Exhibit 99.1

 

 

 

SERVISFIRST BANCSHARES, INC.

Announces Results For Fourth Quarter and Year Ended 2016

 

Birmingham, Ala. – (PR Newswire) – January 30, 2017 – ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the quarter and year ended December 31, 2016.

 

FOURTH Quarter AND YEAR ENDED 2016 Highlights:

§

2-for-1 stock split in December 2016

§

Diluted EPS increased 27% from $1.20 to $1.52 year over year

§

Diluted EPS increased 3% from $0.39 to $0.40 on a linked quarter basis

§

Loans and deposits increased 24% and 27%, respectively, for the fourth quarter on an annualized basis

§

Loans and deposits increased 16% and 28%, respectively, year over year

 

Tom Broughton, President and CEO, said, “We are pleased to report a year of record growth in net income, loans and deposits while maintaining pristine credit quality.” Bud Foshee, CFO, stated, “Our new regions of Nashville, Tennessee, Atlanta, Georgia, Charleston, South Carolina and Tampa Bay, Florida all made solid progress in 2016.”

 

FINANCIAL SUMMARY (UNAUDITED)

(in Thousands except share and per share amounts)

 

On December 20, 2016, the Company effected a two-for-one split of its common stock in the form of a stock dividend. All share and per share information in this release has been adjusted to give effect to this stock split.

 

		Period Ending December 31, 2016				Period Ending September 30, 2016				% Change From Period Ending September 30, 2016 to Period Ending December 31, 2016				Period Ending December 31, 2015				% Change From Period Ending December 31, 2015 to Period Ending December 31, 2016
QUARTERLY OPERATING RESULTS
Net Income		$	21,738			$	20,909				4	%		$	19,750				10	%
Net Income Available to Common Stockholders		$	21,714			$	20,909				4	%		$	19,726				10	%
Diluted Earnings Per Share		$	0.40			$	0.39				3	%		$	0.37				8	%
Return on Average Assets			1.39	%			1.39	%							1.55	%
Return on Average Common Stockholders' Equity			16.71	%			16.66	%							17.75	%
Average Diluted Shares Outstanding			53,961,160				53,879,328								53,190,478
YEAR-TO-DATE OPERATING RESULTS
Net Income		$	81,479											$	63,540				28	%
Net Income Available to Common Stockholders		$	81,432											$	63,260				29	%
Diluted Earnings Per Share		$	1.52											$	1.20				27	%
Return on Average Assets			1.42	%											1.38	%
Return on Average Common Stockholders' Equity			16.63	%											15.30	%
Average Diluted Shares Outstanding			53,608,372												52,885,108
Core Net Income*		$	81,479											$	65,307				25	%
Core Net Income Available to Common Stockholders*		$	81,432											$	65,027				25	%
Core Diluted Earnings Per Share*		$	1.52											$	1.23				24	%
Core Return on Average Assets*			1.42	%											1.42	%
Core Return on Average Common Stockholders' Equity*			16.63	%											15.73	%
BALANCE SHEET
Total Assets		$	6,370,448			$	6,002,621				6	%		$	5,095,509				25	%
Loans			4,911,770				4,631,821				6	%			4,216,375				16	%
Non-interest-bearing Demand Deposits			1,281,605				1,269,726				1	%			1,053,467				22	%
Total Deposits			5,420,311				5,081,128				7	%			4,223,888				28	%
Stockholders' Equity			522,889				507,866				3	%			449,147				16	%

 

* 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 $21.7 million for the quarter ended December 31, 2016, compared to net income of $19.8 million and net income available to common stockholders of $19.7 million for the same quarter in 2015. Basic and diluted earnings per common share were $0.41 and $0.40 respectively, for the fourth quarter of 2016, compared to $0.38 and $0.37, respectively, for the fourth quarter of 2015.

 

Return on average assets was 1.39% and return on average equity was 16.71% for the fourth quarter of 2016, compared to 1.55% and 17.75%, respectively, for the fourth quarter of 2015.

 

Net interest income was $49.1 million for the fourth quarter of 2016, compared to $47.9 million for the third quarter of 2016 and $43.2 million for the fourth quarter of 2015. The net interest margin in the fourth quarter of 2016 was 3.30%, a five basis point decrease from the third quarter of 2016 and 26 basis point decrease from the fourth quarter of 2015. The increase in net interest income on a linked quarter basis is attributable to a $126.1 million increase in average loans outstanding, a $39.3 million increase in average non-interest-bearing deposits and a $17.6 million increase in average stockholders’ equity, all resulting in a positive mix change in our balance sheet. The average yield on loans decreased by two basis points to 4.45% on a linked quarter basis.

 

Average loans for the fourth quarter of 2016 were $4.70 billion, an increase of $126.1 million, or 3%, over average loans of $4.58 billion for the third quarter of 2016, and an increase of $580.2 million, or 14%, over average loans of $4.12 billion for the fourth quarter of 2015.

 

Average total deposits for the fourth quarter of 2016 were $5.27 billion, an increase of $291.7 million, or 6%, over average total deposits of $4.98 billion for the third quarter of 2016, and an increase of $1.01 billion, or 24%, over average total deposits of $4.27 billion for the fourth quarter of 2015.

 

Non-performing assets to total assets were 0.34% for the fourth quarter of 2016, an increase of 18 basis points compared to 0.16% for the third quarter of 2016 and an increase of eight basis points compared to 0.26% for the fourth quarter of 2015. One loan with a balance of approximately $6.2 million, which was greater than 90 days past due and accruing as of December 31, 2016, has paid current as of the date of this earnings release. This loan represented 10 basis points of the non-performing assets ratio as of December 31, 2016. Net credit charge-offs to average loans were 0.09%, a four basis point decrease compared to 0.13% for the third quarter of 2016 and a 15 basis point decrease compared to 0.24% for the fourth quarter of 2015. We recorded a $4.1 million provision for loan losses in the fourth quarter of 2016 compared to $3.5 million in the third quarter of 2016 and $3.3 million in the fourth quarter of 2015. The allowance for loan loss as a percentage of total loans was 1.06% for December 31, 2016 compared to 1.05% at September 30, 2016 and 1.03% at December 31, 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 $2.5 million during the fourth quarter of 2016, or 71%, compared to the fourth quarter of 2015. Mortgage banking revenue increased by $424,000 in the fourth quarter of 2016, or 68%, compared to the fourth quarter of 2015, resulting from a 38% increase in the number of loans originated and improved operations, translating to increased net gains on sales. Credit card income increased $411,000 in the fourth quarter of 2016, or 64%, compared to the fourth quarter of 2015, resulting from an 89% increase in the volume of spending on ServisFirst Bank cards and a 29% increase in spending on our agent banks’ cards. We recognized a $1.3 million gain on the sale of fixed assets during the fourth quarter of 2016.

 

Non-interest expense for the fourth quarter of 2016 increased $3.0 million, or 16%, to $22.0 million from $19.0 million in the fourth quarter of 2015, and increased $1.8 million, or 9%, on a linked quarter basis. Salary and benefit expense for the fourth quarter of 2016 increased $2.3 million, or 26%, to $11.2 million from $8.9 million in the fourth quarter of 2015, and increased $200,000, or 2%, on a linked quarter basis. We reversed $2.0 million of accrued incentive pay during the fourth quarter of 2015. Excluding this reversal, salary and benefit expenses increased $300,000, or 3%, from the fourth quarter of 2015 to the fourth quarter of 2016. Equipment and Occupancy expense increased $358,000, or 24% to $1.9 million in the fourth quarter of 2016, from $1.5 million in the fourth 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 $352,000, or 50%, to $1.1 million in the fourth quarter of 2016, from $706,000 in the fourth quarter of 2015, primarily the result of legal fees accrued for pending litigation. FDIC assessments increased $339,000, or 46%, to $1.1 million in the fourth quarter of 2016, from $733,000 in the fourth quarter of 2015. This increase was the result of higher assessment rates under the new assessment calculation rule adopted by the FDIC effective at the beginning of the second quarter 2016, and growth in assets.

 

 

Income tax expense increased $2.7 million, or 59%, to $7.3 million in the fourth quarter of 2016, compared to $4.6 million in the fourth quarter of 2015, and increased $3.8 million, or 15%, to $29.3 million in the year ended December 31, 2016, compared to $25.5 million in the year ended December 31, 2015. In the second quarter of 2016 we adopted the amendments in Accounting Standards Update 2016-09 using the modified retrospective method. We have recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $54,000 in the fourth quarter of 2016 and $4.8 million for the year ended December 31, 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 and 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 annual comparative periods ended December 31, 2016 and 2015 included in this press release. Dollars are in thousands, except share and per share data.

 

 

		As of December 31, 2016				As Of and For the Year Ended December 31, 2015
Return on average assets - GAAP							1.38	%
Net income - GAAP						$	63,540
Adjustments:
Merger expenses - Metro Bancshares, Inc.							2,096
Initial reserve for unfunded loan commitments							500
Tax (benefit) of adjustments							(829	)
Core net income - non-GAAP*						$	65,307
Average assets						$	4,591,860
Core return on average assets - non-GAAP*							1.42	%
Return on average common stockholders' equity - GAAP							15.30	%
Net income available to common stockholders - GAAP						$	63,260
Adjustments:
Merger expenses - Metro Bancshares, Inc.							2,096
Initial reserve for unfunded loan commitments							500
Tax (benefit) of adjustments							(829	)
Core net income available to common stockholders - non-GAAP*						$	65,027
Average common stockholders' equity						$	413,445
Core return on average common stockholders' equity - non-GAAP*							15.73	%
Earnings per share - diluted - GAAP						$	1.20
Weighted average shares outstanding, diluted - GAAP							52,885,108
Core diluted earnings per share - non-GAAP*						$	1.23
Book value per share - GAAP		$	9.93			$	8.65
Total common stockholders' equity - GAAP			522,889				449,147
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			14,996				15,330
Tangible common stockholders' equity - non-GAAP		$	507,893			$	433,817
Tangible book value per share - non-GAAP		$	9.65			$	8.35
Stockholders' equity to total assets - GAAP			8.21	%			8.81	%
Total assets - GAAP		$	6,370,448			$	5,095,509
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			14,996				15,330
Total tangible assets - non-GAAP		$	6,355,452			$	5,080,179
Tangible common equity to total tangible assets - non-GAAP			7.99	%			8.54	%

 

* 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 on Non-GAAP Financial Measures” above.

 

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)

 

		4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	56,200			$	54,691			$	52,050			$	49,961			$	48,451
Interest expense			7,091				6,773				6,159				5,782				5,290
Net interest income			49,109				47,918				45,891				44,179				43,161
Provision for loan losses			4,075				3,464				3,800				2,059				3,308
Net interest income after provision for loan losses			45,034				44,454				42,091				42,120				39,853
Non-interest income			6,039				4,791				3,847				3,435				3,475
Non-interest expense			22,037				20,162				19,504				19,290				19,002
Income before income tax			29,036				29,083				26,434				26,265				24,326
Provision for income tax			7,298				8,174				7,558				6,309				4,576
Net income			21,738				20,909				18,876				19,956				19,750
Preferred stock dividends			24				-				23				-				24
Net income available to common stockholders		$	21,714			$	20,909			$	18,853			$	19,956			$	19,726
Earnings per share - basic (1)		$	0.41			$	0.40			$	0.36			$	0.38			$	0.38
Earnings per share - diluted (1)		$	0.40			$	0.39			$	0.36			$	0.38			$	0.37
Average diluted shares outstanding			53,961,160				53,879,328				53,452,568				53,133,620				53,190,478
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	6,370,448			$	6,002,621			$	5,646,055			$	5,378,599			$	5,095,509
Loans			4,949,282				4,657,284				4,539,338				4,340,900				4,216,375
Debt securities			447,427				377,270				347,706				362,106				370,364
Non-interest-bearing demand deposits			1,281,605				1,269,726				1,185,668				1,070,275				1,053,467
Total deposits			5,420,311				5,081,128				4,664,795				4,339,747				4,223,888
Borrowings			55,262				55,356				55,450				55,543				55,637
Stockholders' equity		$	522,889			$	507,866			$	489,097			$	470,940			$	449,147
Shares outstanding			52,636,896				52,610,896				52,503,896				52,365,396				51,945,396
Book value per share		$	9.93			$	9.65			$	9.32			$	8.99			$	8.65
Tangible book value per share (2)		$	9.65			$	9.37			$	9.03			$	8.70			$	8.35
SELECTED FINANCIAL RATIOS
Net interest margin			3.30	%			3.35	%			3.51	%			3.57	%			3.56	%
Return on average assets			1.39	%			1.39	%			1.37	%			1.53	%			1.55	%
Return on average common stockholders' equity			16.71	%			16.66	%			15.79	%			17.39	%			17.75	%
Efficiency ratio			39.96	%			38.25	%			39.21	%			40.51	%			40.75	%
Non-interest expense to average earning assets			1.46	%			1.39	%			1.50	%			1.56	%			1.56	%
CAPITAL RATIOS (3)
Common equity tier 1 capital to risk-weighted assets			9.78	%			9.91	%			9.83	%			9.90	%			9.72	%
Tier 1 capital to risk-weighted assets			9.78	%			9.92	%			9.84	%			9.91	%			9.73	%
Total capital to risk-weighted assets			11.84	%			12.03	%			11.98	%			12.12	%			11.95	%
Tier 1 capital to average assets			8.22	%			8.20	%			8.52	%			8.65	%			8.55	%
Tangible common equity to total tangible assets (2)			7.99	%			8.23	%			8.42	%			8.50	%			8.54	%

 

(1) Adjusted to reflect two-for-one stock split that occurred on December 20, 2016.

(2) See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a discussion of these Non-GAAP financial measures.

(3) Regulatory capital ratios for most recent period are preliminary.

 

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

 

		December 31, 2016				December 31, 2015				% Change
ASSETS
Cash and due from banks		$	56,855			$	46,614				22	%
Interest-bearing balances due from depository institutions			566,707				270,836				109	%
Federal funds sold			160,435				34,785				361	%
Cash and cash equivalents			783,997				352,235				123	%
Available for sale debt securities, at fair value			422,375				342,938				23	%
Held to maturity debt securities (fair value of $63,302 and $27,910 at
December 31, 2016 and 2015, respectively)			62,564				27,426				128	%
Restricted equity securities			1,024				4,954				(79	)%
Mortgage loans held for sale			4,675				8,249				(43	)%
Loans			4,911,770				4,216,375				16	%
Less allowance for loan losses			(51,893	)			(43,419	)			20	%
Loans, net			4,859,877				4,172,956				16	%
Premises and equipment, net			40,314				19,434				107	%
Goodwill and other identifiable intangible assets			14,996				15,330				(2	)%
Other assets			180,626				151,987				19	%
Total assets		$	6,370,448			$	5,095,509				25	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	1,281,605			$	1,053,467				22	%
Interest-bearing			4,138,706				3,170,421				31	%
Total deposits			5,420,311				4,223,888				28	%
Federal funds purchased			355,944				352,360				1	%
Other borrowings			55,262				55,637				(1	)%
Other liabilities			16,042				14,477				11	%
Total liabilities			5,847,559				4,646,362				26	%
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 December 31, 2016, and 40,000 shares authorized, no shares issued and outstanding at December 31, 2015			-				-				-	%
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at December 31, 2016, and 1,000,000 authorized and 960,000 shares undesignated at December 31, 2015			-				-				-	%
Common stock, par value $0.001 per share; 100,000,000 shares authorized;
52,636,896 shares issued and outstanding at December 31, 2016, and 51,945,396 shares issued and outstanding at December 31, 2015			53				26				104	%
Additional paid-in capital			215,932				211,546				2	%
Retained earnings			307,151				234,150				31	%
Accumulated other comprehensive (loss) income			(624	)			3,048				(120	)%
Noncontrolling interest			377				377				-	%
Total stockholders' equity			522,889				449,147				16	%
Total liabilities and stockholders' equity		$	6,370,448			$	5,095,509				25	%

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

		Three Months Ended December 31,								Year Ended December 31,
		2016				2015				2016				2015
Interest income:
Interest and fees on loans		$	52,533			$	46,150			$	200,463			$	171,302
Taxable securities			1,604				1,058				5,343				4,331
Nontaxable securities			785				875				3,300				3,499
Federal funds sold			377				46				1,007				127
Other interest and dividends			901				322				2,789				716
Total interest income			56,200				48,451				212,902				179,975
Interest expense:
Deposits			5,817				4,294				20,169				14,894
Borrowed funds			1,274				996				5,636				2,810
Total interest expense			7,091				5,290				25,805				17,704
Net interest income			49,109				43,161				187,097				162,271
Provision for loan losses			4,075				3,308				13,398				12,847
Net interest income after provision for loan losses			45,034				39,853				173,699				149,424
Non-interest income:
Service charges on deposit accounts			1,375				1,326				5,355				5,088
Mortgage banking			1,044				620				3,725				2,682
Securities gains			-				-				(3	)			29
Increase in cash surrender value life insurance			745				630				2,794				2,621
Other operating income			2,875				899				6,241				3,157
Total non-interest income			6,039				3,475				18,112				13,577
Non-interest expense:
Salaries and employee benefits			11,197				8,884				43,955				38,913
Equipment and occupancy expense			1,877				1,519				7,985				6,389
Professional services			1,058				706				3,977				2,607
FDIC and other regulatory assessments			1,072				733				3,400				2,660
Other real estate owned expense			91				324				759				1,227
Merger expense			-				-				-				2,100
Other operating expense			6,742				6,836				20,917				20,100
Total non-interest expense			22,037				19,002				80,993				73,996
Income before income tax			29,036				24,326				110,818				89,005
Provision for income tax			7,298				4,576				29,339				25,465
Net income			21,738				19,750				81,479				63,540
Dividends on preferred stock			24				24				47				280
Net income available to common stockholders		$	21,714			$	19,726			$	81,432			$	63,260
Basic earnings per common share (1)		$	0.41			$	0.38			$	1.55			$	1.23
Diluted earnings per common share (1)		$	0.40			$	0.37			$	1.52			$	1.20

 

(1) Adjusted to reflect two-for-one stock split that occurred on December 20, 2016.

 

LOANS BY TYPE (UNAUDITED)

(In thousands)

 

		4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015
Commercial, financial and agricultural		$	1,982,267			$	1,885,315			$	1,892,870			$	1,799,132			$	1,760,479
Real estate - construction			335,085				292,721				251,144				254,254				243,267
Real estate - mortgage:
Owner-occupied commercial			1,171,719				1,138,308				1,117,514				1,055,852				1,014,669
1-4 family mortgage			536,805				520,394				494,733				458,032				444,134
Other mortgage			830,683				740,127				725,336				723,542				698,779
Subtotal: Real estate - mortgage			2,539,207				2,398,829				2,337,583				2,237,426				2,157,582
Consumer			55,211				54,957				54,741				50,088				55,047
Total loans		$	4,911,770			$	4,631,822			$	4,536,338			$	4,340,900			$	4,216,375

 

 

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)

(Dollars in thousands)

 

		4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015
Allowance for loan losses:
Beginning balance		$	48,933			$	46,998			$	45,145			$	43,419			$	42,574
Loans charged off:
Commercial financial and agricultural			1,059				1,270				1,412				50				2,186
Real estate - construction			-				79				355				381				161
Real estate - mortgage			45				144				191				-				463
Consumer			82				81				31				18				21
Total charge offs			1,186				1,574				1,989				449				2,831
Recoveries:
Commercial financial and agricultural			10				35				1				3				241
Real estate - construction			12				9				39				16				61
Real estate - mortgage			46				1				2				97				65
Consumer			3				-				-				-				1
Total recoveries			71				45				42				116				368
Net charge-offs			1,115				1,529				1,947				333				2,463
Provision for loan losses			4,075				3,464				3,800				2,059				3,308
Ending balance		$	51,893			$	48,933			$	46,998			$	45,145			$	43,419
Allowance for loan losses to total loans			1.06	%			1.05	%			1.04	%			1.04	%			1.03	%
Allowance for loan losses to total average loans			1.10	%			1.07	%			1.06	%			1.06	%			1.05	%
Net charge-offs to total average loans			0.09	%			0.13	%			0.18	%			0.03	%			0.24	%
Provision for loan losses to total average loans			0.34	%			0.30	%			0.34	%			0.20	%			0.32	%
Nonperforming assets:
Nonaccrual loans		$	10,624			$	6,647			$	4,730			$	6,133			$	7,767
Loans 90+ days past due and accruing			6,263				43				423				417				1
Other real estate owned and
repossessed assets			4,988				3,035				4,260				4,044				5,392
Total		$	21,875			$	9,725			$	9,413			$	10,594			$	13,160
Nonperforming loans to total loans			0.34	%			0.14	%			0.11	%			0.15	%			0.18	%
Nonperforming assets to total assets			0.34	%			0.16	%			0.17	%			0.20	%			0.26	%
Nonperforming assets to earning assets			0.35	%			0.16	%			0.17	%			0.20	%			0.26	%
Reserve for loan losses to nonaccrual loans			488.45	%			736.17	%			993.62	%			736.10	%			559.02	%
Restructured accruing loans		$	558			$	6,738			$	6,753			$	6,763			$	6,782
Restructured accruing loans to total loans			0.01	%			0.14	%			0.15	%			0.16	%			0.16	%

 

TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)

(In thousands)

 

		4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015
Beginning balance:		$	6,738			$	6,753			$	6,763			$	7,736			$	8,266
Net (paydowns) / advances			554				(15	)			(10	)			(19	)			(83	)
Transfers to other real estate owned			-				-				-				(954	)			-
Charge-offs			-				-				-				-				(447	)
		$	7,292			$	6,738			$	6,753			$	6,763			$	7,736

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

		4th Quarter 2016				3rd Quarter 2016				2nd Quarter 2016				1st Quarter 2016				4th Quarter 2015
Interest income:
Interest and fees on loans		$	52,533			$	51,598			$	49,210			$	47,247			$	46,150
Taxable securities			1,604				1,107				1,238				1,269				1,058
Nontaxable securities			785				823				834				858				875
Federal funds sold			377				347				210				73				46
Other interest and dividends			901				816				558				514				322
Total interest income			56,200				54,691				52,050				49,961				48,451
Interest expense:
Deposits			5,817				5,358				4,611				4,361				4,294
Borrowed funds			1,274				1,415				1,548				1,421				996
Total interest expense			7,091				6,773				6,159				5,782				5,290
Net interest income			49,109				47,918				45,891				44,179				43,161
Provision for loan losses			4,075				3,464				3,800				2,059				3,308
Net interest income after provision for loan losses			45,034				44,454				42,091				42,120				39,853
Non-interest income:
Service charges on deposit accounts			1,375				1,367				1,306				1,307				1,326
Mortgage banking			1,044				1,112				901				668				620
Securities gains			-				-				(3	)			-				-
Increase in cash surrender value life insurance			745				770				655				624				630
Other operating income			2,875				1,542				988				836				899
Total non-interest income			6,039				4,791				3,847				3,435				3,475
Non-interest expense:
Salaries and employee benefits			11,197				10,958				10,733				11,067				8,884
Equipment and occupancy expense			1,877				2,100				2,023				1,985				1,519
Professional services			1,058				1,182				999				738				706
FDIC and other regulatory assessments			1,072				775				803				750				733
Other real estate owned expense			91				178				41				449				324
Other operating expense			6,742				4,969				4,905				4,301				6,836
Total non-interest expense			22,037				20,162				19,504				19,290				19,002
Income before income tax			29,036				29,083				26,434				26,265				24,326
Provision for income tax			7,298				8,174				7,558				6,309				4,576
Net income			21,738				20,909				18,876				19,956				19,750
Dividends on preferred stock			24				-				23				-				24
Net income available to common stockholders		$	21,714			$	20,909			$	18,853			$	19,956			$	19,726
Basic earnings per common share (1)		$	0.41			$	0.40			$	0.36			$	0.38			$	0.38
Diluted earnings per common share (1)		$	0.40			$	0.39			$	0.36			$	0.38			$	0.37

 

(1) Adjusted to reflect two-for-one stock split that occurred on December 20, 2016.

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

 

		4th Quarter 2016								3rd Quarter 2016								2nd Quarter 2016								1st Quarter 2016								4th 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		$	4,676,565				4.45	%		$	4,554,900				4.47	%		$	4,406,107				4.47	%		$	4,230,057				4.48	%		$	4,113,044				4.44	%
Tax-exempt (2)			26,344				4.74				21,939				4.37				16,315				4.54				10,281				5.59				9,639				4.94
Total loans, net of unearned income			4,702,909				4.45				4,576,839				4.47				4,422,422				4.47				4,240,338				4.48				4,122,683				4.44
Mortgage loans held for sale			6,271				3.36				6,724				3.79				7,323				3.62				6,084				4.63				4,362				4.27
Debt securities:
Taxable			295,608				2.17				224,825				2.19				208,113				2.38				221,722				2.29				193,982				2.18
Tax-exempt (2)			134,748				3.54				135,272				3.73				135,954				3.73				137,763				3.79				139,435				3.88
Total securities (3)			430,356				2.60				360,097				2.77				344,067				2.91				359,485				2.86				333,417				2.89
Federal funds sold			242,211				0.62				217,158				0.64				144,206				0.59				48,390				0.61				33,255				0.55
Restricted equity securities			3,042				8.24				5,658				4.01				5,659				3.62				4,962				3.81				4,954				4.24
Interest-bearing balances with banks			601,143				0.55				590,675				0.51				393,782				0.52				373,339				0.51				366,771				0.29
Total interest-earning assets			5,985,932				3.77	%			5,757,151				3.81	%			5,317,459				3.97	%			5,032,598				4.03	%			4,865,442				3.99	%
Non-interest-earning assets:
Cash and due from banks			55,593								58,809								65,318								61,578								62,037
Net premises and equipment			30,421								25,000								23,241								21,023								19,609
Allowance for loan losses, accrued interest and other assets			140,721								145,804								127,640								126,491								124,241
Total assets		$	6,212,667							$	5,986,764							$	5,533,658							$	5,241,690							$	5,071,329
Interest-bearing liabilities:
Interest-bearing deposits:
Checking		$	735,115				0.37	%		$	696,100				0.37	%		$	691,776				0.36	%		$	665,039				0.35	%		$	611,521				0.30	%
Savings			51,845				0.32				43,569				0.30				41,546				0.30				41,055				0.29				39,590				0.29
Money market			2,669,513				0.56				2,471,829				0.55				2,105,420				0.52				1,979,727				0.51				2,048,453				0.49
Time deposits			527,100				1.00				519,653				0.99				498,151				1.01				507,605				1.00				503,217				1.00
Total interest-bearing deposits			3,983,573				0.58				3,731,151				0.57				3,336,893				0.56				3,193,426				0.55				3,202,781				0.53
Federal funds purchased			353,029				0.63				436,415				0.64				505,076				0.64				441,309				0.64				295,530				0.37
Other borrowings			55,315				5.16				55,410				5.15				55,521				5.20				55,630				5.19				55,805				5.11
Total interest-bearing liabilities			4,391,917				0.64	%			4,222,976				0.64	%			3,897,490				0.64	%			3,690,365				0.63	%			3,554,116				0.59	%
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits			1,289,448								1,250,139								1,142,541								1,077,613								1,062,795
Other liabilities			14,399								14,376								13,301								12,194								13,469
Stockholders' equity			514,245								494,248								475,917								457,218								436,928
Unrealized gains on securities and derivatives			2,658								5,025								4,409								4,300								4,021
Total liabilities and stockholders' equity		$	6,212,667							$	5,986,764							$	5,533,658							$	5,241,690							$	5,071,329
Net interest spread							3.13	%							3.18	%							3.34	%							3.40	%							3.40	%
Net interest margin							3.30	%							3.35	%							3.51	%							3.57	%							3.56	%

 

(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.