Exhibit 99.1

 

 

 

SERVISFIRST BANCSHARES, INC.

Announces Results For First Quarter 2016

 

Birmingham, Ala. – (PR Newswire) – April 18, 2016 – ServisFirst Bancshares, Inc. (“ServisFirst”) (NASDAQ: SFBS), the holding company for ServisFirst Bank, today announced earnings and operating results for the quarter ended March 31, 2016.

 

First Quarter 2016 Highlights:

 

§

Net income of $17.6 million, a 35% increase year over year

§

Diluted EPS of $0.66, a 35% increase year over year

§

Core diluted EPS increased 18% year over year

§

Loans and deposits increased 20% and 19%, respectively, year over year

§

Production team increased by eight to 122, five in our newest region, the Tampa Bay area of Florida

 

Tom Broughton, President and CEO, said, “We are pleased with loan and deposit growth across all regions to start the year off, and believe our new main offices in Mobile, Charleston and Nashville will only bolster our growth opportunities through improved visibility in those markets.” Bud Foshee, CFO, stated, “We got off to a good start for 2016 and will continue to focus our efforts on improving net interest margins and maintaining quality customer service.”

 

FINANCIAL SUMMARY

(in Thousands except share and per share amounts)

 

		Period Ending March 31, 2016				Period Ending December 31, 2015				% Change From Period Ending December 31, 2015 to Period Ending March 31, 2016				Period Ending March 31, 2015				% Change From Period Ending March 31, 2015 to Period Ending March 31, 2016
QUARTERLY OPERATING RESULTS
Net Income		$	17,649			$	19,750				(11	)%		$	13,055				35	%
Net Income Available to Common Stockholders		$	17,649			$	19,726				(11	)%		$	12,955				36	%
Diluted Earnings Per Share		$	0.66			$	0.74				(11	)%		$	0.49				35	%
Return on Average Assets			1.35	%			1.55	%							1.26	%
Return on Average Common Stockholders' Equity			15.38	%			17.75	%							13.55	%
Average Diluted Shares Outstanding			26,566,810				26,595,239								26,237,980
Core Net Income*		$	17,649			$	19,750				(11	)%		$	14,822				19	%
Core Net Income Available to Common Stockholders*		$	17,649			$	19,726				(11	)%		$	14,722				20	%
Core Diluted Earnings Per Share*		$	0.66			$	0.74				(11	)%		$	0.56				18	%
Core Return on Average Assets*			1.35	%			1.55	%							1.43	%
Core Return on Average Common Stockholders' Equity*			15.38	%			17.75	%							15.39	%
BALANCE SHEET
Total Assets		$	5,378,599			$	5,095,509				6	%		$	4,393,342				22	%
Loans			4,340,900				4,216,375				3	%			3,607,852				20	%
Non-interest-bearing Demand Deposits			1,070,275				1,053,467				2	%			866,743				23	%
Total Deposits			4,339,747				4,223,888				3	%			3,638,763				19	%
Stockholders' Equity			470,940				449,147				5	%			441,458				7	%

 

* 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 $17.6 million for the quarter ended March 31, 2016, compared to net income of $13.1 million and net income available to common stockholders of $13.0 million for the same quarter in 2015. Net income for the quarter ended March 31, 2016 benefitted from growth in average loans of $117.7 million from the previous quarter and lower charge offs of loans. Basic and diluted earnings per common share were $0.68 and $0.66, respectively, for the first quarter of 2016, compared to $0.51 and $0.49, respectively, for the first quarter of 2015.

 

Return on average assets was 1.35% and return on average common stockholders’ equity was 15.38% for the first quarter of 2016, compared to 1.26% and 13.55%, respectively, for the first quarter of 2015.

 

Net interest income was $44.2 million for the first quarter of 2016, compared to $43.2 million for the fourth quarter of 2015 and $37.0 million for the first quarter of 2015. The net interest margin in the first quarter of 2016 was 3.57%, a one basis point increase from the fourth quarter of 2015 and a 23 basis point decrease from the first quarter of 2015. Average loans outstanding increased $117.7 million on a linked quarter basis, and average stockholders’ equity increased $20.6 million, all resulting in a positive mix variance in net interest margin. The average yield on loans increased four basis points to 4.48% on a linked quarter basis, resulting in a positive rate variance in net interest margin. However, this was offset by a two basis point increase in the average rate paid on interest-bearing deposits. Excess liquidity in the form of balances kept on deposit at the Federal Reserve and funds sold to our correspondent banks remained higher than normal for the first quarter, resulting in a negative mix variance in net interest margin.

 

Average loans for the first quarter of 2016 were $4.24 billion, an increase of $117.7 million, or 3%, over average loans of $4.12 billion for the fourth quarter of 2015, and an increase of $737.8 million, or 21%, over average loans of $3.50 billion for the first quarter of 2015. All of our regions, except one, experienced growth in loans during the first quarter.

 

Average total deposits for the first quarter of 2016 were flat at $4.27 billion compared to average total deposits of $4.27 billion for the fourth quarter of 2015, and increased $0.8 billion, or 23%, over average total deposits of $3.47 billion for the first quarter of 2015. All of our regions, except one, experienced growth in deposits during the first quarter on an ending basis.

 

Non-performing assets to total assets were 0.20%, a decrease of six basis points compared to 0.26% for the fourth quarter of 2015 and a decrease of 20 basis points compared to 0.40% for the first quarter of 2015. Net credit charge-offs to average loans were 0.03%, a 21 basis point decrease compared to 0.24% for the fourth quarter of 2015 and a five basis point decrease compared to 0.08% for the first quarter of 2015. We recorded a $2.1 million provision for loan losses in the first quarter of 2016, a decrease of $1.2 million compared to $3.3 million in the fourth quarter of 2015 and a decrease of $0.3 million compared to $2.4 million in the first quarter of 2015. The loan loss reserve as a percentage of total loans increased one basis point to 1.04% at March 31, 2016, compared to 1.03% at December 31, 2015 and was flat compared to 1.04% at March 31, 2015. In management’s opinion, the reserve is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its reserve for loan losses.

 

Non-interest income increased $649,000 in the first quarter of 2016, or 21%, compared to the first quarter of 2015. Deposit service charges increased $100,000 in the first quarter of 2016, or 8%, compared to the first quarter of 2015. Mortgage banking income increased $214,000 in the first quarter of 2016, or 47%, compared to the first quarter of 2015 as a result of increased production and improved pricing margins. Credit card income increased $371,000 in the first quarter of 2016, or 78%, compared to the first quarter of 2015, primarily as a result of increases in volume of activity on existing accounts. The number of credit card accounts also increased by 411, or 8.4%, during this time.

 

Non-interest expense for the first quarter of 2016 increased $830,000, or 4%, to $19.6 million from $18.8 million in the first quarter of 2015. Excluding merger expenses related to our acquisition of Metro Bancshares, Inc. during the first quarter of 2015, non-interest expense increased $2.9 million, or 18%, from the first quarter of 2015 to the first quarter of 2016. Salary and benefit expense for the first quarter of 2016 increased $2.1 million, or 23%, to $11.1 million from $9.0 million in the first quarter of 2015, and increased $2.2 million, or 25%, on a linked quarter basis. Eight new sales officers were added during the first quarter of 2016, with five of these comprising our team in the Tampa Bay area of Florida, our newest region. Occupancy expense increased $324,000, or 20%, from the first quarter of 2015 to the first quarter of 2016, and increased $466,000, or 31%, on a linked quarter basis. New main offices were opened in our Mobile, Alabama, Charleston, South Carolina and Nashville, Tennessee regions during the first quarter of 2016. Also, we accelerated depreciation of leasehold improvements for our headquarters building in Birmingham, Alabama to coincide with the date we move into our new headquarters building, which we anticipate will be in 2017. Other operating expense for the first quarter of 2016 was relatively flat at $4.6 million compared to the first quarter of 2015. Excluding $500,000 in expense for the initial funding of reserves for unfunded loan commitments as of March 31, 2015, consistent with guidance provided in the Federal Reserve Bank’s Inter-agency Policy Statement SR 06-17, other operating expense increased by 12% from the first quarter of 2015 to the first quarter of 2016. Increases in service charges from the Federal Reserve of $126,000 from the first quarter of 2015 to the first quarter of 2016 are the result of continued increases in clearing services for our correspondent bank clients.

 

 

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

 

As discussed in more detail in the section titled “Detailed Financials,” 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 as of March 31, 2015, consistent with guidance provided in the Federal Reserve Bank’s Inter-agency Policy Statement SR 06-17. The non-GAAP financial measures included in this press release of our results for the first quarter of 2015 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 merger expenses and the initial funding of a reserve for unfunded loan commitments. None of the other periods included in this press release are affected by such non-routine expenses.

 

“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 on 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.

 

We present tangible book value per share and the ratio of tangible common equity to total tangible assets in our Selected Financial Highlights table. Our acquisition of Metro resulted in goodwill and other identifiable intangible assets, which are subtracted from equity and assets in the computation of tangible book value per share and tangible common equity to total tangible assets.

 

We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures for the first quarter of 2015. Dollars are in thousands, except share and per share data.

 

 

		As Of and For the Period Ended March 31, 2016				As Of and For the Period Ended March 31, 2015
Provision for income taxes - GAAP						$	5,903
Adjustments:
Adjustment for non-routine expense							829
Core provision for income taxes						$	6,732
Return on average assets - GAAP							1.26	%
Net income - GAAP						$	13,055
Adjustments:
Adjustment for non-routine expense							1,767
Core net income						$	14,822
Average assets						$	4,193,413
Core return on average assets							1.43	%
Return on average common stockholders' equity							13.55	%
Net income available to common stockholders - GAAP						$	12,955
Adjustments:
Adjustment for non-routine expense							1,767
Core net income available to common stockholders						$	14,722
Average common stockholders' equity						$	387,870
Core return on average common stockholders' equity							15.39	%
Earnings per share - diluted - GAAP						$	0.49
Weighted average shares outstanding, diluted							26,237,980
Core diluted earnings per share						$	0.56
Book value per share		$	17.99			$	15.65
Total common stockholders' equity - GAAP			470,940				401,500
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			15,239				18,069
Tangible common stockholders' equity		$	455,701			$	383,431
Tangible bookvalue per share		$	17.40			$	14.95
Stockholders' equity to total assets			8.76	%			10.05	%
Total assets - GAAP		$	5,378,599			$	4,393,342
Adjustments:
Adjusted for goodwill and other identifiable intangible assets			15,239				18,069
Total tangible assets		$	5,363,360			$	4,375,273
Tangible common equity to total tangible assets			8.50	%			8.76	%

 

 

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 area, 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.servisfirstbank.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 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. 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)

 

		1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	49,961			$	48,451			$	46,532			$	44,209			$	40,783
Interest expense			5,782				5,290				4,670				3,998				3,746
Net interest income			44,179				43,161				41,862				40,211				37,037
Provision for loan losses			2,059				3,308				3,072				4,062				2,405
Net interest income after provision for loan losses			42,120				39,853				38,790				36,149				34,632
Non-interest income			3,726				3,559				3,822				3,505				3,077
Non-interest expense			19,581				19,086				18,332				18,213				18,751
Income before income tax			26,265				24,326				24,280				21,441				18,958
Provision for income tax			8,616				4,576				8,014				6,972				5,903
Net income			17,649				19,750				16,266				14,469				13,055
Preferred stock dividends			-				24				33				123				100
Net income available to common stockholders		$	17,649			$	19,726			$	16,233			$	14,346			$	12,955
Earnings per share - basic		$	0.68			$	0.76			$	0.63			$	0.56			$	0.51
Earnings per share - diluted		$	0.66			$	0.74			$	0.61			$	0.54			$	0.49
Average diluted shares outstanding			26,566,810				26,595,239				26,506,334				26,426,036				26,237,980
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	5,378,599			$	5,095,509			$	4,772,601			$	4,492,539			$	4,393,342
Loans			4,340,900				4,216,375				4,044,242				3,863,734				3,607,852
Debt securities			362,106				370,364				334,635				335,008				336,505
Non-interest-bearing demand deposits			1,070,275				1,053,467				1,029,354				926,577				866,743
Total deposits			4,339,747				4,223,888				4,044,634				3,729,132				3,638,763
Borrowings			55,543				55,748				55,728				21,016				21,278
Stockholders' equity		$	470,940			$	449,147			$	431,194			$	454,487			$	441,458
Shares outstanding			26,182,698				25,972,698				25,903,698				25,826,198				25,653,610
Book value per share		$	17.99			$	17.29			$	16.65			$	16.05			$	15.65
Tangible book value per share (1)		$	17.40			$	16.70			$	15.96			$	15.35			$	14.95
SELECTED FINANCIAL RATIOS
Net interest margin			3.57	%			3.56	%			3.77	%			3.88	%			3.80	%
Return on average assets			1.35	%			1.55	%			1.38	%			1.31	%			1.26	%
Return on average common stockholders' equity			15.38	%			17.75	%			15.52	%			14.06	%			13.55	%
Efficiency ratio			40.87	%			40.85	%			40.13	%			41.66	%			46.74	%
Non-interest expense to average earning assets			1.56	%			1.56	%			1.63	%			1.73	%			1.90	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets:			9.90	%			9.72	%			9.59	%			9.60	%			9.93	%
Tier 1 capital to risk-weighted assets:			9.91	%			9.73	%			9.60	%			10.58	%			10.98	%
Total capital to risk-weighted assets			12.12	%			11.95	%			11.89	%			12.05	%			12.49	%
Tier 1 capital to average assets:			8.65	%			8.55	%			8.83	%			9.88	%			10.07	%
Tangible common equity to total tangible assets (1)			8.50	%			8.54	%			8.70	%			8.86	%			8.76	%

 

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

 

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

 

 

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands)

 

		March 31, 2016				March 31, 2015				% Change
ASSETS
Cash and cash equivalents			525,637				299,679				75	%
Available for sale debt securities, at fair value			334,567				307,379				9	%
Held to maturity debt securities (fair value of $28,409 and $29,886 at
March 31, 2016 and 2015, respectively)			27,539				29,126				(5	)%
Restricted equity securities			5,667				4,953				14	%
Mortgage loans held for sale			5,090				12,384				(59	)%
Loans			4,340,900				3,607,852				20	%
Less allowance for loan losses			(45,145	)			(37,356	)			21	%
Loans, net			4,295,755				3,570,496				20	%
Premises and equipment, net			20,989				16,082				31	%
Goodwill and other identifiable intangible assets			15,239				18,069				(16	)%
Other assets			148,116				135,174				10	%
Total assets		$	5,378,599			$	4,393,342				22	%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing		$	1,070,275			$	866,743				23	%
Interest-bearing			3,269,472				2,772,020				18	%
Total deposits			4,339,747				3,638,763				19	%
Federal funds purchased			497,885				280,900				77	%
Other borrowings			55,543				21,278				161	%
Other liabilities			14,484				10,943				32	%
Total liabilities			4,907,659				3,951,884				24	%
Stockholders' equity:
Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001
(liquidation preference $1,000), net of discount; 40,000 shares authorized,
no shares issued and outstanding at March 31, 2016 and 40,000 shares
issued and oustanding at March 31, 2015			-				39,958				(100	)%
Preferred stock, par value $0.001 per share; 1,000,000 authorized and
960,000 currently undesignated			-				-				-	%
Common stock, par value $0.001 per share; 50,000,000 shares authorized;
26,182,698 shares issued and outstanding at March 31, 2016 and
25,653,610 shares issued and outstanding at March 31, 2015			26				26				-	%
Additional paid-in capital			215,948				207,374				4	%
Retained earnings			249,704				188,507				32	%
Accumulated other comprehensive income			4,885				5,216				(6	)%
Noncontrolling interest			377				377				-	%
Total stockholders' equity			470,940				441,458				7	%
Total liabilities and stockholders' equity		$	5,378,599			$	4,393,342				22	%

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

  

		Three Months Ended March 31,
		2016				2015
Interest income:
Interest and fees on loans		$	47,247			$	38,646
Taxable securities			1,269				1,128
Nontaxable securities			858				860
Federal funds sold			73				77
Other interest and dividends			514				72
Total interest income			49,961				40,783
Interest expense:
Deposits			4,361				3,270
Borrowed funds			1,421				476
Total interest expense			5,782				3,746
Net interest income			44,179				37,037
Provision for loan losses			2,059				2,405
Net interest income after provision for loan losses			42,120				34,632
Non-interest income:
Service charges on deposit accounts			1,307				1,207
Mortgage banking			668				454
Securities gains			-				29
Increase in cash surrender value life insurance			624				648
Other operating income			1,127				739
Total non-interest income			3,726				3,077
Non-interest expense:
Salaries and employee benefits			11,067				9,008
Equipment and occupancy expense			1,985				1,661
Professional services			738				568
FDIC and other regulatory assessments			750				620
Other real estate owned expense			449				214
Merger expenses			-				2,096
Other operating expense			4,592				4,584
Total non-interest expense			19,581				18,751
Income before income tax			26,265				18,958
Provision for income tax			8,616				5,903
Net income			17,649				13,055
Dividends on preferred stock			-				100
Net income available to common stockholders		$	17,649			$	12,955
Basic earnings per common share		$	0.68			$	0.51
Diluted earnings per common share		$	0.66			$	0.49

 

 

LOANS BY TYPE

(UNAUDITED)

(In thousands)

 

		1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
Commercial, financial and agricultural		$	1,799,132			$	1,760,479			$	1,683,819			$	1,642,182			$	1,554,020
Real estate - construction			254,254				243,267				232,895				219,607				219,005
Real estate - mortgage:
Owner-occupied commercial			1,055,852				1,014,669				978,721				930,719				869,724
1-4 family mortgage			458,032				444,134				417,012				392,245				375,770
Other mortgage			723,542				698,779				677,822				627,099				545,668
Subtotal: Real estate - mortgage			2,237,426				2,157,582				2,073,555				1,950,063				1,791,162
Consumer			50,088				55,047				53,973				51,882				43,665
Total loans		$	4,340,900			$	4,216,375			$	4,044,242			$	3,863,734			$	3,607,852

 

 

SUMMARY OF LOAN LOSS EXPERIENCE

(Dollars in thousands)

 

		1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
Reserve for loan losses:
Beginning balance		$	43,419			$	42,574			$	40,020			$	37,356			$	35,629
Loans charged off:
Commercial financial and agricultural			50				2,186				388				1,151				77
Real estate - construction			381				161				31				93				382
Real estate - mortgage:			-				463				-				208				433
Consumer			18				21				126				19				5
Total charge offs			449				2,831				545				1,471				897
Recoveries:
Commercial financial and agricultural			3				241				13				6				19
Real estate - construction			16				61				13				65				99
Real estate - mortgage:			97				65				1				2				101
Consumer			-				1				-				-				-
Total recoveries			116				368				27				73				219
Net charge-offs			333				2,463				518				1,398				678
Provision for loan losses			2,059				3,308				3,072				4,062				2,405
Ending balance		$	45,145			$	43,419			$	42,574			$	40,020			$	37,356
Reserve for loan losses to total loans			1.04	%			1.03	%			1.05	%			1.04	%			1.04	%
Reserve for loan losses to total average
loans			1.06	%			1.05	%			1.08	%			1.07	%			1.07	%
Net charge-offs to total average loans			0.03	%			0.24	%			0.05	%			0.15	%			0.08	%
Provision for loan losses to total average
loans			0.20	%			0.32	%			0.31	%			0.44	%			0.28	%
Nonperforming assets:
Nonaccrual loans		$	6,133			$	7,767			$	9,850			$	8,194			$	8,361
Loans 90+ days past due and accruing			417				1				524				470				553
Other real estate owned and
repossessed assets			4,044				5,392				6,068				8,235				8,638
Total		$	10,594			$	13,160			$	16,442			$	16,899			$	17,552
Nonperforming loans to total loans			0.15	%			0.18	%			0.26	%			0.22	%			0.25	%
Nonperforming assets to total assets			0.20	%			0.26	%			0.34	%			0.38	%			0.40	%
Nonperforming assets to earning assets			0.20	%			0.26	%			0.35	%			0.38	%			0.41	%
Reserve for loan losses to nonaccrual loans			736.10	%			559.02	%			432.22	%			488.41	%			446.79	%
Restructured accruing loans		$	6,763			$	6,782			$	8,266			$	8,279			$	8,280
Restructured accruing loans to total loans			0.16	%			0.16	%			0.20	%			0.21	%			0.23	%

 

 

TROUBLED DEBT RESTRUCTURINGS (TDRs)

(In thousands)

 

		1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
Beginning balance:		$	7,736			$	8,266			$	8,279			$	8,280			$	8,992
Net (paydowns) / advances			(19	)			(83	)			(13	)			(1	)			(381	)
Transfers to other real estate owned			(954	)			-				-				-				-
Charge-offs			-				(447	)			-				-				(331	)
		$	6,763			$	7,736			$	8,266			$	8,279			$	8,280

 

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

 

		1st Quarter 2016				4th Quarter 2015				3rd Quarter 2015				2nd Quarter 2015				1st Quarter 2015
Interest income:
Interest and fees on loans		$	47,247			$	46,150			$	44,401			$	42,105			$	38,646
Taxable securities			1,269				1,058				1,041				1,104				1,128
Nontaxable securities			858				875				890				874				860
Federal funds sold			73				46				32				24				77
Other interest and dividends			514				322				168				102				72
Total interest income			49,961				48,451				46,532				44,209				40,783
Interest expense:
Deposits			4,361				4,294				3,818				3,512				3,270
Borrowed funds			1,421				996				852				486				476
Total interest expense			5,782				5,290				4,670				3,998				3,746
Net interest income			44,179				43,161				41,862				40,211				37,037
Provision for loan losses			2,059				3,308				3,072				4,062				2,405
Net interest income after provision for loan losses			42,120				39,853				38,790				36,149				34,632
Non-interest income:
Service charges on deposit accounts			1,307				1,326				1,279				1,276				1,207
Mortgage banking			668				620				873				735				454
Securities gains			-				-				-				-				29
Increase in cash surrender value life insurance			624				630				683				660				648
Other operating income			1,127				983				987				834				739
Total non-interest income			3,726				3,559				3,822				3,505				3,077
Non-interest expense:
Salaries and employee benefits			11,067				8,884				10,595				10,426				9,008
Equipment and occupancy expense			1,985				1,519				1,575				1,634				1,661
Professional services			738				706				668				665				568
FDIC and other regulatory assessments			750				733				681				626				620
Other real estate owned expense			449				324				400				289				214
Merger expense			-				-				-				-				2,096
Other operating expense			4,592				6,920				4,413				4,573				4,584
Total non-interest expense			19,581				19,086				18,332				18,213				18,751
Income before income tax			26,265				24,326				24,280				21,441				18,958
Provision for income tax			8,616				4,576				8,014				6,972				5,903
Net income			17,649				19,750				16,266				14,469				13,055
Dividends on preferred stock			-				24				33				123				100
Net income available to common stockholders		$	17,649			$	19,726			$	16,233			$	14,346			$	12,955
Basic earnings per common share		$	0.68			$	0.76			$	0.63			$	0.56			$	0.51
Diluted earnings per common share		$	0.66			$	0.74			$	0.61			$	0.54			$	0.49

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS - UNAUDITED

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

 

 

		1st Quarter 2016								4th Quarter 2015								3rd Quarter 2015								2nd Quarter 2015								1st 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		$	4,230,057				4.48	%		$	4,113,044				4.44	%		$	3,915,778				4.48	%		$	3,731,699				4.51	%		$	3,492,363				4.47	%
Tax-exempt (2)			10,281				5.56				9,639				4.98				9,802				4.98				10,005				5.00				10,180				5.03
Total loans, net of unearned income			4,240,338				4.48				4,122,683				4.44				3,925,580				4.48				3,741,704				4.51				3,502,543				4.48
Mortgage loans held for sale			6,084				4.63				4,362				4.27				7,714				4.32				12,718				2.21				6,884				2.12
Debt securities:
Taxable			221,722				2.29				193,982				2.16				189,941				2.17				193,848				2.29				198,104				2.31
Tax-exempt (2)			137,745				3.79				139,435				3.85				139,543				3.91				136,104				3.94				129,525				4.07
Total securities (3)			359,467				2.86				333,417				2.87				329,484				2.91				329,952				2.97				327,629				3.01
Federal funds sold			48,390				0.61				33,255				0.55				24,860				0.51				26,638				0.36				39,438				0.27
Restricted equity securities			4,962				3.81				4,954				4.24				4,954				4.16				4,953				3.16				4,354				3.63
Interest-bearing balances with banks			373,339				0.51				366,771				0.29				168,548				0.27				97,482				0.26				119,195				0.28
Total interest-earning assets			5,032,580				4.03	%			4,865,442				3.99	%			4,461,140				4.18	%			4,213,447				4.26	%			4,000,043				4.18	%
Non-interest-earning assets:
Cash and due from banks			61,596								62,037								63,259								58,347								61,911
Net premises and equipment			21,023								19,609								18,961								16,323								13,847
Allowance for loan losses, accrued interest and other assets			126,491								124,241								127,778								129,233								117,612
Total assets		$	5,241,690							$	5,071,329							$	4,671,136							$	4,417,350							$	4,193,413
Interest-bearing liabilities:
Interest-bearing deposits:
Checking		$	665,039				0.35	%		$	611,521				0.30	%		$	593,550				0.28	%		$	579,650				0.27	%		$	553,569				0.26	%
Savings			41,055				0.29				39,590				0.29				37,281				0.30				37,697				0.28				36,128				0.28
Money market			1,979,727				0.51				2,048,453				0.49				1,817,997				0.47				1,653,708				0.45				1,618,715				0.44
Time deposits			507,605				1.00				503,217				1.00				485,137				0.99				480,140				1.05				446,084				1.05
Total interest-bearing deposits			3,193,426				0.55				3,202,781				0.54				2,933,965				0.52				2,751,195				0.51				2,654,496				0.50
Federal funds purchased			441,309				0.64				295,530				0.37				246,168				0.31				275,888				0.29				270,549				0.28
Other borrowings			55,630				5.19				55,805				5.11				50,509				5.18				21,238				5.40				20,455				5.67
Total interest-bearing liabilities			3,690,365				0.63	%			3,554,116				0.59	%			3,230,642				0.57	%			3,048,321				0.53	%			2,945,500				0.52	%
Non-interest-bearing liabilities:
Non-interest-bearing demand			1,077,613								1,062,795								988,756								908,020								813,340
Other liabilities			12,194								13,469								23,738								11,793								6,745
Stockholders' equity			457,218								436,928								424,113								444,302								422,847
Unrealized gains on securities and derivatives			4,300								4,021								3,911								4,914								4,981
Total liabilities and stockholders' equity		$	5,241,690							$	5,071,329							$	4,671,136							$	4,417,350							$	4,193,413
Net interest spread							3.40	%							3.40	%							3.61	%							3.73	%							3.67	%
Net interest margin							3.57	%							3.56	%							3.77	%							3.88	%							3.80	%

 

(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.