ServisFirst Bancshares, Inc. Announces Results for First Quarter 2018

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BIRMINGHAM, Ala., April 16, 2018 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS) today announced earnings and operating results for the quarter ended March 31, 2018.

Tom Broughton, President and CEO, said, “Our strong asset quality and solid financial performance, coupled with our focus on serving client needs, continues to attract new clients.”  Bud Foshee, CFO, stated, “Even though our financial results were enhanced by lower federal corporate tax rates, our pre-tax income in the first quarter increased 31% year over year, pointing to continued improvement in our financial metrics.”

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $32.6 million for the quarter ended March 31, 2018, compared to net income and net income available to common stockholders of $22.5 million for the same quarter in 2017.  Basic and diluted earnings per common share were $0.61 and $0.60, respectively, for the first quarter of 2018, compared to $0.43 and $0.42, respectively, for the first quarter of 2017.

Return on average assets was 1.91% and return on average equity was 21.40% for the first quarter of 2018, compared to 1.45% and 17.09%, respectively, for the first quarter of 2017.

Net interest income was $62.4 million for the first quarter of 2018, compared to $61.4 million for the fourth quarter of 2017 and $52.1 million for the first quarter of 2017.  The net interest margin in the first quarter of 2018 was 3.81%, an increase of 15 basis points from the fourth quarter of 2017 and an increase of 28 basis points from the first quarter of 2017.  The increase in net interest income on a linked quarter basis is attributable to a $166.6 million increase in average loans outstanding and an $18.0 million increase in average stockholders’ equity, all resulting in a positive mix change in our balance sheet.  A $55.1 million decrease in average non-interest-bearing deposits offset the positive mix change caused by increases in loans and stockholders’ equity, while a $226.7 million decrease in federal funds sold and interest-bearing balances with banks added to the positive mix change.  The average yield on loans increased by 12 basis points to 4.80% on a linked quarter basis, boosted by the Federal Reserve Bank’s recent increases of interest rates.

Average loans for the first quarter of 2018 were $5.88 billion, an increase of $166.6 million, or 2.9%, over average loans of $5.72 billion for the fourth quarter of 2017, and an increase of $879.5 million, or 17.6%, over average loans of $5.00 billion for the first quarter of 2017.

Average total deposits for the first quarter of 2018 were $5.95 billion, a decrease of $88.8 million, or 1.5%, from average total deposits of $6.03 billion for the fourth quarter of 2017, and an increase of $627.4 million, or 11.8%, over average total deposits of $5.32 billion for the first quarter of 2017.

Non-performing assets to total assets were 0.22% for the first quarter of 2018, a decrease of three basis points compared to 0.25% for the fourth quarter of 2017 and a decrease of five basis points compared to 0.27% for the first quarter of 2017.  Net credit charge-offs to average loans were 0.10%, a 46 basis point decrease compared to 0.56% for the fourth quarter of 2017 and a 14 basis point decrease compared to 0.24% for the first quarter of 2017.  We recorded a $4.1 million provision for loan losses in the first quarter of 2018 compared to $9.1 million in the fourth quarter of 2017 and $5.0 million in the first quarter of 2017.  The allowance for loan losses as a percentage of total loans was 1.05% at March 31, 2018 compared to 1.02% at December 31, 2017 and 1.05% at March 31, 2017.  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.

Non-interest income for the first quarter of 2018 increased $323,000, or 7%, to $4.9 million compared to the first quarter of 2017.  Service charges on deposit accounts increased $231,000 during the first quarter of 2018, or 17%, compared to the first quarter of 2017, primarily the result of increased non-sufficient funds charges.  Mortgage revenue decreased $381,000, or 42%, to $518,000 during the first quarter of 2018, compared to $899,000 during the first quarter of 2017, as origination volumes slowed by $12.6 million, or 30%, for the first quarter of 2018 compared to the same quarter in 2017.  Credit card revenue increased 33% to $1.6 million during the first quarter of 2018, compared to $1.2 million during the first quarter of 2017.  Spending on credit cards increased 38% for the same comparative period.   

Non-interest expense for the first quarter of 2018 increased $2.2 million, or 10%, to $23.5 million from $21.3 million in the first quarter of 2017, and increased $2.3 million, or 11%, on a linked quarter basis.  Salary and benefit expense for the first quarter of 2018 increased $1.6 million, or 14%, to $13.3 million from $11.7 million in the first quarter of 2017, and increased $1.9 million, or 17%, on a linked quarter basis.  We had 437 FTE employees at the end of March 2018 compared to 417 at the end of March 2017, an increase of 5%.  Equipment and occupancy expense decreased $296,000, or 13%, to $2.0 million in the first quarter of 2018, from $2.3 million in the first quarter of 2017.  A decrease in rental payments more than offset increased depreciation expense resulting from our fourth quarter 2017 move from our previous headquarters building, which was leased, to our new headquarters building, which is owned.  FDIC insurance assessments increased from $1.0 million during the first quarter of 2017 to $1.1 million during the first quarter of 2018, resulting primarily from asset growth which impacts our assessment base.  Our efficiency ratio for the first quarter of 2018, fourth quarter of 2017 and first quarter of 2017 was 34.93%, 32.05% and 37.58%, respectively.

Income tax expense decreased $775,000, or 10%, to $7.1 million in the first quarter of 2018, compared to $7.8 million in the first quarter of 2017.  Lower corporate income tax rates resulting from the passage of the Tax Cuts and Jobs Act in December 2017 has resulted in lower effective tax rates.  Excess tax benefits from the exercise of stock options and vesting of restricted stock were $1.5 million for the first quarter of 2018 compared to $2.1 million for the first quarter of 2017.  Our effective tax rate for the first quarter of 2018 and the first quarter of  2017 was 17.8% and 25.8%, respectively.

We recorded $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets at December 31, 2017 due to lower corporate income tax rates provided by the Tax Cuts and Jobs Act passed into law in December 2017.  We also recorded expenses of $347,000 related to terminating the lease agreement on our previous headquarters building in Birmingham, Alabama and expenses of moving into our new headquarters building.  Core financial measures included in this press release are “core net income,” “core net income available to common stockholders,” “core diluted earnings per share,” “core return on average assets,” and “core return on average common stockholders’ equity.”  Each of these five core financial measures excludes the impact of the non-routine expenses attributable to our net deferred tax asset revaluation, lease termination and moving expenses, and are all considered non-GAAP financial measures.  In addition to these financial measures adjusting for non-routine expenses, 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 tables provide 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.

ServisFirst Bancshares, Inc. will host a live audio webcast to discuss earnings and results on Monday, April 16, 2018 beginning at 5:15 p.m. ET.  You may access the webcast at .  The webcast will be available until April 27, 2018.

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 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 or at .

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

 

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Globe Newswire: 21:01 GMT Monday 16th April 2018

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