ServisFirst Bancshares, Inc. Announces Results for Third Quarter of 2021

Rhea-AI Summary

ServisFirst Bancshares, Inc. (SFBS) reported strong third-quarter results for 2021, with net income of $52.5 million, a 21% increase year-over-year. Diluted earnings per share rose to $0.96, up 20% from the same quarter in 2020. Total loans increased by $163.1 million, while deposits surged to $12.08 billion, reflecting a 25% year-over-year growth. The bank's liquidity reached $4.2 billion, and credit quality remained robust. However, non-interest income fell slightly, and operating expenses rose significantly, with a 29.4% increase compared to the previous year.

Positive

• Net income up 21% year-over-year to $52.5 million.
• Diluted earnings per share increased 20% to $0.96.
• Total loans grew by $163.1 million (8% annualized).
• Deposits increased 25% year-over-year to $12.08 billion.
• Liquidity reached $4.2 billion, a record high.

Negative

• Non-interest income decreased by 1.8% compared to Q3 2020.
• Operating expenses rose 29.4% year-over-year, adversely affecting profitability.

BIRMINGHAM, Ala., Oct. 18, 2021 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NYSE: SFBS), today announced earnings and operating results for the quarter ended September 30, 2021.

Third Quarter 2021 Highlights:

• Total loans grew $163.1 million, or 8% annualized, during the quarter, while loans, excluding the impact of Paycheck Protection Program (“PPP”) loan forgiveness, grew $370.4 million, or 18% annualized, during the quarter
• Diluted earnings per share were $0.96 for the third quarter, an increase of 20% over the third quarter of 2020
• Deposits grew from $9.67 billion to $12.08 billion year-over-year, or 25%, and grew $1.12 billion, or 41% annualized, on a linked-quarter basis
• Book value per share increased to $20.56, a 17% increase year-over-year
• Liquidity reached new record levels, with approximately $4.2 billion on deposit at the Federal Reserve Bank
  

Tom Broughton, Chairman, President and CEO, said, “The economic recovery in the Southeast United States is resulting in very strong loan growth for our bank. Our bankers are winning in the marketplace.”

Bud Foshee, CFO, said, “Credit losses continue at historically low levels and credit quality remains very good. Operating efficiency is also very good.”

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
				Period Ending September 30, 2021				Period Ending June 30, 2021				% Change From Period Ending June 30, 2021 to Period Ending September 30, 2021			Period Ending September 30, 2020				% Change From Period Ending September 30, 2020 to Period Ending September 30, 2021
QUARTERLY OPERATING RESULTS
Net Income				$	52,499			$	50,027			5	%		$	43,362			21	%
Net Income Available to Common Stockholders				$	52,499			$	49,996			5	%		$	43,362			21	%
Diluted Earnings Per Share				$	0.96			$	0.92			4	%		$	0.80			20	%
Return on Average Assets					1.50	%			1.56	%						1.54	%
Return on Average Common Stockholders' Equity					18.93	%			18.98	%						18.43	%
Average Diluted Shares Outstanding					54,477,740				54,460,230							54,232,965
YEAR-TO-DATE OPERATING RESULTS
Net Income				$	153,981										$	118,588			30	%
Net Income Available to Common Stockholders				$	153,950										$	118,557			30	%
Diluted Earnings Per Share				$	2.83										$	2.19			29	%
Return on Average Assets					1.63	%										1.54	%
Return on Average Common Stockholders' Equity					19.73	%										17.73	%
Average Diluted Shares Outstanding					54,440,004											54,198,422
BALANCE SHEET
Total Assets				$	14,602,228			$	13,207,319			11	%		$	11,394,874			28	%
Loans					8,812,811				8,649,694			2	%			8,508,554			4	%
Non-interest-bearing Demand Deposits					4,366,654				3,296,429			32	%			2,762,814			58	%
Total Deposits					12,078,670				10,958,236			10	%			9,673,783			25	%
Stockholders' Equity					1,114,293				1,073,284			4	%			949,589			17	%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $52.5 million for the quarter ended September 30, 2021, compared to net income and net income available to common stockholders of $43.4 million for the same quarter in 2020. Basic and diluted earnings per common share were $0.97 and $0.96, respectively, for the third quarter of 2021, compared to $0.80 for the third quarter of 2020.

Annualized return on average assets was 1.50% and annualized return on average common stockholders’ equity was 18.93% for the third quarter of 2021, compared to 1.54% and 18.43%, respectively, for the third quarter of 2020.

Net interest income was $96.3 million for the third quarter of 2021, compared to $94.7 million for the second quarter of 2021 and $85.1 million for the third quarter of 2020. The net interest margin in the third quarter of 2021 was 2.85% compared to 3.06% in the second quarter of 2021 and 3.14% in the third quarter of 2020. Accretion of net fees on PPP loans of $5.2 million during the third quarter of 2021 contributed 24 basis points of the loan yield, compared to $8.0 million of PPP loan fee accretion during the second quarter of 2021, or 37 basis points of the loan yield and $4.0 million during the third quarter of 2020, or 19 basis points of the loan yield.

Average loans for the third quarter of 2021 were $8.68 billion, an increase of $35.2 million, or 1.6% annualized, over average loans of $8.64 billion for the second quarter of 2021, and an increase of $315.0 million, or 3.8%, over average loans of $8.37 billion for the third quarter of 2020. Forgiveness of PPP loans during the third quarter of 2021 totaled $207.4 million. PPP loans outstanding as of September 30, 2021 were $387.7 million.

Average total deposits for the third quarter of 2021 were $11.49 billion, an increase of $757.1 million, or 28.0%, annualized, over average total deposits of $10.73 billion for the second quarter of 2021, and an increase of $2.02 billion, or 21.3%, over average total deposits of $9.47 billion for the third quarter of 2020.

Non-performing assets to total assets were 0.11% for the third quarter of 2021, a decrease of 4 basis points compared to 0.15% for the second quarter of 2021 and a decrease of 18 basis points compared to 0.29% for the third quarter of 2020. Annualized net charge-offs to average loans were 0.08% for the third quarter of 2021, compared to -0.01% and 0.54% for the second quarter of 2021 and third quarter of 2020, respectively. The allowance for credit losses for the quarters ending September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020 were calculated under the CECL methodology and as a percentage of total loans were 1.24%, 1.21%, 1.12%, and 1.04%, respectively. Other quarter-end periods presented for the allowance for loan losses were not restated for CECL adoption and were calculated under the incurred loss methodology. The allowance for loan losses as a percentage of total loans was 1.09% at September 30, 2020. Excluding PPP loans, for all periods discussed, the allowance for credit losses as a percentage of total loans under the CECL methodology at September 30, 2021 and June 30, 2021 was 1.29% and 1.30%, respectively, compared to 1.24% at September 30, 2020, under the incurred loss model. We recorded a $6.0 million provision for credit losses in the third quarter of 2021 compared to $9.7 million in the second quarter of 2021 and $12.3 million in the third quarter of 2020.

Non-interest income for the third quarter of 2021 decreased $146,000, or 1.8%, to $8.0 million from $8.2 million in the third quarter of 2020. Mortgage banking revenue decreased $1.1 million, or 43.5%, to $1.4 million from the third quarter of 2020 to the third quarter of 2021. The number of mortgage loans originated during the third quarter of 2021 fell to 208, from 325 during the same quarter in 2020. Net credit card revenue increased $203,000, or 11.0%, to $2.0 million during the third quarter of 2021, compared to $1.8 million during the third quarter of 2020. The number of credit card accounts increased approximately 31% and the aggregate amount of spend on all credit card accounts increased 43% during the third quarter of 2021 compared to the third quarter of 2020. Increase in cash surrender value of life insurance decreased $62,000, or 3.6%, during the third quarter of 2021 compared the third quarter of 2020, due to decreases in crediting rates on policies. Other income for the third quarter of 2021 increased $900,000, or 343.5%, to $1.2 million from $262,000 in the third quarter of 2020. We wrote down the value of our interest rate cap by $98,000 during the third quarter of 2021 through other income compared to a write down of $343,000 during the third quarter of 2020. Merchant service revenue increased from $163,000 during the third quarter of 2020 to $375,000, or 30.1%, during the third quarter of 2021.

Non-interest expense for the third quarter of 2021 increased $7.8 million, or 29.4%, to $34.4 million from $26.6 million in the third quarter of 2020, and increased $3.1 million, or 9.8%, on a linked quarter basis. Salary and benefit expense for the third quarter of 2021 increased $3.0 million, or 20.0%, to $18.0 million from $15.0 million in the third quarter of 2020, and increased $1.1 million, or 6.6%, on a linked quarter basis. Salary expense alone increased 7.6% year over year. We increased our annual incentive accrual based on the increased loan production in 2021 and on final anticipated payouts for 2021 PPP loan originations. Total incentive accruals increased $2.2 million to $4.9 million for the third quarter of 2021 compared the same quarter in 2020. The number of FTE employees increased by 24 to 518 at September 30, 2021 compared to 494 at September 30, 2020, and decreased by 9 from the end of the second quarter of 2021. Equipment and occupancy expense increased $440,000, or 17.2%, to $3.0 million in the third quarter of 2021, from $2.6 million in the third quarter of 2020, and increased $152,000, or 5.3% on a linked-quarter basis. We moved our office in Nashville, Tennessee in early 2021 to expand our space and improve visibility and we opened our new office in Orlando, Florida in the third quarter of 2021. Third party processing and other services expense increased $863,000, or 26.3%, to $4.1 million in the third quarter of 2021, from $3.3 million in the third quarter of 2020 and increased $198,000, or 5.0%, on a linked-quarter basis. We increased the number of correspondent banks for which we are processing transactions through the Federal Reserve Bank. FDIC and other regulatory assessments increased $569,000 to $1.6 million in the third quarter of 2021, from $1.1 million in the third quarter of 2020, and increased $205,000, or 14.4%, on a linked quarter basis. Growth in total assets has increased our assessments. ServisFirst Bank was reclassified as a large financial institution by the FDIC as of September 30, 2021. Expenses associated with other real estate owned increased $4,000, to $123,000 in the third quarter of 2021, from $119,000 in the third quarter of 2020, and decreased $417,000 on a linked quarter basis. The third quarter of 2021 included a write-down in value of a property in our Atlanta region. The linked-quarter decrease was due to the write-down of one property in our Nashville region during the second quarter of 2021. Other operating expenses for the third quarter of 2021 increased $2.9 million, or 81.3%, to $6.5 million from $3.6 million in the third quarter of 2020, and increased $2.0 million on a linked-quarter basis. We invested in new market tax credits in July 2021 and wrote down the investments by $2.8 million during the third quarter of 2021 with a charge to other operating expenses. We decreased our reserve for credit losses on unfunded loan commitments by $300,000 in the third quarter of 2021. The efficiency ratio was 32.95% during the third quarter of 2021 compared to 28.50% during the third quarter of 2020 and compared to 30.03% during the second quarter of 2021.

Income tax expense increased $472,000, or 4.3%, to $11.5 million in the third quarter of 2021, compared to $11.0 million in the third quarter of 2020. Our effective tax rate was 17.98% for the third quarter of 2021 compared to 20.29% for the third quarter of 2020. We recognized $3.2 million in credits during the third quarter of 2021 related to the investment in new market tax credits in July 2021. 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 2021 and 2020 of $78,000 and $180,000, 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 also include total loans adjusted for the impact of PPP loan activities. 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, 2021				At June 30, 2021				At March 31, 2021				At December 31, 2020				At September 30, 2020
Book value per share - GAAP		$	20.56			$	19.80			$	19.03			$	18.41			$	17.61
Total common stockholders' equity - GAAP			1,114,293				1,073,284				1,030,485				992,852				949,589
Adjustments:
Adjusted for goodwill and core deposit intangible asset			13,705				13,773				13,841				13,908				13,976
Tangible common stockholders' equity - non-GAAP		$	1,100,588			$	1,059,511			$	1,016,644			$	978,944			$	935,613
Tangible book value per share - non-GAAP		$	20.30			$	19.55			$	18.78			$	18.15			$	17.35
Stockholders' equity to total assets - GAAP			7.63	%			8.13	%			8.15	%			8.32	%			8.33	%
Total assets - GAAP		$	14,602,228			$	13,207,319			$	12,647,374			$	11,932,654			$	11,394,874
Adjustments:
Adjusted for goodwill and core deposit intangible asset			13,705				13,773				13,841				13,908				13,976
Total tangible assets - non-GAAP		$	14,588,523			$	13,193,546			$	12,633,533			$	11,918,746			$	11,380,898
Tangible common equity to total tangible assets - non-GAAP			7.54	%			8.03	%			8.05	%			8.21	%			8.22	%
Total loans - GAAP		$	8,812,811			$	8,649,694			$	8,504,980
Adjustments:
Adjusted to exclude PPP loans			387,725				595,017				967,641
Loans, excluding PPP loans - non-GAAP		$	8,425,086			$	8,054,677			$	7,537,339

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, and Charleston, South 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 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 2021, 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.

Contact: ServisFirst Bank
Davis Mange (205) 949-3420
dmange@servisfirstbank.com

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except share and per share data)
		3rd Quarter 2021				2nd Quarter 2021				1st Quarter 2021				4th Quarter 2020				3rd Quarter 2020
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	104,236			$	102,719			$	100,396			$	101,065			$	96,110
Interest expense			7,916				8,051				8,031				8,984				11,028
Net interest income			96,320				94,668				92,365				92,081				85,082
Provision for credit losses			5,963				9,652				7,451				6,283				12,284
Net interest income after provision for credit losses			90,357				85,016				84,914				85,798				72,798
Non-interest income			8,026				9,598				8,463				8,237				8,172
Non-interest expense			34,377				31,309				28,914				28,202				26,573
Income before income tax			64,006				63,305				64,463				65,833				54,397
Provision for income tax			11,507				13,278				13,008				14,852				11,035
Net income			52,499				50,027				51,455				50,981				43,362
Preferred stock dividends			-				31				-				32				-
Net income available to common stockholders		$	52,499			$	49,996			$	51,455			$	50,949			$	43,362
Earnings per share - basic		$	0.97			$	0.92			$	0.95			$	0.94			$	0.80
Earnings per share - diluted		$	0.96			$	0.92			$	0.95			$	0.94			$	0.80
Average diluted shares outstanding			54,477,740				54,381,991				54,273,944				54,232,965				54,194,506
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	14,602,228			$	13,207,319			$	12,647,374			$	11,932,654			$	11,394,874
Loans			8,812,811				8,649,694				8,504,980				8,465,688				8,508,544
Debt securities			984,600				1,013,783				962,129				886,938				913,299
Non-interest-bearing demand deposits			4,366,654				3,296,429				3,044,611				2,788,772				2,762,814
Total deposits			12,078,670				10,958,236				10,577,610				9,975,724				9,673,783
Borrowings			64,701				64,696				64,691				64,748				64,719
Stockholders' equity		$	1,114,293			$	1,073,284			$	1,030,485			$	992,852			$	949,589
Shares outstanding			54,207,147				54,201,204				54,137,650				53,943,751				53,915,245
Book value per share		$	20.56			$	19.80			$	19.03			$	18.41			$	17.61
Tangible book value per share (1)		$	20.30			$	19.55			$	18.78			$	18.15			$	17.35
SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin			2.85	%			3.06	%			3.20	%			3.27	%			3.14	%
Return on average assets			1.50	%			1.56	%			1.72	%			1.74	%			1.54	%
Return on average common stockholders' equity			18.93	%			18.98	%			19.83	%			20.78	%			18.43	%
Efficiency ratio			32.95	%			30.03	%			28.68	%			28.11	%			28.50	%
Non-interest expense to average earning assets			1.01	%			1.01	%			1.00	%			1.00	%			0.98	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets			10.46	%			10.60	%			10.73	%			10.50	%			11.24	%
Tier 1 capital to risk-weighted assets			10.47	%			10.60	%			10.73	%			10.50	%			11.25	%
Total capital to risk-weighted assets			12.18	%			12.36	%			12.48	%			12.20	%			13.10	%
Tier 1 capital to average assets			7.80	%			8.10	%			8.25	%			8.23	%			8.22	%
Tangible common equity to total tangible assets (1)			7.54	%			8.03	%			8.05	%			8.22	%			8.22	%
(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, 2021				September 30, 2020				% Change
ASSETS
Cash and due from banks		$	102,313			$	70,472			45	%
Interest-bearing balances due from depository institutions			4,297,473				1,551,597			177	%
Federal funds sold			44,700				1,302			3,333	%
Cash and cash equivalents			4,444,486				1,623,371			174	%
Available for sale debt securities, at fair value			723,324				913,049			(21	)%
Held to maturity debt securities (fair value of $261,276 at September 30, 2021 and $250 at September 30, 2020)			261,276				250			104,410	%
Mortgage loans held for sale			578				21,472			(97	)%
Loans			8,812,811				8,508,554			4	%
Less allowance for credit losses			(108,950	)			(92,440	)		18	%
Loans, net			8,703,861				8,416,114			3	%
Premises and equipment, net			60,953				55,273			10	%
Goodwill and other identifiable intangible assets			13,705				13,976			(2	)%
Other assets			394,045				351,369			12	%
Total assets		$	14,602,228			$	11,394,874			28	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	4,366,654			$	2,762,814			58	%
Interest-bearing			7,712,016				6,910,969			12	%
Total deposits			12,078,670				9,673,783			25	%
Federal funds purchased			1,286,756				669,350			92	%
Other borrowings			64,701				64,719			-	%
Other liabilities			57,808				37,433			54	%
Total liabilities			13,487,935				10,445,285			29	%
Stockholders' equity:
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
September 30, 2021 and September 30, 2020			-				-
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 54,207,147 shares
issued and outstanding at September 30, 2021, and 53,915,245 shares issued and outstanding
at September 30, 2020			54				54			-	%
Additional paid-in capital			225,648				223,280			1	%
Retained earnings			869,731				706,924			23	%
Accumulated other comprehensive income			18,360				18,831			(3	)%
Total stockholders' equity attributable to ServisFirst Bancshares, Inc.			1,113,793				949,089			17	%
Noncontrolling interest			500				500			-	%
Total stockholders' equity			1,114,293				949,589			17	%
Total liabilities and stockholders' equity		$	14,602,228			$	11,394,874			28	%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021			2020
Interest income:
Interest and fees on loans			$	96,119		$	89,564		$	285,373		$	268,332
Taxable securities				6,544			5,858			18,666			16,104
Nontaxable securities				62			166			255			610
Federal funds sold				4			16			11			327
Other interest and dividends				1,507			506			3,046			2,584
Total interest income				104,236			96,110			307,351			287,957
Interest expense:
Deposits				6,581			9,876			20,298			37,377
Borrowed funds				1,335			1,152			3,700			4,624
Total interest expense				7,916			11,028			23,998			42,001
Net interest income				96,320			85,082			283,353			245,956
Provision for credit losses				5,963			12,284			23,066			36,151
Net interest income after provision for credit losses				90,357			72,798			260,287			209,805
Non-interest income:
Service charges on deposit accounts				1,727			1,818			5,542			5,557
Mortgage banking				1,423			2,519			6,869			5,697
Credit card income				2,043			1,840			5,147			5,003
Securities gains				-			-			620			-
Increase in cash surrender value life insurance				1,671			1,733			5,012			4,650
Other operating income				1,162			262			2,897			972
Total non-interest income				8,026			8,172			26,087			21,879
Non-interest expense:
Salaries and employee benefits				17,995			14,994			50,425			46,444
Equipment and occupancy expense				2,996			2,556			8,494			7,390
Third party processing and other services				4,144			3,281			11,506			10,360
Professional services				948			955			2,978			2,994
FDIC and other regulatory assessments				1,630			1,061			4,637			2,988
Other real estate owned expense				123			119			820			2,023
Other operating expense				6,541			3,607			15,740			11,110
Total non-interest expense				34,377			26,573			94,600			83,309
Income before income tax				64,006			54,397			191,774			148,375
Provision for income tax				11,507			11,035			37,793			29,787
Net income				52,499			43,362			153,981			118,588
Dividends on preferred stock				-			-			31			31
Net income available to common stockholders			$	52,499		$	43,362		$	153,950		$	118,557
Basic earnings per common share			$	0.97		$	0.80		$	2.84		$	2.20
Diluted earnings per common share			$	0.96		$	0.80		$	2.83		$	2.19

LOANS BY TYPE (UNAUDITED)
(In thousands)
		3rd Quarter 2021			2nd Quarter 2021			1st Quarter 2021			4th Quarter 2020			3rd Quarter 2020
Commercial, financial and agricultural		$	2,927,845		$	3,105,243		$	3,323,093		$	3,295,900		$	3,466,189
Real estate - construction			887,938			782,305			666,592			593,614			530,919
Real estate - mortgage:
Owner-occupied commercial			1,809,840			1,726,888			1,698,695			1,693,428			1,725,222
1-4 family mortgage			765,102			707,546			685,840			711,692			671,841
Other mortgage			2,357,812			2,262,231			2,068,560			2,106,184			2,056,549
Subtotal: Real estate - mortgage			4,932,754			4,696,665			4,453,095			4,511,304			4,453,612
Consumer			64,274			65,481			62,200			64,870			57,834
Total loans		$	8,812,811		$	8,649,694		$	8,504,980		$	8,465,688		$	8,508,554

SUMMARY OF CREDIT LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
		3rd Quarter 2021				2nd Quarter 2021				1st Quarter 2021				4th Quarter 2020				3rd Quarter 2020
Allowance for credit losses:
Beginning balance		$	104,670			$	94,906			$	87,942			$	92,440			$	91,507
Impact of Adoption of ASC 326			-				-				-				(2,000	)			-
Loans charged off:
Commercial financial and agricultural			1,541				150				477				8,792				11,146
Real estate - construction			-				-				-				202				-
Real estate - mortgage			208				59				12				-				200
Consumer			86				54				87				38				44
Total charge offs			1,835				263				576				9,032				11,390
Recoveries:
Commercial financial and agricultural			140				298				26				94				12
Real estate - construction			-				2				50				30				-
Real estate - mortgage			4				62				2				114				12
Consumer			8				13				11				13				15
Total recoveries			152				375				89				251				39
Net charge-offs			1,683				(112	)			487				8,781				11,351
Provision for credit losses			5,963				9,652				7,451				6,283				12,284
Ending balance		$	108,950			$	104,670			$	94,906			$	87,942			$	92,440
Allowance for credit losses to total loans			1.24	%			1.21	%			1.12	%			1.04	%			-
Allowance for credit losses to total average loans			1.26	%			1.21	%			1.11	%			1.04	%			-
Allowance for loan losses to total loans			-				-				-				-				1.09	%
Allowance for loan losses to total average loans			-				-				-				-				1.11	%
Net charge-offs (recoveries) to total average loans			0.08	%			(0.01	)%			0.02	%			0.41	%			0.54	%
Provision for credit losses to total average loans			0.27	%			0.45	%			0.35	%			0.30	%			-
Provision for loan losses to total average loans			-				-				-				-				0.58	%
Nonperforming assets:
Nonaccrual loans		$	9,145			$	12,301			$	13,088			$	13,973			$	21,675
Loans 90+ days past due and accruing			5,326				4,888				4,804				4,981				4,898
Other real estate owned and repossessed assets			2,068				2,039				2,067				6,497				6,976
Total		$	16,539			$	19,228			$	19,959			$	25,451			$	33,549
Nonperforming loans to total loans			0.16	%			0.20	%			0.21	%			0.22	%			0.31	%
Nonperforming assets to total assets			0.11	%			0.15	%			0.16	%			0.21	%			0.29	%
Nonperforming assets to earning assets			0.11	%			0.15	%			0.16	%			0.22	%			0.30	%
Allowance for credit losses to nonaccrual loans			1,191.36	%			850.91	%			725.14	%			629.37	%			-
Allowance for loan losses to nonaccrual loans			-				-				-				-				426.48	%
Restructured accruing loans		$	437			$	441			$	794			$	818			$	1,800
Restructured accruing loans to total loans			-	%			0.01	%			0.01	%			0.01	%			0.02	%
TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
(In thousands)
		3rd Quarter 2021				2nd Quarter 2021				1st Quarter 2021				4th Quarter 2020				3rd Quarter 2020
Beginning balance:		$	2,918			$	3,542			$	1,433			$	2,738			$	1,568
Additions			-				-				2,146				-				1,182
Net (paydowns) / advances			(25	)			(624	)			(37	)			(619	)			(12	)
Charge-offs			-				-				-				(535	)			-
Transfer to OREO			-				-				-				(151	)			-
Ending balance		$	2,893			$	2,918			$	3,542			$	1,433			$	2,738

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
		3rd Quarter 2021			2nd Quarter 2021			1st Quarter 2021			4th Quarter 2020			3rd Quarter 2020
Interest income:
Interest and fees on loans		$	96,119		$	95,451		$	93,803		$	94,332		$	89,564
Taxable securities			6,544			6,315			5,807			6,018			5,858
Nontaxable securities			62			86			107			129			166
Federal funds sold			4			4			3			5			16
Other interest and dividends			1,507			863			676			581			506
Total interest income			104,236			102,719			100,396			101,065			96,110
Interest expense:
Deposits			6,581			6,836			6,881			7,853			9,876
Borrowed funds			1,335			1,215			1,150			1,131			1,152
Total interest expense			7,916			8,051			8,031			8,984			11,028
Net interest income			96,320			94,668			92,365			92,081			85,082
Provision for credit losses			5,963			9,652			7,451			6,283			12,284
Net interest income after provision for credit losses			90,357			85,016			84,914			85,798			72,798
Non-interest income:
Service charges on deposit accounts			1,727			1,907			1,908			1,971			1,818
Mortgage banking			1,423			2,699			2,747			3,050			2,519
Credit card income			2,043			1,912			1,192			913			1,840
Securities gains			-			620			-			-			-
Increase in cash surrender value life insurance			1,671			1,683			1,658			1,660			1,733
Other operating income			1,162			777			958			643			262
Total non-interest income			8,026			9,598			8,463			8,237			8,172
Non-interest expense:
Salaries and employee benefits			17,995			16,887			15,543			14,970			14,994
Equipment and occupancy expense			2,996			2,844			2,654			2,680			2,556
Third party processing and other services			4,144			3,946			3,416			3,418			3,281
Professional services			948			1,107			923			1,248			955
FDIC and other regulatory assessments			1,630			1,425			1,582			1,366			1,061
Other real estate owned expense			123			540			157			140			119
Other operating expense			6,541			4,560			4,639			4,380			3,607
Total non-interest expense			34,377			31,309			28,914			28,202			26,573
Income before income tax			64,006			63,305			64,463			65,833			54,397
Provision for income tax			11,507			13,278			13,008			14,852			11,035
Net income			52,499			50,027			51,455			50,981			43,362
Dividends on preferred stock			-			31			-			32			-
Net income available to common stockholders		$	52,499		$	49,996		$	51,455		$	50,949		$	43,362
Basic earnings per common share		$	0.97		$	0.92		$	0.95		$	0.94		$	0.80
Diluted earnings per common share		$	0.96		$	0.92		$	0.95		$	0.94		$	0.80

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
						3rd Quarter 2021						2nd Quarter 2021						1st Quarter 2021						4th Quarter 2020						3rd Quarter 2020
						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				$	8,653,632		4.40	%		$	8,618,139		4.43	%		$	8,484,914		4.47	%		$	8,435,237		4.43	%		$	8,335,087		4.26	%
		Tax-exempt (2)					26,542		4.05				26,854		4.05				27,592		4.17				29,393		4.16				30,068		4.14
			Total loans, net of
				unearned income			8,680,174		4.39				8,644,993		4.43				8,512,506		4.47				8,464,630		4.43				8,365,155		4.26
	Mortgage loans held for sale						7,050		1.69				11,470		1.92				13,601		1.94				19,459		1.37				20,053		1.41
	Debt securities:
		Taxable					969,715		2.70				936,863		2.70				878,118		2.65				862,333		2.79				820,526		2.86
		Tax-exempt (2)					12,382		2.39				16,872		2.47				21,084		2.43				25,542		2.52				31,880		2.51
			Total securities (3)				982,097		2.70				953,735		2.69				899,202		2.64				887,875		2.78				852,406		2.84
	Federal funds sold						8,551		0.19				8,224		0.20				11,935		0.10				16,306		0.12				41,884		0.15
	Interest-bearing balances with banks						3,761,652		0.16				2,790,524		0.12				2,262,233		0.12				1,837,249		0.13				1,500,563		0.13
	Total interest-earning assets					$	13,439,524		3.08	%		$	12,408,946		3.32	%		$	11,699,477		3.48	%		$	11,225,519		3.58	%		$	10,780,061		3.55	%
Non-interest-earning assets:
	Cash and due from banks						90,034						85,478						71,166						91,258						75,065
	Net premises and equipment						62,845						61,240						57,198						56,315						56,799
	Allowance for credit losses, accrued
		interest and other assets					315,178						320,729						320,407						308,746						281,196
			Total assets			$	13,907,581					$	12,876,393					$	12,148,248					$	11,681,838					$	11,193,121
Interest-bearing liabilities:
	Interest-bearing deposits:
	Checking					$	1,431,420		0.19	%		$	1,350,098		0.19	%		$	1,294,614		0.19	%		$	1,197,908		0.23	%		$	1,077,595		0.31	%
	Savings						122,579		0.17				104,283		0.18				93,375		0.18				86,259		0.18				82,671		0.36
	Money market						5,328,291		0.26				5,321,338		0.26				5,057,828		0.27				4,933,285		0.31				4,739,566		0.44
	Time deposits						806,108		1.15				801,928		1.33				808,561		1.44				810,675		1.59				841,378		1.78
		Total interest-bearing deposits					7,688,398		0.34				7,577,647		0.36				7,254,378		0.38				7,028,127		0.44				6,741,210		0.58
	Federal funds purchased						1,205,327		0.21				970,708		0.22				849,772		0.22				752,765		0.22				682,971		0.22
	Other borrowings						64,694		4.23				64,694		4.28				64,689		4.33				64,701		4.41				64,717		4.78
	Total interest-bearing liabilities					$	8,958,419		0.35	%		$	8,613,049		0.37	%		$	8,168,839		0.40	%		$	7,845,593		0.46	%		$	7,488,898		0.59	%
Non-interest-bearing liabilities:
	Non-interest-bearing
		demand deposits					3,800,972						3,154,605						2,923,041						2,812,254						2,728,513
	Other liabilities						26,891						52,027						39,442						48,642						39,537
	Stockholders' equity						1,100,156						1,038,012						996,741						956,847						917,626
	Accumulated other comprehensive
		income					21,143						18,700						20,185						18,502						18,547
			Total liabilities and
				stockholders' equity		$	13,907,581					$	12,876,393					$	12,148,248					$	11,681,838					$	11,193,121
Net interest spread									2.73	%					2.95	%					3.08	%					3.12	%					2.96	%
Net interest margin									2.85	%					3.06	%					3.20	%					3.27	%					3.14	%
(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 21%.
(3	)	Unrealized losses on available-for-sale debt securities are excluded from the yield calculation.

 

FAQ

What were the earnings for ServisFirst Bancshares (SFBS) in Q3 2021?

ServisFirst Bancshares reported net income of $52.5 million for the third quarter of 2021.

How much did diluted earnings per share increase for SFBS in Q3 2021?

Diluted earnings per share increased by 20% to $0.96 in Q3 2021.

What was the loan growth for SFBS in the third quarter of 2021?

Total loans grew by $163.1 million, or 8% annualized, during Q3 2021.

What was the year-over-year deposit growth for SFBS as of Q3 2021?

Deposits increased by 25% year-over-year, reaching $12.08 billion.

How did SFBS's liquidity change in Q3 2021?

Liquidity reached record levels of approximately $4.2 billion as of September 30, 2021.