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ServisFirst Bancshares, Inc.
850 Shades Creek Parkway Suite 200
Birmingham, AL 35209-4510

 

(205) 949-0302

Investor Relations Contact
Mr. Davis S. Mange
(205) 949-3420
dmange@servisfirstbank.com

Transfer Agent
By Regular Mail
Computershare
P.O. BOX 30170
College Station, TX 77842

 

By Overnight Delivery
Computershare
211 Quality Circle Suite 210
College Station, TX 77845

 

(800) 368-5948

 

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Press Releases

ServisFirst Bancshares, Inc. Announces Results For Second Quarter of 2014

Jul 22, 2014

BIRMINGHAM, Ala., July 22, 2014 /PRNewswire/ -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the quarter and six months ended June 30, 2014.

SECOND QUARTER 2014 HIGHLIGHTS:

  • Net income for the second quarter increased 20% year over year
  • Second quarter annualized loan and deposit growth of 16% and 17%, respectively, on a linked quarter basis
  • Core diluted earnings per share of $0.51 for the second quarter of 2014, a 16% increase year over year*
  • Diluted earnings per share of $0.46 for the second quarter, a 5% increase year over year
  • Completed initial public offering in the second quarter with net proceeds of $52.1 million
  • 30% growth in non-interest-bearing demand deposits year over year

Tom Broughton, President and CEO, said, "We are pleased to report a great quarter following our initial public offering in May."  Bud Foshee, CFO, stated, "Strong loan and deposit growth combined with excellent credit quality continue to drive our strong earnings performance."

 

FINANCIAL SUMMARY

                               

(in Thousands except share and per share amounts)

                         
                                           

On June 16, 2014, the Company declared a three-for-one split of its common stock in the form of a stock dividend.  All share and per share information in this release has been adjusted to give effect to this stock split.

 
                                           
       

Period Ending
June 30, 2014

 

Period Ending
March 31, 2014

 

% Change
From Period
Ending March
31, 2014 to
Period Ending
June 30, 2014

 

Period Ending June 30, 2013

 

% Change
From Period
Ending June
30, 2013 to
Period Ending
June 30, 2014

 

QUARTERLY OPERATING RESULTS

                                     

Net Income

 

$

11,585

   

$

11,758

   

(1)

%

 

$

9,686

   

20

%

 

Net Income Available to Common Stockholders

 

$

11,469

   

$

11,656

   

(2)

%

 

$

9,586

   

20

%

 

Diluted Earnings Per Share

 

$

0.46

   

$

0.51

   

(10)

%

 

$

0.44

   

5

%

 

Return on Average Assets

   

1.28

%

   

1.36

%

         

1.31

%

       

Return on Average Common Stockholders' Equity

   

15.03

%

   

17.83

%

         

17.28

%

       

Average Diluted Shares Outstanding

   

24,823,590

     

22,985,670

           

21,655,326

         
                                           

Core Net Income*

 

$

12,740

   

$

12,215

   

4

%

 

$

9,686

   

32

%

 

Core Net Income Available to Common Stockholders*

 

$

12,624

   

$

12,113

   

4

%

 

$

9,586

   

32

%

 

Core Diluted Earnings Per Share*

 

$

0.51

   

$

0.53

   

(4)

%

 

$

0.44

   

16

%

 

Core Return on Average Assets*

   

1.41

%

   

1.42

%

         

1.31

%

       

Core Return on Average Common Stockholders' Equity*

   

16.54

%

   

18.53

%

         

17.28

%

       
                                           

YEAR-TO-DATE OPERATING RESULTS

                                     

Net Income

 

$

23,343

                 

$

18,937

   

23

%

 

Net Income Available to Common Stockholders

 

$

23,127

                 

$

18,737

   

23

%

 

Diluted Earnings Per Share

 

$

0.97

                 

$

0.88

   

10

%

 

Return on Average Assets

   

1.32

%

                 

1.31

%

       

Return on Average Common Stockholders' Equity

   

15.61

%

                 

17.96

%

       

Average Diluted Shares Outstanding

   

23,909,707

                   

21,443,595

         
                                           

Core Net Income*

 

$

24,955

                 

$

18,937

   

32

%

 

Core Net Income Available to Common Stockholders*

 

$

24,739

                 

$

18,737

   

32

%

 

Core Diluted Earnings Per Share*

 

$

1.03

                 

$

0.88

   

18

%

 

Core Return on Average Assets*

   

1.41

%

                 

1.31

%

       

Core Return on Average Common Stockholders' Equity*

   

16.70

%

                 

17.96

%

       
                                           

BALANCE SHEET

                                     

Total Assets

 

$

3,762,684

   

$

3,572,914

   

5

%

 

$

3,140,626

   

20

%

 

Loans

   

3,053,989

     

2,937,797

   

4

%

   

2,590,192

   

18

%

 

Non-interest-bearing Demand Deposits

   

729,163

     

662,834

   

10

%

   

562,196

   

30

%

 

Total Deposits

   

3,157,642

     

3,031,041

   

4

%

   

2,674,977

   

18

%

 

Stockholders' Equity

   

380,074

     

312,283

   

22

%

   

265,189

   

43

%

 
                                           

* Core measures exclude non-routine expenses in the first and second quarter of 2014 resulting from a correction of our accounting for vested stock options previously granted to members of our advisory boards in our markets.  For a reconciliation of these non-GAAP measures to the most comparable GAAP measure, see "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.

 

 

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income of $11.6 million and net income available to common stockholders of $11.5 million for the quarter ended June 30, 2014, compared to net income of $9.7 million and net income available to common stockholders of $9.6 million for the same quarter in 2013.  Basic and diluted earnings per common share were $0.49 and $0.46, respectively, for the second quarter of 2014, compared to $0.46 and $0.44, respectively, for the second quarter of 2013.

Return on average assets was 1.29% and return on average equity was 15.03% for the second quarter of 2014, compared to 1.29% and 17.28%, respectively, for the second quarter of 2013.

Net interest income was $32.0 million for the second quarter of 2014, compared to $30.8 million for the first quarter of 2014 and $27.5 million for the second quarter of 2013.  The net interest margin in the second quarter of 2014 was 3.74%, a 6 basis point decrease from the first quarter of 2014 and 19 basis point decrease from the second quarter of 2013.  The increase in net interest income on a linked quarter basis is attributable to a $87.5 million increase in average loans outstanding, a $33.6 million increase in non-interest-bearing deposits and a $40.9 million increase in average stockholders' equity, all resulting in a positive mix change in our balance sheet.

Average loans for the second quarter of 2014 were $2.99 billion, an increase of $87.5 million, or 3%, over average loans of $2.91 billion for the first quarter of 2014, and an increase of $472.1 million, or 19%, over average loans of $2.52 billion for the second quarter of 2013.

Average total deposits for the second quarter of 2014 were $3.06 billion, an increase of $83.1 million, or 3%, over average total deposits of $2.97 billion for the first quarter of 2014, and an increase of $554.3 million, or 22%, over average total deposits of $2.50 billion for the second quarter of 2013.

Non-performing assets to total assets were unchanged for the second quarter of 2014 compared to the first quarter of 2014 at 0.53%.  Net credit charge-offs decreased slightly in the second quarter of 2014 compared to the first quarter of 2014 and remain well below levels we experienced in the first two quarters of 2013.  We recorded a $2.4 million provision for loan losses in the second quarter of 2014 compared to $2.3 million in the first quarter of 2014 and $3.3 million in the second quarter of 2013.  Growth in loans and improving credit quality has resulted in a relatively stable loan loss reserve as a percent of loans ratio, remaining unchanged at 1.08% for June 30, 2014 and March 31, 2014 and increasing one basis point as compared to 1.07% at December 31, 2013.  In management's opinion, the reserve is adequate and was determined by consistent application of ServisFirst Bank's methodology for calculating its reserve for loan losses.

Non-interest income increased $365,000 during the second quarter of 2014, or 14%, compared to the second quarter of 2013.  Deposit service charges increased by $251,000, or 31%, resulting from higher balances and an increase in the number of accounts and transactions.  Increases in the cash surrender value of our life insurance contracts resulted from added investments in contracts during the third quarter of 2013.

Non-interest expense for the second quarter of 2014 increased $3.0 million, or 24%, to $15.4 million from $12.4 million in the second quarter of 2013, and increased $1.7 million, or 12%, on a linked quarter basis.  Salary and benefit expense for the second quarter of 2014 increased $2.0 million, or 28%, to $9.1 million from $7.1 million in the second quarter of 2013, and increased $1.4 million, or 18%, on a linked quarter basis.  Included in salary and benefit expense for the first and second quarters of 2014 are non-routine expenses of $703,000 and $1.8 million, respectively, resulting from a correction of our accounting for vested stock options previously granted to members of our advisory boards in our markets.  This expense impacted our diluted earnings per share for the first and second quarters of 2014 by $0.02 and $0.05, respectively.  We historically accounted for these options under the provisions of FASB ASC 718-10, Compensation – Stock Compensation, and now have determined to recognize as an expense the fair value of these vested options in accordance with the provisions of the FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees.  The change in accounting treatment is a non-cash item and does not impact the Company's operating activities or cash from operations.  Other operating expense for the second quarter of 2014 increased $800,000, or 29%, to $3.6 million from $2.8 million in the second of 2013.  This was primarily the result of write downs of investments in tax credit partnerships of $377,000 for the second quarter of 2014 compared to $53,000 in the same quarter in 2013.  We recognized tax credits of $550,000 during the second quarter of 2014 from these investments.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

As discussed in more detail in the section titled "Detailed Financials," we recorded a non-routine expense of $703,000 for the first quarter of 2014 resulting from the correction  of our accounting for vested stock options previously granted to members of our advisory boards in our Dothan, Huntsville and Montgomery, Alabama markets, and we recorded a non-routine expense of $1.8 million for the second quarter of 2014 resulting from a correction of our accounting for vested stock options previously granted to members of our advisory boards in our Mobile, Alabama and Pensacola, Florida markets.  This change in accounting treatment is a non-cash item and does not impact our operating activities or cash from operations.  The non-GAAP financial measures included in this press release of our results for the first and second quarters of 2014 and the first six months of 2014 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 the correction of our accounting for vested stock options.  None of the other periods included in this press release are affected by this correction.

"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.

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 for the six months ended June 30, 2014 and the three month periods ended June 30, 2014 and March 31, 2014.  Dollars are in thousands, except share and per share data.

 

     

For the Six Months

Ended June 30, 2014

 

For the Three

Months Ended June

30, 2014

 

For the Three

Months Ended

March 31, 2014

 

Provision for income taxes - GAAP

 

$

10,705

   

$

5,476

   

$

5,229

   
 

Adjustments:

                         
 

Adjustment for non-routine expense

   

865

     

619

     

246

   

Core provision for income taxes

 

$

11,570

   

$

6,095

   

$

5,475

   
                             

Return on average assets - GAAP

   

1.32

%

   

1.28

%

   

1.36

%

 

Net income - GAAP

 

$

23,343

   

$

11,585

   

$

11,758

   
 

Adjustments:

                         
 

Adjustment for non-routine expense

   

1,612

     

1,155

     

457

   

Core net income

 

$

24,955

   

$

12,740

   

$

12,215

   

Average assets

 

$

3,568,159

   

$

3,635,506

   

$

3,500,257

   

Core return on average assets

   

1.41

%

   

1.41

%

   

1.42

%

 
                             

Return on average common stockholders' equity

   

15.61

%

   

15.67

%

   

17.83

%

 

Net income available to common stockholders - GAAP

 

$

23,127

   

$

11,469

   

$

11,658

   
 

Adjustments:

                         
 

Adjustment for non-routine expense

   

1,612

     

1,155

     

457

   

Core net income available to common stockholders

 

$

24,739

   

$

12,624

   

$

12,115

   

Average common stockholders' equity

 

$

298,713

   

$

306,050

   

$

265,188

   

Core return on average common stockholders' equity

   

16.70

%

   

16.54

%

   

18.53

%

 
                             

Earnings per share - diluted - GAAP

 

$

0.97

   

$

0.46

   

$

0.51

   

Weighted average shares outstanding, diluted

   

23,909,707

     

24,823,590

     

22,985,670

   

Core diluted earnings per share

 

$

1.03

   

$

0.51

   

$

0.53

   

 

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, Florida 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)

                             
                               
   

2nd Quarter 2014

 

1st Quarter 2014

 

4th Quarter 2013

 

3rd Quarter 2013

 

2nd Quarter 2013

 

CONSOLIDATED STATEMENT OF INCOME

                                         

Interest income

 

$

35,424

   

$

34,281

   

$

33,725

   

$

32,499

   

$

30,692

   

Interest expense

   

3,446

     

3,432

     

3,610

     

3,534

     

3,211

   

Net interest income

   

31,978

     

30,849

     

30,115

     

28,965

     

27,481

   

Provision for loan losses

   

2,438

     

2,314

     

2,356

     

3,034

     

3,334

   

Net interest income after provision for loan losses

   

29,540

     

28,535

     

27,759

     

25,931

     

24,147

   

Non-interest income

   

2,938

     

2,175

     

2,371

     

2,269

     

2,573

   

Non-interest expense

   

15,417

     

13,723

     

12,298

     

12,067

     

12,372

   

Income before income tax

   

17,061

     

16,987

     

17,832

     

16,133

     

14,348

   

Provision for income tax

   

5,476

     

5,229

     

5,964

     

5,321

     

4,662

   

Net income

   

11,585

     

11,758

     

11,868

     

10,812

     

9,686

   

Preferred stock dividends

   

116

     

100

     

116

     

100

     

100

   

Net income available to common stockholders

 

$

11,469

   

$

11,658

   

$

11,752

   

$

10,712

   

$

9,586

   

Earnings per share - basic

 

$

0.49

   

$

0.53

   

$

0.55

   

$

0.51

   

$

0.46

   

Earnings per share - diluted

 

$

0.46

   

$

0.51

   

$

0.53

   

$

0.49

   

$

0.44

   
                                           

Average diluted shares outstanding

   

24,823,590

     

22,985,670

     

22,359,351

     

21,965,733

     

21,655,326

   
                                           

CONSOLIDATED BALANCE SHEET DATA

                                         

Total assets

 

$

3,762,684

   

$

3,572,914

   

$

3,520,699

   

$

3,396,153

   

$

3,140,626

   

Loans

   

3,053,989

     

2,937,797

     

2,858,868

     

2,731,973

     

2,590,192

   

Debt securities

   

325,432

     

309,475

     

298,494

     

289,515

     

261,578

   

Non-interest-bearing demand deposits

   

729,163

     

662,834

     

650,456

     

635,153

     

562,196

   

Total deposits

   

3,157,642

     

3,031,041

     

3,019,642

     

2,919,217

     

2,674,977

   

Borrowings

   

19,957

     

19,949

     

19,940

     

19,932

     

19,924

   

Stockholders' equity

 

$

380,074

   

$

312,283

   

$

297,192

   

$

276,300

   

$

265,189

   
                                           

Shares outstanding

   

24,749,436

     

22,574,436

     

22,050,036

     

21,229,041

     

20,922,936

   

Book value per share

 

$

13.74

   

$

12.06

   

$

11.67

   

$

11.13

   

$

10.76

   

Tangible book value per share (1)

 

$

13.74

   

$

12.06

   

$

11.67

   

$

11.13

   

$

10.76

   
                                           

SELECTED FINANCIAL RATIOS

                                         

Net interest margin

   

3.74

%

   

3.80

%

   

3.67

%

   

3.69

%

   

3.93

%

 

Return on average assets

   

1.28

%

   

1.36

%

   

1.36

%

   

1.31

%

   

1.31

%

 

Return on average common stockholders' equity

   

15.03

%

   

17.83

%

   

18.86

%

   

18.47

%

   

17.28

%

 

Efficiency ratio

   

44.15

%

   

41.55

%

   

37.86

%

   

38.63

%

   

41.17

%

 

Non-interest expense to average earning assets

   

1.78

%

   

1.66

%

   

1.48

%

   

1.52

%

   

1.74

%

 

Tangible common equity to total tangible assets (1)

   

9.04

%

   

7.62

%

   

7.31

%

   

6.96

%

   

7.17

%

 
                                           

(1) Non-GAAP financial measures.  "Tangible book value per share" and "tangible common equity to total tangible assets" are not measures of financial performance recognized by generally accepted accounting principles in the United States, or GAAP;   However, because the Company has no intangible assets, there is no reconciliation of these non-GAAP financial measures.

 

 

 

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                 

(Dollars in thousands)

                   
       

June 30, 2014

 

June 30, 2013

 

% Change

 

ASSETS

                   

Cash and due from banks

 

$

76,893

 

$

60,251

 

28

%

 

Interest-bearing balances due from depository institutions

   

199,990

   

129,767

 

54

%

 

Federal funds sold

   

3,044

   

2,590

 

18

%

 
 

Cash and cash equivalents

   

279,927

   

192,608

 

45

%

 

Available for sale debt securities, at fair value

   

294,254

   

227,770

 

29

%

 

Held to maturity debt securities (fair value of $33,663 and $33,292 at

                   
 

June 30, 2014 and 2013, respectively)

   

31,178

   

33,808

 

(8)

%

 

Restricted equity securities

   

3,418

   

3,738

 

(9)

%

 

Mortgage loans held for sale

   

11,675

   

16,374

 

(29)

%

 

Loans

   

3,053,989

   

2,590,192

 

18

%

 

Less allowance for loan losses

   

(32,984)

   

(28,757)

 

15

%

 
 

Loans, net

   

3,021,005

   

2,561,435

 

18

%

 

Premises and equipment, net

   

7,745

   

8,756

 

(12)

%

 

Accrued interest and dividends receivable

   

9,686

   

9,101

 

6

%

 

Deferred tax asset, net

   

12,817

   

10,383

 

23

%

 

Other real estate owned and repossessed assets

   

6,739

   

9,071

 

(26)

%

 

Bank owned life insurance contracts

   

70,090

   

57,969

 

21

%

 

Other assets

   

14,150

   

9,613

 

47

%

 
 

Total assets

 

$

3,762,684

 

$

3,140,626

 

20

%

 

LIABILITIES AND STOCKHOLDERS' EQUITY

                   

Liabilities:

                   

Deposits:

                   
 

Non-interest-bearing

 

$

729,163

 

$

562,196

 

30

%

 
 

Interest-bearing

   

2,428,479

   

2,112,781

 

15

%

 
   

Total deposits

   

3,157,642

   

2,674,977

 

18

%

 

Federal funds purchased

   

181,070

   

175,475

 

3

%

 

Other borrowings

   

19,957

   

19,924

 

0

%

 

Accrued interest payable

   

1,946

   

905

 

115

%

 

Other liabilities

   

21,995

   

4,156

 

429

%

 
 

Total liabilities

   

3,382,610

   

2,875,437

 

18

%

 

Stockholders' equity:

                   
 

Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001

                   
   

(liquidation preference $1,000), net of discount; 40,000 shares authorized,

                   
   

40,000 shares issued and outstanding at June 30, 2014 and 2013

   

39,958

   

39,958

 

-

%

 
 

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

                   
 

Common stock, par value $0.0003 per share; 50,000,000 shares authorized;

                   
   

24,749,436 shares issued and outstanding at June 30, 2014 and

                   
   

20,922,936 shares issued and outstanding at June 30, 2013

   

8

   

7

 

14

%

 
 

Additional paid-in capital

   

183,782

   

109,874

 

67

%

 
 

Retained earnings

   

150,769

   

111,217

 

36

%

 
 

Accumulated other comprehensive income

   

5,305

   

4,133

 

28

%

 
 

Noncontrolling interest

   

252

   

-

 

100

%

 
   

Total stockholders' equity

   

380,074

   

265,189

 

43

%

 
 

Total liabilities and stockholders' equity

 

$

3,762,684

 

$

3,140,626

 

20

%

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

                       
 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2014

 

2013

 

2014

 

2013

Interest income:

                     
 

Interest and fees on loans

$

33,250

 

$

28,874

 

$

65,502

 

$

56,192

 

Taxable securities

 

1,126

   

908

   

2,223

   

1,856

 

Nontaxable securities

 

870

   

847

   

1,741

   

1,679

 

Federal funds sold

 

43

   

17

   

85

   

33

 

Other interest and dividends

 

135

   

46

   

154

   

97

 

   Total interest income

 

35,424

   

30,692

   

69,705

   

59,857

Interest expense:

                     
 

Deposits

 

3,027

   

2,784

   

6,041

   

5,497

 

Borrowed funds

 

419

   

427

   

837

   

978

 

   Total interest expense

 

3,446

   

3,211

   

6,878

   

6,475

 

   Net interest income

 

31,978

   

27,481

   

62,827

   

53,382

Provision for loan losses

 

2,438

   

3,334

   

4,752

   

7,618

 

   Net interest income after provision for loan losses

 

29,540

   

24,147

   

58,075

   

45,764

Non-interest income:

                     
 

Service charges on deposit accounts

 

1,057

   

806

   

1,925

   

1,568

 

Mortgage banking

 

674

   

787

   

958

   

1,752

 

Securities gains

 

-

   

8

   

-

   

131

 

Increase in cash surrender value life insurance

 

546

   

485

   

1,082

   

955

 

Other operating income

 

661

   

487

   

1,148

   

964

 

   Total non-interest income

 

2,938

   

2,573

   

5,113

   

5,370

Non-interest expense:

                     
 

Salaries and employee benefits

 

9,098

   

7,056

   

16,795

   

12,735

 

Equipment and occupancy expense

 

1,409

   

1,469

   

2,775

   

2,580

 

Professional services

 

532

   

425

   

1,048

   

886

 

FDIC and other regulatory assessments

 

528

   

426

   

1,045

   

858

 

Other real estate owned expense

 

298

   

204

   

785

   

594

 

Other operating expense

 

3,552

   

2,792

   

6,692

   

5,471

 

   Total non-interest expense

 

15,417

   

12,372

   

29,140

   

23,124

 

   Income before income tax

 

17,061

   

14,348

   

34,048

   

28,010

Provision for income tax

 

5,476

   

4,662

   

10,705

   

9,073

 

         Net income

 

11,585

   

9,686

   

23,343

   

18,937

 

Dividends on preferred stock

 

116

   

100

   

216

   

200

 

         Net income available to common stockholders

$

11,469

 

$

9,586

 

$

23,127

 

$

18,737

Basic earnings per common share

$

0.49

 

$

0.46

 

$

1.01

 

$

0.94

Diluted earnings per common share

$

0.46

 

$

0.44

 

$

0.97

 

$

0.88

 

 

 

SUMMARY OF LOAN LOSS EXPERIENCE

                                   

(Dollars in thousands)

                                   
         

2nd Quarter 2014

 

1st Quarter 2014

 

4th Quarter 2013

 

3rd Quarter 2013

 

2nd Quarter 2013

 

Reserve for loan losses:

                                         

Beginning balance

 

$

31,728

   

$

30,663

   

$

28,927

   

$

28,757

   

$

27,679

   

Loans charged off:

                                         
 

Commercial financial and agricultural

   

142

     

1,222

     

95

     

849

     

101

   
 

Real estate - construction

   

325

     

23

     

557

     

394

     

1,888

   
 

Real estate - mortgage:

   

890

     

4

     

25

     

1,746

     

270

   
 

Consumer

   

18

     

58

     

38

     

42

     

129

   
   

Total charge off

   

1,375

     

1,307

     

715

     

3,031

     

2,388

   

Recoveries:

                                         
 

Commercial financial and agricultural

   

1

     

45

     

16

     

13

     

31

   
 

Real estate - construction

   

180

     

8

     

70

     

124

     

95

   
 

Real estate - mortgage:

   

10

     

4

     

9

     

24

     

3

   
 

Consumer

   

2

     

1

     

-

     

6

     

3

   
   

Total recoveries

   

193

     

58

     

95

     

167

     

132

   
 

Net charge-off

   

1,182

     

1,249

     

620

     

2,864

     

2,256

   
 

Provision for loan losses

   

2,438

     

2,314

     

2,356

     

3,034

     

3,334

   
 

Ending balance

 

$

32,984

   

$

31,728

   

$

30,663

   

$

28,927

   

$

28,757

   
                                                 
 

Reserve for loan losses to total loans

   

1.08

%

   

1.08

%

   

1.07

%

   

1.06

%

   

1.11

%

 
 

Reserve for loan losses to total average

                                         
   

loans

   

1.10

%

   

1.09

%

   

1.11

%

   

1.09

%

   

1.14

%

 
 

Net charge-offs to total average loans

   

0.16

%

   

0.17

%

   

0.09

%

   

0.43

%

   

0.36

%

 
 

Provision for loan losses to total average

                                         
   

loans

   

0.33

%

   

0.32

%

   

0.34

%

   

0.46

%

   

0.53

%

 
 

Nonperforming assets:

                                         
   

Nonaccrual loans

 

$

13,193

   

$

9,084

   

$

9,621

   

$

9,396

   

$

14,765

   
   

Loans 90+ days past due and accruing

   

-

     

110

     

115

     

-

     

259

   
   

Other real estate owned and

                                         
   

   repossessed assets

   

6,739

     

9,752

     

12,861

     

14,258

     

9,232

   
 

Total

 

$

19,932

   

$

18,946

   

$

22,597

   

$

23,654

   

$

24,256

   
                                                 
 

Nonperforming loans to total loans

   

0.43

%

   

0.31

%

   

0.35

%

   

0.34

%

   

0.58

%

 
 

Nonperforming assets to total assets

   

0.53

%

   

0.53

%

   

0.64

%

   

0.70

%

   

0.77

%

 
 

Nonperforming assets to earning assets

   

0.54

%

   

0.55

%

   

0.66

%

   

0.72

%

   

0.79

%

 
 

Reserve for loan losses to nonaccrual loans

   

250.01

%

   

349.27

%

   

318.71

%

   

307.87

%

   

194.76

%

 
                                                 
 

Restructured accruing loans

 

$

7,030

   

$

9,411

   

$

9,689

   

$

6,233

   

$

9,406

   
                                                 
 

Restructured accruing loans to total loans

   

0.23

%

   

0.32

%

   

0.35

%

   

0.23

%

   

0.36

%

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

                   

(In thousands except per share data)

                   
       

2nd Quarter
2014

 

1st Quarter
2014

 

4th Quarter
2013

 

3rd Quarter
2013

 

2nd Quarter
2013

 

Interest income:

                               
 

Interest and fees on loans

 

$

33,250

 

$

32,252

 

$

31,618

 

$

30,475

 

$

28,874

 
 

Taxable securities

   

1,126

   

1,097

   

1,052

   

980

   

908

 
 

Nontaxable securities

   

870

   

871

   

870

   

858

   

847

 
 

Federal funds sold

   

43

   

42

   

51

   

44

   

17

 
 

Other interest and dividends

   

135

   

19

   

134

   

142

   

46

 
 

   Total interest income

   

35,424

   

34,281

   

33,725

   

32,499

   

30,692

 
 

Deposits

   

3,027

   

3,014

   

3,202

   

3,131

   

2,784

 
 

Borrowed funds

   

419

   

418

   

408

   

403

   

427

 
 

   Total interest expense

   

3,446

   

3,432

   

3,610

   

3,534

   

3,211

 
 

   Net interest income

   

31,978

   

30,849

   

30,115

   

28,965

   

27,481

 

Provision for loan losses

   

2,438

   

2,314

   

2,356

   

3,034

   

3,334

 
 

   Net interest income after provision for loan losses

   

29,540

   

28,535

   

27,759

   

25,931

   

24,147

 

Non-interest income:

                               
 

Service charges on deposit accounts

   

1,057

   

868

   

837

   

823

   

806

 
 

Mortgage banking

   

674

   

284

   

344

   

402

   

787

 
 

Securities gains

   

-

   

-

   

-

   

-

   

8

 
 

Increase in cash surrender value life insurance

   

546

   

536

   

548

   

491

   

485

 
 

Other operating income

   

661

   

487

   

642

   

553

   

487

 
 

   Total non-interest income

   

2,938

   

2,175

   

2,371

   

2,269

   

2,573

 
 

Salaries and employee benefits

   

9,098

   

7,697

   

6,541

   

7,048

   

7,056

 
 

Equipment and occupancy expense

   

1,409

   

1,366

   

1,350

   

1,272

   

1,469

 
 

Professional services

   

532

   

516

   

480

   

443

   

425

 
 

FDIC and other regulatory assessments

   

528

   

517

   

536

   

405

   

426

 
 

Other real estate owned expense

   

298

   

487

   

475

   

357

   

204

 
 

Other operating expense

   

3,552

   

3,140

   

2,916

   

2,542

   

2,792

 
 

   Total non-interest expense

   

15,417

   

13,723

   

12,298

   

12,067

   

12,372

 
 

   Income before income tax

   

17,061

   

16,987

   

17,832

   

16,133

   

14,348

 

Provision for income tax

   

5,476

   

5,229

   

5,964

   

5,321

   

4,662

 
 

       Net income

   

11,585

   

11,758

   

11,868

   

10,812

   

9,686

 
 

Dividends on preferred stock

   

116

   

100

   

116

   

100

   

100

 
 

         Net income available to common stockholders

 

$

11,469

 

$

11,658

 

$

11,752

 

$

10,712

 

$

9,586

 

Basic earnings per common share

 

$

0.49

 

$

0.53

 

$

0.55

 

$

0.51

 

$

0.46

 

Diluted earnings per common share

 

$

0.46

 

$

0.51

 

$

0.53

 

$

0.49

 

$

0.44

 

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS - UNAUDITED

 

ON A FULLY TAXABLE-EQUIVALENT BASIS

 

(Dollars in thousands)

 
   
                                                                       
           

2nd Quarter 2014

 

1st Quarter 2014

   

4th Quarter 2013

 

3rd Quarter 2013

 

2nd Quarter 2013

 
           

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

 

$

2,978,631

 

4.46

%

 

$

2,892,433

 

4.52

%

 

$

2,754,955

 

4.54

%

 

$

2,640,444

 

4.56

%

 

$

2,519,869

 

4.58

%

 
   

Tax-exempt (2)

   

15,803

 

3.25

     

14,550

 

3.34

     

5,669

 

4.34

     

2,483

 

5.91

     

2,453

 

5.72

   
 

Mortgage loans held for sale

   

8,048

 

3.24

     

4,496

 

2.80

     

5,956

 

3.66

     

12,531

 

2.66

     

14,157

 

2.10

   
 

Debt securities:

                                                             
   

Taxable

   

188,148

 

2.40

     

174,842

 

2.54

     

166,027

 

2.49

     

152,135

 

2.56

     

139,189

 

2.65

   
   

Tax-exempt (2)

   

123,897

 

4.11

     

122,686

 

4.13

     

120,161

 

4.11

     

118,001

 

4.13

     

115,428

 

4.22

   
     

Total securities (3)

   

312,045

 

3.08

     

297,528

 

3.20

     

286,188

 

3.17

     

270,136

 

3.24

     

254,617

 

3.36

   
 

Federal funds sold

   

41,388

 

0.37

     

54,895

 

0.31

     

68,710

 

0.25

     

62,192

 

0.28

     

21,303

 

0.26

   
 

Restricted equity securities

   

3,446

 

7.57

     

3,738

 

-

     

3,738

 

2.55

     

3,738

 

2.65

     

3,738

 

2.25

   
 

Interest-bearing balances with banks

   

121,532

 

0.25

     

82,279

 

0.09

     

173,521

 

0.29

     

161,169

 

0.29

     

30,083

 

0.24

   
 

Total interest-earning assets

   

3,480,893

 

4.13

%

   

3,349,919

 

4.21

%

   

3,298,737

 

4.11

%

   

3,152,693

 

4.14

%

   

2,846,220

 

4.38

%

 

Non-interest-earning assets:

                                                             
 

Cash and due from banks

   

57,387

         

56,082

         

53,062

         

45,314

         

42,175

       
 

Net premises and equipment

   

8,377

         

8,724

         

8,944

         

9,052

         

9,359

       
 

Allowance for loan losses,

                                                             
   

accrued interest and

                                                             
   

other assets

   

88,849

         

85,532

         

98,586

         

76,477

         

75,239

       
     

Total assets

 

$

3,635,506

       

$

3,500,257

       

$

3,459,329

       

$

3,283,536

       

$

2,972,993

       
                                                                       

Interest-bearing liabilities:

                                                             
 

Interest-bearing deposits:

                                                             
 

Checking

 

$

482,115

 

0.27

%

 

$

478,678

 

0.27

%

 

$

472,751

 

0.27

%

 

$

432,453

 

0.28

%

 

$

415,955

 

0.28

%

 
 

Savings

   

25,406

 

0.28

     

25,081

 

0.27

     

21,755

 

0.27

     

21,602

 

0.29

     

21,733

 

0.28

   
 

Money market

   

1,472,346

 

0.44

     

1,416,645

 

0.45

     

1,420,771

 

0.47

     

1,356,197

 

0.47

     

1,123,605

 

0.46

   
 

Time deposits

   

402,613

 

1.08

     

412,622

 

1.10

     

412,254

 

1.13

     

408,600

 

1.16

     

402,733

 

1.19

   
 

Federal funds purchased

   

195,809

 

0.28

     

195,967

 

0.28

     

176,967

 

0.28

     

168,121

 

0.28

     

185,533

 

0.29

   
 

Other borrowings

   

19,953

 

5.69

     

19,945

 

5.75

     

19,936

 

5.63

     

19,928

 

5.63

     

19,920

 

5.92

   
 

Total interest-bearing liabilities

   

2,598,242

 

0.53

%

   

2,548,938

 

0.55

%

   

2,524,434

 

0.57

%

   

2,406,901

 

0.58

%

   

2,169,479

 

0.59

%

 

Non-interest-bearing liabilities:

                                                             
 

Non-interest-bearing

                                                             
   

demand

   

675,098

         

641,450

         

640,476

         

599,379

         

539,228

       
 

Other liabilities

   

16,158

         

4,724

         

7,226

         

7,250

         

1,799

       
 

Stockholders' equity

   

341,120

         

300,512

         

282,549

         

266,427

         

255,837

       
 

Unrealized gains on securities and

                                                             
   

derivatives

   

4,888

         

4,634

         

4,644

         

3,580

         

6,650

       
     

Total liabilities and

                                                             
       

stockholders' equity

 

$

3,635,506

       

$

3,500,257

       

$

3,459,329

       

$

3,283,536

       

$

2,972,993

       

Net interest spread

       

3.60

%

       

3.67

%

       

3.54

%

       

3.56

%

       

3.79

%

 

Net interest margin

       

3.74

%

       

3.80

%

       

3.67

%

       

3.69

%

       

3.93

%

 
                                                                       

(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 35%.

 

(3)

Unrealized gains on available-for-sale debt securities are excluded from the yield calculation.

 

 

 

SOURCE ServisFirst Bancshares, Inc.


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