Exhibit No. 99.1

 

SERVISFIRST BANCSHARES, INC.

Announces Results For Second Quarter of 2016

 

Birmingham, Ala. – (PR Newswire) – July 18, 2016 – ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the quarter and six months ended June 30, 2016.

 

SECOND Quarter 2016 Highlights:

 

§

Net income of $38.8 million and diluted EPS of $1.46 for the six months ended June 30, 2016

§

Diluted EPS of $0.71 for second quarter of 2016, a 31% increase year over year

§

Core diluted EPS* for the six months ended June 30, 2016 increased 33% year over year as 2015 results were impacted by acquisition expenses

§

Loans and deposits increased 17% and 24%, respectively, year over year

§

Loans and deposits increased 18% and 26%, respectively, for the second quarter on an annualized basis

§

Early adoption of Accounting Standard Update 2016-09 results in upward revision of first quarter 2016 diluted EPS to $0.75 (further details are contained in this press release)

 

Tom Broughton, President and CEO, said, “Our strong loan pipeline points to improved economic conditions within our Southeastern U.S. footprint.” Bud Foshee, CFO, stated, “Strong loan and deposit growth coupled with excellent credit quality continue to drive growth and net income.”

 

FINANCIAL SUMMARY (UNAUDITED)

(in Thousands except share and per share amounts)

 

		Period Ending June 30, 2016				Period Ending March 31, 2016				% Change From Period Ending March 31, 2016 to Period Ending June 30, 2016				Period Ending June 30, 2015				% Change From Period Ending June 30, 2015 to Period Ending June 30, 2016
QUARTERLY OPERATING RESULTS
Net Income		$	18,876			$	19,956				(5	)%		$	14,469				30	%
Net Income Available to Common Stockholders		$	18,853			$	19,956				(6	)%		$	14,346				31	%
Diluted Earnings Per Share		$	0.71			$	0.75				(5	)%		$	0.54				31	%
Return on Average Assets			1.37	%			1.53	%							1.31	%
Return on Average Common Stockholders' Equity			15.79	%			17.39	%							14.06	%
Average Diluted Shares Outstanding			26,726,284				26,566,810								26,426,036
YEAR-TO-DATE OPERATING RESULTS
Net Income		$	38,832											$	27,524				41	%
Net Income Available to Common Stockholders		$	38,809											$	27,301				42	%
Diluted Earnings Per Share		$	1.46											$	1.04				40	%
Return on Average Assets			1.45	%											1.29	%
Return on Average Common Stockholders' Equity			16.57	%											13.81	%
Average Diluted Shares Outstanding			26,646,547												26,332,527
Core Net Income*		$	38,832											$	29,291				33	%
Core Net Income Available to Common Stockholders*		$	38,809											$	29,068				34	%
Core Diluted Earnings Per Share*		$	1.46											$	1.10				33	%
Core Return on Average Assets*			1.45	%											1.37	%
Core Return on Average Common Stockholders' Equity*			16.57	%											14.70	%
BALANCE SHEET
Total Assets		$	5,646,055			$	5,378,599				5	%		$	4,492,539				26	%
Loans			4,539,338				4,340,900				5	%			3,863,734				17	%
Non-interest-bearing Demand Deposits			1,185,668				1,070,275				11	%			926,577				28	%
Total Deposits			4,664,795				4,339,747				7	%			3,729,132				25	%
Stockholders' Equity			489,097				470,940				4	%			454,487				8	%

 

*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 and net income available to common stockholders of $18.9 million for the quarter ended June 30, 2016, compared to net income of $14.5 million and net income available to common stockholders of $14.3 million for the same quarter in 2015. Basic and diluted earnings per common share were $0.72 and $0.71, respectively, for the second quarter of 2016, compared to $0.56 and $0.54, respectively, for the second quarter of 2015.

 

Return on average assets was 1.37% and return on average equity was 15.79% for the second quarter of 2016, compared to 1.31% and 14.06%, respectively, for the second quarter of 2015.

 

Net interest income was $45.9 million for the second quarter of 2016, compared to $44.2 million for the first quarter of 2016 and $40.2 million for the second quarter of 2015. The net interest margin in the second quarter of 2016 was 3.51%, a six basis point decrease from the first quarter of 2016 and 37 basis point decrease from the second quarter of 2015. The increase in net interest income on a linked quarter basis is attributable to a $182.1 million increase in average loans outstanding, a $64.9 million increase in non-interest-bearing deposits and a $18.8 million increase in average stockholders’ equity, all resulting in a positive mix change in our balance sheet. The average yield on loans decreased by one basis point to 4.47% on a linked quarter basis.

 

Average loans for the second quarter of 2016 were $4.42 billion, an increase of $182.1 million, or 4%, over average loans of $4.24 billion for the first quarter of 2016, and an increase of $680.7 million, or 18%, over average loans of $3.74 billion for the second quarter of 2015.

 

Average total deposits for the second quarter of 2016 were $4.48 billion, an increase of $208.4 million, or 5%, over average total deposits of $4.27 billion for the first quarter of 2016, and an increase of $820.2 million, or 22%, over average total deposits of $3.66 billion for the second quarter of 2015.

 

Non-performing assets to total assets were 0.17% for the second quarter of 2016, a decrease of three basis points compared to 0.20% for the first quarter of 2016 and a decrease of 21 basis points compared to 0.38% for the second quarter of 2015. Net credit charge-offs to average loans were 0.18%, a 15 basis point increase compared to 0.03% for the first quarter of 2016 and a three basis point increase compared to 0.15% for the second quarter of 2015. We recorded a $3.8 million provision for loan losses in the second quarter of 2016 compared to $2.1 million in the first quarter of 2016 and $4.1 million in the second quarter of 2015. The allowance for loan loss as a percentage of total loans was unchanged at 1.04% for June 30, 2016 and March 31, 2016 as well as June 30, 2015. 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 $417,000 during the second quarter of 2016, or 12%, compared to the second quarter of 2015. Mortgage banking revenue increased by $166,000 in the second quarter of 2016, or 23%, compared to the second quarter of 2015, resulting from improved operations, translating to increased net gains on sales. Credit card income increased $125,000 in the second quarter of 2016, or 24%, compared to the second quarter of 2015, resulting from a 31% increase in the volume of spending on ServisFirst Bank cards and a 54% increase in spending on our agent banks’ cards.

 

Non-interest expense for the second quarter of 2016 increased $1.4 million, or 8%, to $19.5 million from $18.1 million in the second quarter of 2015, and increased $214,000, or 1%, on a linked quarter basis. Salary and benefit expense for the second quarter of 2016 increased $307,000, or 3%, to $10.7 million from $10.4 million in the second quarter of 2015, and decreased $334,000, or 3%, on a linked quarter basis. Equipment and Occupancy expense increased $389,000, or 24%, to $2.0 million in the second quarter of 2016, from $1.6 million in the second quarter of 2015. This increase in equipment and occupancy expense was attributable to new offices in our Charleston, South Carolina and Nashville, Tennessee regions, each of which were relocations from temporary facilities we previously occupied. We also accelerated depreciation of leasehold improvements in our Birmingham, Alabama headquarters building to coincide with our anticipated move date to our new headquarters building, which we anticipate will be in the second half of 2017. Professional services expense increased $334,000, or 50%, to $999,000 in the second quarter of 2016, from $665,000 in the second quarter of 2015, primarily the result of legal fees accrued for current pending litigation. Other operating expense for the second quarter of 2016 increased $407,000, or 9%, to $4.9 million from $4.5 million in the second quarter of 2015. This was primarily the result of higher data processing expenses related to increased online banking transaction volumes and an upgrade of our correspondent banking platform, 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. These increases were offset by lower costs incurred related to nonperforming loans.

 

 

Income tax expense increased $586,000, or 8%, to $7.6 million in the second quarter of 2016, compared to $7.0 million in the second quarter of 2015, and increased $992,000, or 8%, to $13.9 million in the six month period ended June 30, 2016, compared to $12.9 million in the six month period ended June 30, 2015. In the second quarter of 2016 we adopted the amendments in Accounting Standards Update 2016-09 using the modified retrospective method. We recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $1.3 million in the second quarter of 2016 and retrospectively recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $2.3 million in the first quarter of 2016. Previously under generally accepted accounting principles, such credits were reflected within additional paid-in capital.

 

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. 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, 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 as of and for the six month comparative periods ended June 30, 2016 and 2015 included in this press release. Dollars are in thousands, except share and per share data.

 

 

		As Of June 30, 2016				As Of and For the Six Months Ended June 30, 2015
Provision for income taxes - GAAP						$	12,875
Adjustments:
Adjustment for non-routine expense							830
Core provision for income taxes						$	13,705
Return on average assets - GAAP							1.29	%
Net income - GAAP						$	27,524
Adjustments:
Adjustment for non-routine expense							1,767
Core net income						$	29,291
Average assets						$	4,307,778
Core return on average assets							1.37	%
Return on average common stockholders' equity							13.81	%
Net income available to common stockholders - GAAP						$	27,301
Adjustments:
Adjustment for non-routine expense							1,767
Core net income available to common stockholders						$	29,068
Average common stockholders' equity						$	398,678
Core return on average common stockholders' equity							14.70	%
Earnings per share - diluted - GAAP						$	1.04
Weighted average shares outstanding, diluted							26,332,527
Core diluted earnings per share						$	1.10
Book value per share		$	18.63			$	16.05
Total common stockholders' equity - GAAP			489,097				414,529
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			15,154				18,060
Tangible common stockholders' equity		$	473,943			$	396,469
Tangible book value per share		$	18.05			$	15.35
Stockholders' equity to total assets			8.66	%			10.13	%
Total assets - GAAP		$	5,646,055			$	4,485,091
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			15,154				18,060
Total tangible assets			5,630,901				4,467,031
Tangible common equity to total tangible assets			8.42	%			8.88	%

 

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, 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 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	52,050			$	49,961			$	48,451			$	46,532			$	44,209
Interest expense			6,159				5,782				5,290				4,670				3,998
Net interest income			45,891				44,179				43,161				41,862				40,211
Provision for loan losses			3,800				2,059				3,308				3,072				4,062
Net interest income after provision for loan losses			42,091				42,120				39,853				38,790				36,149
Non-interest income			3,847				3,435				3,475				3,738				3,430
Non-interest expense			19,504				19,290				19,002				18,248				18,138
Income before income tax			26,434				26,265				24,326				24,280				21,441
Provision for income tax			7,558				6,309				4,576				8,014				6,972
Net income			18,876				19,956				19,750				16,266				14,469
Preferred stock dividends			23				-				24				33				123
Net income available to common stockholders		$	18,853			$	19,956			$	19,726			$	16,233			$	14,346
Earnings per share - basic		$	0.72			$	0.76			$	0.76			$	0.63			$	0.56
Earnings per share - diluted		$	0.71			$	0.75			$	0.74			$	0.61			$	0.54
Average diluted shares outstanding			26,726,284				26,566,810				26,595,239				26,506,334				26,426,036
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	5,646,055			$	5,378,599			$	5,095,509			$	4,772,601			$	4,492,539
Loans			4,539,338				4,340,900				4,216,375				4,044,242				3,863,734
Debt securities			347,706				362,106				370,364				334,635				335,008
Non-interest-bearing demand deposits			1,185,668				1,070,275				1,053,467				1,029,354				926,577
Total deposits			4,664,795				4,339,747				4,223,888				4,044,634				3,729,132
Borrowings			55,450				55,543				55,748				55,728				21,016
Stockholders' equity		$	489,097			$	470,940			$	449,147			$	431,194			$	454,487
Shares outstanding			26,251,948				26,182,698				25,972,698				25,903,698				25,826,198
Book value per share		$	18.63			$	17.99			$	17.29			$	16.65			$	16.05
Tangible book value per share (1)		$	18.05			$	17.40			$	16.70			$	15.96			$	15.35
SELECTED FINANCIAL RATIOS
Net interest margin			3.51	%			3.57	%			3.56	%			3.77	%			3.88	%
Return on average assets			1.37	%			1.53	%			1.55	%			1.38	%			1.31	%
Return on average common stockholders' equity			15.79	%			17.39	%			17.75	%			15.52	%			14.06	%
Efficiency ratio			39.21	%			40.51	%			40.75	%			40.02	%			41.56	%
Non-interest expense to average earning assets			1.50	%			1.56	%			1.56	%			1.63	%			1.73	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets (3)			9.83	%			9.90	%			9.72	%			9.59	%			9.60	%
Tier 1 capital to risk-weighted assets			9.84	%			9.91	%			9.73	%			9.60	%			10.58	%
Total capital to risk-weighted assets			11.98	%			12.12	%			11.95	%			11.89	%			12.05	%
Tier 1 capital to average assets			8.52	%			8.65	%			8.55	%			8.83	%			9.88	%
Tangible common equity to total tangible assets (1)			8.42	%			8.50	%			8.54	%			8.70	%			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.

(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, 2016				June 30, 2015				% Change
ASSETS
Cash and due from banks		$	54,985			$	49,731				11	%
Interest-bearing balances due from depository institutions			417,703				69,104				504	%
Federal funds sold			116,038				17,622				558	%
Cash and cash equivalents			588,726				136,457				331	%
Available for sale debt securities, at fair value			321,044				305,985				5	%
Held to maturity debt securities (fair value of $27,717 and $29,348 at
June 30, 2016 and 2015, respectively)			26,662				29,023				(8	)%
Restricted equity securities			5,671				4,954				14	%
Mortgage loans held for sale			7,933				11,722				(32	)%
Loans			4,539,338				3,863,734				17	%
Less allowance for loan losses			(46,998	)			(40,020	)			17	%
Loans, net			4,492,340				3,823,714				17	%
Premises and equipment, net			23,221				15,563				49	%
Goodwill and other identifiable intangible assets			15,154				18,060				(16	)%
Other assets			165,304				147,061				12	%
Total assets		$	5,646,055			$	4,492,539				26	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	1,185,668			$	926,577				28	%
Interest-bearing			3,479,127				2,802,555				24	%
Total deposits			4,664,795				3,729,132				25	%
Federal funds purchased			423,430				273,095				55	%
Other borrowings			55,450				21,016				164	%
Other liabilities			13,283				14,809				(10	)%
Total liabilities			5,156,958				4,038,052				28	%
Stockholders' equity:
Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001
(liquidation preference $1,000), net of discount; no shares authorized,
or outstanding at June 30, 2016, and 40,000 authorized, issued and
outstanding at June 30, 2015			-				39,958				(100	)%
Preferred stock, par value $0.001 per share; 1,000,000 shares authorized and
1,000,000 shares undesignated at June 30, 2016, and 960,000 shares
undesignated at June 30, 2015			-				-				-	%
Common stock, par value $0.001 per share; 100,000,000 shares authorized and
26,251,948 shares issued and outstanding at June 30, 2016 and 50,000,000
authorized and 25,826,198 shares issued and outstanding at June 30, 2015			26				26				-	%
Additional paid-in capital			214,525				209,074				3	%
Retained earnings			268,765				201,303				34	%
Accumulated other comprehensive income			5,404				3,749				44	%
Noncontrolling interest			377				377				-	%
Total stockholders' equity			489,097				454,487				8	%
Total liabilities and stockholders' equity		$	5,646,055			$	4,492,539				26	%

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015				2016				2015
Interest income:
Interest and fees on loans		$	49,210			$	42,105			$	96,457			$	80,751
Taxable securities			1,238				1,104				2,507				2,232
Nontaxable securities			834				874				1,692				1,734
Federal funds sold			210				24				283				101
Other interest and dividends			558				102				1,072				174
Total interest income			52,050				44,209				102,011				84,992
Interest expense:
Deposits			4,589				3,512				8,950				6,782
Borrowed funds			1,570				486				2,991				962
Total interest expense			6,159				3,998				11,941				7,744
Net interest income			45,891				40,211				90,070				77,248
Provision for loan losses			3,800				4,062				5,859				6,467
Net interest income after provision for loan losses			42,091				36,149				84,211				70,781
Non-interest income:
Service charges on deposit accounts			1,306				1,276				2,613				2,483
Mortgage banking			901				735				1,569				1,189
Securities gains			(3	)			-				(3	)			29
Increase in cash surrender value life insurance			655				660				1,279				1,308
Other operating income			988				759				1,823				1,355
Total non-interest income			3,847				3,430				7,281				6,364
Non-interest expense:
Salaries and employee benefits			10,733				10,426				21,800				19,434
Equipment and occupancy expense			2,023				1,634				4,008				3,295
Professional services			999				665				1,737				1,233
FDIC and other regulatory assessments			803				626				1,553				1,246
Other real estate owned expense			41				289				490				503
Merger expense			-				4				-				2,100
Other operating expense			4,905				4,494				9,205				8,935
Total non-interest expense			19,504				18,138				38,793				36,746
Income before income tax			26,434				21,441				52,699				40,399
Provision for income tax			7,558				6,972				13,867				12,875
Net income			18,876				14,469				38,832				27,524
Dividends on preferred stock			23				123				23				223
Net income available to common stockholders		$	18,853			$	14,346			$	38,809			$	27,301
Basic earnings per common share		$	0.72			$	0.56			$	1.48			$	1.07
Diluted earnings per common share		$	0.71			$	0.54			$	1.46			$	1.04

 

LOANS BY TYPE (UNAUDITED)
(In thousands)

 

		2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015
Commercial, financial and agricultural		$	1,895,870			$	1,799,132			$	1,760,479			$	1,683,819			$	1,642,182
Real estate - construction			251,144				254,254				243,267				232,895				219,607
Real estate - mortgage:
Owner-occupied commercial			1,117,514				1,055,852				1,014,669				978,721				930,719
1-4 family mortgage			494,733				458,032				444,134				417,012				392,245
Other mortgage			725,336				723,542				698,779				677,822				627,099
Subtotal: Real estate - mortgage			2,337,583				2,237,426				2,157,582				2,073,555				1,950,063
Consumer			54,741				50,088				55,047				53,973				51,882
Total loans		$	4,539,338			$	4,340,900			$	4,216,375			$	4,044,242			$	3,863,734

 

 

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)

(Dollars in thousands)

 

		2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015
Allowance for loan losses:
Beginning balance		$	45,145			$	43,419			$	42,574			$	40,020			$	37,356
Loans charged off:
Commercial financial and agricultural			1,412				50				2,186				388				1,151
Real estate - construction			355				381				161				31				93
Real estate - mortgage			191				-				463				-				208
Consumer			31				18				21				126				19
Total charge offs			1,989				449				2,831				545				1,471
Recoveries:
Commercial financial and agricultural			1				3				241				13				6
Real estate - construction			39				16				61				13				65
Real estate - mortgage			2				97				65				1				2
Consumer			-				-				1				-				-
Total recoveries			42				116				368				27				73
Net charge-offs			1,947				333				2,463				518				1,398
Provision for loan losses			3,800				2,059				3,308				3,072				4,062
Ending balance		$	46,998			$	45,145			$	43,419			$	42,574			$	40,020
Allowance for loan losses to total loans			1.04	%			1.04	%			1.03	%			1.05	%			1.04	%
Allowance for loan losses to total average
loans			1.06	%			1.06	%			1.05	%			1.08	%			1.07	%
Net charge-offs to total average loans			0.18	%			0.03	%			0.24	%			0.05	%			0.15	%
Provision for loan losses to total average
loans			0.34	%			0.20	%			0.32	%			0.31	%			0.44	%
Nonperforming assets:
Nonaccrual loans		$	4,730			$	6,133			$	7,767			$	9,850			$	8,194
Loans 90+ days past due and accruing			423				417				1				524				470
Other real estate owned and
repossessed assets			4,260				4,044				5,392				6,068				8,235
Total		$	9,413			$	10,594			$	13,160			$	16,442			$	16,899
Nonperforming loans to total loans			0.11	%			0.15	%			0.18	%			0.26	%			0.22	%
Nonperforming assets to total assets			0.17	%			0.20	%			0.26	%			0.34	%			0.38	%
Nonperforming assets to earning assets			0.17	%			0.20	%			0.26	%			0.35	%			0.38	%
Reserve for loan losses to nonaccrual loans			993.62	%			736.10	%			559.02	%			432.22	%			488.41	%
Restructured accruing loans		$	6,753			$	6,763			$	6,782			$	8,266			$	8,279
Restructured accruing loans to total loans			0.15	%			0.16	%			0.16	%			0.20	%			0.21	%

 

TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)

(In thousands)

 

		2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015
Beginning balance:		$	6,763			$	7,736			$	8,266			$	8,279			$	8,280
Net (paydowns) / advances			(10	)			(19	)			(83	)			(13	)			(1	)
Transfers to other real estate owned			-				(954	)			-				-				-
Charge-offs			-				-				(447	)			-				-
		$	6,753			$	6,763			$	7,736			$	8,266			$	8,279

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

		2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015
Interest income:
Interest and fees on loans		$	49,210			$	47,247			$	46,150			$	44,401			$	42,105
Taxable securities			1,238				1,269				1,058				1,041				1,104
Nontaxable securities			834				858				875				890				874
Federal funds sold			210				73				46				32				24
Other interest and dividends			558				514				322				168				102
Total interest income			52,050				49,961				48,451				46,532				44,209
Interest expense:
Deposits			4,611				4,361				4,294				3,818				3,512
Borrowed funds			1,548				1,421				996				852				486
Total interest expense			6,159				5,782				5,290				4,670				3,998
Net interest income			45,891				44,179				43,161				41,862				40,211
Provision for loan losses			3,800				2,059				3,308				3,072				4,062
Net interest income after provision for loan losses			42,091				42,120				39,853				38,790				36,149
Non-interest income:
Service charges on deposit accounts			1,306				1,307				1,326				1,279				1,276
Mortgage banking			901				668				620				873				735
Securities gains			(3	)			-				-				-				-
Increase in cash surrender value life insurance			655				624				630				683				660
Other operating income			988				836				899				903				759
Total non-interest income			3,847				3,435				3,475				3,738				3,430
Non-interest expense:
Salaries and employee benefits			10,733				11,067				8,884				10,595				10,426
Equipment and occupancy expense			2,023				1,985				1,519				1,575				1,634
Professional services			999				738				706				668				665
FDIC and other regulatory assessments			803				750				733				681				626
Other real estate owned expense			41				449				324				400				289
Other operating expense			4,905				4,301				6,836				4,329				4,498
Total non-interest expense			19,504				19,290				19,002				18,248				18,138
Income before income tax			26,434				26,265				24,326				24,280				21,441
Provision for income tax			7,558				6,309				4,576				8,014				6,972
Net income			18,876				19,956				19,750				16,266				14,469
Dividends on preferred stock			23				-				24				33				123
Net income available to common stockholders		$	18,853			$	19,956			$	19,726			$	16,233			$	14,346
Basic earnings per common share		$	0.72			$	0.76			$	0.76			$	0.63			$	0.56
Diluted earnings per common share		$	0.71			$	0.75			$	0.74			$	0.61			$	0.54

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

 

		2nd Quarter 2016								1st Quarter 2016								4th Quarter 2015								3rd Quarter 2015								2nd Quarter 2015
		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		$	4,406,107				4.47	%		$	4,230,057				4.48	%		$	4,113,044				4.44	%		$	3,915,778				4.48	%		$	3,731,699				4.51	%
Tax-exempt (2)			16,315				4.51				10,281				5.56				9,639				4.98				9,802				4.98				10,005				5.00
Total loans, net of
unearned income			4,422,422				4.47				4,240,338				4.48				4,122,683				4.44				3,925,580				4.48				3,741,704				4.51
Mortgage loans held for sale			7,323				3.62				6,084				4.63				4,362				4.27				7,714				4.32				12,718				2.21
Debt securities:
Taxable			208,113				2.38				221,722				2.29				193,982				2.16				189,941				2.17				193,848				2.29
Tax-exempt (2)			135,954				3.73				137,763				3.79				139,435				3.85				139,543				3.91				136,104				3.94
Total securities (3)			344,067				2.91				359,485				2.86				333,417				2.87				329,484				2.91				329,952				2.97
Federal funds sold			144,206				0.59				48,390				0.60				33,255				0.55				24,860				0.51				26,638				0.36
Restricted equity securities			5,659				3.62				4,962				3.81				4,954				4.24				4,954				4.16				4,953				3.16
Interest-bearing balances with banks			393,782				0.52				373,339				0.51				366,771				0.29				168,548				0.27				97,482				0.26
Total interest-earning assets			5,317,459				3.97	%			5,032,598				4.03	%			4,865,442				3.99	%			4,461,140				4.18	%			4,213,447				4.26	%
Non-interest-earning assets:
Cash and due from banks			65,318								61,578								62,037								63,259								58,347
Net premises and equipment			23,241								21,023								19,609								18,961								16,323
Allowance for loan losses, accrued
interest and other assets			127,640								126,491								124,241								127,778								129,233
Total assets		$	5,533,658							$	5,241,690							$	5,071,329							$	4,671,136							$	4,417,350
Interest-bearing liabilities:
Interest-bearing deposits:
Checking		$	691,776				0.36	%		$	665,039				0.35	%		$	611,521				0.30	%		$	593,550				0.28	%		$	579,650				0.27	%
Savings			41,546				0.30				41,055				0.29				39,590				0.29				37,281				0.30				37,697				0.28
Money market			2,105,420				0.52				1,979,727				0.51				2,048,453				0.49				1,817,997				0.47				1,653,708				0.45
Time deposits			498,151				1.01				507,605				1.00				503,217				1.00				485,137				0.99				480,140				1.05
Total interest-bearing deposits			3,336,893				0.56				3,193,426				0.55				3,202,781				0.54				2,933,965				0.52				2,751,195				0.51
Federal funds purchased			505,076				0.64				441,309				0.64				295,530				0.37				246,168				0.31				275,888				0.29
Other borrowings			55,521				5.20				55,630				5.19				55,805				5.11				50,509				5.18				21,238				5.40
Total interest-bearing liabilities			3,897,490				0.64	%			3,690,365				0.63	%			3,554,116				0.59	%			3,230,642				0.57	%			3,048,321				0.53	%
Non-interest-bearing liabilities:
Non-interest-bearing
demand			1,142,541								1,077,613								1,062,795								988,756								908,020
Other liabilities			13,301								12,194								13,469								23,738								11,793
Stockholders' equity			475,917								457,218								436,928								424,113								444,302
Unrealized gains on securities and
derivatives			4,409								4,300								4,021								3,911								4,914
Total liabilities and
stockholders' equity		$	5,533,658							$	5,241,690							$	5,071,329							$	4,671,136							$	4,417,350
Net interest spread							3.33	%							3.40	%							3.40	%							3.61	%							3.73	%
Net interest margin							3.51	%							3.57	%							3.56	%							3.77	%							3.88	%

 

(1) Average loans include loans on which the accrual of interest has been discontinued.