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

Rhea-AI Summary

ServisFirst Bancshares (NYSE: SFBS) reported earnings for Q1 2023, with diluted earnings per share remaining at $1.06, a 7% increase when adjusted for PPP loan income in 2022. The bank saw a 23% rise in new accounts opened year-over-year, contributing to a $69 million growth in deposits. Total assets stood at approximately $14.57 billion, with a Tier 1 capital ratio improving to 9.91%. However, net income fell by 14% from the previous quarter to $58.0 million, and net interest income decreased to $108.3 million. The efficiency ratio increased to 34.60%. Despite these challenges, credit quality remained strong with non-performing assets at 0.12%. Overall, the bank is focused on growth while maintaining financial stability.

Positive

• 23% increase in new accounts year-over-year.
• Deposits grew by $69 million in Q1 2023.
• Improved Tier 1 capital ratio from 8.08% to 9.91%.
• Book value per share increased by 14% year-over-year.

Negative

• Net income decreased by 14% from the previous quarter.
• Net interest income fell to $108.3 million, down from $122.4 million.
• Efficiency ratio increased to 34.60%, indicating higher operational costs.

BIRMINGHAM, Ala.--(BUSINESS WIRE)-- ServisFirst Bancshares, Inc. (NYSE: SFBS), today announced earnings and operating results for the quarter ended March 31, 2023.

First Quarter 2023 Highlights:

• Diluted earnings per share were $1.06 for the first quarter of 2023, unchanged from the first quarter of 2022. When adjusting for income on Paycheck Protection Program (“PPP”) loans in 2022, diluted earnings per share increased 7% over the first quarter of 2022. ⁽¹⁾
• An increase of 23% in new accounts opened year-over-year.
• Deposit balances grew $69 million during the first quarter of 2023 while the deposit pipeline increased by $244 million, or 51%.
• Available liquidity sources totaled $8.4 billion as of March 31, 2023.
• Return on assets increased from 1.53% to 1.63% year-over-year.
• Book value per share grew from $21.61 to $24.63, or 14%, year-over-year.
• No brokered deposits or FHLB borrowings as of March 31, 2023.
• Bank level Tier 1 capital to average assets increased from 8.08% to 9.91% year-over-year.
• Industry-leading credit quality measures.

Tom Broughton, Chairman, President and CEO, said, “Our business model has proven itself over the past 18 years and we continue to attract new customers with a 23% increase in new accounts opened year-over-year due to our financial stability, our commitment to customer service, and our team of responsive bankers.”

Bud Foshee, CFO, said, “We are pleased with a very good first quarter of growth in profitability, liquidity, and capital while maintaining pristine credit quality.”

(1) See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a discussion of these Non-GAAP financial measures

FINANCIAL SUMMARY (UNAUDITED)
(In thousands except share and per share amounts)
		Period Ending March 31, 2023				Period Ending December 31, 2022				% Change From Period Ending December 31, 2022 to Period Ending March 31, 2023			Period Ending March 31, 2022				% Change From Period Ending March 31, 2022 to Period Ending March 31, 2023
QUARTERLY OPERATING RESULTS
Net Income		$	57,971			$	67,724			(14)	%		$	57,613			1	%
Net Income Available to Common Stockholders		$	57,971			$	67,693			(14)	%		$	57,613			1	%
Diluted Earnings Per Share		$	1.06			$	1.24			(15)	%		$	1.06			-	%
Return on Average Assets			1.63	%			1.89	%						1.53	%
Return on Average Common Stockholders' Equity			17.83	%			21.27	%						20.09	%
Average Diluted Shares Outstanding			54,534,482				54,537,685							54,522,042
BALANCE SHEET
Total Assets		$	14,566,559			$	14,595,753			-	%		$	15,339,419			(5)	%
Loans			11,629,802				11,687,968			-	%			9,898,957			17	%
Non-interest-bearing Demand Deposits			2,898,736				3,321,347			(13)	%			4,889,495			(41)	%
Total Deposits			11,615,317				11,546,805			1	%			12,408,755			(6)	%
Stockholders' Equity			1,339,817				1,297,896			3	%			1,172,975			14	%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $58.0 million for the quarter ended March 31, 2023, compared to net income and net income available to common stockholders of $57.6 million for the same quarter in 2022. Basic and diluted earnings per common share were $1.07 and $1.06, respectively, for the first quarter of 2023, compared to $1.06 for both in the first quarter of 2022.

Annualized return on average assets was 1.63% and annualized return on average common stockholders’ equity was 17.83% for the first quarter of 2023, compared to 1.53% and 20.09%, respectively, for the first quarter of 2022.

Net interest income was $108.3 million for the first quarter of 2023, compared to $122.4 million for the fourth quarter of 2022 and $105.7 million for the first quarter of 2022. The net interest margin in the first quarter of 2023 was 3.15% compared to 3.52% in the fourth quarter of 2022 and 2.89% in the first quarter of 2022. Loan yields were 5.70% during the first quarter of 2023 compared to 5.32% during the fourth quarter of 2022 and 4.29% during the first quarter of 2022. Investment yields were 2.54% during the first quarter of 2023, compared to 2.49% during the fourth quarter of 2022 and 2.17% during the first quarter of 2022. Average interest-bearing deposit rates were 2.68% during the first quarter of 2023, compared to 1.70% during the fourth quarter of 2022 and 0.31% during the first quarter of 2022. Average federal funds purchased rates were 4.67% during the first quarter of 2023, compared to 3.75% during the fourth quarter of 2022 and 0.23% during the first quarter of 2022.

Average loans for the first quarter of 2023 were $11.65 billion, an increase of $166.4 million, or 5.9% annualized, over average loans of $11.49 billion for the fourth quarter of 2022, and an increase of $2.00 billion, or 20.8%, over average loans of $9.65 billion for the first quarter of 2022.

Average total deposits for the first quarter of 2023 were $11.50 billion, an increase of $118.9 million, or 4.2%, annualized, over average total deposits of $11.39 billion for the fourth quarter of 2022, and a decrease of $875.0 million, or 7.1%, over average total deposits of $12.38 billion for the first quarter of 2022.

Non-performing assets to total assets were 0.12% for the first quarter of 2023, unchanged compared to 0.12% for the fourth quarter of 2022, and a decrease of two basis points compared to 0.14% for the first quarter of 2022. Annualized net charge-offs to average loans were 0.05% for the first quarter of 2023, compared to 0.06% and 0.11% for the fourth quarter of 2022 and first quarter of 2022, respectively. The allowance for credit losses as a percentage of total loans at March 31, 2023, December 31, 2022 and March 31, 2022, was 1.28%, 1.25%, and 1.21%, respectively. We recorded a $4.2 million provision for credit losses in the first quarter of 2023 compared to $7.1 million in the fourth quarter of 2022, and $5.4 million in the first quarter of 2022.

Non-interest income decreased $1.6 million, or 20.5%, to $6.3 million for the first quarter of 2023 from $7.9 million in the first quarter of 2022, and decreased $645,000, or 9.3%, on a linked quarter basis. Service charges on deposit accounts decreased $208,000, or 9.7%, to $1.9 million from the first quarter of 2022 to the first quarter of 2023, and increased $68,000, or 3.6%, on a linked quarter basis. Mortgage banking revenue decreased $84,000, or 16.0%, to $442,000 from the first quarter of 2022 to the first quarter of 2023, and decreased $72,000, or 14.0%, on a linked quarter basis. Net credit card revenue decreased $683,000, or 28.8%, to $1.7 million during the first quarter of 2023, compared to $2.4 million during the first quarter of 2022, and decreased $572,000, or 25.3%, on a linked quarter basis. The number of credit card accounts increased approximately 8.2% and the aggregate amount of spend on all credit card accounts increased 14.7% during the first quarter of 2023 compared to the first quarter of 2022. Cash surrender value life insurance increased $13,000, or 0.8%, to $1.6 million during the first quarter of 2023, compared to $1.6 million during the first quarter of 2022, and increased $21,000, or 1.3%, on a linked quarter basis. Other operating income for the first quarter of 2023 decreased $4.0 million, or 86.3%, to $635,000 from $4.6 million in the first quarter of 2022, and decreased $90,000, or 12.4%, on a linked quarter basis. Other income in the first quarter of 2022 included $3.4 million of income on our interest rate cap. We did not recognize any income on the cap during the first quarter of 2023 and $162,000 during the fourth quarter of 2022. Merchant service revenue increased by $118,000, or 35.2%, to $455,000, during the first quarter of 2023, from $336,000 during the first quarter of 2022, and decreased $35,000, or 7.2%, on a linked quarter basis.

Non-interest expense for the first quarter of 2023 increased $2.4 million, or 6.6%, to $39.7 million from $37.2 million in the first quarter of 2022, and increased $1.6 million, or 4.1%, on a linked quarter basis. Salary and benefit expense for the first quarter of 2023 increased $765,000, or 4.2%, to $19.1 million from $18.3 million in the first quarter of 2022, and decreased $164,000, or 0.9%, on a linked quarter basis. The number of FTE employees increased by 62 to 573 at March 31, 2023 compared to 511 at March 31, 2022, and increased by 2 from the end of the fourth quarter of 2022. Equipment and occupancy expense increased $502,000, or 17.1%, to $3.4 million in the first quarter of 2023, from $2.9 million in the first quarter of 2022, and increased $172,000, or 5.3% on a linked-quarter basis. Third party processing and other services expense increased $1.7 million, or 30.0%, to $7.3 million in the first quarter of 2023, from $5.6 million in the first quarter of 2022, and decreased $886,000, or 10.8%, on a linked-quarter basis. The increase year-over-year in third party processing also includes Federal Reserve Bank charges related to correspondent bank settlement activities. Professional services expense increased $662,000, or 66.7%, to $1.7 million in the first quarter of 2023, from $992,000 in the first quarter of 2022, and increased $732,000, or 79.4%, on a linked quarter basis. FDIC and other regulatory assessments increased $385,000, or 34.0%, to $1.5 million in the first quarter of 2023, from $1.1 million in the first quarter of 2022, and increased $206,000, or 15.7%, on a linked quarter basis. Other operating expenses for the first quarter of 2023 decreased $1.6 million, or 18.8%, to $6.7 million from $8.3 million in the first quarter of 2022, and increased $1.7 million on a linked-quarter basis. The efficiency ratio was 34.60% during the first quarter of 2023 compared to 32.74% during the first quarter of 2022 and compared to 29.45% during the fourth quarter of 2022.

Income tax expense decreased $687,000, or 5.1%, to $12.8 million in the first quarter of 2023, compared to $13.5 million in the first quarter of 2022. Our effective tax rate was 18.07% for the first quarter of 2023 compared to 18.96% for the first quarter of 2022. We recognized an aggregate of $3.9 million in credits during the first quarter of 2023 related to investments in tax credit partnerships, compared to an aggregate of $3.3 million in credits during the first 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 first quarter of 2023 and 2022 of $1.1 million and $572,000, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

We originated over 7,400 PPP loans with an aggregate balance of approximately $1.5 billion during the COVID-19 pandemic. At March 31, 2022, we had outstanding PPP loans of $107.6 million. Financial measures in this press release that are presented adjusted for our PPP activities are net income available to common stockholders and diluted earnings per share. These financial measures exclude the impact of PPP loans, net of tax, and are considered non-GAAP financial measures. 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.

				Three Months Ended March 31, 2022
Net income - GAAP				$	57,613
	Adjustments:
	PPP loan income				(4,869	)
		Tax on adjustment			1,222
Adjusted net income - non-GAAP				$	53,966
Diluted earnings per share - GAAP				$	1.06
	Adjustments:
	PPP loan income				(0.09	)
		Tax on adjustment			0.02
Adjusted diluted earnings per share - non-GAAP				$	0.99

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, Mobile, Montgomery and Dothan, Alabama, Northwest Florida, West Central Florida, Nashville, Tennessee, Atlanta, Georgia, Charleston, South Carolina, and Charlotte and Asheville, North Carolina.

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: the global health and economic crisis precipitated by the COVID-19 outbreak; general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves, interest rate spread relationships and inflation; 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; economic crisis and associated credit issues in industries most impacted by the COVID-19 outbreak; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives 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 credit worthiness 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; the effect of data breaches, cyberattacks or other data security issues; and increased competition from both banks and non-bank financial institutions. The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K, and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. ServisFirst Bancshares, Inc. assumes no obligation to update or revise any forward-looking statements that are made from time to time.

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

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except share and per share data)
		1st Quarter 2023				4th Quarter 2022				3rd Quarter 2022				2nd Quarter 2022				1st Quarter 2022
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	181,322			$	170,273			$	149,299			$	126,555			$	113,188
Interest expense			73,021				47,889				22,881				10,187				7,466
Net interest income			108,301				122,384				126,418				116,368				105,722
Provision for credit losses			4,197				7,135				15,603				9,507				5,362
Net interest income after provision for credit losses			104,104				115,249				110,815				106,861				100,360
Non-interest income			6,321				6,966				8,939				9,506				7,948
Non-interest expense			39,664				38,092				42,685				39,821				37,218
Income before income tax			70,761				84,123				77,069				76,546				71,090
Provision for income tax			12,790				16,399				13,038				14,410				13,477
Net income			57,971				67,724				64,031				62,136				57,613
Preferred stock dividends			-				31				-				31				-
Net income available to common stockholders		$	57,971			$	67,693			$	64,031			$	62,105			$	57,613
Earnings per share - basic		$	1.07			$	1.25			$	1.18			$	1.14			$	1.06
Earnings per share - diluted		$	1.06			$	1.24			$	1.17			$	1.14			$	1.06
Average diluted shares outstanding			54,534,482				54,537,716				54,528,554				54,532,385				54,522,042
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	14,566,559			$	14,595,753			$	13,890,030			$	14,494,317			$	15,339,419
Loans			11,629,802				11,687,968				11,278,614				10,617,320				9,898,957
Debt securities			1,646,937				1,678,936				1,714,603				1,790,218				1,617,977
Non-interest-bearing demand deposits			2,898,736				3,321,347				3,661,936				4,686,511				4,889,495
Total deposits			11,615,317				11,546,805				11,051,915				11,772,337				12,408,755
Borrowings			65,417				64,726				64,721				64,716				64,711
Stockholders' equity			1,339,817				1,297,896				1,242,589				1,211,918				1,172,975
Shares outstanding			54,398,025				54,326,527				54,324,007				54,306,875				54,282,132
Book value per share		$	24.63			$	23.89			$	22.87			$	22.32			$	21.61
Tangible book value per share (1)		$	24.38			$	23.64			$	22.62			$	22.07			$	21.36
SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin			3.15	%			3.52	%			3.64	%			3.26	%			2.89	%
Return on average assets			1.63	%			1.89	%			1.77	%			1.67	%			1.53	%
Return on average common stockholders' equity			17.83	%			21.27	%			20.49	%			20.93	%			20.09	%
Efficiency ratio			34.60	%			29.45	%			31.54	%			31.64	%			32.74	%
Non-interest expense to average earning assets			1.15	%			1.10	%			1.23	%			1.11	%			1.02	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets			10.01	%			9.54	%			9.37	%			9.59	%			9.86	%
Tier 1 capital to risk-weighted assets			10.02	%			9.54	%			9.37	%			9.59	%			9.87	%
Total capital to risk-weighted assets			11.54	%			11.06	%			10.91	%			11.12	%			11.43	%
Tier 1 capital to average assets			9.49	%			9.29	%			8.84	%			8.19	%			7.67	%
Tangible common equity to total tangible assets (1)			9.11	%			8.81	%			8.86	%			8.28	%			7.56	%
(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.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
				March 31, 2023				March 31, 2022				% Change
ASSETS
Cash and due from banks				$	139,175			$	103,439			35		%
Interest-bearing balances due from depository institutions					725,318				3,315,312			(78	)	%
Federal funds sold					6,478				24,638			(74	)	%
	Cash and cash equivalents				870,971				3,443,389			(75	)	%
Available for sale debt securities, at fair value					624,948				784,673			(20	)	%
Held to maturity debt securities (fair value of $937,960 at March 31, 2023 and $799,347 at March 31, 2022)					1,021,989				833,304			23		%
Restricted equity securities					7,307				7,734			(6	)	%
Mortgage loans held for sale					1,651				403			310		%
Loans					11,629,802				9,898,957			17		%
Less allowance for credit losses					(148,965	)			(119,463	)		25		%
	Loans, net				11,480,837				9,779,494			17		%
Premises and equipment, net					60,093				59,908			-		%
Goodwill and other identifiable intangible assets					13,615				13,615			-		%
Other assets					485,148				416,899			16		%
	Total assets			$	14,566,559			$	15,339,419			(5	)	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing			$	2,898,736			$	4,889,495			(41	)	%
	Interest-bearing				8,716,581				7,519,260			16		%
		Total deposits			11,615,317				12,408,755			(6	)	%
Federal funds purchased					1,480,160				1,639,238			(10	)	%
Other borrowings					65,417				64,711			1		%
Other liabilities					65,848				53,740			23		%
	Total liabilities				13,226,742				14,166,444			(7	)	%
Stockholders' equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at March 31, 2023 and March 31, 2022				-				-
	Common stock, par value $0.001 per share; 200,000,000 shares authorized; 54,398,025 shares issued and outstanding at March 31, 2023, and 100,000,000 shares authorized; 54,282,132 shares issued and outstanding at March 31, 2022				54				54			-		%
	Additional paid-in capital				229,631				227,127			1		%
	Retained earnings				1,152,681				956,169			21		%
	Accumulated other comprehensive loss				(43,049	)			(10,875	)		296		%
		Total stockholders' equity attributable to ServisFirst Bancshares, Inc.			1,339,317				1,172,475			14		%
	Noncontrolling interest				500				500			-		%
		Total stockholders' equity			1,339,817				1,172,975			14		%
	Total liabilities and stockholders' equity			$	14,566,559			$	15,339,419			(5	)	%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended March 31,
		2023			2022
Interest income:
Interest and fees on loans		$	163,732		$	103,105
Taxable securities			10,895			8,223
Nontaxable securities			21			43
Federal funds sold			614			13
Other interest and dividends			6,060			1,804
Total interest income			181,322			113,188
Interest expense:
Deposits			55,713			5,843
Borrowed funds			17,308			1,623
Total interest expense			73,021			7,466
Net interest income			108,301			105,722
Provision for credit losses			4,197			5,362
Net interest income after provision for credit losses			104,104			100,360
Non-interest income:
Service charges on deposit accounts			1,934			2,142
Mortgage banking			442			526
Credit card income			1,689			2,372
Securities losses			-			(3,335	)
Increase in cash surrender value life insurance			1,621			1,608
Other operating income			635			4,635
Total non-interest income			6,321			7,948
Non-interest expense:
Salaries and employee benefits			19,066			18,301
Equipment and occupancy expense			3,435			2,933
Third party processing and other services			7,284			5,605
Professional services			1,654			992
FDIC and other regulatory assessments			1,517			1,132
Other real estate owned expense			6			3
Other operating expense			6,702			8,252
Total non-interest expense			39,664			37,218
Income before income tax			70,761			71,090
Provision for income tax			12,790			13,477
Net income			57,971			57,613
Net income available to common stockholders		$	57,971		$	57,613
Basic earnings per common share		$	1.07		$	1.06
Diluted earnings per common share		$	1.06		$	1.06

LOANS BY TYPE (UNAUDITED)
(In thousands)
			1st Quarter 2023			4th Quarter 2022			3rd Quarter 2022			2nd Quarter 2022			1st Quarter 2022
Commercial, financial and agricultural			$	3,081,926		$	3,145,317		$	3,104,155		$	2,966,040		$	2,955,927
Real estate - construction				1,469,670			1,532,388			1,433,698			1,383,155			1,164,690
Real estate - mortgage:
	Owner-occupied commercial			2,243,436			2,199,280			2,145,621			2,026,807			1,919,811
	1-4 family mortgage			1,138,645			1,146,831			1,089,826			1,015,698			926,697
	Other mortgage			3,624,071			3,597,750			3,438,762			3,160,510			2,869,158
Subtotal: Real estate - mortgage				7,006,152			6,943,861			6,674,209			6,203,015			5,715,666
Consumer				72,054			66,402			66,552			65,110			62,674
Total loans			$	11,629,802		$	11,687,968		$	11,278,614		$	10,617,320		$	9,898,957

SUMMARY OF CREDIT LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
				1st Quarter 2023				4th Quarter 2022				3rd Quarter 2022				2nd Quarter 2022				1st Quarter 2022
Allowance for credit losses:
Beginning balance				$	146,297			$	140,967			$	128,387			$	119,463			$	116,660
Loans charged off:
	Commercial financial and agricultural				1,257				2,116				2,902				1,667				2,574
	Real estate - construction				-				-				-				-				-
	Real estate - mortgage				26				-				170				23				27
	Consumer				390				200				261				123				75
		Total charge offs			1,673				2,316				3,333				1,813				2,676
Recoveries:
	Commercial financial and agricultural				128				393				297				1,217				105
	Real estate - construction				3				-				-				-				-
	Real estate - mortgage				1				-				-				-				-
	Consumer				11				118				12				13				12
		Total recoveries			143				511				309				1,230				117
	Net charge-offs				1,530				1,805				3,024				583				2,559
	Provision for credit losses				4,197				7,135				15,604				9,507				5,362
	Ending balance			$	148,965			$	146,297			$	140,967			$	128,387			$	119,463
	Allowance for credit losses to total loans				1.28	%			1.25	%			1.25	%			1.21	%			1.21	%
	Allowance for credit losses to total average
		loans			1.30	%			1.27	%			1.29	%			1.26	%			1.24	%
	Net charge-offs to total average loans				0.05	%			0.06	%			0.11	%			0.02	%			0.11	%
	Provision for credit losses to total average loans				0.14	%			0.25	%			0.57	%			0.37	%			0.23	%
	Nonperforming assets:
		Nonaccrual loans		$	13,157			$	12,450			$	11,655			$	10,540			$	14,738
		Loans 90+ days past due and accruing			4,683				5,391				4,803				4,991				4,686
		Other real estate owned and repossessed assets			248				248				1,245				1,207				1,989
	Total			$	18,088			$	18,089			$	17,703			$	16,738			$	21,413
	Nonperforming loans to total loans				0.15	%			0.15	%			0.15	%			0.15	%			0.20	%
	Nonperforming assets to total assets				0.12	%			0.12	%			0.13	%			0.12	%			0.14	%
	Nonperforming assets to earning assets				0.13	%			0.13	%			0.13	%			0.12	%			0.14	%
	Allowance for credit losses to nonaccrual loans				1,132.24	%			1,175.08	%			1,209.50	%			1,218.05	%			826.19	%
	Restructured accruing loans							$	2,480			$	236			$	421			$	426
	Restructured accruing loans to total loans								0.02	%			-	%			-	%			-	%
	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
								4th Quarter 2022				3rd Quarter 2022				2nd Quarter 2022				1st Quarter 2022
	Beginning balance:							$	2,041			$	2,403			$	2,482			$	2,576
		Additions							444				-				-				-
		Net (paydowns) / advances							(5)				(362)				(79)				(94)
		Charge-offs							-				-				-				-
		Transfer to OREO							-				-				-				-
	Ending balance							$	2,480			$	2,041			$	2,403			$	2,482

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		1st Quarter 2023			4th Quarter 2022			3rd Quarter 2022			2nd Quarter 2022				1st Quarter 2022
Interest income:
Interest and fees on loans		$	163,732		$	153,924		$	131,375		$	111,287			$	103,105
Taxable securities			10,895			10,895			11,089			10,515				8,223
Nontaxable securities			21			27			30			37				43
Federal funds sold			614			818			632			93				13
Other interest and dividends			6,060			4,609			6,173			4,623				1,804
Total interest income			181,322			170,273			149,299			126,555				113,188
Interest expense:
Deposits			55,713			33,471			13,655			6,427				5,843
Borrowed funds			17,308			14,418			9,226			3,760				1,623
Total interest expense			73,021			47,889			22,881			10,187				7,466
Net interest income			108,301			122,384			126,418			116,368				105,722
Provision for credit losses			4,197			7,135			15,603			9,507				5,362
Net interest income after provision for credit losses			104,104			115,249			110,815			106,861				100,360
Non-interest income:
Service charges on deposit accounts			1,934			1,866			1,892			2,133				2,142
Mortgage banking			442			514			784			614				526
Credit card income			1,689			2,261			2,612			2,672				2,372
Securities losses			-			-			-			(2,833	)			(3,335	)
Increase in cash surrender value life insurance			1,621			1,600			1,637			1,633				1,608
Other operating income			635			725			2,014			5,287				4,635
Total non-interest income			6,321			6,966			8,939			9,506				7,948
Non-interest expense:
Salaries and employee benefits			19,066			19,230			19,687			20,734				18,301
Equipment and occupancy expense			3,435			3,263			3,140			2,983				2,933
Third party processing and other services			7,284			8,170			7,213			6,345				5,605
Professional services			1,654			922			1,036			1,327				992
FDIC and other regulatory assessments			1,517			1,311			975			1,147				1,132
Other real estate owned expense			6			239			21			32				3
Other operating expense			6,702			4,957			10,613			7,253				8,252
Total non-interest expense			39,664			38,092			42,685			39,821				37,218
Income before income tax			70,761			84,123			77,069			76,546				71,090
Provision for income tax			12,790			16,399			13,038			14,410				13,477
Net income			57,971			67,724			64,031			62,136				57,613
Dividends on preferred stock			-			31			-			31				-
Net income available to common stockholders		$	57,971		$	67,693		$	64,031		$	62,105			$	57,613
Basic earnings per common share		$	1.07		$	1.25		$	1.18		$	1.14			$	1.06
Diluted earnings per common share		$	1.06		$	1.24		$	1.17		$	1.14			$	1.06

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
					1st Quarter 2023						4th Quarter 2022						3rd Quarter 2022						2nd Quarter 2022						1st 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			$	11,632,439		5.70	%		$	11,465,538		5.32	%		$	10,900,105		4.77	%		$	10,165,470		4.38	%		$	9,621,484		4.29	%
		Tax-exempt (2)				18,978		3.36				19,526		6.60				19,852		4.14				23,616		4.09				25,195		4.08
			Total loans, net of unearned income			11,651,417		5.70				11,485,064		5.32				10,919,957		4.77				10,189,086		4.38				9,646,679		4.29
	Mortgage loans held for sale					1,522		6.40				1,515		3.67				2,906		2.73				471		3.41				927		1.73
	Debt securities:
		Taxable				1,724,523		2.54				1,755,764		2.49				1,797,560		2.47				1,775,425		2.37				1,518,572		2.17
		Tax-exempt (2)				3,781		2.43				4,863		2.39				5,863		2.39				7,148		2.35				8,812		2.36
			Total securities (3)			1,728,304		2.54				1,760,627		2.49				1,803,423		2.47				1,782,573		2.37				1,527,384		2.17
	Federal funds sold					50,526		4.93				82,656		3.93				102,028		2.46				30,721		1.21				16,639		0.31
	Restricted equity securities					9,919		7.69				7,724		7.35				7,724		3.65				7,724		3.74				7,371		3.70
	Interest-bearing balances with banks					510,021		4.67				458,115		3.83				945,142		2.56				2,332,412		0.80				3,637,882		0.20
	Total interest-earning assets				$	13,951,709		5.27			$	13,795,701		4.90			$	13,781,180		4.30			$	14,342,987		3.54			$	14,836,882		3.06
Non-interest-earning assets:
	Cash and due from banks					106,448						113,823						256,607						204,994						74,534
	Net premises and equipment					60,617						60,323						60,155						60,673						61,209
	Allowance for credit losses, accrued interest and other assets					279,775						273,964						294,006						297,893						313,560
			Total assets		$	14,398,549					$	14,243,811					$	14,391,948					$	14,906,547					$	15,286,185
Interest-bearing liabilities:
	Interest-bearing deposits:
	Checking				$	1,675,355		1.25	%		$	1,763,622		0.73	%		$	1,722,926		0.28	%		$	1,699,602		0.21	%		$	1,594,645		0.20	%
	Savings					134,671		0.94				141,163		0.64				144,368		0.21				134,469		0.18				135,545		0.17
	Money market					5,756,642		3.17				5,047,133		2.07				4,444,583		0.89				4,617,021		0.33				4,985,224		0.26
	Time deposits					850,639		2.51				860,336		1.69				809,057		1.16				766,225		0.86				792,930		0.91
		Total interest-bearing deposits				8,417,307		2.68				7,812,254		1.70				7,120,934		0.76				7,217,317		0.36				7,508,344		0.31
	Federal funds purchased					1,389,217		4.67				1,453,445		3.75				1,493,444		2.27				1,550,805		0.79				1,620,012		0.23
	Other borrowings					114,726		4.61				64,726		4.23				65,406		4.19				64,713		4.28				64,708		4.28
	Total interest-bearing liabilities				$	9,921,250		2.98	%		$	9,330,425		2.04	%		$	8,679,784		1.05	%		$	8,832,835		0.46	%		$	9,193,064		0.33	%
Non-interest-bearing liabilities:
	Non-interest-bearing demand deposits					3,086,774						3,572,956						4,410,318						4,824,521						4,870,701
	Other liabilities					72,121						77,544						62,093						58,784						59,619
	Stockholders' equity					1,358,587						1,307,553						1,263,870						1,205,551						1,156,186
	Accumulated other comprehensive (loss) income					(40,183)						(44,667)						(24,117)						(15,144)						6,615
			Total liabilities and stockholders' equity		$	14,398,549					$	14,243,811					$	14,391,948					$	14,906,547					$	15,286,185
Net interest spread								2.29	%					2.86	%					3.25	%					3.08	%					2.77	%
Net interest margin								3.15	%					3.52	%					3.64	%					3.26	%					2.89	%
(1)	Average loans include nonaccrual loans in all periods. Loan fees of $3,263, $3,630, $3,849, $5,303, and $6,823 are included in interest income in the first quarter of 2023, fourth quarter of 2022, third quarter of 2022, second quarter of 2022, and first 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) gains on debt securities of $(59,738), $(62,568), $(34,688), $(25,703), and $8,245 for the first quarter of 2023, fourth quarter of 2022, third quarter of 2022, second quarter of 2022, and first quarter of 2022, respectively, are excluded from the yield calculation.

 

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ServisFirst Bank

Davis Mange (205) 949-3420

dmange@servisfirstbank.com

Source: ServisFirst Bancshares, Inc.

FAQ

What were the earnings per share for SFBS in Q1 2023?

ServisFirst Bancshares reported diluted earnings per share of $1.06 for Q1 2023.

How did new account openings for SFBS change in Q1 2023?

New accounts opened increased by 23% year-over-year.

What is the net income for SFBS in Q1 2023?

The net income for ServisFirst Bancshares in Q1 2023 was $58.0 million.

How did the Tier 1 capital ratio change for SFBS?

The Tier 1 capital ratio improved to 9.91% in Q1 2023.

What were the challenges faced by SFBS in Q1 2023?

Challenges included a 14% decrease in net income from the previous quarter and a decline in net interest income.