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
| ||||||
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. | ||||||||||||||||||||||||||||||||
Contacts
ServisFirst Bank
Davis Mange (205) 949-3420
dmange@servisfirstbank.com
