10,617,320

 

Debt securities

 

2,048,227

 

 

1,646,937

 

 

1,678,936

 

 

1,714,603

 

 

1,790,218

 

Non-interest-bearing demand deposits

 

2,855,102

 

 

2,898,736

 

 

3,321,347

 

 

3,661,936

 

 

4,686,511

 

Total deposits

 

12,288,219

 

 

11,615,317

 

 

11,546,805

 

 

11,051,915

 

 

11,772,337

 

Borrowings

 

64,737

 

 

65,417

 

 

64,726

 

 

64,721

 

 

64,716

 

Stockholders' equity

 

1,363,471

 

 

1,339,817

 

 

1,297,896

 

 

1,242,589

 

 

1,211,918

 

 

 

 

 

 

 

Shares outstanding

 

54,425,033

 

 

54,398,025

 

 

54,326,527

 

 

54,324,007

 

 

54,306,875

 

Book value per share

$

25.05

 

$

24.63

 

$

23.89

 

$

22.87

 

$

22.32

 

Tangible book value per share (1)

$

24.80

 

$

24.38

 

$

23.64

 

$

22.62

 

$

22.07

 

 

 

 

 

 

 

SELECTED FINANCIAL RATIOS (Annualized)

 

 

 

 

 

Net interest margin

 

2.93

%

 

3.15

%

 

3.60

%

 

3.64

%

 

3.26

%

Return on average assets

 

1.50

%

 

1.63

%

 

1.89

%

 

1.77

%

 

1.67

%

Return on average common stockholders' equity

 

15.85

%

 

17.83

%

 

21.27

%

 

20.49

%

 

20.93

%

Efficiency ratio

 

35.02

%

 

34.60

%

 

29.45

%

 

31.54

%

 

31.64

%

Non-interest expense to average earning assets

 

1.11

%

 

1.15

%

 

1.10

%

 

1.23

%

 

1.11

%

 

 

 

 

 

 

CAPITAL RATIOS (2)

 

 

 

 

 

Common equity tier 1 capital to risk-weighted assets

 

10.37

%

 

10.01

%

 

9.55

%

 

9.42

%

 

9.64

%

Tier 1 capital to risk-weighted assets

 

10.38

%

 

10.02

%

 

9.55

%

 

9.43

%

 

9.64

%

Total capital to risk-weighted assets

 

11.94

%

 

11.54

%

 

11.03

%

 

10.96

%

 

11.18

%

Tier 1 capital to average assets

 

9.83

%

 

9.49

%

 

9.29

%

 

8.84

%

 

8.19

%

Tangible common equity to total tangible assets (1)

 

8.96

%

 

9.11

%

 

8.81

%

 

8.86

%

 

8.28

%

 

 

 

 

 

 

(1) 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 associated with our acquisition of Metro Bancshares, Inc. in January 2015.

(2) Regulatory capital ratios for most recent period are preliminary.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

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 table provides 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.

 

At June 30, 2023

At March 31, 2023

At December 31, 2022

At September 30, 2022

At June 30, 2022

Book value per share - GAAP

$

25.05

 

$

24.63

 

$

23.89

 

$

22.87

 

$

22.32

 

Total common stockholders' equity - GAAP

 

1,363,471

 

 

1,339,817

 

 

1,297,896

 

 

1,242,589

 

 

1,211,918

 

Adjustments:

 

 

 

 

 

Adjusted for goodwill and core deposit intangible asset

 

(13,615

)

 

(13,615

)

 

(13,615

)

 

(13,615

)

 

(13,615

)

Tangible common stockholders' equity - non-GAAP

$

1,349,856

 

$

1,326,202

 

$

1,284,281

 

$

1,228,974

 

$

1,198,303

 

Tangible book value per share - non-GAAP

$

24.80

 

$

24.38

 

$

23.64

 

$

22.62

 

$

22.07

 

 

 

 

 

 

 

Stockholders' equity to total assets - GAAP

 

9.05

%

 

9.20

%

 

8.89

%

 

8.95

%

 

8.36

%

Total assets - GAAP

$

15,072,808

 

$

14,566,559

 

$

14,595,753

 

$

13,890,030

 

$

14,494,317

 

Adjustments:

 

 

 

 

 

Adjusted for goodwill and core deposit intangible asset

 

(13,615

)

 

(13,615

)

 

(13,615

)

 

(13,615

)

 

(13,615

)

Total tangible assets - non-GAAP

$

15,059,193

 

$

14,552,944

 

$

14,582,138

 

$

13,876,415

 

$

14,480,702

 

Tangible common equity to total tangible assets - non-GAAP

 

8.96

%

 

9.11

%

 

8.81

%

 

8.86

%

 

8.28

%

 

 

 

 

 

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

 

June 30, 2023

June 30, 2022

% Change

ASSETS

 

 

 

Cash and due from banks

$

107,251

 

$

252,638

 

(58

)%

Interest-bearing balances due from depository institutions

 

852,483

 

 

1,334,511

 

(36

)%

Federal funds sold

 

17,958

 

 

101,447

 

(82

)%

Cash and cash equivalents

 

977,692

 

 

1,688,596

 

(42

)%

Available for sale debt securities, at fair value

 

990,921

 

 

724,463

 

37

%

Held to maturity debt securities (fair value of $963,843 at June 30, 2023 and $1,003,840 at June 30, 2022)

 

1,057,306

 

 

1,065,755

 

(1

)%

Restricted equity securities

 

7,307

 

 

7,734

 

(6

)%

Mortgage loans held for sale

 

3,981

 

 

3,451

 

15

%

Loans

 

11,604,894

 

 

10,617,320

 

9

%

Less allowance for credit losses

 

(152,272

)

 

(128,387

)

19

%

Loans, net

 

11,452,622

 

 

10,488,933

 

9

%

Premises and equipment, net

 

59,655

 

 

59,482

 

-

%

Goodwill and other identifiable intangible assets

 

13,615

 

 

13,615

 

-

%

Other assets

 

509,709

 

 

442,288

 

15

%

Total assets

$

15,072,808

 

$

14,494,317

 

4

%

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Liabilities:

 

 

 

Deposits:

 

 

 

Non-interest-bearing

$

2,855,102

 

$

4,686,511

 

(39

)%

Interest-bearing

 

9,433,117

 

 

7,085,826

 

33

%

Total deposits

 

12,288,219

 

 

11,772,337

 

4

%

Federal funds purchased

 

1,298,066

 

 

1,389,167

 

(7

)%

Other borrowings

 

64,737

 

 

64,716

 

-

%

Other liabilities

 

58,315

 

 

56,179

 

4

%

Total liabilities

 

13,709,337

 

 

13,282,399

 

3

%

Stockholders' equity:

 

 

 

Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at

 

 

 

June 30, 2023 and June 30, 2022

 

-

 

 

-

 

-

%

Common stock, par value $0.001 per share; 200,000,000 shares authorized; 54,425,033 shares

 

 

 

issued and outstanding at June 30, 2023, and 54,306,875

 

 

 

shares issued and outstanding at June 30, 2022

 

54

 

 

54

 

-

%

Additional paid-in capital

 

230,659

 

 

227,906

 

1

%

Retained earnings

 

1,190,920

 

 

1,005,815

 

18

%

Accumulated other comprehensive loss

 

(58,662

)

 

(22,357

)

162

%

Total stockholders' equity attributable to ServisFirst Bancshares, Inc.

 

1,362,971

 

 

1,211,418

 

13

%

Noncontrolling interest

 

500

 

 

500

 

-

%

Total stockholders' equity

 

1,363,471

 

 

1,211,918

 

13

%

Total liabilities and stockholders' equity

$

15,072,808

 

$

14,494,317

 

4

%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2023

 

2022

 

2023

 

2022

Interest income:

 

 

 

 

Interest and fees on loans

$

171,718

$

111,287

 

$

335,450

$

214,392

 

Taxable securities

 

11,570

 

10,515

 

 

22,465

 

18,738

 

Nontaxable securities

 

17

 

37

 

 

38

 

80

 

Federal funds sold

 

227

 

93

 

 

841

 

106

 

Other interest and dividends

 

6,124

 

4,623

 

 

12,184

 

6,427

 

Total interest income

 

189,656

 

126,555

 

 

370,978

 

239,743

 

Interest expense:

 

 

 

 

Deposits

 

71,971

 

6,427

 

 

127,684

 

12,270

 

Borrowed funds

 

16,434

 

3,760

 

 

33,742

 

5,383

 

Total interest expense

 

88,405

 

10,187

 

 

161,426

 

17,653

 

Net interest income

 

101,251

 

116,368

 

 

209,552

 

222,090

 

Provision for credit losses

 

6,654

 

9,507

 

 

10,851

 

14,869

 

Net interest income after provision for credit losses

 

94,597

 

106,861

 

 

198,701

 

207,221

 

Non-interest income:

 

 

 

 

Service charges on deposit accounts

 

2,142

 

2,133

 

 

4,076

 

4,275

 

Mortgage banking

 

696

 

614

 

 

1,138

 

1,140

 

Credit card income

 

2,406

 

2,672

 

 

4,095

 

5,044

 

Securities losses

 

-

 

(2,833

)

 

-

 

(6,168

)

Bank-owned life insurance income

 

2,496

 

3,733

 

 

4,117

 

5,341

 

Other operating income

 

842

 

3,187

 

 

1,477

 

7,822

 

Total non-interest income

 

8,582

 

9,506

 

 

14,903

 

17,454

 

Non-interest expense:

 

 

 

 

Salaries and employee benefits

 

18,795

 

20,734

 

 

37,861

 

39,035

 

Equipment and occupancy expense

 

3,421

 

2,983

 

 

6,856

 

5,916

 

Third party processing and other services

 

6,198

 

6,345

 

 

13,482

 

11,950

 

Professional services

 

1,580

 

1,327

 

 

3,234

 

2,319

 

FDIC and other regulatory assessments

 

2,242

 

1,147

 

 

3,759

 

2,279

 

Other real estate owned expense

 

6

 

32

 

 

12

 

35

 

Other operating expense

 

6,224

 

7,253

 

 

12,926

 

15,505

 

Total non-interest expense

 

38,466

 

39,821

 

 

78,130

 

77,039

 

Income before income tax

 

64,713

 

76,546

 

 

135,474

 

147,636

 

Provision for income tax

 

11,245

 

14,410

 

 

24,035

 

27,887

 

Net income

 

53,468

 

62,136

 

 

111,439

 

119,749

 

Dividends on preferred stock

 

31

 

31

 

 

31

 

31

 

Net income available to common stockholders

$

53,437

$

62,105

 

$

111,408

$

119,718

 

Basic earnings per common share

$

0.98

$

1.14

 

$

2.05

$

2.21

 

Diluted earnings per common share

$

0.98

$

1.14

 

$

2.04

$

2.20

 

LOANS BY TYPE (UNAUDITED)

(In thousands)

 

 

 

 

 

 

 

2nd Quarter 2023

1st Quarter 2023

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

Commercial, financial and agricultural

$

2,986,453

$

3,081,926

$

3,145,317

$

3,104,155

$

2,966,040

Real estate - construction

 

1,397,732

 

1,469,670

 

1,532,388

 

1,433,698

 

1,383,155

Real estate - mortgage:

 

 

 

 

 

Owner-occupied commercial

 

2,294,002

 

2,243,436

 

2,199,280

 

2,145,621

 

2,026,807

1-4 family mortgage

 

1,167,238

 

1,138,645

 

1,146,831

 

1,089,826

 

1,015,698

Other mortgage

 

3,686,434

 

3,624,071

 

3,597,750

 

3,438,762

 

3,160,510

Subtotal: Real estate - mortgage

 

7,147,674

 

7,006,152

 

6,943,861

 

6,674,209

 

6,203,015

Consumer

 

73,035

 

72,054

 

66,402

 

66,552

 

65,110

Total loans

$

11,604,894

$

11,629,802

$

11,687,968

$

11,278,614

$

10,617,320

SUMMARY OF CREDIT LOSS EXPERIENCE (UNAUDITED)

(Dollars in thousands)

 

2nd Quarter 2023

1st Quarter 2023

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

Allowance for credit losses:

 

 

 

 

 

Beginning balance

$

148,965

 

$

146,297

 

$

140,967

 

$

128,387

 

$

119,463

 

Loans charged off:

 

 

 

 

 

Commercial financial and agricultural

 

4,336

 

 

1,257

 

 

2,116

 

 

2,902

 

 

1,667

 

Real estate - construction

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Real estate - mortgage

 

131

 

 

26

 

 

-

 

 

170

 

 

23

 

Consumer

 

133

 

 

390

 

 

200

 

 

261

 

 

123

 

Total charge offs

 

4,600

 

 

1,673

 

 

2,316

 

 

3,333

 

 

1,813

 

Recoveries:

 

 

 

 

 

Commercial financial and agricultural

 

1,233

 

 

128

 

 

393

 

 

297

 

 

1,217

 

Real estate - construction

 

-

 

 

3

 

 

-

 

 

-

 

 

-

 

Real estate - mortgage

 

-

 

 

1

 

 

-

 

 

-

 

 

-

 

Consumer

 

21

 

 

11

 

 

118

 

 

12

 

 

13

 

Total recoveries

 

1,254

 

 

143

 

 

511

 

 

309

 

 

1,230

 

Net charge-offs

 

3,346

 

 

1,530

 

 

1,805

 

 

3,024

 

 

583

 

Provision for credit losses

 

6,654

 

 

4,197

 

 

7,135

 

 

15,604

 

 

9,507

 

Ending balance

$

152,272

 

$

148,965

 

$

146,297

 

$

140,967

 

$

128,387

 

 

 

 

 

 

 

Allowance for credit losses to total loans

 

1.31

%

 

1.28

%

 

1.25

%

 

1.25

%

 

1.21

%

Allowance for credit losses to total average

 

 

 

 

 

loans

 

1.31

%

 

1.28

%

 

1.27

%

 

1.29

%

 

1.26

%

Net charge-offs to total average loans

0.11

%

 

0.05

%

 

0.06

%

 

0.11

%

 

0.02

%

Provision for credit losses to total average

 

 

 

 

 

loans

 

0.23

%

 

0.14

%

 

0.25

%

 

0.57

%

 

0.37

%

Nonperforming assets:

 

 

 

 

 

Nonaccrual loans

$

16,897

 

$

13,157

 

$

12,450

 

$

11,655

 

$

10,540

 

Loans 90+ days past due and accruing

 

5,947

 

 

4,683

 

 

5,391

 

 

4,803

 

 

4,991

 

Other real estate owned and

 

 

 

 

 

repossessed assets

 

832

 

 

248

 

 

248

 

 

1,245

 

 

1,207

 

Total

$

23,676

 

$

18,088

 

$

18,089

 

$

17,703

 

$

16,738

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

0.20

%

 

0.15

%

 

0.15

%

 

0.15

%

 

0.15

%

Nonperforming assets to total assets

 

0.16

%

 

0.12

%

 

0.12

%

 

0.13

%

 

0.12

%

Nonperforming assets to earning assets

 

0.16

%

 

0.13

%

 

0.13

%

 

0.13

%

 

0.12

%

Allowance for credit losses to nonaccrual loans

901.18

%

 

1,132.24

%

 

1,175.08

%

 

1,209.50

%

 

1,218.05

%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

2nd Quarter 2023

1st Quarter 2023

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

Interest income:

 

 

 

 

 

Interest and fees on loans

$

171,718

$

163,732

$

153,924

$

131,375

$

111,287

 

Taxable securities

 

11,570

 

10,895

 

10,895

 

11,089

 

10,515

 

Nontaxable securities

 

17

 

21

 

27

 

30

 

37

 

Federal funds sold

 

227

 

614

 

818

 

632

 

93

 

Other interest and dividends

 

6,124

 

6,060

 

4,609

 

6,173

 

4,623

 

Total interest income

 

189,656

 

181,322

 

170,273

 

149,299

 

126,555

 

Interest expense:

 

 

 

 

 

Deposits

 

71,971

 

55,713

 

33,471

 

13,655

 

6,427

 

Borrowed funds

 

16,434

 

17,308

 

14,418

 

9,226

 

3,760

 

Total interest expense

 

88,405

 

73,021

 

47,889

 

22,881

 

10,187

 

Net interest income

 

101,251

 

108,301

 

122,384

 

126,418

 

116,368

 

Provision for credit losses

 

6,654

 

4,197

 

7,135

 

15,603

 

9,507

 

Net interest income after provision for credit losses

 

94,597

 

104,104

 

115,249

 

110,815

 

106,861

 

Non-interest income:

 

 

 

 

 

Service charges on deposit accounts

 

2,142

 

1,934

 

1,866

 

1,892

 

2,133

 

Mortgage banking

 

696

 

442

 

514

 

784

 

614

 

Credit card income

 

2,406

 

1,689

 

2,261

 

2,612

 

2,672

 

Securities losses

 

-

 

-

 

-

 

-

 

(2,833

)

Bank-owned life insurance income

 

2,496

 

1,621

 

1,600

 

1,637

 

3,733

 

Other operating income

 

842

 

635

 

725

 

2,014

 

3,187

 

Total non-interest income

 

8,582

 

6,321

 

6,966

 

8,939

 

9,506

 

Non-interest expense:

 

 

 

 

 

Salaries and employee benefits

 

18,795

 

19,066

 

19,230

 

19,687

 

20,734

 

Equipment and occupancy expense

 

3,421

 

3,435

 

3,263

 

3,140

 

2,983

 

Third party processing and other services

 

6,198

 

7,284

 

8,170

 

7,213

 

6,345

 

Professional services

 

1,580

 

1,654

 

922

 

1,036

 

1,327

 

FDIC and other regulatory assessments

 

2,242

 

1,517

 

1,311

 

975

 

1,147

 

Other real estate owned expense

 

6

 

6

 

239

 

21

 

32

 

Other operating expense

 

6,224

 

6,702

 

4,957

 

10,613

 

7,253

 

Total non-interest expense

 

38,466

 

39,664

 

38,092

 

42,685

 

39,821

 

Income before income tax

 

64,713

 

70,761

 

84,123

 

77,069

 

76,546

 

Provision for income tax

 

11,245

 

12,790

 

16,399

 

13,038

 

14,410

 

Net income

 

53,468

 

57,971

 

67,724

 

64,031

 

62,136

 

Dividends on preferred stock

 

31

 

-

 

31

 

-

 

31

 

Net income available to common stockholders

$

53,437

$

57,971

$

67,693

$

64,031

$

62,105

 

Basic earnings per common share

$

0.98

$

1.07

$

1.25

$

1.18

$

1.14

 

Diluted earnings per common share

$

0.98

$

1.06

$

1.24

$

1.17

$

1.14

 

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

2nd Quarter 2023

1st Quarter 2023

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

 

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

$

11,581,008

 

5.94

%

$

11,632,439

 

5.70

%

$

11,465,538

 

5.32

%

$

10,900,105

 

4.77

%

$

10,165,470

 

4.38

%

Tax-exempt (2)

 

18,312

 

4.82

 

 

18,978

 

3.36

 

 

19,526

 

6.60

 

 

19,852

 

4.14

 

 

23,616

 

4.09

 

Total loans, net of

 

 

 

 

 

 

 

 

 

 

unearned income

 

11,599,320

 

5.94

 

 

11,651,417

 

5.70

 

 

11,485,064

 

5.32

 

 

10,919,957

 

4.77

 

 

10,189,086

 

4.38

 

Mortgage loans held for sale

 

5,014

 

5.12

 

 

1,522

 

6.40

 

 

1,515

 

3.67

 

 

2,906

 

2.73

 

 

471

 

3.41

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

Taxable

 

1,757,397

 

2.64

 

 

1,724,523

 

2.54

 

 

1,755,764

 

2.49

 

 

1,797,560

 

2.47

 

 

1,775,425

 

2.37

 

Tax-exempt (2)

 

2,960

 

2.43

 

 

3,781

 

2.43

 

 

4,863

 

2.39

 

 

5,863

 

2.39

 

 

7,148

 

2.35

 

Total securities (3)

 

1,760,357

 

2.64

 

 

1,728,304

 

2.54

 

 

1,760,627

 

2.49

 

 

1,803,423

 

2.47

 

 

1,782,573

 

2.37

 

Federal funds sold

 

15,908

 

5.72

 

 

50,526

 

4.93

 

 

82,656

 

3.93

 

 

102,028

 

2.46

 

 

30,721

 

1.21

 

Restricted equity securities

 

8,834

 

6.08

 

 

9,919

 

7.69

 

 

7,724

 

7.35

 

 

7,724

 

3.65

 

 

7,724

 

3.74

 

Interest-bearing balances with banks

 

460,893

 

5.21

 

 

510,021

 

4.67

 

 

458,115

 

3.83

 

 

945,142

 

2.56

 

 

2,332,412

 

0.80

 

Total interest-earning assets

$

13,850,326

 

5.49

 

$

13,951,709

 

5.27

 

$

13,795,701

 

4.90

 

$

13,781,180

 

4.30

 

$

14,342,987

 

3.54

 

Non-interest-earning assets:

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

101,188

 

 

 

106,448

 

 

 

113,823

 

 

 

256,607

 

 

 

204,994

 

 

Net premises and equipment

 

60,499

 

 

 

60,617

 

 

 

60,323

 

 

 

60,155

 

 

 

60,673

 

 

Allowance for credit losses, accrued

 

 

 

 

 

 

 

 

 

 

interest and other assets

 

279,860

 

 

 

279,775

 

 

 

273,964

 

 

 

294,006

 

 

 

297,893

 

 

Total assets

$

14,291,873

 

 

$

14,398,549

 

 

$

14,243,811

 

 

$

14,391,948

 

 

$

14,906,547

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

Checking

$

1,628,936

 

1.69

%

$

1,675,355

 

1.25

%

$

1,763,622

 

0.73

%

$

1,722,926

 

0.28

%

$

1,699,602

 

0.21

%

Savings

 

122,050

 

1.38

 

 

134,671

 

0.94

 

 

141,163

 

0.64

 

 

144,368

 

0.21

 

 

134,469

 

0.18

 

Money market

 

5,971,639

 

3.78

 

 

5,756,642

 

3.17

 

 

5,047,133

 

2.07

 

 

4,444,583

 

0.89

 

 

4,617,021

 

0.33

 

Time deposits

 

983,582

 

3.44

 

 

850,639

 

2.51

 

 

860,336

 

1.69

 

 

809,057

 

1.16

 

 

766,225

 

0.86

 

Total interest-bearing deposits

 

8,706,207

 

3.32

 

 

8,417,307

 

2.68

 

 

7,812,254

 

1.70

 

 

7,120,934

 

0.76

 

 

7,217,317

 

0.36

 

Federal funds purchased

 

1,191,582

 

5.14

 

 

1,389,217

 

4.67

 

 

1,453,445

 

3.75

 

 

1,493,444

 

2.27

 

 

1,550,805

 

0.79

 

Other borrowings

 

100,998

 

4.62

 

 

114,726

 

4.61

 

 

64,726

 

4.23

 

 

65,406

 

4.19

 

 

64,713

 

4.28

 

Total interest-bearing liabilities

$

9,998,787

 

3.55

%

$

9,921,250

 

2.98

%

$

9,330,425

 

2.04

%

$

8,679,784

 

1.05

%

$

8,832,835

 

0.46

%

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing

 

 

 

 

 

 

 

 

 

 

demand deposits

 

2,876,225

 

 

 

3,086,774

 

 

 

3,572,956

 

 

 

4,410,318

 

 

 

4,824,521

 

 

Other liabilities

 

64,917

 

 

 

72,121

 

 

 

77,544

 

 

 

62,093

 

 

 

58,784

 

 

Stockholders' equity

 

1,399,578

 

 

 

1,358,587

 

 

 

1,307,553

 

 

 

1,263,870

 

 

 

1,205,551

 

 

Accumulated other comprehensive

 

 

 

 

 

 

 

 

 

 

loss

 

(47,634

)

 

 

(40,183

)

 

 

(44,667

)

 

 

(24,117

)

 

 

(15,144

)

 

Total liabilities and

 

 

 

 

 

 

 

 

 

 

stockholders' equity

$

14,291,873

 

 

$

14,398,549

 

 

$

14,243,811

 

 

$

14,391,948

 

 

$

14,906,547

 

 

Net interest spread

 

1.94

%

 

2.29

%

 

2.86

%

 

3.25

%

 

3.08

%

Net interest margin

 

2.93

%

 

3.15

%

 

3.52

%

 

3.64

%

 

3.26

%

(1)

Average loans include nonaccrual loans in all periods. Loan fees of $3,318 $3,263, $3,630, $3,849, and $5,303 are included in interest income in the second quarter of 2023, first quarter of 2023, fourth quarter of 2022, third quarter of 2022, and second quarter of 2022, respectively.

(2)

Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%.

(3)

Unrealized losses on debt securities of $(69,498), $(59,738), $(62,567), $(34,688), and $(25,703) for the second quarter of 2023, first quarter of 2023, fourth quarter of 2022, third quarter of 2022, and second quarter of 2022, respectively, are excluded from the yield calculation.

 

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