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CST: 24/03/2019 00:29:38   

ServisFirst Bancshares, Inc. Announces Results for Fourth Quarter of 2018

60 Days ago

BIRMINGHAM, Ala., Jan. 22, 2019 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the quarter and year ended December 31, 2018.

Fourth Quarter 2018 Highlights:

  • Assets exceed $8 billion at year end 2018
  • Diluted EPS increased 47% from $1.72 to $2.53 year over year
  • Deposits increased 25% on an annualized basis for the quarter and 14% year over year
  • Increased dividend to $0.15 per share, a 36% increase
  • Loans increased 12% year over year

Tom Broughton, President and CEO, said, “Our strong organic growth continues for the 13th year, with assets now exceeding $8 billion.”  Bud Foshee, CFO, added, “Our strong organic growth continued in the fourth quarter as a result of our bank’s focus on developing new and existing relationships.”

FINANCIAL SUMMARY (UNAUDITED) 
(in Thousands except share and per share amounts) 
      Period Ending
December 31, 2018
  Period Ending
September 30, 2018
  % Change
From Period
Ending
September 30,
2018 to Period
Ending
December 31,
2018
  Period Ending
December 31, 2017
  % Change
From Period
Ending
December 31,
2017 to Period
Ending
December 31,
2018
QUARTERLY OPERATING RESULTS                                    
Net Income   $ 36,237     $ 34,560     5 %   $ 21,150     71 %
Net Income Available to Common Stockholders   $ 36,205     $ 34,560     5 %   $ 21,119     71 %
Diluted Earnings Per Share   $ 0.67     $ 0.64     5 %   $ 0.39     72 %
Return on Average Assets     1.85 %     1.87 %           1.20 %      
Return on Average Common Stockholders' Equity     21.13 %     20.42 %           13.97 %      
Average Diluted Shares Outstanding     54,109,450       54,191,222             54,161,788        
                                       
Net Income - adjusted for non-routine expenses *   $ 36,237                   $ 24,424     48 %
Net Income Available to Common Stockholders - adjusted for                                    
  non-routine expenses*   $ 36,205                   $ 24,393     48 %
Diluted Earnings Per Share - adjusted for non-routine expenses *   $ 0.67                   $ 0.45     49 %
Return on Average Assets - adjusted for non-routine expenses *     1.85 %                   1.39 %      
Return on Average Common Stockholders' Equity - adjusted for                                    
  non-routine expenses*     21.13 %                   16.13 %      
                                       
YEAR-TO-DATE OPERATING RESULTS                                    
Net Income   $ 136,940                   $ 93,092     47 %
Net Income Available to Common Stockholders   $ 136,877                   $ 93,030     47 %
Diluted Earnings Per Share   $ 2.53                   $ 1.72     47 %
Return on Average Assets     1.88 %                   1.43 %      
Return on Average Common Stockholders' Equity     20.95 %                   16.37 %      
Average Diluted Shares Outstanding     54,169,879                     54,123,957        
                                       
Net Income - adjusted for non-routine expenses *   $ 136,940                   $ 96,366     42 %
Net Income Available to Common Stockholders - adjusted for                                    
  non-routine expenses*   $ 136,877                   $ 96,304     42 %
Diluted Earnings Per Share - adjusted for non-routine expenses *   $ 2.53                   $ 1.78     42 %
Return on Average Assets - adjusted for non-routine expenses *     1.88 %                   1.48 %      
Return on Average Common Stockholders' Equity - adjusted for                                    
  non-routine expenses*     20.95 %                   16.95 %      
                                       
BALANCE SHEET                                    
Total Assets   $ 8,007,382     $ 7,517,833     7 %   $ 7,082,384     13 %
Loans     6,533,499       6,363,531     3 %     5,851,261     12 %
Non-interest-bearing Demand Deposits     1,557,341       1,504,447     4 %     1,440,326     8 %
Total Deposits     6,915,708       6,505,351     6 %     6,091,674     14 %
Stockholders' Equity     715,203       681,510     5 %     607,604     18 %
                                       
* 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 $36.2 million for the quarter ended December 31, 2018, compared to net income of $21.2 million and net income available to common stockholders of $21.1 million for the same quarter in 2017.  Basic and diluted earnings per common share were $0.68 and $0.67, respectively, for the fourth quarter of 2018, compared to $0.40 and $0.39, respectively, for the fourth quarter of 2017.

Return on average assets was 1.85% and return on average common stockholders’ equity was 21.13 for the fourth quarter of 2018, compared to 1.20% and 13.97%, respectively, for the fourth quarter of 2017.

Net interest income was $68.9 million for the fourth quarter of 2018, compared to $66.9 million for the third quarter of 2018 and $61.4 million for the fourth quarter of 2017.  The net interest margin in the fourth quarter of 2018 was 3.63% compared to 3.77% in the third quarter of 2018 and 3.66% in the fourth quarter of 2017.  Loans of $16.7 million were added to nonaccrual status during the fourth quarter of 2018 resulting in the reversal of $390,000 in interest income.  Linked quarter increases in average rates paid on deposits in excess of increased average yields on loans drove unfavorable mix change, while increases in average balances in loans, non-interest bearing deposits and equity drove favorable volume change and overall change.

Average loans for the fourth quarter of 2018 were $6.43 billion, an increase of $199.4 million, or 3%, over average loans of $6.23 billion for the third quarter of 2018, and an increase of $715.6 million, or 13%, over average loans of $5.72 billion for the fourth quarter of 2017.

Average total deposits for the fourth quarter of 2018 were $6.74 billion, an increase of $403.5 million, or 6%, over average total deposits of $6.33 billion for the third quarter of 2018, and an increase of $702.4 million, or 12%, over average total deposits of $6.03 billion for the fourth quarter of 2017.

Non-performing assets to total assets were 0.41% for the fourth quarter of 2018, an increase of 14 basis points compared to 0.27% for the third quarter of 2018 and an increase of 16 basis points compared to 0.25% for the fourth quarter of 2017.  $10.4 million of the previously mentioned $16.7 million of loans added to nonaccrual status were classified as accruing TDRs at September 30, 2018.  Net credit charge-offs to average loans were 0.30%, a five basis point increase compared to 0.25% for the third quarter of 2018 and a decrease of 26 basis points compared to 0.56% for the fourth quarter of 2017.  Year-to-date net credit charge-offs to average loans were 0.20%, a nine basis point decrease compared to 0.29% for the same period in 2017.  We recorded a $6.5 million provision for loan losses in the fourth quarter of 2018 compared to $6.6 million in the third quarter of 2018 and $9.1 million in the fourth quarter of 2017.  The allowance for loan loss as a percentage of total loans was 1.05% at December 31, 2018 compared to 1.05% at September 30, 2018 and 1.02% at December 31, 2017.  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 $712,000 during the fourth quarter of 2018, or 15%, compared to the fourth quarter of 2017.  Deposit service charges increased $215,000 in the fourth quarter of 2018, or 14%, compared to the fourth quarter of 2017.  The number of transaction deposit accounts increased approximately 8% from December 31, 2017 to December 31, 2018, and the amount of overdraft fees increased $175,000, or 24%, from the fourth quarter of 2017 to the fourth quarter of 2018.  Mortgage banking revenue decreased $206,000, or 23%, from the fourth quarter of 2017 to the fourth quarter of 2018.  Increases in market rates have slowed originations and refinancing activity during 2018.  Credit card revenue increased $695,000, or 54%, to $2.0 million during the fourth quarter of 2018, compared to $1.3 million during the fourth quarter of 2017, driven by increased numbers of accounts and increased purchases per account.

Non-interest expense for the fourth quarter of 2018 increased $2.0 million, or 9%, to $23.3 million from $21.3 million in the fourth quarter of 2017, and increased $149,000, or 1%, on a linked quarter basis.  Salary and benefit expense for the fourth quarter of 2018 increased $953,000, or 8%, to $12.4 million from $11.4 million in the fourth quarter of 2017, and decreased $685,000, or 5%, on a linked quarter basis.  The linked-quarter decrease resulted from a $815,000 reversal of incentive bonuses in December 2018 that were accrued during the first eleven months of 2018.  The number of FTE employees increased from 428 at December 31, 2017 to 468 at December 31, 2018, or 9%.  Equipment and occupancy expense increased $597,000, or 38%, to $2.2 million in the fourth quarter of 2018, from $1.6 million in the fourth quarter of 2017, and decreased $30,000 on a linked-quarter basis.  Other operating expense for the fourth quarter of 2018 increased $526,000, or 8%, to $6.8 million from $6.2 million in the fourth quarter of 2017, and increased $690,000, or 11%, on a linked-quarter basis.  During the fourth quarter of 2018 we recognized a $250,000 charge related to a wire fraud.  The efficiency ratio improved to 31.28% during the fourth quarter of 2018 from 32.05% during the fourth quarter of 2017 and from 31.95% on a linked quarter basis.

Income tax expense decreased $6.4 million, or 43%, to $8.4 million in the fourth quarter of 2018, compared to $14.9 million in the fourth quarter of 2017.  We recognized $3.1 million of additional tax expense during the fourth quarter of 2017 as a result of revaluing our net deferred tax assets as of December 31, 2017 in connection with the Tax Cuts and Jobs Act passed into law in December 2017.  Lower corporate income tax rates resulting from the passage of this law have resulted in lower effective tax rates starting in 2018.  We also recognized a reduction in provision for income taxes resulting from excess tax benefits from the exercise and vesting of stock options and restricted stock during the fourth quarters of 2018 and 2017 of $1.5 million and $351,000, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

We recorded $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets at December 31, 2017 due to lower corporate income tax rates provided by the Tax Cuts and Jobs Act passed into law in December 2017. During the fourth quarter of 2017 we also recorded expenses of $347,000 related to terminating the lease agreement on our previous headquarters building in Birmingham, Alabama and expenses of moving into our new headquarters building.  Financial measures included in this press release that are presented adjusted for these non-routine expenses are net income, net income available to common stockholders, diluted earnings per share, return on average assets and return on average common stockholders’ equity.  Each of these five financial measures excludes the impact of the non-routine expenses attributable to our net deferred tax asset revaluation, lease termination and moving expenses, and are all considered non-GAAP financial measures.  In addition to these financial measures adjusted for non-routine expenses, this press release contains certain non-GAAP financial measures, including tangible common stockholders’ equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015.  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 comparative periods presented in this press release.  Dollars are in thousands, except share and per share data.

                              Three Months ended
December 31, 2017
  Year ended
December 31, 2017
Return on average assets - GAAP                             1.20  %     1.43  %
Net income - GAAP                           $ 21,150     $ 93,092  
  Adjustments:                                    
  Revaluation of net deferred tax assets                             3,059       3,059  
  Lease termination and moving expenses                             347       347  
    Tax (benefit) of adjustments                             (132 )     (132 )
Net income adjusted for non-routine expenses, net of tax                                    
  benefit - non-GAAP                           $ 24,424     $ 96,366  
Average assets                           $ 6,988,731     $ 6,495,067  
Return on average assets adjusted for non-routine                                    
  expenses - non-GAAP                             1.39  %     1.48  %
                                       
Return on average common stockholders' equity - GAAP                             13.97  %     16.37  %
Net income available to common stockholders - GAAP                           $ 21,119     $ 93,030  
  Adjustments:                                    
  Revaluation of net deferred tax assets                             3,059       3,059  
  Lease termination and moving expenses                             347       347  
    Tax (benefit) of adjustments                             (132 )     (132 )
Net income available to common stockholders - adjusted for                                    
  non-routine expenses - non-GAAP                           $ 24,393     $ 96,304  
Average common stockholders' equity                           $ 599,947     $ 568,228  
Return on average common stockholders' equity - adjusted                                    
  for non-routine expenses - non-GAAP                             16.13  %     16.95  %
Diluted earnings per share                           $ 0.39     $ 1.72  
Weighted average shares outstanding, diluted - GAAP                             54,161,788       54,123,957  
Diluted earnings per share - adjusted for non-routine                                    
  expenses - non-GAAP                           $ 0.45     $ 1.78  
                                       
      At December 31,
2018
  At September 30,
2018
  At June 30,
2018
  At March 31,
2018
  At December 31,
2017
Book value per share - GAAP   $ 13.40     $ 12.81     $ 12.33     $ 11.84     $ 11.47  
Total common stockholders' equity - GAAP     715,203       681,510       655,114       629,297       607,604  
  Adjustments:                                    
  Adjusted for goodwill and core deposit intangible asset     14,449       14,517       14,584       14,652       14,719  
Tangible common stockholders' equity - non-GAAP   $ 700,754     $ 666,993     $ 640,530     $ 614,645     $ 592,885  
Tangible book value per share - non-GAAP   $ 13.13     $ 12.54     $ 12.05     $ 11.56     $ 11.19  
                                       
Stockholders' equity to total assets - GAAP     8.93 %     9.07 %     9.25 %     8.98  %     8.58  %
Total assets - GAAP   $ 8,007,382     $ 7,517,833     $ 7,084,562     $ 7,011,735     $ 7,082,384  
  Adjustments:                                    
  Adjusted for goodwill and core deposit intangible asset     14,449       14,517       14,584       14,652       14,719  
Total tangible assets - non-GAAP   $ 7,992,933     $ 7,503,316     $ 7,069,978     $ 6,997,083     $ 7,067,665  
Tangible common equity to total tangible assets - non-GAAP     8.77 %     8.89 %     9.06 %     8.78  %     8.39  %
                                         

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 www.servisfirstbancshares.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 www.servisfirstbancshares.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 2018   3rd Quarter 2018   2nd Quarter 2018   1st Quarter 2018   4th Quarter 2017
CONSOLIDATED STATEMENT OF INCOME                                        
Interest income   $ 90,164     $ 84,058     $ 78,396     $ 74,009     $ 72,060  
Interest expense     21,306       17,195       13,874       11,573       10,652  
Net interest income     68,858       66,863       64,522       62,436       61,408  
Provision for loan losses     6,518       6,624       4,121       4,139       9,055  
Net interest income after provision for loan losses     62,340       60,239       60,401       58,297       52,353  
Non-interest income     5,617       5,591       5,459       4,869       4,905  
Non-interest expense     23,299       23,150       24,010       23,512       21,255  
Income before income tax     44,658       42,680       41,850       39,654       36,003  
Provision for income tax     8,421       8,120       8,310       7,051       14,853  
Net income     36,237       34,560       33,540       32,603       21,150  
Preferred stock dividends     32       -       31       -       31  
Net income available to common stockholders   $ 36,205     $ 34,560     $ 33,509     $ 32,603     $ 21,119  
Earnings per share - basic   $ 0.68     $ 0.65     $ 0.63     $ 0.61     $ 0.40  
Earnings per share - diluted   $ 0.67     $ 0.64     $ 0.62     $ 0.60     $ 0.39  
Average diluted shares outstanding     54,109,450       54,191,222       54,196,023       54,183,400       54,161,788  
                                         
CONSOLIDATED BALANCE SHEET DATA                                        
Total assets   $ 8,007,382     $ 7,517,833     $ 7,084,562     $ 7,011,735     $ 7,082,384  
Loans     6,533,499       6,363,531       6,129,649       5,928,327       5,851,261  
Debt securities     590,184       578,271       583,799       560,885       538,330  
Non-interest-bearing demand deposits     1,557,341       1,504,447       1,481,447       1,407,592       1,440,326  
Total deposits     6,915,708       6,505,351       6,085,682       5,977,387       6,091,674  
Borrowings     64,666       64,657       64,648       64,739       64,832  
Stockholders' equity   $ 715,203     $ 681,510     $ 655,114     $ 629,297     $ 607,604  
                                         
Shares outstanding     53,375,195       53,197,807       53,150,733       53,147,169       52,992,586  
Book value per share   $ 13.40     $ 12.81     $ 12.33     $ 11.84     $ 11.47  
Tangible book value per share (1)   $ 13.13     $ 12.54     $ 12.05     $ 11.56     $ 11.19  
                                         
SELECTED FINANCIAL RATIOS                                        
Net interest margin     3.63 %     3.77 %     3.82 %     3.81 %     3.66 %
Return on average assets     1.85 %     1.87 %     1.91 %     1.91 %     1.20 %
Return on average common stockholders' equity     21.13 %     20.42 %     20.89 %     21.40 %     13.97 %
Efficiency ratio     31.28 %     31.95 %     34.31 %     34.93 %     32.05 %
Non-interest expense to average earning assets     1.23 %     1.30 %     1.42 %     1.43 %     1.26 %
                                         
CAPITAL RATIOS (2)                                        
Common equity tier 1 capital to risk-weighted assets     10.12 %     10.08 %     10.08 %     9.88 %     9.51 %
Tier 1 capital to risk-weighted assets     10.13 %     10.09 %     10.08 %     9.88 %     9.52 %
Total capital to risk-weighted assets     12.05 %     12.05 %     12.10 %     11.91 %     11.52 %
Tier 1 capital to average assets     9.07 %     9.28 %     9.21 %     8.95 %     8.51 %
Tangible common equity to total tangible assets (1)     8.77 %     8.89 %     9.06 %     8.78 %     8.39 %
                                         
(1) See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a discussion of these Non-GAAP financial measures.
(2) Regulatory capital ratios for most recent period are preliminary.
 


CONSOLIDATED BALANCE SHEETS (UNAUDITED)                
(Dollars in thousands)                
      December 31, 2018   December 31, 2017      
              % Change
ASSETS                
Cash and due from banks $ 206,434     $ 86,213     139   %
Interest-bearing balances due from depository institutions   251,616       151,849     66   %
Federal funds sold   223,845       239,524     (7 ) %
  Cash and cash equivalents   681,895       477,586     43   %
Available for sale debt securities, at fair value   590,184       538,080     10   %
Held to maturity debt securities (fair value of $250 at December 31, 2017)   -       250     NM    
Restricted equity securities   894       1,034     (14 ) %
Mortgage loans held for sale   120       4,459     (97 ) %
Loans   6,533,499       5,851,261     12   %
Less allowance for loan losses   (68,600 )     (59,406 )   15   %
  Loans, net   6,464,899       5,791,855     12   %
Premises and equipment, net   57,822       58,900     (2 ) %
Goodwill and other identifiable intangible assets   14,449       14,719     (2 ) %
Other assets   197,119       195,501     1   %
  Total assets $ 8,007,382     $ 7,082,384     13   %
LIABILITIES AND STOCKHOLDERS' EQUITY                
Liabilities:                
Deposits:                
  Non-interest-bearing $ 1,557,341     $ 1,440,326     8   %
  Interest-bearing   5,358,367       4,651,348     15   %
    Total deposits   6,915,708       6,091,674     14   %
Federal funds purchased   288,725       301,797     (4 ) %
Other borrowings   64,666       64,832     -   %
Other liabilities   23,080       16,477     40   %
  Total liabilities   7,292,179       6,474,780     13   %
Stockholders' equity:                
  Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at                
    December 31, 2018 and December 31, 2017   -       -     -   %
  Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,375,195 shares                
    issued and outstanding at December 31, 2018, and 52,992,586 shares issued and outstanding                
    at December 31, 2017   53       53     -   %
  Additional paid-in capital   218,521       217,693     -   %
  Retained earnings   500,868       389,554     29   %
  Accumulated other comprehensive loss   (4,741 )     (198 )   N/M    
    Total stockholders' equity attributable to ServisFirst Bancshares, Inc.   714,701       607,102     18   %
  Noncontrolling interest   502       502     -   %
    Total stockholders' equity   715,203       607,604     18   %
  Total liabilities and stockholders' equity $ 8,007,382     $ 7,082,384     13   %
                     


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                    
(In thousands except per share data)                          
      Three Months Ended December 31,   Year Ended December 31,  
      2018   2017   2018   2017  
Interest income:                          
  Interest and fees on loans   $ 83,085   $ 67,357   $ 305,370   $ 246,682  
  Taxable securities     3,506     2,468     12,654     9,117  
  Nontaxable securities     544     702     2,406     2,948  
  Federal funds sold     966     508     3,103     1,693  
  Other interest and dividends     2,063     1,025     3,094     2,316  
    Total interest income     90,164     72,060     326,627     262,756  
Interest expense:                          
  Deposits     18,957     8,954     55,502     28,831  
  Borrowed funds     2,349     1,698     8,446     6,502  
    Total interest expense     21,306     10,652     63,948     35,333  
    Net interest income     68,858     61,408     262,679     227,423  
Provision for loan losses     6,518     9,055     21,402     23,225  
    Net interest income after provision for loan losses     62,340     52,353     241,277     204,198  
Non-interest income:                          
  Service charges on deposit accounts     1,714     1,499     6,547     5,702  
  Mortgage banking     688     894     2,784     3,835  
  Credit card income     1,993     1,298     7,165     4,815  
  Securities gains     -     -     190     -  
  Increase in cash surrender value life insurance     780     797     3,130     3,131  
  Other operating income     442     417     1,720     1,563  
    Total non-interest income     5,617     4,905     21,536     19,046  
Non-interest expense:                          
  Salaries and employee benefits     12,385     11,432     51,849     47,604  
  Equipment and occupancy expense     2,163     1,566     8,423     8,018  
  Professional services     1,064     833     3,646     3,217  
  FDIC and other regulatory assessments     902     1,030     3,869     3,918  
  Other real estate owned expense     25     160     790     323  
  Other operating expense     6,760     6,234     25,394     22,814  
    Total non-interest expense     23,299     21,255     93,971     85,894  
    Income before income tax     44,658     36,003     168,842     137,350  
Provision for income tax     8,421     14,853     31,902     44,258  
     Net income     36,237     21,150     136,940     93,092  
  Dividends on preferred stock     32     31     63     62  
    Net income available to common stockholders   $ 36,205   $ 21,119   $ 136,877   $ 93,030  
Basic earnings per common share   $ 0.68   $ 0.40   $ 2.57   $ 1.76  
Diluted earnings per common share   $ 0.67   $ 0.39   $ 2.53   $ 1.72  


LOANS BY TYPE (UNAUDITED)                              
(In thousands)                              
                                 
      4th Quarter 2018   3rd Quarter 2018   2nd Quarter 2018   1st Quarter 2018   4th Quarter 2017
Commercial, financial and agricultural   $ 2,513,225   $ 2,478,788   $ 2,345,879   $ 2,329,904   $ 2,279,366
Real estate - construction     533,192     543,611     522,788     506,050     580,874
Real estate - mortgage:                              
  Owner-occupied commercial     1,463,887     1,430,111     1,383,882     1,349,679     1,328,666
  1-4 family mortgage     621,634     610,460     584,133     581,498     603,063
  Other mortgage     1,337,068     1,236,954     1,225,906     1,099,482     997,079
Subtotal: Real estate - mortgage     3,422,589     3,277,525     3,193,921     3,030,659     2,928,808
Consumer     64,493     63,607     67,061     61,714     62,213
Total loans   $ 6,533,499   $ 6,363,531   $ 6,129,649   $ 5,928,327   $ 5,851,261


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)                                  
(Dollars in thousands)                                  
      4th Quarter 2018   3rd Quarter 2018   2nd Quarter 2018   1st Quarter 2018   4th Quarter 2017
Allowance for loan losses:                                      
Beginning balance $ 66,879       $ 64,239        $ 62,050        $ 59,406        $ 58,459    
Loans charged off:                                      
  Commercial, financial and agricultural   4,685         3,923         1,732         1,088         7,064    
  Real estate - construction   -         -         -         -         -    
  Real estate - mortgage   173         48         440         381         1,134    
  Consumer   72         76         47         88         137    
    Total charge offs   4,930         4,047         2,219         1,557         8,335    
Recoveries:                                      
  Commercial, financial and agricultural   120         52         173         4         64    
  Real estate - construction   4         4         97         7         126    
  Real estate - mortgage   1         1         2         42         26    
  Consumer   8         6         15         9         11    
    Total recoveries   133         63         287         62         227    
  Net charge-offs   4,797         3,984         1,932         1,495         8,108    
  Provision for loan losses   6,518         6,624         4,121         4,139         9,055    
  Ending balance $ 68,600       $ 66,879       $ 64,239       $ 62,050       $ 59,406    
                                           
  Allowance for loan losses to total loans   1.05   %     1.05    %     1.05    %     1.05    %     1.02   %
  Allowance for loan losses to total average                                      
    loans   1.07   %     1.07    %     1.07    %     1.05    %     1.04   %
  Net charge-offs to total average loans   0.30   %     0.25    %     0.13    %     0.10    %     0.56   %
  Provision for loan losses to total average                                      
    loans   0.40   %     0.42    %     0.28    %     0.29    %     0.63   %
  Nonperforming assets:                                      
    Nonaccrual loans $ 21,926       $ 9,153        $ 8,022        $ 9,271        $ 10,765    
    Loans 90+ days past due and accruing   5,844         5,714         6,081         678         60    
    Other real estate owned and                                      
      repossessed assets   5,169         5,714         5,937         5,748         6,701    
  Total $ 32,939       $ 20,581       $ 20,040       $ 15,697       $ 17,526    
                                           
  Nonperforming loans to total loans   0.43   %     0.23    %     0.23    %     0.17    %     0.19   %
  Nonperforming assets to total assets   0.41   %     0.27    %     0.28    %     0.22    %     0.25   %
  Nonperforming assets to earning assets   0.43   %     0.28    %     0.29    %     0.23    %     0.25   %
  Reserve for loan losses to nonaccrual loans   312.87   %     730.68    %     800.79    %     669.29    %     551.84   %
                                           
  Restructured accruing loans $ 3,073       $ 15,495        $ 15,572        $ 15,838        $ 16,919    
                                           
  Restructured accruing loans to total loans   0.04   %     0.24    %     0.25    %     0.27    %     0.29   %
                                           
  TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)                          
  (In thousands)                                
      4th Quarter 2018   3rd Quarter 2018   2nd Quarter 2018   1st Quarter 2018   4th Quarter 2017
  Beginning balance: $ 16,584       $ 17,257       $ 18,792       $ 20,572       $ 16,354    
    Additions   -         100         -         -         4,233    
    Net (paydowns) / advances   (11 )       (177 )       (267 )       (1,080 )       (15 )  
    Charge-offs   (2,018 )       (596 )       (1,268 )       (700 )       -    
      $ 14,555       $ 16,584       $ 17,257       $ 18,792       $ 20,572    


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)                    
(In thousands except per share data)                    
        4th Quarter 2018   3rd Quarter 2018   2nd Quarter 2018   1st Quarter 2018   4th Quarter 2017  
Interest income:                                
  Interest and fees on loans   $ 83,085   $ 78,991   $ 73,620   $ 69,674   $ 67,357  
  Taxable securities     3,506     3,276     3,127     2,745     2,468  
  Nontaxable securities     544     583     623     656     702  
  Federal funds sold     966     892     694     551     508  
  Other interest and dividends     2,063     316     332     383     1,025  
    Total interest income     90,164     84,058     78,396     74,009     72,060  
Interest expense:                                
  Deposits     18,957     15,210     11,714     9,621     8,954  
  Borrowed funds     2,349     1,985     2,160     1,952     1,698  
    Total interest expense     21,306     17,195     13,874     11,573     10,652  
    Net interest income     68,858     66,863     64,522     62,436     61,408  
Provision for loan losses     6,518     6,624     4,121     4,139     9,055  
    Net interest income after provision for loan losses     62,340     60,239     60,401     58,297     52,353  
Non-interest income:                                
  Service charges on deposit accounts     1,714     1,595     1,653     1,585     1,499  
  Mortgage banking     688     789     789     518     894  
  Credit card income     1,993     1,838     1,756     1,578     1,298  
  Securities gains     -     186     -     4     -  
  Increase in cash surrender value life insurance     780     787     786     777     797  
  Other operating income     442     396     475     407     417  
    Total non-interest income     5,617     5,591     5,459     4,869     4,905  
Non-interest expense:                                
  Salaries and employee benefits     12,385     13,070     13,098     13,296     11,432  
  Equipment and occupancy expense     2,163     2,193     2,113     1,954     1,566  
  Professional services     1,064     853     924     805     833  
  FDIC and other regulatory assessments     902     675     1,159     1,133     1,030  
  Other real estate owned expense     25     289     160     316     160  
  Other operating expense     6,760     6,070     6,556     6,008     6,234  
    Total non-interest expense     23,299     23,150     24,010     23,512     21,255  
    Income before income tax     44,658     42,680     41,850     39,654     36,003  
Provision for income tax     8,421     8,120     8,310     7,051     14,853  
    Net income     36,237     34,560     33,540     32,603     21,150  
  Dividends on preferred stock     32     -     31     -     31  
    Net income available to common stockholders   $ 36,205   $ 34,560   $ 33,509   $ 32,603   $ 21,119  
Basic earnings per common share   $ 0.68   $ 0.65   $ 0.63   $ 0.61   $ 0.40  
Diluted earnings per common share   $ 0.67   $ 0.64   $ 0.62   $ 0.60   $ 0.39  


AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
                                                                     
            4th Quarter 2018   3rd Quarter 2018   2nd Quarter 2018   1st Quarter 2018   4th Quarter 2017
            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   $ 6,403,139     5.13 %   $ 6,203,372     5.03 %   $ 5,958,377     4.94 %   $ 5,847,443     4.81 %   $ 5,680,227   4.68 %
    Tax-exempt (2)     29,656     3.26       30,005     3.94       30,246     3.94       36,357     4.06       36,992   4.95  
      Total loans, net of                                                            
        unearned income     6,432,795     5.12       6,233,377     5.03       5,988,623     4.93       5,883,800     4.80       5,717,219   4.68  
  Mortgage loans held for sale     3,364     3.30       3,538     4.15       3,770     4.26       3,698     4.50       6,199   3.52  
  Debt securities:                                                            
    Taxable     498,138     2.82       482,571     2.72       475,777     2.63       435,747     2.52       406,488   2.43  
    Tax-exempt (2)     98,027     2.34       105,592     2.45       112,145     2.60       120,270     2.56       128,201   3.27  
      Total securities (3)     596,165     2.74       588,163     2.67       587,922     2.62       556,017     2.53       534,689   2.63  
  Federal funds sold     156,884     2.44       163,453     2.17       141,915     1.96       131,472     1.70       143,905   1.40  
  Restricted equity securities     879     1.35       993     2.80       1,022     1.18       1,030     1.57       1,030   1.93  
  Interest-bearing balances with banks     334,065     2.45       61,867     1.98       73,714     1.79       96,012     1.60       310,289   1.31  
  Total interest-earning assets   $ 7,524,152     4.76 %   $ 7,051,391     4.74 %   $ 6,796,966     4.64 %   $ 6,672,029     4.51 %   $ 6,713,331   4.29 %
Non-interest-earning assets:                                                            
  Cash and due from banks     74,272             76,800             68,190             68,309             68,444      
  Net premises and equipment     58,521             58,873             59,262             59,709             57,320      
  Allowance for loan losses, accrued                                                            
    interest and other assets     128,054             127,850             129,585             140,558             149,636      
      Total assets   $ 7,784,999           $ 7,314,914           $ 7,054,003           $ 6,940,605           $ 6,988,731      
                                                                     
Interest-bearing liabilities:                                                            
  Interest-bearing deposits:                                                            
  Checking   $ 908,416     0.74 %   $ 819,807     0.67 %   $ 827,540     0.56 %   $ 899,311     0.52 %   $ 899,334   0.46 %
  Savings     52,443     0.54       53,835     0.52       54,842     0.34       53,269     0.31       49,697   0.31  
  Money market     3,537,522     1.56       3,305,293     1.33       3,089,595     1.10       3,027,176     0.90       3,065,298   0.80  
  Time deposits     687,361     1.92       643,260     1.65       596,450     1.36       576,857     1.21       576,010   1.16  
    Total interest-bearing deposits     5,185,742     1.45       4,822,195     1.25       4,568,427     1.03       4,556,613     0.86       4,590,339   0.77  
  Federal funds purchased     263,125     2.36       229,016     2.09       295,309     1.87       297,051     1.60       271,248   1.37  
  Other borrowings     64,665     4.79       64,652     4.79       64,699     4.85       64,805     4.89       60,829   4.98  
  Total interest-bearing liabilities   $ 5,513,532     1.53 %   $ 5,115,863     1.33 %   $ 4,928,435     1.13 %   $ 4,918,469     0.95 %   $ 4,922,416   0.86 %
Non-interest-bearing liabilities:                                                            
  Non-interest-bearing                                                            
    demand     1,551,366             1,511,410             1,469,194             1,389,217             1,444,338      
  Other liabilities     40,185             16,333             13,079             15,007             22,029      
  Stockholders' equity     689,525             678,839             650,641             621,004             599,754      
  Accumulated other comprehensive                                                            
    (loss) income     (9,609 )           (7,531 )           (7,346 )           (3,092 )           194      
      Total liabilities and                                                            
        stockholders' equity   $ 7,784,999           $ 7,314,914           $ 7,054,003           $ 6,940,605           $ 6,988,731      
Net interest spread         3.23 %         3.41 %         3.51 %         3.56 %         3.43 %
Net interest margin         3.63 %         3.77 %         3.82 %         3.81 %         3.66 %
                                                                     
(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 21% for the quarters in 2018 and 35% for the quarter in 2017.
(3 ) Unrealized (losses) gains on available-for-sale debt securities are excluded from the yield calculation.

 

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