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ServisFirst Bancshares, Inc.$42.98$.02.05%

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 ServisFirst Bancshares, Inc. Announces Results for Fourth Quarter and Year Ended 2016
   Monday, January 30, 2017 4:01:00 PM ET

ServisFirst Bancshares, Inc. (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            Period Ending            % Change      Period Ending            % Change
                                                     December 31,             September 30,            From Period   December 31,             From Period
                                                     2016                     2016                     Ending        2015                     Ending
                                                                                                       September                              December 31,
                                                                                                       30, 2016 to                            2015 to Period
                                                                                                       Period Ending                          Ending
                                                                                                       December 31,                           December 31,
                                                                                                       2016                                   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   3rd Quarter   2nd Quarter   1st Quarter   4th Quarter
                                                                  2016          2016          2016          2016          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.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/servisfirst-bancshares-inc-announces-results-for-fourth-quarter-and-year-ended-2016-300398732.html

SOURCE ServisFirst Bancshares, Inc.

https://rt.prnewswire.com/rt.gif?NewsItemId=CL99569&Transmission_Id=201701301601PR_NEWS_USPR_____CL99569&DateId=20170130



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