ServisFirst Bancshares, Inc. Announces Results For Third Quarter of 2022

Rhea-AI Summary

ServisFirst Bancshares (NYSE: SFBS) reported strong third-quarter earnings for the period ending September 30, 2022. The diluted earnings per share rose 22% year-over-year to $1.17. Total loans increased by $661.3 million (25% annualized), with a book value per share up 11% year-over-year. However, a preliminary settlement and write-down resulted in a charge of $2.4 million. The return on average common stockholders' equity stood at 20.49%. The efficiency ratio improved to 31.54%, reflecting operational efficiency despite rising expenses.

Positive

• Diluted earnings per share increased 22% year-over-year to $1.17.
• Total loans grew by $661.3 million (25% annualized).
• Book value per share increased by 11% year-over-year.
• Return on average common stockholders' equity was 20.49%.
• Efficiency ratio improved to 31.54%.

Negative

• Charges of $2.4 million related to litigation settlement and investment write-down.
• Non-interest expenses rose by 24.2% year-over-year, indicating increased operational costs.
• Average total deposits decreased by 16.8% annualized from the previous quarter.

BIRMINGHAM, Ala.--(BUSINESS WIRE)-- ServisFirst Bancshares, Inc. (NYSE: SFBS), today announced earnings and operating results for the quarter ended September 30, 2022.

Third Quarter 2022 Highlights:

• Diluted earnings per share were $1.17 for the third quarter of 2022, a 22% increase over the third quarter of 2021 and a 3% increase on a linked-quarter basis
• Preliminary settlement of litigation and write-down of a private investment resulting in charges of $2.4 million, net of income taxes, or $0.05 per diluted share
• Total loans grew $661.3 million during the third quarter of 2022, or 25% annualized
• Entered the Piedmont, North Carolina market and expanded our presence in Northwest Florida and Nashville.
• Book value per share increased 11% year-over-year
• Return on average common stockholders’ equity was 20.49% for the quarter
• Efficiency ratio was 31.54% for the quarter, including the charges above

Tom Broughton, Chairman, President and CEO, said, “We were pleased to add some exceptional bankers during the quarter who will help in the continued growth and expansion of our company.”

Bud Foshee, CFO, said, “Excess funds have returned to normal levels. Our net interest margins should remain relatively stable going forward.”

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
		Period Ending September 30, 2022				Period Ending June 30, 2022				% Change From Period Ending June 30, 2022 to Period Ending September 30, 2022			Period Ending September 30, 2021				% Change From Period Ending September 30, 2021 to Period Ending September 30, 2022
QUARTERLY OPERATING RESULTS
Net Income		$	64,031			$	62,136			3	%		$	52,499			22	%
Net Income Available to Common Stockholders		$	64,031			$	62,105			3	%		$	52,499			22	%
Diluted Earnings Per Share		$	1.17			$	1.14			3	%		$	0.96			22	%
Return on Average Assets			1.77	%			1.67	%						1.50	%
Return on Average Common Stockholders' Equity			20.49	%			20.93	%						18.93	%
Average Diluted Shares Outstanding			54,546,682				54,532,385							54,477,740
YEAR-TO-DATE OPERATING RESULTS
Net Income		$	183,780										$	153,981			19	%
Net Income Available to Common Stockholders		$	183,749										$	153,950			19	%
Diluted Earnings Per Share		$	3.37										$	2.83			19	%
Return on Average Assets			1.64	%										1.63	%
Return on Average Common Stockholders' Equity			20.43	%										19.73	%
Average Diluted Shares Outstanding			54,533,793											54,440,004
BALANCE SHEET
Total Assets		$	13,890,030			$	14,494,317			(4)	%		$	14,602,228			(5)	%
Loans			11,278,614				10,617,320			6	%			8,812,811			28	%
Non-interest-bearing Demand Deposits			3,661,936				4,686,511			(22)	%			4,366,654			(16)	%
Total Deposits			11,051,915				11,772,337			(6)	%			12,078,670			(9)	%
Stockholders' Equity			1,242,589				1,211,918			3	%			1,114,293			12	%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $64.0 million for the quarter ended September 30, 2022, compared to net income and net income available to common stockholders of $62.1 million for the second quarter of 2022 and $52.5 million for the third quarter of 2021. Basic and diluted earnings per common share were $1.18 and $1.17, respectively, for the third quarter of 2022, compared to $1.14 for both in the second quarter of 2022 and $0.97 and $0.96, respectively, for the third quarter of 2021.

Annualized return on average assets was 1.77% and annualized return on average common stockholders’ equity was 20.49% for the third quarter of 2022, compared to 1.50% and 18.93%, respectively, for the third quarter of 2021.

Net interest income was $126.4 million for the third quarter of 2022, compared to $116.4 million for the second quarter of 2022 and $96.3 million for the third quarter of 2021. The net interest margin in the third quarter of 2022 was 3.64% compared to 3.26% in the second quarter of 2022 and 2.85% in the third quarter of 2021. Loan yields were 4.77% during the third quarter of 2022 compared to 4.38% during the second quarter of 2022 and 4.39% during the third quarter of 2021. Fees on Paycheck Protection Program ("PPP") loans of $400,000 during the third quarter of 2022 contributed one basis point of the loan yield, compared to $2.8 million of PPP loan fee accretion during the second quarter of 2022, or 11 basis points of the loan yield, and $5.2 million during the third quarter of 2021, or 24 basis points of the loan yield. Investment yields were 2.47% during the third quarter of 2022 compared to 2.37% during the second quarter of 2022 and 2.70% during the third quarter of 2021. Amortization of mortgage-backed securities decreased by $203,000 from the second quarter to the third quarter of 2022.

Average loans for the third quarter of 2022 were $10.92 billion, an increase of $730.9 million, or 28.5% annualized, over average loans of $10.19 billion for the second quarter of 2022, and an increase of $2.24 billion, or 25.8%, over average loans of $8.68 billion for the third quarter of 2021.

Average total deposits for the third quarter of 2022 were $11.53 billion, a decrease of $510.6 million, or 16.8%, annualized, over average total deposits of $12.04 billion for the second quarter of 2022, and an increase of $41.9 million, or 0.4%, over average total deposits of $11.49 billion for the third quarter of 2021.

Non-performing assets to total assets were 0.13% for the third quarter of 2022, an increase of one basis point compared to 0.12% for the second quarter of 2022 and an increase of two basis points compared to 0.11% for the third quarter of 2021. Annualized net charge-offs to average loans were 0.11% for the third quarter of 2022, compared to 0.02% and 0.08% for the second quarter of 2022 and third quarter of 2021, respectively. The allowance for credit losses as a percentage of total loans at September 30, 2022, June 30, 2022 and September 30, 2021 was 1.25%, 1.21%, and 1.24%, respectively. We recorded a $15.6 million provision for credit losses in the third quarter of 2022 compared to $9.5 million in the second quarter of 2022 and $6.0 million in the third quarter of 2021. A less optimistic outlook for unemployment and GDP is driving the increase in provision for credit losses during the third quarter of 2022.

Non-interest income increased $913,000, or 11.4%, to $8.9 million for the third quarter of 2022 from $8.0 million in the third quarter of 2021. Service charges on deposit accounts increased $165,000, or 9.6%, to $1.9 million from the third quarter of 2021 to the third quarter of 2022. Mortgage banking revenue decreased $639,000, or 44.9%, to $784,000 from the third quarter of 2021 to the third quarter of 2022. Net credit card revenue increased $569,000, or 27.9%, to $2.6 million during the third quarter of 2022, compared to $2.0 million during the third quarter of 2021. The aggregate amount of spend on all credit card accounts increased 27.2% during the third quarter of 2022 compared to the third quarter of 2021. Cash surrender value life insurance decreased $34,000, or 2.0%, to $1.6 million during the third quarter of 2022, compared to $1.7 million during the third quarter of 2021. Other operating income for the third quarter of 2022 increased $852,000, or 73.3%, to $2.0 million from $1.2 million in the third quarter of 2021. We recognized $1.3 million of income related to our interest rate cap during the third quarter 2022 compared to write down of $98,000 during the third quarter of 2021. Merchant service revenue increased by $93,000, or 25%, to $468,000, or 25%, during the third quarter of 2022, from $375,000 during the third quarter of 2021.

Non-interest expense for the third quarter of 2022 increased $8.3 million, or 24.2%, to $42.7 million from $34.4 million in the third quarter of 2021, and increased $2.9 million, or 7.2%, on a linked quarter basis. Salary and benefit expense for the third quarter of 2022 increased $1.7 million, or 9.4%, to $19.7 million from $18.0 million in the third quarter of 2021, and decreased $1.0 million, or 5.0%, on a linked quarter basis. The number of FTE employees increased by 40 to 558 at September 30, 2022 compared to 518 at September 30, 2021, and increased by 18 from the end of the second quarter of 2022. Equipment and occupancy expense increased $144,000, or 4.8%, to $3.1 million in the third quarter of 2022, from $3.0 million in the third quarter of 2021, and increased $157,000, or 5.3% on a linked-quarter basis. Third party processing and other services expense increased $3.1 million, or 74.1%, to $7.2 million in the third quarter of 2022, from $4.1 million in the third quarter of 2021, and increased $868,000, or 13.7%, on a linked-quarter basis. This increase in third party processing also includes Federal Reserve Bank charges related to correspondent bank settlement activities, which increased by $3.0 million year-over-year to $3.7 million during the third quarter of 2022. Professional services expense increased $88,000, or 9.3%, to $1.0 million in the third quarter of 2022, from $948,000 in the third quarter of 2021. FDIC and other regulatory assessments decreased $655,000 to $975,000 in the third quarter of 2022, from $1.6 million in the third quarter of 2021, and decreased $172,000, or 15.0%, on a linked quarter basis. Other operating expenses for the third quarter of 2022 increased $4.1 million, or 62.3%, to $10.6 million from $6.5 million in the third quarter of 2021, and increased $3.4 million on a linked-quarter basis. During the third quarter of 2022 we reached a preliminary settlement on a lawsuit and wrote down the value of a private investment resulting in charges of $3.1 million, or $2.4 million net of income tax. The efficiency ratio was 31.54% during the third quarter of 2022 compared to 32.95% during the third quarter of 2021 and compared to 31.64% during the second quarter of 2022.

Income tax expense increased $1.5 million, or 13.3%, to $13.0 million in the third quarter of 2022, compared to $11.5 million in the third quarter of 2021. Our effective tax rate was 16.92% for the third quarter of 2022 compared to 17.98% for the third quarter of 2021. We recognized an aggregate of $3.4 million in credits during the third quarter of 2022 related to investments in tax credit partnerships. 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 third quarters of 2022 and 2021 of $370,000 and $78,000, respectively.

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 September 30, 2022				At June 30, 2022				At March 31, 2022				At December 31, 2021				At September 30, 2021
Book value per share - GAAP		$	22.87			$	22.32			$	21.61			$	21.24			$	20.56
Total common stockholders' equity - GAAP			1,242,589				1,211,949				1,172,975				1,152,015				1,114,293
Adjustments:
Adjusted for goodwill and core deposit intangible asset			(13,615)				(13,615)				(13,615)				(13,638)				(13,705)
Tangible common stockholders' equity - non-GAAP		$	1,228,974			$	1,198,334			$	1,159,360			$	1,138,377			$	1,100,588
Tangible book value per share - non-GAAP		$	22.62			$	22.07			$	21.36			$	20.99			$	20.30
Stockholders' equity to total assets - GAAP			8.95	%			8.36	%			7.65	%			7.46	%			7.63	%
Total assets - GAAP		$	13,890,030			$	14,494,348			$	15,339,419			$	15,448,806			$	14,602,228
Adjustments:
Adjusted for goodwill and core deposit intangible asset			(13,615)				(13,615)				(13,615)				(13,638)				(13,705)
Total tangible assets - non-GAAP		$	13,876,415			$	14,480,733			$	15,325,804			$	15,435,168			$	14,588,523
Tangible common equity to total tangible assets - non-GAAP			8.86	%			8.28	%			7.56	%			7.38	%			7.54	%

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, and Tennessee. We also operate loan production offices in Florida. 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: 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 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; economic crisis and associated credit issues in industries most impacted by the COVID-19 outbreak, including but not limited to, the restaurant, hospitality and retail sectors; 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 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 2022, 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)
		3rd Quarter 2022				2nd Quarter 2022				1st Quarter 2022				4th Quarter 2021				3rd Quarter 2021
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	149,299			$	126,555			$	113,188			$	108,954			$	104,236
Interest expense			22,881				10,187				7,466				7,804				7,916
Net interest income			126,418				116,368				105,722				101,150				96,320
Provision for credit losses			15,603				9,507				5,362				8,451				5,963
Net interest income after provision for credit losses			110,815				106,861				100,360				92,699				90,357
Non-interest income			8,939				9,506				7,948				7,365				8,026
Non-interest expense			42,685				39,821				37,218				38,489				34,377
Income before income tax			77,069				76,546				71,090				61,575				64,006
Provision for income tax			13,038				14,410				13,477				7,822				11,507
Net income			64,031				62,136				57,613				53,753				52,499
Preferred stock dividends			-				31				-				31				-
Net income available to common stockholders		$	64,031			$	62,105			$	57,613			$	53,722			$	52,499
Earnings per share - basic		$	1.18			$	1.14			$	1.06			$	0.99			$	0.97
Earnings per share - diluted		$	1.17			$	1.14			$	1.06			$	0.99			$	0.96
Average diluted shares outstanding			54,546,682				54,532,385				54,522,042				54,493,959				54,477,740
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	13,890,030			$	14,494,317			$	15,339,419			$	15,448,806			$	14,602,228
Loans			11,278,614				10,617,320				9,898,957				9,532,934				8,812,811
Debt securities			1,714,603				1,790,218				1,617,977				1,305,527				984,600
Non-interest-bearing demand deposits			3,661,936				4,686,511				4,889,495				4,799,767				4,366,654
Total deposits			11,051,915				11,772,337				12,408,755				12,452,836				12,078,670
Borrowings			65,406				64,716				64,711				64,706				64,701
Stockholders' equity			1,242,589				1,211,918				1,172,975				1,152,015				1,114,293
Shares outstanding			54,324,007				54,306,875				54,282,132				54,227,060				54,207,147
Book value per share		$	22.87			$	22.32			$	21.61			$	21.24			$	20.56
Tangible book value per share (1)		$	22.62			$	22.07			$	21.36			$	20.99			$	20.30
SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin			3.64	%			3.26	%			2.89	%			2.71	%			2.85	%
Return on average assets			1.77	%			1.67	%			1.53	%			1.40	%			1.50	%
Return on average common stockholders' equity			20.49	%			20.93	%			20.09	%			18.75	%			18.93	%
Efficiency ratio			31.54	%			31.64	%			32.74	%			35.47	%			32.95	%
Non-interest expense to average earning assets			1.23	%			1.11	%			1.02	%			1.03	%			1.01	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets			9.37	%			9.59	%			9.86	%			9.95	%			10.46	%
Tier 1 capital to risk-weighted assets			9.37	%			9.59	%			9.87	%			9.96	%			10.47	%
Total capital to risk-weighted assets			10.91	%			11.12	%			11.43	%			11.58	%			12.18	%
Tier 1 capital to average assets			8.84	%			8.19	%			7.67	%			7.39	%			7.80	%
Tangible common equity to total tangible assets (1)			8.86	%			8.28	%			7.56	%			7.38	%			7.54	%
(1) See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a discussion of these Non-GAAP financial measures.
(2) Regulatory capital ratios for most recent period are preliminary.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
		September 30, 2022				September 30, 2021				% Change
ASSETS
Cash and due from banks		$	249,051			$	102,313			143	%
Interest-bearing balances due from depository institutions			156,959				4,297,473			(96	)%
Federal funds sold			82,316				44,700			84	%
Cash and cash equivalents			488,326				4,444,486			(89	)%
Available for sale debt securities, at fair value			665,763				723,324			(8	)%
Held to maturity debt securities (fair value of $942,282 at September 30, 2022 and $261,276 at September 30, 2021)			1,048,840				261,276			301	%
Restricted equity securities			7,734				-			NM
Mortgage loans held for sale			2,003				578			247	%
Loans			11,278,614				8,812,811			28	%
Less allowance for credit losses			(140,967	)			(108,950	)		29	%
Loans, net			11,137,647				8,703,861			28	%
Premises and equipment, net			59,080				60,953			(3	)%
Goodwill and other identifiable intangible assets			13,615				13,705			(1	)%
Other assets			467,022				394,045			19	%
Total assets		$	13,890,030			$	14,602,228			(5	)%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	3,661,936			$	4,366,654			(16	)%
Interest-bearing			7,389,979				7,712,016			(4	)%
Total deposits			11,051,915				12,078,670			(9	)%
Federal funds purchased			1,466,322				1,286,756			14	%
Other borrowings			65,406				64,701			1	%
Other liabilities			63,798				57,808			10	%
Total liabilities			12,647,441				13,487,935			(6	)%
Stockholders' equity:
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
September 30, 2022 and September 30, 2021			-				-			-	%
Common stock, par value $0.001 per share; 200,000,000 shares authorized; 54,324,007 shares
issued and outstanding at September 30, 2022, and 100,000,000 shares authorized; 54,207,147
shares issued and outstanding at September 30, 2021			54				54			-	%
Additional paid-in capital			228,738				225,648			1	%
Retained earnings			1,057,387				869,731			22	%
Accumulated other comprehensive (loss) income			(44,090	)			18,360			NM
Total stockholders' equity attributable to ServisFirst Bancshares, Inc.			1,242,089				1,113,793			12	%
Noncontrolling interest			500				500			-	%
Total stockholders' equity			1,242,589				1,114,293			12	%
Total liabilities and stockholders' equity		$	13,890,030			$	14,602,228			(5	)%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
Interest income:
Interest and fees on loans		$	131,375		$	96,119		$	345,767		$	285,373
Taxable securities			11,089			6,544			29,827			18,666
Nontaxable securities			30			62			110			255
Federal funds sold			632			4			738			11
Other interest and dividends			6,173			1,507			12,600			3,046
Total interest income			149,299			104,236			389,042			307,351
Interest expense:
Deposits			13,655			6,581			25,925			20,298
Borrowed funds			9,226			1,335			14,609			3,700
Total interest expense			22,881			7,916			40,534			23,998
Net interest income			126,418			96,320			348,508			283,353
Provision for credit losses			15,603			5,963			30,472			23,066
Net interest income after provision for credit losses			110,815			90,357			318,036			260,287
Non-interest income:
Service charges on deposit accounts			1,892			1,727			6,167			5,542
Mortgage banking			784			1,423			1,924			6,869
Credit card income			2,612			2,043			7,656			5,147
Securities (losses) gains			-			-			(6,168)			620
Increase in cash surrender value life insurance			1,637			1,671			4,878			5,012
Other operating income			2,014			1,162			11,936			2,897
Total non-interest income			8,939			8,026			26,393			26,087
Non-interest expense:
Salaries and employee benefits			19,687			17,995			58,722			50,425
Equipment and occupancy expense			3,140			2,996			9,056			8,494
Third party processing and other services			7,213			4,144			19,163			11,506
Professional services			1,036			948			3,355			2,978
FDIC and other regulatory assessments			975			1,630			3,254			4,637
Other real estate owned expense			21			123			56			820
Other operating expense			10,613			6,541			26,118			15,740
Total non-interest expense			42,685			34,377			119,724			94,600
Income before income tax			77,069			64,006			224,705			191,774
Provision for income tax			13,038			11,507			40,925			37,793
Net income			64,031			52,499			183,780			153,981
Dividends on preferred stock			-			-			31			31
Net income available to common stockholders		$	64,031		$	52,499		$	183,749		$	153,950
Basic earnings per common share		$	1.18		$	0.97		$	3.38		$	2.84
Diluted earnings per common share		$	1.17		$	0.96		$	3.37		$	2.83

LOANS BY TYPE (UNAUDITED)
(In thousands)
		3rd Quarter 2022			2nd Quarter 2022			1st Quarter 2022			4th Quarter 2021			3rd Quarter 2021
Commercial, financial and agricultural		$	3,104,155		$	2,966,040		$	2,955,927		$	2,984,053		$	2,927,845
Real estate - construction			1,433,698			1,383,155			1,164,690			1,103,076			887,938
Real estate - mortgage:
Owner-occupied commercial			2,145,621			2,026,807			1,919,811			1,874,103			1,809,840
1-4 family mortgage			1,089,826			1,015,698			926,697			826,765			765,102
Other mortgage			3,438,762			3,160,510			2,869,158			2,678,084			2,357,812
Subtotal: Real estate - mortgage			6,674,209			6,203,015			5,715,666			5,378,952			4,932,754
Consumer			66,552			65,110			62,674			66,853			64,274
Total loans		$	11,278,614		$	10,617,320		$	9,898,957		$	9,532,934		$	8,812,811

SUMMARY OF CREDIT LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
		3rd Quarter 2022				2nd Quarter 2022				1st Quarter 2022				4th Quarter 2021				3rd Quarter 2021
Allowance for credit losses:
Beginning balance		$	128,387			$	119,463			$	116,660			$	108,950			$	104,670
Loans charged off:
Commercial financial and agricultural			2,902				1,667				2,574				1,285				1,541
Real estate - construction			-				-				-				14				-
Real estate - mortgage			170				23				27				-				208
Consumer			261				123				75				141				86
Total charge offs			3,333				1,813				2,676				1,440				1,835
Recoveries:
Commercial financial and agricultural			297				1,217				105				671				140
Real estate - construction			-				-				-				-				-
Real estate - mortgage			-				-				-				18				4
Consumer			12				13				12				10				8
Total recoveries			309				1,230				117				699				152
Net charge-offs			3,024				583				2,559				741				1,683
Provision for credit losses			15,604				9,507				5,362				8,451				5,963
Ending balance		$	140,967			$	128,387			$	119,463			$	116,660			$	108,950
Allowance for credit losses to total loans			1.25	%			1.21	%			1.21	%			1.22	%			1.24	%
Allowance for credit losses to total average
loans			1.32	%			1.26	%			1.24	%			1.29	%			1.26	%
Net charge-offs (recoveries) to total average loans			0.11	%			0.02	%			0.11	%			0.03	%			0.08	%
Provision for credit losses to total average
loans			0.58	%			0.37	%			0.23	%			0.37	%			0.27	%
Nonperforming assets:
Nonaccrual loans		$	11,655			$	10,540			$	14,738			$	6,762			$	9,145
Loans 90+ days past due and accruing			4,803				4,991				4,686				5,335				5,326
Other real estate owned and
repossessed assets			1,245				1,207				1,989				1,208				2,068
Total		$	17,703			$	16,738			$	21,413			$	13,305			$	16,539
Nonperforming loans to total loans			0.15	%			0.15	%			0.20	%			0.13	%			0.16	%
Nonperforming assets to total assets			0.13	%			0.12	%			0.14	%			0.09	%			0.11	%
Nonperforming assets to earning assets			0.13	%			0.12	%			0.14	%			0.09	%			0.11	%
Allowance for credit losses to nonaccrual loans			1,209.50	%			1,218.05	%			826.19	%			1,725.23	%			1,191.36	%
Restructured accruing loans		$	236			$	421			$	426			$	431			$	437
Restructured accruing loans to total loans			-	%			-	%			-	%			-	%			-	%
TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
(In thousands)
		3rd Quarter 2022				2nd Quarter 2022				1st Quarter 2022				4th Quarter 2021				3rd Quarter 2021
Beginning balance:		$	2,403			$	2,482			$	2,576			$	2,893			$	2,918
Additions			-				-				-				-				-
Net (paydowns) / advances			(362	)			(79	)			(94	)			(303	)			(25	)
Charge-offs			-				-				-				(14	)			-
Ending balance		$	2,041			$	2,403			$	2,482			$	2,576			$	2,893

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		3rd Quarter 2022			2nd Quarter 2022			1st Quarter 2022			4th Quarter 2021			3rd Quarter 2021
Interest income:
Interest and fees on loans		$	131,375		$	111,287		$	103,105		$	100,348		$	96,119
Taxable securities			11,089			10,515			8,223			6,747			6,544
Nontaxable securities			30			37			43			47			62
Federal funds sold			632			93			13			18			4
Other interest and dividends			6,173			4,623			1,804			1,794			1,507
Total interest income			149,299			126,555			113,188			108,954			104,236
Interest expense:
Deposits			13,655			6,427			5,843			6,271			6,581
Borrowed funds			9,226			3,760			1,623			1,533			1,335
Total interest expense			22,881			10,187			7,466			7,804			7,916
Net interest income			126,418			116,368			105,722			101,150			96,320
Provision for credit losses			15,603			9,507			5,362			8,451			5,963
Net interest income after provision for credit losses			110,815			106,861			100,360			92,699			90,357
Non-interest income:
Service charges on deposit accounts			1,892			2,133			2,142			1,297			1,727
Mortgage banking			784			614			526			471			1,423
Credit card income			2,612			2,672			2,372			2,200			2,043
Securities losses			-			(2,833)			(3,335)			-			-
Increase in cash surrender value life insurance			1,637			1,633			1,608			1,630			1,671
Other operating income			2,014			5,287			4,635			1,767			1,162
Total non-interest income			8,939			9,506			7,948			7,365			8,026
Non-interest expense:
Salaries and employee benefits			19,687			20,734			18,301			17,303			17,995
Equipment and occupancy expense			3,140			2,983			2,933			2,910			2,996
Third party processing and other services			7,213			6,345			5,605			4,856			4,144
Professional services			1,036			1,327			992			913			948
FDIC and other regulatory assessments			975			1,147			1,132			1,042			1,630
Other real estate owned expense			21			32			3			48			123
Other operating expense			10,613			7,253			8,252			11,417			6,541
Total non-interest expense			42,685			39,821			37,218			38,489			34,377
Income before income tax			77,069			76,546			71,090			61,575			64,006
Provision for income tax			13,038			14,410			13,477			7,822			11,507
Net income			64,031			62,136			57,613			53,753			52,499
Dividends on preferred stock			-			31			-			31			-
Net income available to common stockholders		$	64,031		$	62,105		$	57,613		$	53,722		$	52,499
Basic earnings per common share		$	1.18		$	1.14		$	1.06		$	0.99		$	0.97
Diluted earnings per common share		$	1.17		$	1.14		$	1.06		$	0.99		$	0.96

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
		3rd Quarter 2022						2nd Quarter 2022						1st Quarter 2022						4th Quarter 2021						3rd Quarter 2021
		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		$	10,900,105		4.77	%		$	10,165,470		4.38	%		$	9,621,484		4.29	%		$	9,032,914		4.40	%		$	8,653,632		4.40	%
Tax-exempt (2)			19,852		4.14				23,616		4.09				25,195		4.08				26,148		4.07				26,542		4.05
Total loans, net of
unearned income			10,919,957		4.77				10,189,086		4.38				9,646,679		4.29				9,059,062		4.40				8,680,174		4.39
Mortgage loans held for sale			2,906		2.73				471		3.41				927		1.73				998		1.99				7,050		1.69
Debt securities:
Taxable			1,797,560		2.47				1,775,425		2.37				1,518,572		2.17				1,134,378		2.38				969,715		2.70
Tax-exempt (2)			5,863		2.39				7,148		2.35				8,812		2.36				9,823		2.36				12,382		2.39
Total securities (3)			1,803,423		2.47				1,782,573		2.37				1,527,384		2.17				1,144,201		2.38				982,097		2.70
Federal funds sold			102,028		2.46				30,721		1.21				16,639		0.31				39,445		0.18				8,551		0.19
Restricted equity securities			7,724		3.65				7,724		3.74				7,371		3.70				873		3.18				-		-
Interest-bearing balances with banks			945,142		2.56				2,332,412		0.80				3,637,882		0.20				4,561,662		0.16				3,761,652		0.16
Total interest-earning assets		$	13,781,180		4.30			$	14,342,987		3.54			$	14,836,882		3.06			$	14,806,241		2.92			$	13,439,524		3.08
Non-interest-earning assets:
Cash and due from banks			256,607						204,994						74,534						79,293						90,034
Net premises and equipment			60,155						60,673						61,209						61,837						62,845
Allowance for credit losses, accrued
interest and other assets			294,000						297,893						313,560						303,300						315,178
Total assets		$	14,391,942					$	14,906,547					$	15,286,185					$	15,250,671					$	13,907,581
Interest-bearing liabilities:
Interest-bearing deposits:
Checking		$	1,722,926		0.28	%		$	1,699,602		0.21	%		$	1,594,645		0.20	%		$	1,499,918		0.19	%		$	1,431,420		0.19	%
Savings			144,368		0.21				134,469		0.18				135,545		0.17				123,179		0.18				122,579		0.17
Money market			4,444,583		0.89				4,617,021		0.33				4,985,224		0.26				5,100,192		0.26				5,328,291		0.26
Time deposits			809,057		1.16				766,225		0.86				792,930		0.91				807,342		1.05				806,108		1.15
Total interest-bearing deposits			7,120,934		0.76				7,217,317		0.36				7,508,344		0.31				7,530,631		0.33				7,688,398		0.34
Federal funds purchased			1,493,444		2.27				1,550,805		0.79				1,620,012		0.23				1,608,349		0.21				1,205,327		0.21
Other borrowings			65,406		4.19				64,713		4.28				64,708		4.28				64,704		4.23				64,694		4.23
Total interest-bearing liabilities		$	8,679,784		1.05	%		$	8,832,835		0.46	%		$	9,193,064		0.33	%		$	9,203,684		0.34	%		$	8,958,419		0.35	%
Non-interest-bearing liabilities:
Non-interest-bearing
demand deposits			4,410,318						4,824,521						4,870,701						4,856,243						3,800,972
Other liabilities			62,087						58,784						59,619						54,134						48,060
Stockholders' equity			1,263,870						1,205,551						1,156,186						1,121,578						1,078,987
Accumulated other comprehensive
(loss) income			(24,117)						(15,144)						6,615						15,032						21,143
Total liabilities and
stockholders' equity		$	14,391,942					$	14,906,547					$	15,286,185					$	15,250,671					$	13,907,581
Net interest spread					3.25	%					3.08	%					2.77	%					2.58	%					2.73	%
Net interest margin					3.64	%					3.26	%					2.89	%					2.71	%					2.85	%

(1)		Average loans include nonaccrual loans in all periods. Loan fees of $3,849, $5,303, $6,823, $7,686, and $7,203 are included in interest income in the third quarter of 2022, the second quarter of 2022, first quarter of 2022, the fourth quarter of 2021, and the third quarter of 2021, 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 $(34,688), $(25,703), $8,245, $18,974, and $26,709 for the third quarter of 2022, second quarter of 2022, first quarter of 2022, fourth quarter of 2021, and third quarter of 2021, 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 are the earnings per share for ServisFirst Bancshares in Q3 2022?

The diluted earnings per share for Q3 2022 were $1.17, a 22% increase from Q3 2021.

How much did total loans grow for ServisFirst Bancshares in Q3 2022?

Total loans grew by $661.3 million during the third quarter of 2022, reflecting a 25% annualized growth.

What is the book value per share for ServisFirst Bancshares as of Q3 2022?

The book value per share increased by 11% year-over-year, reaching $22.87.

What was the efficiency ratio for ServisFirst Bancshares in Q3 2022?

The efficiency ratio for Q3 2022 improved to 31.54%.

What legal charges did ServisFirst Bancshares incur in Q3 2022?

ServisFirst Bancshares incurred charges of $2.4 million due to a preliminary settlement of litigation and write-down of a private investment.