Exhibit 99.1

 

 

SERVISFIRST BANCSHARES, INC.

Announces Results For Second Quarter of 2015

 

Birmingham, Ala. – (PR Newswire) – July 20, 2015 – ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the quarter and six months ended June 30, 2015.

 

SECOND Quarter 2015 Highlights:

 

§

Net income for the second quarter increased 25% year over year

§

Second quarter annualized loan growth of 28% on a linked quarter basis

§

Diluted earnings per share of $0.54 for the second quarter, a 17% increase year over year

§

Continued strong asset quality with non-performing assets to total assets of 0.38% at quarter-end and annualized net charge-offs of 0.15%

§

Added more producers during first six months of 2015 than in any equivalent period in our ten year history

 

Tom Broughton, President and CEO, said, “We are pleased to welcome seven new producers to our company in the second quarter, for a total of 19 new producers year to date, excluding officers added through the Metro Bank (Atlanta) acquisition.” Bud Foshee, CFO, stated, “The improvement in net interest margin in the quarter, combined with strong loan growth, gives us strong fundamentals from which to build for the balance of 2015.”

 

FINANCIAL SUMMARY (UNAUDITED)

(in Thousands except share and per share amounts)

 

		Period Ending June 30, 2015				Period Ending March 31, 2015				% Change From Period Ending March 31, 2015 to Period Ending June 30, 2015				Period Ending June 30, 2014				% Change From Period Ending June 30, 2014 to Period Ending June 30, 2015
QUARTERLY OPERATING RESULTS
Net Income		$	14,469			$	13,055				11	%		$	11,585				25	%
Net Income Available to Common Stockholders		$	14,346			$	12,955				11	%		$	11,469				25	%
Diluted Earnings Per Share		$	0.54			$	0.49				10	%		$	0.46				17	%
Return on Average Assets			1.31	%			1.26	%							1.28	%
Return on Average Common Stockholders' Equity			14.06	%			13.55	%							15.03	%
Average Diluted Shares Outstanding			26,426,036				26,237,980								24,823,590
Core Net Income*		$	14,469			$	14,822				(2	)%		$	12,740				14	%
Core Net Income Available to Common Stockholders*		$	14,346			$	14,722				(3	)%		$	12,624				14	%
Core Diluted Earnings Per Share*		$	0.54			$	0.56				(4	)%		$	0.51				6	%
Core Return on Average Assets*			1.31	%			1.43	%							1.41	%
Core Return on Average Common Stockholders' Equity*			14.06	%			15.39	%							16.54	%
YEAR-TO-DATE OPERATING RESULTS
Net Income		$	27,524											$	23,343				18	%
Net Income Available to Common Stockholders		$	27,301											$	23,127				18	%
Diluted Earnings Per Share		$	1.04											$	0.97				7	%
Return on Average Assets			1.29	%											1.32	%
Return on Average Common Stockholders' Equity			13.81	%											15.61	%
Average Diluted Shares Outstanding			26,332,527												23,909,707
Core Net Income*		$	29,291											$	24,955				17	%
Core Net Income Available to Common Stockholders*		$	29,068											$	24,739				17	%
Core Diluted Earnings Per Share*		$	1.10											$	1.03				7	%
Core Return on Average Assets*			1.37	%											1.41	%
Core Return on Average Common Stockholders' Equity*			14.70	%											16.70	%
BALANCE SHEET
Total Assets		$	4,492,539			$	4,393,342				2	%		$	3,762,684				19	%
Loans			3,863,734				3,607,852				7	%			3,053,989				27	%
Non-interest-bearing Demand Deposits			926,577				866,743				7	%			729,163				27	%
Total Deposits			3,729,132				3,638,763				2	%			3,157,642				18	%
Stockholders' Equity			454,487				441,458				3	%			380,074				20	%

 

  

* Core measures exclude non-routine expenses during the comparative periods presented in this press release as more fully described in "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.

 

DETAILED FINANCIALS

 

ServisFirst Bancshares, Inc. reported net income of $14.5 million and net income available to common stockholders of $14.3 million for the quarter ended June 30, 2015, compared to net income of $11.6 million and net income available to common stockholders of $11.5 million for the same quarter in 2014. Basic and diluted earnings per common share were $0.56 and $0.54, respectively, for the second quarter of 2015, compared to $0.49 and $0.46, respectively, for the second quarter of 2014.

 

Return on average assets was 1.31% and return on average equity was 14.06% for the second quarter of 2015, compared to 1.28% and 15.03%, respectively, for the second quarter of 2014.

 

Net interest income was $40.2 million for the second quarter of 2015, compared to $37.0 million for the first quarter of 2015 and $32.0 million for the second quarter of 2014. The net interest margin in the second quarter of 2015 was 3.88%, an 8 basis point increase from the first quarter of 2015 and 14 basis point increase from the second quarter of 2014. The increase in net interest income on a linked quarter basis is attributable to a $239.2 million increase in average loans outstanding, a $94.7 million increase in non-interest-bearing deposits and a $21.4 million increase in average stockholders’ equity, all resulting in a positive mix change in our balance sheet. The average yield on loans increased 4 basis points to 4.51% on a linked quarter basis.

 

Average loans for the second quarter of 2015 were $3.74 billion, an increase of $239.2 million, or 7%, over average loans of $3.50 billion for the first quarter of 2015, and an increase of $747.3 million, or 25%, over average loans of $2.99 billion for the second quarter of 2014.

 

Average total deposits for the second quarter of 2015 were $3.66 billion, an increase of $191.4 million, or 6%, over average total deposits of $3.47 billion for the first quarter of 2015, and an increase of $601.6 million, or 20%, over average total deposits of $3.06 billion for the second quarter of 2014.

 

Non-performing assets to total assets were 0.38% for the second quarter of 2015, a decrease of two basis points compared to 0.40% for the first quarter of 2015 and a decrease of fifteen basis points compared to 0.53% for the second quarter of 2014. Net credit charge-offs to average loans were 0.15%, a seven basis point increase compared to 0.08% for the first quarter of 2015 and a one basis point decrease compared to 0.16% for the second quarter of 2014. We recorded a $4.1 million provision for loan losses in the second quarter of 2015 compared to $2.4 million in the first quarter of 2015 and $2.4 million in the second quarter of 2014. The $1.7 million increase in loan loss provision in the second quarter is primarily attributable to loan growth combined with new impairment and charge-off of two large commercial loans. The allowance for loan loss as a percentage of total loans remained unchanged at 1.04% for June 30, 2015 and March 31, 2015 and decreased four basis points compared to 1.08% at June 30, 2014. 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 increased $567,000 during the second quarter of 2015, or 19%, compared to the second quarter of 2014. Deposit service charges increased by $219,000, or 21%, resulting from higher balances and an increase in the number of accounts and transactions. Increases in the cash surrender value of our life insurance contracts resulted from added investments in contracts during the third quarter of 2014.

 

  

Non-interest expense for the second quarter of 2015 increased $2.8 million, or 18%, to $18.2 million from $15.4 million in the second quarter of 2014, and decreased $0.5 million, or 3%, on a linked quarter basis. Salary and benefit expense for the second quarter of 2015 increased $1.3 million, or 15%, to $10.4 million from $9.1 million in the second quarter of 2014, and increased $1.4 million, or 16%, on a linked quarter basis. Salary and benefit expenses for the second quarter of 2014 included non-routine expense of $1.8 million resulting from the accelerated vesting of stock options previously granted to members of our advisory boards in our markets. Excluding this non-routine expense, salary and benefit expenses increased $3.1 million, or 42%. This increase is primarily the result of the Metro Bank employees coming on board in February 2015 and employee hires in our newer markets. Merger expenses during the first quarter of 2015 related to our acquisition of Metro Bancshares were $2.1 million. Other operating expense for the second quarter of 2015 increased $1.0 million, or 29%, to $4.6 million from $3.6 million in the second of 2014. This was primarily the result of increased loan origination expenses, increased federal reserve bank charges from our correspondent bank clearing activities, and amortization of the core deposit intangible asset resulting from the Metro Bancshares acquisition.

 

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

 

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 for the first quarter of 2015, consistent with guidance provided in the Federal Reserve Bank’s Inter-agency Policy Statement SR 06-17. We recorded non-routine expenses of $2.5 million during the first half of 2014 resulting from a correction of our accounting for vested stock options and acceleration of vesting for unvested stock options previously granted to members of our advisory boards in our markets. This change in accounting treatment is a non-cash item and did not impact our operating activities or cash from operations. 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 merger expenses, the initial funding of reserves for unfunded loan commitments, the correction of our accounting for vested stock options and the acceleration of vesting of unvested stock options, and are all considered non-GAAP financial measures. Other non-GAAP financial measures included in this press release are “tangible common stockholders’ equity,” “total tangible assets,” “tangible book value per share,” and “tangible common equity to total tangible assets.” All non-GAAP financial measures are more fully explained below.

 

“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 of 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.

 

“Tangible common stockholders’ equity” is defined as common stockholders’ equity, adjusted by the total of goodwill and other identifiable intangible assets.

 

“Total tangible assets” is defined as total assets, adjusted by the total of goodwill and other identifiable intangible assets.

 

“Tangible book value per share” is defined as tangible common stockholders’ equity divided by the number of common shares outstanding.

 

“Tangible common equity to total tangible assets” is defined as tangible common equity divided by 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 three months ended March 31, 2015 and six month comparative periods ended June 30, 2015 and 2014 included in this press release. Dollars are in thousands, except share and per share data.

 

 

		For the Three Months Ended March 31, 2015				For the Six Months Ended June 30, 2015				For the Six Months Ended June 30, 2014
Provision for income taxes - GAAP		$	5,903			$	12,875			$	10,705
Adjustments:
Adjustment for non-routine expense			829				830				865
Core provision for income taxes		$	6,732			$	13,705			$	11,570
Return on average assets - GAAP			1.26	%			1.29	%			1.32	%
Net income - GAAP		$	13,055			$	27,524			$	23,343
Adjustments:
Adjustment for non-routine expense			1,767				1,767				1,612
Core net income		$	14,822			$	29,291			$	24,955
Average assets		$	4,193,413			$	4,307,778			$	3,568,159
Core return on average assets			1.43	%			1.37	%			1.41	%
Return on average common stockholders' equity			13.55	%			13.81	%			15.61	%
Net income available to common stockholders - GAAP		$	12,955			$	27,301			$	23,127
Adjustments:
Adjustment for non-routine expense			1,767				1,767				1,612
Core net income available to common stockholders		$	14,722			$	29,068			$	24,739
Average common stockholders' equity		$	387,870			$	398,678			$	298,713
Core return on average common stockholders' equity			15.39	%			14.70	%			16.70	%
Earnings per share - diluted - GAAP		$	0.49			$	1.04			$	0.97
Weighted average shares outstanding, diluted			26,237,980				26,332,527				23,909,707
Core diluted earnings per share		$	0.56			$	1.10			$	1.03
Book value per share		$	15.65			$	16.05			$	13.74
Total common stockholders' equity - GAAP			401,500				414,529				340,116
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			18,069				18,060				-
Tangible common stockholders' equity		$	383,431			$	396,469			$	340,116
Tangible book value per share		$	14.95			$	15.35			$	13.74
Stockholders' equity to total assets			10.05	%			10.13	%			10.10	%
Total assets - GAAP		$	4,393,342			$	4,485,091			$	3,762,684
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			18,069				18,060				-
Total tangible assets			4,375,273				4,467,031				3,762,684
Tangible common equity to total tangible assets			8.76	%			8.88	%			10.10	%

 

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, 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 http://servisfirstbancshares.investorroom.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 the 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 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 http://servisfirstbancshares.investorroom.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)

 

		2nd Quarter 2015				1st Quarter 2015				4th Quarter 2014				3rd Quarter 2014				2nd Quarter 2014
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	44,209			$	40,783			$	38,163			$	36,857			$	35,424
Interest expense			3,998				3,746				3,703				3,538				3,446
Net interest income			40,211				37,037				34,460				33,319				31,978
Provision for loan losses			4,062				2,405				2,759				2,748				2,438
Net interest income after provision for loan losses			36,149				34,632				31,701				30,571				29,540
Non-interest income			3,505				3,077				3,110				3,006				2,938
Non-interest expense			18,213				18,751				13,143				15,315				15,417
Income before income tax			21,441				18,958				21,668				18,262				17,061
Provision for income tax			6,972				5,903				6,636				4,260				5,476
Net income			14,469				13,055				15,032				14,002				11,585
Preferred stock dividends			123				100				115				100				116
Net income available to common stockholders		$	14,346			$	12,955			$	14,917			$	13,902			$	11,469
Earnings per share - basic		$	0.56			$	0.51			$	0.60			$	0.56			$	0.49
Earnings per share - diluted		$	0.54			$	0.49			$	0.58			$	0.54			$	0.46
Average diluted shares outstanding			26,426,036				26,237,980				25,697,531				25,726,313				24,823,590
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	4,492,539			$	4,393,342			$	4,098,679			$	3,952,799			$	3,762,684
Loans			3,863,734				3,607,852				3,359,858				3,159,772				3,053,989
Debt securities			335,008				336,505				327,665				332,351				325,432
Non-interest-bearing demand deposits			926,577				866,743				810,460				794,553				729,163
Total deposits			3,729,132				3,638,763				3,398,160				3,352,766				3,157,642
Borrowings			21,016				21,278				19,973				19,965				19,957
Stockholders' equity		$	454,487			$	441,458			$	407,213			$	393,136			$	380,074
Shares outstanding			25,826,198				26,653,610				24,801,518				24,791,436				24,749,436
Book value per share		$	16.05			$	15.65			$	14.81			$	14.25			$	13.74
Tangible book value per share (1)		$	15.35			$	14.95			$	14.81			$	14.25			$	13.74
SELECTED FINANCIAL RATIOS
Net interest margin			3.88	%			3.80	%			3.56	%			3.65	%			3.74	%
Return on average assets			1.31	%			1.26	%			1.47	%			1.45	%			1.28	%
Return on average common stockholders' equity			14.06	%			13.55	%			16.39	%			15.89	%			15.03	%
Efficiency ratio			41.66	%			46.74	%			34.98	%			42.16	%			44.15	%
Non-interest expense to average earning assets			1.73	%			1.90	%			1.34	%			1.66	%			1.78	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets (3)			9.60	%			9.93	%			N/A				N/A				N/A
Tier 1 capital to risk-weighted assets			10.58	%			10.98	%			11.75	%			12.02	%			12.04	%
Total capital to risk-weighted assets			12.04	%			12.49	%			13.38	%			13.70	%			13.74	%
Tier 1 capital to average assets			9.88	%			10.07	%			9.91	%			10.18	%			10.32	%
Tangible common equity to total tangible assets (1)			8.86	%			8.76	%			8.96	%			8.93	%			9.04

 

(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.

(3) Basel III final capital rules, including the new Common Equity Tier 1 Capital to Risk-Weighted Assets ratio, became effective for the Company on January 1, 2015.

 

  

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

 

		June 30, 2015				June 30, 2014				% Change
ASSETS
Cash and due from banks		$	49,731			$	76,893				(35	)%
Interest-bearing balances due from depository institutions			69,104				199,990				(65	)%
Federal funds sold			17,622				3,044				479	%
Cash and cash equivalents			136,457				279,927				(51	)%
Available for sale debt securities, at fair value			305,985				294,254				4	%
Held to maturity debt securities (fair value of $29,348 and $31,446 at June 30, 2015 and 2014, respectively)			29,023				31,178				(7	)%
Restricted equity securities			4,954				3,418				45	%
Mortgage loans held for sale			11,722				11,675				0	%
Loans			3,863,734				3,053,989				27	%
Less allowance for loan losses			(40,020	)			(32,984	)			21	%
Loans, net			3,823,714				3,021,005				27	%
Premises and equipment, net			15,563				7,745				101	%
Goodwill and other identifiable intangible assets			18,060				-
Other assets			147,061				113,482				30	%
Total assets		$	4,492,539			$	3,762,684				19	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	926,577			$	729,163				27	%
Interest-bearing			2,802,555				2,428,479				15	%
Total deposits			3,729,132				3,157,642				18	%
Federal funds purchased			273,095				181,070				51	%
Other borrowings			21,016				19,957				5	%
Other liabilities			14,809				23,941				(38	)%
Total liabilities			4,038,052				3,382,610				19	%
Stockholders' equity:
Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001 (liquidation preference $1,000), net of discount; 40,000 shares authorized, 40,000 shares issued and outstanding at June 30, 2015 and 2014			39,958				39,958				-	%
Preferred stock, par value $0.001 per share; 1,000,000 authorized and 960,000 currently undesignated			-				-				-	%
Common stock, par value $0.0003 per share; 50,000,000 shares authorized; 25,833,698 shares issued and 25,826,198 outstanding at June 30, 2015 and 24,749,436 shares issued and outstanding at June 30, 2014			26				25				4	%
Additional paid-in capital			209,074				183,765				14	%
Retained earnings			201,303				150,769				34	%
Accumulated other comprehensive income			3,749				5,305				(29	)%
Noncontrolling interest			377				252				50	%
Total stockholders' equity			454,487				380,074				20	%
Total liabilities and stockholders' equity		$	4,492,539			$	3,762,684				19	%

 

  

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Interest income:
Interest and fees on loans		$	42,105			$	33,250			$	80,751			$	65,502
Taxable securities			1,104				1,126				2,232				2,223
Nontaxable securities			874				870				1,734				1,741
Federal funds sold			24				43				101				85
Other interest and dividends			102				135				174				154
Total interest income			44,209				35,424				84,992				69,705
Interest expense:
Deposits			3,512				3,027				6,782				6,041
Borrowed funds			486				419				962				837
Total interest expense			3,998				3,446				7,744				6,878
Net interest income			40,211				31,978				77,248				62,827
Provision for loan losses			4,062				2,438				6,467				4,752
Net interest income after provision for loan losses			36,149				29,540				70,781				58,075
Non-interest income:
Service charges on deposit accounts			1,276				1,057				2,483				1,925
Mortgage banking			735				674				1,189				958
Securities gains			-				-				29				-
Increase in cash surrender value life insurance			660				546				1,308				1,082
Other operating income			834				661				1,573				1,148
Total non-interest income			3,505				2,938				6,582				5,113
Non-interest expense:
Salaries and employee benefits			10,426				9,098				19,434				16,795
Equipment and occupancy expense			1,634				1,409				3,295				2,775
Professional services			665				532				1,233				1,048
FDIC and other regulatory assessments			626				528				1,246				1,045
Other real estate owned expense			289				298				503				785
Merger expense			4				-				2,100				-
Other operating expense			4,569				3,552				9,153				6,692
Total non-interest expense			18,213				15,417				36,964				29,140
Income before income tax			21,441				17,061				40,399				34,048
Provision for income tax			6,972				5,476				12,875				10,705
Net income			14,469				11,585				27,524				23,343
Dividends on preferred stock			123				116				223				216
Net income available to common stockholders		$	14,346			$	11,469			$	27,301			$	23,127
Basic earnings per common share		$	0.56			$	0.49			$	1.07			$	1.01
Diluted earnings per common share		$	0.54			$	0.46			$	1.04			$	0.97

 

LOANS BY TYPE (UNAUDITED)

(In thousands)

 

		2nd Quarter 2015				1st Quarter 2015				4th Quarter 2014				3rd Quarter 2014				2nd Quarter 2014
Commercial, financial and agricultural		$	1,630,134			$	1,543,531			$	1,495,092			$	1,382,607			$	1,362,757
Real estate - construction			219,607				219,005				208,769				194,506				178,033
Real estate - mortgage:
Owner-occupied commercial			930,719				869,724				793,917				773,432				708,294
1-4 family mortgage			392,245				375,770				333,455				314,778				296,220
Other mortgage			627,099				545,668				471,363				443,245				457,845
Subtotal: Real estate - mortgage			1,950,063				1,791,162				1,598,735				1,531,455				1,462,359
Consumer			63,930				54,154				57,262				51,204				50,840
Total loans		$	3,863,734			$	3,607,852			$	3,359,858			$	3,159,772			$	3,053,989

 

  

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)

(Dollars in thousands)

 

		2nd Quarter 2015				1st Quarter 2015				4th Quarter 2014				3rd Quarter 2014				2nd Quarter 2014
Allowance for loan losses:
Beginning balance		$	37,356			$	35,629			$	34,442			$	32,984			$	31,728
Loans charged off:
Commercial financial and agricultural			1,151				77				416				531				142
Real estate - construction			93				382				309				610				325
Real estate - mortgage			208				433				922				149				890
Consumer			19				5				21				131				18
Total charge offs			1,471				897				1,668				1,421				1,375
Recoveries:
Commercial financial and agricultural			6				19				2				-				1
Real estate - construction			65				99				37				97				180
Real estate - mortgage			2				101				46				14				10
Consumer			-				-				11				20				2
Total recoveries			73				219				96				131				193
Net charge-offs			1,398				678				1,572				1,290				1,182
Provision for loan losses			4,062				2,405				2,759				2,748				2,438
Ending balance		$	40,020			$	37,356			$	35,629			$	34,442			$	32,984
Allowance for loan losses to total loans			1.04	%			1.04	%			1.06	%			1.09	%			1.08	%
Allowance for loan losses to total average loans			1.07	%			1.07	%			1.10	%			1.11	%			1.10	%
Net charge-offs to total average loans			0.15	%			0.08	%			0.19	%			0.17	%			0.16	%
Provision for loan losses to total average loans			0.44	%			0.28	%			0.34	%			0.35	%			0.33	%
Nonperforming assets:
Nonaccrual loans		$	8,194			$	8,361			$	9,125			$	16,078			$	13,193
Loans 90+ days past due and accruing			470				553				925				1,190				-
Other real estate owned and repossessed assets			8,235				8,638				6,840				6,940				6,739
Total		$	16,899			$	17,552			$	16,890			$	24,208			$	19,932
Nonperforming loans to total loans			0.22	%			0.25	%			0.30	%			0.55	%			0.43	%
Nonperforming assets to total assets			0.38	%			0.40	%			0.41	%			0.61	%			0.53	%
Nonperforming assets to earning assets			0.38	%			0.41	%			0.42	%			0.62	%			0.54	%
Reserve for loan losses to nonaccrual loans			488.41	%			446.79	%			390.45	%			214.22	%			250.01	%
Restructured accruing loans		$	8,279			$	8,280			$	8,295			$	2,067			$	7,030
Restructured accruing loans to total loans			0.21	%			0.23	%			0.25	%			0.07	%			0.23	%

 

TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)

(In thousands)

 

		2nd Quarter 2015				1st Quarter 2015				4th Quarter 2014				3rd Quarter 2014				2nd Quarter 2014
Beginning balance:		$	8,280			$	8,992			$	7,932			$	9,217			$	13,478
Additions			-				-				6,250				-				1,409
Net (paydowns) / advances			(1	)			(381	)			(4,492	)			(802	)			(5,080	)
Charge-offs			-				(331	)			(698	)			(483	)			(590	)
		$	8,279			$	8,280			$	8,992			$	7,932			$	9,217

 

  

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

		2nd Quarter 2015				1st Quarter 2015				4th Quarter 2014				3rd Quarter 2014				2nd Quarter 2014
Interest income:
Interest and fees on loans		$	42,105			$	38,646			$	35,902			$	34,662			$	33,250
Taxable securities			1,104				1,128				1,143				1,131				1,126
Nontaxable securities			874				860				871				877				870
Federal funds sold			24				77				41				38				43
Other interest and dividends			102				72				206				149				135
Total interest income			44,209				40,783				38,163				36,857				35,424
Interest expense:
Deposits			3,512				3,270				3,256				3,123				3,027
Borrowed funds			486				476				447				415				419
Total interest expense			3,998				3,746				3,703				3,538				3,446
Net interest income			40,211				37,037				34,460				33,319				31,978
Provision for loan losses			4,062				2,405				2,759				2,748				2,438
Net interest income after provision for loan losses			36,149				34,632				31,701				30,571				29,540
Non-interest income:
Service charges on deposit accounts			1,276				1,207				1,168				1,172				1,057
Mortgage banking			735				454				507				582				674
Securities gains			-				29				-				3				-
Increase in cash surrender value life insurance			660				648				649				549				546
Other operating income			834				739				786				700				661
Total non-interest income			3,505				3,077				3,110				3,006				2,938
Non-interest expense:
Salaries and employee benefits			10,426				9,008				6,332				7,890				9,098
Equipment and occupancy expense			1,634				1,661				1,335				1,437				1,409
Professional services			665				568				558				829				532
FDIC and other regulatory assessments			626				620				516				533				528
Other real estate owned expense			289				214				528				220				298
Merger expense			4				2,096				-				-				-
Other operating expense			4,569				4,584				3,874				4,406				3,552
Total non-interest expense			18,213				18,751				13,142				15,315				15,417
Income before income tax			21,441				18,958				21,668				18,262				17,061
Provision for income tax			6,972				5,903				6,636				4,260				5,476
Net income			14,469				13,055				15,032				14,002				11,585
Dividends on preferred stock			123				100				115				100				116
Net income available to common stockholders		$	14,346			$	12,955			$	14,917			$	13,902			$	11,469
Basic earnings per common share		$	0.56			$	0.51			$	0.60			$	0.56			$	0.49
Diluted earnings per common share		$	0.54			$	0.49			$	0.58			$	0.54			$	0.46

 

  

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

 

		2nd Quarter 2015								1st Quarter 2015								4th Quarter 2014								3rd Quarter 2014								2nd Quarter 2014
		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		$	3,731,699				4.51	%		$	3,492,363				4.47	%		$	3,215,400				4.41	%		$	3,081,435				4.44	%		$	2,978,631				4.46	%
Tax-exempt(2)			10,005				5.01				10,180				5.10				10,367				4.94				12,043				4.25				15,803				3.25
Mortgage loans held for sale			12,718				2.21				6,884				2.12				3,410				6.05				6,861				3.64				8,048				3.24
Debt securities:
Taxable			193,848				2.28				198,104				2.28				195,533				2.32				195,220				2.31				188,148				2.40
Tax-exempt(2)			136,104				3.93				129,525				4.02				127,909				4.19				126,512				4.08				123,897				4.10
Total securities (3)			329,952				2.96				327,629				2.97				323,442				3.06				321,732				3.01				312,045				3.07
Federal funds sold			26,638				0.36				39,438				0.27				68,640				0.24				57,625				0.27				41,388				0.37
Restricted equity securities			4,953				3.16				4,354				3.63				3,418				3.95				3,418				3.83				3,446				7.57
Interest-bearing balances with banks			97,482				0.26				119,195				0.28				273,496				0.26				185,716				0.25				121,532				0.25
Total interest-earning assets			4,213,447				4.26	%			4,000,043				4.18	%			3,898,173				3.94	%			3,668,830				4.03	%			3,480,893				4.13	%
Non-interest-earning assets:
Cash and due from banks			58,347								61,911								58,973								58,340								57,387
Net premises and equipment			16,323								13,847								8,315								8,310								8,377
Allowance for loan losses, accrued interest and other assets			129,233								117,612								101,831								86,901								88,849
Total assets		$	4,417,350							$	4,193,413							$	4,067,292							$	3,822,381							$	3,635,506
Interest-bearing liabilities:
Interest-bearing deposits:
Checking		$	579,650				0.27	%		$	553,569				0.26	%		$	511,451				0.26	%		$	484,291				0.26	%		$	482,115				0.27	%
Savings			37,697				0.28				36,128				0.28				28,806				0.29				26,584				0.28				25,406				0.28
Money market			1,653,708				0.45				1,618,715				0.44				1,645,533				0.45				1,555,091				0.44				1,472,346				0.44
Time deposits			480,140				1.05				446,084				1.05				395,598				1.03				394,158				1.05				402,613				1.08
Federal funds purchased			275,888				0.29				270,549				0.28				231,135				0.28				187,629				0.28				195,809				0.28
Other borrowings			21,238				5.40				20,455				5.65				19,969				5.62				19,961				5.62				19,953				5.69
Total interest-bearing liabilities			3,048,321				0.53	%			2,925,500				0.52	%			2,832,492				0.52	%			2,667,714				0.53	%			2,598,242				0.53	%
Non-interest-bearing liabilities:
Non-interest-bearing demand			908,020								813,340								823,738								751,831								675,098
Other liabilities			11,793								6,745								9,969								15,838								16,158
Stockholders' equity			444,302								422,847								395,981								382,025								341,120
Unrealized gains on securities and derivatives			4,914								4,981								5,112								4,973								4,888
Total liabilities and stockholders' equity		$	4,417,350							$	4,193,413							$	4,067,292							$	3,822,381							$	3,635,506
Net interest spread							3.73	%							3.66	%							3.42	%							3.50	%							3.60	%
Net interest margin							3.88	%							3.80	%							3.56	%							3.65	%							3.74	%

 

(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 35%.

(3)

Unrealized gains on available-for-sale debt securities are excluded from the yield calculation.