ServisFirst Bancshares, Inc. Announces Results For First Quarter 2016

BIRMINGHAM, Ala., April 18, 2016 /PRNewswire/ -- ServisFirst Bancshares, Inc. ("ServisFirst") (NASDAQ: SFBS), the holding company for ServisFirst Bank, today announced earnings and operating results for the quarter ended March 31, 2016.

First Quarter 2016 Highlights:

• Net income of $17.6 million, a 35% increase year over year
• Diluted EPS of $0.66, a 35% increase year over year
• Core diluted EPS increased 18% year over year
• Loans and deposits increased 20% and 19%, respectively, year over year
• Production team increased by eight to 122, five in our newest region, the Tampa Bay area of Florida

Tom Broughton, President and CEO, said, "We are pleased with loan and deposit growth across all regions to start the year off, and believe our new main offices in Mobile, Charleston and Nashville will only bolster our growth opportunities through improved visibility in those markets."  Bud Foshee, CFO, stated, "We got off to a good start for 2016 and will continue to focus our efforts on improving net interest margins and maintaining quality customer service."

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $17.6 million for the quarter ended March 31, 2016, compared to net income of $13.1 million and net income available to common stockholders of $13.0 million for the same quarter in 2015.  Net income for the quarter ended March 31, 2016 benefitted from growth in average loans of $117.7 million from the previous quarter and lower charge offs of loans.  Basic and diluted earnings per common share were $0.68 and $0.66, respectively, for the first quarter of 2016, compared to $0.51 and $0.49, respectively, for the first quarter of 2015.

Return on average assets was 1.35% and return on average common stockholders' equity was 15.38% for the first quarter of 2016, compared to 1.26% and 13.55%, respectively, for the first quarter of 2015.

Net interest income was $44.2 million for the first quarter of 2016, compared to $43.2 million for the fourth quarter of 2015 and $37.0 million for the first quarter of 2015.  The net interest margin in the first quarter of 2016 was 3.57%, a one basis point increase from the fourth quarter of 2015 and a 23 basis point decrease from the first quarter of 2015.  Average loans outstanding increased $117.7 million on a linked quarter basis, and average stockholders' equity increased $20.6 million, all resulting in a positive mix variance in net interest margin.  The average yield on loans increased four basis points to 4.48% on a linked quarter basis, resulting in a positive rate variance in net interest margin.  However, this was offset by a two basis point increase in the average rate paid on interest-bearing deposits.  Excess liquidity in the form of balances kept on deposit at the Federal Reserve and funds sold to our correspondent banks remained higher than normal for the first quarter, resulting in a negative mix variance in net interest margin. 

Average loans for the first quarter of 2016 were $4.24 billion, an increase of $117.7 million, or 3%, over average loans of $4.12 billion for the fourth quarter of 2015, and an increase of $737.8 million, or 21%, over average loans of $3.50 billion for the first quarter of 2015.  All of our regions, except one, experienced growth in loans during the first quarter.

Average total deposits for the first quarter of 2016 were flat at $4.27 billion compared to average total deposits of $4.27 billion for the fourth quarter of 2015, and increased $0.8 billion, or 23%, over average total deposits of $3.47 billion for the first quarter of 2015.  All of our regions, except one, experienced growth in deposits during the first quarter on an ending basis.

Non-performing assets to total assets were 0.20%, a decrease of six basis points compared to 0.26% for the fourth quarter of 2015 and a decrease of 20 basis points compared to 0.40% for the first quarter of 2015.  Net credit charge-offs to average loans were 0.03%, a 21 basis point decrease compared to 0.24% for the fourth quarter of 2015 and a five basis point decrease compared to 0.08% for the first quarter of 2015.  We recorded a $2.1 million provision for loan losses in the first quarter of 2016, a decrease of $1.2 million compared to $3.3 million in the fourth quarter of 2015 and a decrease of $0.3 million compared to $2.4 million in the first quarter of 2015.  The loan loss reserve as a percentage of total loans increased one basis point to 1.04% at March 31, 2016, compared to 1.03% at December 31, 2015 and was flat compared to 1.04% at March 31, 2015.  In management's opinion, the reserve is adequate and was determined by consistent application of ServisFirst Bank's methodology for calculating its reserve for loan losses.

Non-interest income increased $649,000 in the first quarter of 2016, or 21%, compared to the first quarter of 2015.  Deposit service charges increased $100,000 in the first quarter of 2016, or 8%, compared to the first quarter of 2015.  Mortgage banking income increased $214,000 in the first quarter of 2016, or 47%, compared to the first quarter of 2015 as a result of increased production and improved pricing margins.  Credit card income increased $371,000 in the first quarter of 2016, or 78%, compared to the first quarter of 2015, primarily as a result of increases in volume of activity on existing accounts.  The number of credit card accounts also increased by 411, or 8.4%, during this time.

Non-interest expense for the first quarter of 2016 increased $830,000, or 4%, to $19.6 million from $18.8 million in the first quarter of 2015.  Excluding merger expenses related to our acquisition of Metro Bancshares, Inc. during the first quarter of 2015, non-interest expense increased $2.9 million, or 18%, from the first quarter of 2015 to the first quarter of 2016.  Salary and benefit expense for the first quarter of 2016 increased $2.1 million, or 23%, to $11.1 million from $9.0 million in the first quarter of 2015, and increased $2.2 million, or 25%, on a linked quarter basis.  Eight new sales officers were added during the first quarter of 2016, with five of these comprising our team in the Tampa Bay area of Florida, our newest region.  Occupancy expense increased $324,000, or 20%, from the first quarter of 2015 to the first quarter of 2016, and increased $466,000, or 31%, on a linked quarter basis.  New main offices were opened in our Mobile, Alabama, Charleston, South Carolina and Nashville, Tennessee regions during the first quarter of 2016.  Also, we accelerated depreciation of leasehold improvements for our headquarters building in Birmingham, Alabama to coincide with the date we move into our new headquarters building, which we anticipate will be in 2017.  Other operating expense for the first quarter of 2016 was relatively flat at $4.6 million compared to the first quarter of 2015.  Excluding $500,000 in expense for the initial funding of reserves for unfunded loan commitments as of March 31, 2015, consistent with guidance provided in the Federal Reserve Bank's Inter-agency Policy Statement SR 06-17, other operating expense increased by 12% from the first quarter of 2015 to the first quarter of 2016.  Increases in service charges from the Federal Reserve of $126,000 from the first quarter of 2015 to the first quarter of 2016 are the result of continued increases in clearing services for our correspondent bank clients.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

As discussed in more detail in the section titled "Detailed Financials," we recorded expenses of $2.1 million for the first quarter of 2015 related to the acquisition of Metro Bancshares, Inc. and the merger of Metro Bank with and into the Bank, and recorded an expense of $500,000 resulting from the initial funding of reserves for unfunded loan commitments as of March 31, 2015, consistent with guidance provided in the Federal Reserve Bank's Inter-agency Policy Statement SR 06-17.  The non-GAAP financial measures included in this press release of our results for the first quarter of 2015 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 merger expenses and the initial funding of a reserve for unfunded loan commitments.  None of the other periods included in this press release are affected by such non-routine expenses.

"Core net income" is defined as net income, adjusted by the net effect of the non-routine expense.

"Core net income available to common stockholders" is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense.

"Core diluted earnings per share" is defined as net income available to common stockholders, adjusted by the net effect of the non-routine expense, divided by weighted average diluted shares outstanding.

"Core return on average assets" is defined as net income, adjusted by the net effect of the non-routine expense, divided by average total assets.

"Core return on average common stockholders' equity" is defined as net income, adjusted by the net effect of the non-routine expense, divided by average common stockholders' equity.

We present tangible book value per share and the ratio of tangible common equity to total tangible assets in our Selected Financial Highlights table.  Our acquisition of Metro resulted in goodwill and other identifiable intangible assets, which are subtracted from equity and assets in the computation of tangible book value per share and tangible common equity to total tangible assets.

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 for the first quarter of 2015.  Dollars are in thousands, except share and per share data.

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 and Tampa Bay area, 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.servisfirstbank.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," "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: 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 deposit base; 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 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. 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 http://servisfirstbancshares.investorroom.com/ or by calling (205) 949-0302.

Contact: ServisFirst Bank
Davis Mange (205) 949-3420
[email protected]