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ServisFirst Bancshares, Inc. Announces Results for Third Quarter of 2020

BIRMINGHAM, Ala., Oct. 19, 2020 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three and nine months ended September 30, 2020.

Third Quarter 2020 Highlights:

  • Diluted EPS for the third quarter increased 16% to $0.80 year over year
  • Deposits grew 14% annualized during the third quarter
  • Loans, excluding Paycheck Protection Program (“PPP”) loans, grew 10% annualized during the third quarter
  • Efficiency ratio improved to 28.50% during the third quarter 2020
  • Liquidity remains strong with liquid assets to total deposits of 22%
  • Our $34.5 million of 5% Subordinated Notes due July 15, 2025 are being refinanced with a $37 million offering of subordinated notes with an interest rate of 4% during the fourth quarter of 2020

Tom Broughton, Chairman, President and CEO, said, “I am pleased to see a rebound in loan demand from the early months of the pandemic. This is a very positive sign for the Southeastern US economy.”

Bud Foshee, CFO, said, “We continue to have a strong balance sheet with good credit quality and strong liquidity. This strong balance sheet has enabled us to perform above our peers during the pandemic.”

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
 
    Period Ending
September 30,
2020
  Period Ending
June 30, 2020
  % Change
From Period
Ending June
30, 2020 to
Period Ending
September 30, 2020
  Period Ending
September 30,
2019
  % Change
From Period
Ending
September 30,
2019 to Period
Ending
September 30,
2020
QUARTERLY OPERATING RESULTS                                    
Net Income   $ 43,362     $ 40,448     7 %   $ 37,563     15 %
Net Income Available to Common Stockholders   $ 43,362     $ 40,417     7 %   $ 37,563     15 %
Diluted Earnings Per Share   $ 0.80     $ 0.75     7 %   $ 0.69     16 %
Return on Average Assets     1.54 %     1.55 %           1.67 %      
Return on Average Common Stockholders' Equity     18.43 %     18.40 %           18.69 %      
Average Diluted Shares Outstanding     54,232,965       54,194,506             54,096,368        
                                     
YEAR-TO-DATE OPERATING RESULTS                                    
Net Income   $ 118,588                   $ 108,206     10 %
Net Income Available to Common Stockholders   $ 118,557                   $ 108,175     10 %
Diluted Earnings Per Share   $ 2.19                   $ 2.00     9 %
Return on Average Assets     1.54 %                   1.70 %      
Return on Average Common Stockholders' Equity     17.73 %                   18.93 %      
Average Diluted Shares Outstanding     54,198,422                     54,087,410        
                                     
BALANCE SHEET                                    
Total Assets   $ 11,394,874     $ 11,012,195     3 %   $ 9,005,112     27 %
Loans     8,508,554       8,315,375     2 %     7,022,069     21 %
Non-interest-bearing Demand Deposits     2,762,814       2,678,893     3 %     1,678,672     65 %
Total Deposits     9,673,783       9,342,918     4 %     7,724,158     25 %
Stockholders' Equity     949,589       914,588     4 %     810,537     17 %
                                     

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $43.4 million for the quarter ended September 30, 2020, compared to net income and net income available to common stockholders of $37.6 million for the same quarter in 2019. Basic and diluted earnings per common share were $0.80 and $0.80, respectively, for the third quarter of 2020, compared to $0.70 and $0.69, respectively, for the third quarter of 2019.

Annualized return on average assets was 1.54% and annualized return on average common stockholders’ equity was 18.43% for the third quarter of 2020, compared to 1.67% and 18.69%, respectively, for the third quarter of 2019.

Net interest income was $85.1 million for the third quarter of 2020, compared to $83.2 million for the second quarter of 2020 and $73.0 million for the third quarter of 2019. The net interest margin in the third quarter of 2020 was 3.14% compared to 3.32% in the second quarter of 2020 and 3.36% in the third quarter of 2019. Origination of PPP loans and increased excess liquidity drove unfavorable rate and mix changes while lower deposit rates and increases in noninterest bearing demand balances drove favorable rate and mix changes, respectively. Accretion of net fees on PPP loans of $4.0 million during the third quarter of 2020 offset the decrease in loan yield by approximately 19 basis points.

Average loans for the third quarter of 2020 were $8.36 billion, an increase of $31.5 million, or 2% annualized, over average loans of $8.33 billion for the second quarter of 2020, and an increase of $1.40 billion, or 20%, over average loans of $6.96 billion for the third quarter of 2019. We originated over 4,900 PPP loans during 2020 for a total of $1.05 billion. Excluding PPP loans, average loans for the third quarter of 2020 were $7.31 billion, a decrease of $136.0 million compared to the second quarter of 2020, and an increase of $350.6 million, or 5%, over average loans for the third quarter of 2019.

Average total deposits for the third quarter of 2020 were $9.47 billion, an increase of $595.4 million, or 27% annualized, over average total deposits of $8.87 billion for the second quarter of 2020, and an increase of $1.89 billion, or 25%, over average total deposits of $7.58 billion for the third quarter of 2019.

Nonperforming assets to total assets were 0.29% for the third quarter of 2020, an increase of three basis points compared to 0.26% for the second quarter of 2020 and a decrease of 23 basis points compared to 0.52% for the third quarter of 2019. Annualized net charge-offs to average loans were 0.54%, a 34 basis-point increase compared to 0.20% for the second quarter of 2020 and an increase of five basis points compared to 0.49% for the third quarter of 2019. The increase in net charge-offs for the third quarter of 2020 was due to a $7.2 million loan charge-off on a borrower severely impacted by the COVID-19 pandemic. We recorded a $12.3 million provision for loan losses in the third quarter of 2020 compared to $10.3 million in the second quarter of 2020 and $7.0 million in the third quarter of 2019. The allowance for loan loss as a percentage of total loans was 1.09% at September 30, 2020, a decrease of one basis point compared to 1.10% at June 30, 2020 and September 30, 2019, respectively. Excluding PPP loans, for all periods discussed, the allowance for loan loss as a percentage of total loans was 1.24% at September 30, 2020, a decrease of two basis points compared to 1.26% at June 30, 2020 and an increase of 14 basis points compared to 1.10% at September 30, 2019. The CARES Act, passed into law on March 27, 2020 as a result of the COVID-19 outbreak, allows companies to delay their adoption of Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments (CECL), including the current expected credit losses methodology for estimating allowances for credit losses. We have elected to delay adoption of ASU 2016-13 until the date on which the national emergency concerning the COVID-19 outbreak terminates or December 31, 2020, with an effective retrospective implementation date of January 1, 2020. In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.

Noninterest income for the third quarter of 2020 increased $2.0 million, or 32%, to $8.2 million from $6.2 million in the third quarter of 2019. Mortgage banking revenue increased $1.2 million, or 89%, from the third quarter of 2019 to the third quarter of 2020. Mortgage loan origination volumes increased approximately 96% during the third quarter of 2020 when compared to the same quarter in 2019. Credit card revenue decreased $28,000, or 2%, to $1.8 million during the third quarter of 2020, compared to the third quarter of 2019. The amount of spend on purchase cards increased $23.0 million while the amount of spend on business credit cards decreased $8.0 million during the third quarter of 2020 when compared to the third quarter of 2019. Purchase card spend carries lower profit margins than credit cards due to their higher rebates. Income on life insurance policies increased $946,000, or 120%, to $1.7 million during the third quarter of 2020, compared to $787,000 during the third quarter of 2019. We purchased $75.0 million in BOLI contracts at the end of the third quarter of 2019 and another $40.0 million in July 2020. Other income for the third quarter of 2020 decreased $191,000, or 42%, to $262,000 from $453,000 in the third quarter of 2019. On May 4, 2020 we bought an interest rate cap with a term of three years and a notional amount of $300 million. The cap is tied to one-month LIBOR with a strike rate of 0.50%. We wrote down the value of the cap by $342,000 during the third quarter of 2020 and by $595,000 year-to-date through other income and are amortizing the fee paid to our counterparty over the life of the cap.

Noninterest expense for the third quarter of 2020 increased $1.4 million, or 6%, to $26.6 million from $25.2 million in the third quarter of 2019, and decreased $2.2 million, or 8%, on a linked quarter basis. Salary and benefit expense for the third quarter of 2020 decreased $505,000, or 3%, to $15.0 million from $15.5 million in the third quarter of 2019, and decreased $798,000, or 5%, on a linked quarter basis. Costs to originate PPP loans totaling $2.4 million were incurred during the second quarter of 2020. These costs were credited against salary and benefits as a deferred expense and will be amortized over the life of the loans by netting them against accretion of deferred origination fees. Bonuses of approximately $2.5 million were paid during the second quarter of 2020 related to work performed on the PPP. Additional bonuses of $71,000 were paid to front-line employees who continued to assist customers during the peak of the pandemic. The number of FTE employees decreased to 486 as of September 30, 2020 compared to 492 as of June 30, 2020 and 506 as of September 30, 2019. Equipment and occupancy expense increased $169,000, or 7%, to $2.6 million in the third quarter of 2020, from $2.4 million in the third quarter of 2019. Third party processing expenses increased $358,000, or 12%, to $3.3 million in the third quarter of 2020, from $2.9 million in the third quarter of 2019. Professional services expense increased $68,000, or 8%, to $955,000 in the third quarter of 2020, from $887,000 in the third quarter of 2019, and decreased $136,000, or 12%, from $1.1 million on a linked-quarter basis. FDIC and other regulatory assessments were $1.1 million in the third quarter of 2020 compared to a credit of $296,000 in the third quarter of 2019. The net assessment credit for the third quarter of 2019 resulted from the FDIC’s Small Bank Assessment Credit recorded by the Bank. Expenses associated with other real estate owned increased $41,000 to $119,000 in the third quarter of 2020, from $78,000 in the third quarter of 2019. Other operating expenses for the third quarter of 2020 decreased $76,000, or 2%, to $3.6 million from $3.7 million in the third quarter of 2019, and decreased $481,000, or 12%, on a linked-quarter basis. The efficiency ratio was 28.50% during the third quarter of 2020 compared to 31.76% during the third quarter of 2019 and compared to 31.92% during the second quarter of 2020.

Income tax expense increased $1.5 million, or 16%, to $11.0 million in the third quarter of 2020, compared to $9.5 million in the third quarter of 2019. Our effective tax rate was 20.29% for the third quarter of 2020 compared to 20.20% for the third quarter of 2019. State of Alabama tax credit investments matured at the end of 2019, causing our state credit amounts to decrease from $497,000 during the third quarter of 2019 to $132,000 during the third quarter of 2020. 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 2020 and 2019 of $180,000 and $231,000, respectively.

The Company’s 5% Subordinated Notes due July 15, 2025 became redeemable in July 2020. Those Notes are being redeemed in the fourth quarter of 2020 and replaced with up to $37 million in 4% subordinated notes to be offered to holders of the redeemed Notes.

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.

 
  September 30,
2020
  June 30, 2020   March 31, 2020   December 31,
2019
  September 30,
2019
Book value per share - GAAP $ 17.61     $ 16.98     $ 16.38     $ 15.71     $ 15.13  
Total common stockholders' equity - GAAP   949,589       914,588       881,885       842,682       810,537  
Adjustments:                                      
Adjusted for goodwill and core deposit intangible asset   13,976       14,043       14,111       14,179       14,246  
Tangible common stockholders' equity - non-GAAP $ 935,613     $ 900,545     $ 867,775     $ 828,503     $ 796,291  
Tangible book value per share - non-GAAP $ 17.35     $ 16.72     $ 16.12     $ 15.45     $ 14.86  
                                       
Stockholders' equity to total assets - GAAP   8.33 %     8.31 %     9.42 %     9.42 %     9.00 %
Total assets - GAAP $ 11,394,874     $ 11,012,195     $ 9,364,882     $ 8,947,653     $ 9,005,112  
Adjustments:                                      
Adjusted for goodwill and core deposit intangible asset   13,976       14,043       14,111       14,179       14,246  
Total tangible assets - non-GAAP $ 11,380,898     $ 10,998,152     $ 9,350,771     $ 8,933,474     $ 8,990,866  
Tangible common equity to total tangible assets - non-GAAP   8.22 %     8.19 %     9.28 %     9.27 %     8.86 %
                                       

About ServisFirst Bancshares, Inc.

ServisFirst Bancshares, Inc. is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, ServisFirst Bancshares, Inc. provides business and personal financial services from locations in Birmingham, Huntsville, Montgomery, Mobile and Dothan, Alabama, Pensacola, Sarasota and Tampa Bay, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee.

ServisFirst Bancshares, Inc. files periodic reports with the U.S. Securities and Exchange Commission (SEC). Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at 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 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; 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 2020, 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 2020   2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019
CONSOLIDATED STATEMENT OF INCOME                                      
Interest income $ 96,110     $ 95,080     $ 96,767     $ 98,187     $ 101,130  
Interest expense   11,028       11,846       19,127       22,410       28,125  
Net interest income   85,082       83,234       77,640       75,777       73,005  
Provision for loan losses   12,284       10,283       13,584       5,884       6,985  
Net interest income after provision for loan losses   72,798       72,951       64,056       69,893       66,020  
Non-interest income   8,172       7,033       6,674       6,936       6,202  
Non-interest expense   26,573       28,816       27,920       25,503       25,153  
Income before income tax   54,397       51,168       42,810       51,326       47,069  
Provision for income tax   11,035       10,720       8,032       10,289       9,506  
Net income   43,362       40,448       34,778       41,037       37,563  
Preferred stock dividends   -       31       -       32       -  
Net income available to common stockholders $ 43,362     $ 40,417     $ 34,778     $ 41,005     $ 37,563  
Earnings per share - basic $ 0.80     $ 0.75     $ 0.65     $ 0.77     $ 0.70  
Earnings per share - diluted $ 0.80     $ 0.75     $ 0.64     $ 0.76     $ 0.69  
Average diluted shares outstanding   54,232,965       54,194,506       54,167,414       54,149,554       54,096,368  
                                       
CONSOLIDATED BALANCE SHEET DATA                                      
Total assets $ 11,394,874     $ 11,012,195     $ 9,364,882     $ 8,947,653     $ 9,005,112  
Loans   8,508,554       8,315,375       7,568,836       7,261,451       7,022,069  
Debt securities   913,299       856,378       827,032       759,649       688,271  
Non-interest-bearing demand deposits   2,762,814       2,678,893       1,925,626       1,749,879       1,678,672  
Total deposits   9,673,783       9,342,918       7,832,655       7,530,433       7,724,158  
Borrowings   64,719       64,715       64,707       64,703       64,693  
Stockholders' equity $ 949,589     $ 914,588     $ 881,885     $ 842,682     $ 810,537  
                                       
Shares outstanding   53,915,245       53,874,276       53,844,009       53,623,740       53,579,013  
Book value per share $ 17.61     $ 16.98     $ 16.38     $ 15.71     $ 15.13  
Tangible book value per share (1) $ 17.35     $ 16.72     $ 16.12     $ 15.45     $ 14.86  
                                       
SELECTED FINANCIAL RATIOS (Annualized)                                      
Net interest margin   3.14 %     3.32 %     3.58 %     3.47 %     3.36 %
Return on average assets   1.54 %     1.55 %     1.54 %     1.80 %     1.67 %
Return on average common stockholders' equity   18.43 %     18.40 %     16.23 %     19.75 %     18.69 %
Efficiency ratio   28.50 %     31.92 %     33.11 %     30.83 %     31.76 %
Non-interest expense to average earning assets   0.98 %     1.15 %     1.29 %     1.17 %     1.16 %
                                       
CAPITAL RATIOS (2)                                      
Common equity tier 1 capital to risk-weighted assets   11.24 %     11.26 %     10.68 %     10.50 %     10.39 %
Tier 1 capital to risk-weighted assets   11.25 %     11.27 %     10.68 %     10.50 %     10.39 %
Total capital to risk-weighted assets   13.10 %     13.27 %     12.54 %     12.31 %     12.27 %
Tier 1 capital to average assets   8.22 %     8.46 %     9.56 %     9.13 %     8.88 %
Tangible common equity to total tangible assets (1)   8.22 %     8.19 %     9.28 %     9.27 %     8.86 %
                                       
(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,
2020
  September 30,
2019
  % Change
ASSETS                
Cash and due from banks $ 70,472     $ 108,804     (35 ) %
Interest-bearing balances due from depository institutions   1,551,597       463,625     235   %
Federal funds sold   1,302       474,298     (100 ) %
  Cash and cash equivalents   1,623,371       1,046,727     55   %
Available for sale debt securities, at fair value   913,049       688,021     33   %
Held to maturity debt securities (fair value of $250 at September 30, 2020 and 2019)   250       250     -   %
Mortgage loans held for sale   21,472       8,691     147   %
Loans   8,508,554       7,022,069     21   %
Less allowance for loan losses   (92,440 )     (77,192 )   20   %
  Loans, net   8,416,114       6,944,877     21   %
Premises and equipment, net   55,273       56,570     (2 ) %
Goodwill and other identifiable intangible assets   13,976       14,246     (2 ) %
Other assets   351,369       245,730     43   %
  Total assets $ 11,394,874     $ 9,005,112     27   %
LIABILITIES AND STOCKHOLDERS' EQUITY                
Liabilities:                
Deposits:                
  Non-interest-bearing $ 2,762,814     $ 1,678,672     65   %
  Interest-bearing   6,910,969       6,045,486     14   %
    Total deposits   9,673,783       7,724,158     25   %
Federal funds purchased   669,350       370,231     81   %
Other borrowings   64,719       64,693     -   %
Other liabilities   37,433       35,493     5   %
  Total liabilities   10,445,285       8,194,575     27   %
Stockholders' equity:                
  Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at                
    September 30, 2020 and September 30, 2019   -       -        
  Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,915,245 shares                
    issued and outstanding at September 30, 2020, and 53,579,113 shares issued and outstanding                
    at September 30, 2019   54       54     -   %
  Additional paid-in capital   223,280       219,234     2   %
  Retained earnings   706,924       584,968     21   %
  Accumulated other comprehensive income   18,831       5,779     226   %
    Total stockholders' equity attributable to ServisFirst Bancshares, Inc.   949,089       810,035     17   %
  Noncontrolling interest   500       502     -   %
    Total stockholders' equity   949,589       810,537     17   %
  Total liabilities and stockholders' equity $ 11,394,874     $ 9,005,112     27   %
                         


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
    Three Months Ended September 30,   Nine Months Ended September 30,
    2020   2019     2020   2019
Interest income:                      
  Interest and fees on loans $ 89,564   $ 90,767     $ 268,332   $ 264,901
  Taxable securities   5,858     4,367       16,104     12,306
  Nontaxable securities   166     316       610     1,155
  Federal funds sold   16     1,768       327     4,985
  Other interest and dividends   506     3,912       2,584     9,269
  Total interest income   96,110     101,130       287,957     292,616
Interest expense:                      
  Deposits   9,876     24,787       37,377     71,172
  Borrowed funds   1,152     3,338       4,624     9,576
  Total interest expense   11,028     28,125       42,001     80,748
  Net interest income   85,082     73,005       245,956     211,868
Provision for loan losses   12,284     6,985       36,151     16,754
  Net interest income after provision for loan losses   72,798     66,020       209,805     195,114
Non-interest income:                      
  Service charges on deposit accounts   1,818     1,735       5,557     5,223
  Mortgage banking   2,519     1,333       5,697     2,995
  Credit card income   1,840     1,868       5,003     5,185
  Securities gains   -     34       -     28
  Increase in cash surrender value life insurance   1,733     787       4,650     2,327
  Other operating income   262     453       972     1,172
  Total non-interest income   8,172     6,210       21,879     16,930
Non-interest expense:                      
  Salaries and employee benefits   14,994     15,499       46,444     44,103
  Equipment and occupancy expense   2,556     2,387       7,390     6,933
  Third party processing and other services   3,281     2,923       10,360     8,058
  Professional services   955     887       2,994     3,072
  FDIC and other regulatory assessments (credits)   1,061     (296 )     2,988     1,804
  Other real estate owned expense   119     78       2,023     312
  Other operating expense   3,607     3,683       11,110     12,227
  Total non-interest expense   26,573     25,161       83,309     76,509
  Income before income tax   54,397     47,069       148,375     135,535
Provision for income tax   11,035     9,506       29,787     27,329
  Net income   43,362     37,563       118,588     108,206
  Dividends on preferred stock   -     -       31     31
  Net income available to common stockholders $ 43,362   $ 37,563     $ 118,557   $ 108,175
Basic earnings per common share $ 0.80   $ 0.70     $ 2.20   $ 2.02
Diluted earnings per common share $ 0.80   $ 0.69     $ 2.19   $ 2.00
                         


LOANS BY TYPE (UNAUDITED)
(In thousands)
   
    3rd Quarter 2020   2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019
Commercial, financial and agricultural $ 3,466,189   $ 3,498,627   $ 2,771,307   $ 2,696,210   $ 2,653,934
Real estate - construction   530,919     544,586     548,578     521,392     550,871
Real estate - mortgage:                            
  Owner-occupied commercial   1,725,222     1,634,495     1,678,532     1,587,478     1,526,911
  1-4 family mortgage   671,841     665,883     675,870     644,188     632,346
  Other mortgage   2,056,549     1,911,384     1,834,137     1,747,394     1,592,072
Subtotal: Real estate - mortgage   4,453,612     4,211,762     4,188,539     3,979,060     3,751,329
Consumer   57,834     60,400     60,412     64,789     65,935
Total loans $ 8,508,554   $ 8,315,375   $ 7,568,836   $ 7,261,451   $ 7,022,069
                             


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
      3rd Quarter 2020   2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019
Allowance for loan losses:                                      
Beginning balance $ 91,507       $ 85,414       $ 76,584       $ 77,192       $ 71,386    
Loans charged off:                                      
  Commercial, financial and agricultural   11,146         1,358         2,640         4,742         3,626    
  Real estate - construction   -         376         454         -         -    
  Real estate - mortgage   200         2,520         1,678         1,689         4,974    
  Consumer   44         62         58         139         172    
    Total charge offs   11,390         4,316         4,830         6,570         8,772    
Recoveries:                                      
  Commercial, financial and agricultural   12         84         62         51         126    
  Real estate - construction   -         1         1         1         1    
  Real estate - mortgage   12         13         1         2         -    
  Consumer   15         28         12         24         60    
    Total recoveries   39         126         76         78         187    
  Net charge-offs   11,351         4,190         4,754         6,492         8,585    
  Allocation from Loan Guarantee Program   -         -         -         -         7,406    
  Provision for loan losses   12,284         10,283         13,584         5,884         6,985    
  Ending balance $ 92,440       $ 91,507       $ 85,414       $ 76,584       $ 77,192    
                                             
  Allowance for loan losses to total loans   1.09   %     1.10   %     1.13   %     1.05   %     1.10   %
  Allowance for loan losses to total average                                      
    loans   1.11   %     1.10   %     1.16   %     1.08   %     1.11   %
  Net charge-offs to total average loans   0.54   %     0.20   %     0.26   %     0.36   %     0.49   %
  Provision for loan losses to total average                                      
    loans   0.58   %     0.50   %     0.74   %     0.33   %     0.40   %
  Nonperforming assets:                                      
    Nonaccrual loans $ 21,675       $ 16,881       $ 28,914       $ 30,091       $ 35,732    
    Loans 90+ days past due and accruing   4,898         5,133         4,954         6,021         5,317    
    Other real estate owned and                                      
    repossessed assets   6,976         6,537         7,448         8,178         5,337    
  Total $ 33,549       $ 28,551       $ 41,316       $ 44,290       $ 46,386    
                                             
  Nonperforming loans to total loans   0.31   %     0.26   %     0.45   %     0.50   %     0.58   %
  Nonperforming assets to total assets   0.29   %     0.26   %     0.44   %     0.50   %     0.52   %
  Nonperforming assets to earning assets   0.30   %     0.26   %     0.45   %     0.50   %     0.53   %
  Reserve for loan losses to nonaccrual loans   426.48   %     542.07   %     295.41   %     254.51   %     216.03   %
                                             
  Restructured accruing loans $ 1,800       $ 975       $ 975       $ 625       $ 3,468    
                                             
  Restructured accruing loans to total loans   0.02   %     0.01   %     0.01   %     0.01   %     0.05   %
                                             
  TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
  (In thousands)
      3rd Quarter 2020   2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019
  Beginning balance: $ 1,568       $ 2,367       $ 3,330       $ 11,248       $ 11,284    
    Additions   1,182         -         350         250         -    
    Net (paydowns) / advances   (12 )       (12 )       (232 )       (3,481 )       714    
    Charge-offs   -         (412 )       (1,081 )       (1,333 )       (750 )  
    Transfer to OREO   -         (375 )       -         (3,354 )       -    
  Ending balance $ 2,738       $ 1,568       $ 2,367       $ 3,330       $ 11,248    
                                                   


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
      3rd Quarter 2020   2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019
Interest income:                            
  Interest and fees on loans $ 89,564   $ 89,383   $ 89,385   $ 89,407     $ 90,767  
  Taxable securities   5,858     5,092     5,154     4,702       4,367  
  Nontaxable securities   166     211     233     274       316  
  Federal funds sold   16     34     277     1,053       1,768  
  Other interest and dividends   506     360     1,718     2,751       3,912  
  Total interest income   96,110     95,080     96,767     98,187       101,130  
Interest expense:                            
  Deposits   9,876     10,756     16,745     19,786       24,787  
  Borrowed funds   1,152     1,090     2,382     2,624       3,338  
  Total interest expense   11,028     11,846     19,127     22,410       28,125  
  Net interest income   85,082     83,234     77,640     75,777       73,005  
Provision for loan losses   12,284     10,283     13,584     5,884       6,985  
  Net interest income after provision for loan losses   72,798     72,951     64,056     69,893       66,020  
Non-interest income:                            
  Service charges on deposit accounts   1,818     1,823     1,916     1,806       1,735  
  Mortgage banking   2,519     2,107     1,071     1,366       1,333  
  Credit card income   1,840     1,398     1,765     1,891       1,868  
  Securities (losses) gains   -     -     -     (1 )     34  
  Increase in cash surrender value life insurance   1,733     1,464     1,453     1,419       787  
  Other operating income   262     241     469     455       445  
  Total non-interest income   8,172     7,033     6,674     6,936       6,202  
Non-interest expense:                            
  Salaries and employee benefits   14,994     15,792     15,658     13,680       15,499  
  Equipment and occupancy expense   2,556     2,434     2,400     2,339       2,387  
  Third party processing and other services   3,281     3,513     3,345     3,176       2,923  
  Professional services   955     1,091     948     1,163       887  
  FDIC and other regulatory assessments (credits)   1,061     595     1,332     1,171       (296 )
  Other real estate owned expense   119     1,303     601     103       78  
  Other operating expense   3,607     4,088     3,636     3,871       3,675  
  Total non-interest expense   26,573     28,816     27,920     25,503       25,153  
  Income before income tax   54,397     51,168     42,810     51,326       47,069  
Provision for income tax   11,035     10,720     8,032     10,289       9,506  
  Net income   43,362     40,448     34,778     41,037       37,563  
  Dividends on preferred stock   -     31     -     32       -  
  Net income available to common stockholders $ 43,362   $ 40,417   $ 34,778   $ 41,005     $ 37,563  
Basic earnings per common share $ 0.80   $ 0.75   $ 0.65   $ 0.77     $ 0.70  
Diluted earnings per common share $ 0.80   $ 0.75   $ 0.64   $ 0.76     $ 0.69  
                                 


AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
 
  3rd Quarter 2020   2nd Quarter 2020   1st Quarter 2020   4th Quarter 2019   3rd Quarter 2019
  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 $ 8,335,087   4.26 %   $ 8,301,775   4.31 %   $ 7,328,594   4.89 %   $ 7,066,576   5.00 %   $ 6,927,075   5.18 %
    Tax-exempt (2)   30,068   4.14       31,929   4.12       32,555   4.04       35,563   4.00       34,195   3.98  
      Total loans, net of                                                          
        unearned income   8,365,155   4.26       8,333,704   4.31       7,361,149   4.88       7,102,139   4.99       6,961,270   5.17  
  Mortgage loans held for sale   20,053   1.41       13,278   2.09       4,282   2.16       6,505   2.44       6,482   2.45  
  Debt securities:                                                          
    Taxable   820,526   2.86       761,575   2.67       750,413   2.75       670,732   2.81       595,405   2.93  
    Tax-exempt (2)   31,880   2.51       38,201   2.62       44,029   2.33       50,825   2.17       59,992   2.21  
      Total securities (3)   852,406   2.84       799,776   2.67       794,442   2.72       721,557   2.76       655,397   2.87  
  Federal funds sold   41,884   0.15       83,274   0.16       105,423   1.06       238,927   1.75       312,968   2.24  
  Interest-bearing balances with banks   1,500,563   0.13       849,549   0.17       469,199   1.47       602,755   1.81       690,973   2.25  
  Total interest-earning assets $ 10,780,061   3.55 %   $ 10,079,581   3.80 %   $ 8,734,495   4.46 %   $ 8,671,883   4.49 %   $ 8,627,090   4.65 %
Non-interest-earning assets:                                                          
  Cash and due from banks   75,065           76,212           66,140           70,381           71,418      
  Net premises and equipment   56,799           57,446           58,066           57,986           58,243      
  Allowance for loan losses, accrued                                                          
    interest and other assets   281,196           248,702           241,479           233,885           162,654      
      Total assets $ 11,193,121         $ 10,461,941         $ 9,100,180         $ 9,034,135         $ 8,919,405      
                                                                   
Interest-bearing liabilities:                                                          
  Interest-bearing deposits:                                                          
  Checking $ 1,077,595   0.31 %   $ 992,848   0.35 %   $ 956,803   0.57 %   $ 961,258   0.69 %   $ 900,754   0.84 %
  Savings   82,671   0.36       72,139   0.42       67,380   0.50       62,311   0.53       57,431   0.60  
  Money market   4,739,566   0.44       4,285,907   0.52       4,061,286   1.10       4,189,283   1.34       4,265,435   1.76  
  Time deposits   841,378   1.78       877,448   1.95       805,924   2.09       712,155   2.15       703,278   2.20  
    Total interest-bearing deposits   6,741,210   0.58       6,228,342   0.69       5,891,393   1.14       5,925,007   1.32       5,926,898   1.66  
  Federal funds purchased   682,971   0.22       572,990   0.22       492,638   1.31       420,066   1.74       441,526   2.30  
  Other borrowings   64,717   4.77       64,711   4.85       64,707   4.85       64,698   4.79       64,689   4.79  
  Total interest-bearing liabilities $ 7,488,898   0.59 %   $ 6,866,043   0.69 %   $ 6,448,738   1.19 %   $ 6,409,771   1.39 %   $ 6,433,113   1.73 %
Non-interest-bearing liabilities:                                                          
  Non-interest-bearing                                                          
    checking   2,118,889           2,646,030           1,749,671           1,759,671           1,654,928      
  Other liabilities   649,161           69,061           39,801           41,112           34,070      
  Stockholders' equity   917,626           862,500           853,800           818,320           792,284      
  Accumulated other comprehensive                                                          
    income   18,547           18,307           8,170           5,261           5,010      
      Total liabilities and                                                          
        stockholders' equity $ 11,193,121         $ 10,461,941         $ 9,100,180         $ 9,034,135         $ 8,919,405      
Net interest spread       2.96 %         3.11 %         3.27 %         3.10 %         2.92 %
Net interest margin       3.14 %         3.32 %         3.58 %         3.47 %         3.36 %
                                                                   
(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.

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