ServisFirst Bancshares, Inc. Announces Results For Fourth Quarter of 2021

BIRMINGHAM, Ala., Jan. 24, 2022 (GLOBE NEWSWIRE) — ServisFirst Bancshares, Inc. (NYSE: SFBS), today announced earnings and operating results for the quarter and year ended December 31, 2021.

Fourth Quarter 2021 Highlights:

• Diluted earnings per share were $0.99 for the fourth quarter of 2021, a 5% increase over the fourth quarter of 2020. Excluding the impact of core system conversion expenses recognized during the fourth quarter of 2021, diluted earnings per share were $1.03, an increase of 10% over the fourth quarter of 2020
• Diluted earnings per share were $3.82 for 2021, a 22% increase over 2020. Excluding the impact of core system conversion expenses, diluted earnings per share were $3.86 for 2021, a 23% increase over 2020
• Total loans grew from $8.5 billion to $9.5 billion, or by 13%, during 2021, and grew $720.1 million, or 32%, annualized, on a linked-quarter basis. Total loans, excluding the impact of Paycheck Protection Program (“PPP”) loan forgiveness, grew $877.7 million, or 41% annualized, during the quarter
• Deposits grew from $9.98 billion to $12.45 billion year-over-year, or 25%, and grew $374 million on a linked-quarter basis, or 12%, annualized
• Book value per share increased to $21.24, a 15% increase year-over-year
• Cash dividend increased from $0.20 to $0.23 per quarter, a 15% increase

Tom Broughton, Chairman, President and CEO, said, “Our strong business development initiatives continue to result in record loan growth and a strong loan pipeline.”

Bud Foshee, CFO, said, “Excellent credit quality and low levels of loan losses are evidence that we will be able to leverage our excess liquidity in a profitable manner. Operating efficiency will continue to be a focus in 2022.”

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
				Period Ending December 31, 2021				Period Ending September 30, 2021				% Change From Period Ending September 30, 2021 to Period Ending December 31, 2021			Period Ending December 31, 2020				% Change From Period Ending December 31, 2020 to Period Ending December 31, 2021
QUARTERLY OPERATING RESULTS
Net Income				$	53,753			$	52,499			2	%		$	50,981			5	%
Net Income Available to Common Stockholders				$	53,722			$	52,499			2	%		$	50,949			5	%
Diluted Earnings Per Share				$	0.99			$	0.96			3	%		$	0.94			5	%
Return on Average Assets					1.40	%			1.50	%						1.74	%
Return on Average Common Stockholders’ Equity					18.75	%			18.93	%						20.78	%
Average Diluted Shares Outstanding					54,493,959				54,477,740							54,273,944
Net income – adjusted for core system conversion
	expenses, net of tax*			$	56,004			$	52,499			7	%		$	50,981			10	%
Net Income Available to Common Stockholders –
	adjusted for core system conversion expenses,
	net of tax*			$	55,973			$	52,499			7	%		$	50,949			10	%
Diluted Earnings Per Share – adjusted for core
	system conversion expenses, net of tax*			$	1.03			$	0.96			7	%		$	0.94			10	%
Return on Average Assets – adjusted for core
	system conversion expenses, net of tax*				1.46	%			1.50	%						1.74	%
Return on Average Common Stockholders’ Equity –
	adjusted for core system conversion expenses,
	net of tax*				19.54	%			18.93	%						20.78	%
YEAR-TO-DATE OPERATING RESULTS
Net Income				$	207,734										$	169,569			23	%
Net Income Available to Common Stockholders				$	207,672										$	169,506			23	%
Diluted Earnings Per Share				$	3.82										$	3.13			22	%
Return on Average Assets					1.53	%										1.59	%
Return on Average Common Stockholders’ Equity					19.26	%										18.55	%
Average Diluted Shares Outstanding					54,434,573											54,219,037
Net income – adjusted for core system conversion
	expenses, net of tax*			$	209,985										$	169,569			24	%
Net Income Available to Common Stockholders –
	adjusted for core system conversion expenses,
	net of tax*			$	209,923										$	169,506			24	%
Diluted Earnings Per Share – adjusted for core system
	conversion expenses, net of tax*			$	3.86										$	3.13			23	%
Return on Average Assets – adjusted for core
	system conversion expenses, net of tax*				1.55	%										1.59	%
Return on Average Common Stockholders’ Equity –
	adjusted for core system conversion expenses,
	net of tax*				19.47	%										18.55	%
BALANCE SHEET
Total Assets				$	15,448,806			$	14,602,228			6	%		$	11,932,654			29	%
Loans					9,532,934				8,812,811			8	%			8,465,688			13	%
Non-interest-bearing Demand Deposits					4,799,767				4,366,654			10	%			2,788,772			72	%
Total Deposits					12,452,836				12,078,670			3	%			9,975,724			25	%
Stockholders’ Equity					1,152,015				1,114,293			3	%			992,852			16	%
* The adjustment for the core system conversion expenses included in the comparative periods presented in this press release are more fully described in “Detailed Financials” and in “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” below.

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income of $53.8 million and net income available to common stockholders of $53.7 million for the quarter ended December 31, 2021, compared to net income and net income available to common stockholders of $51.0 million and $50.9 million, respectively, for the same quarter in 2020. Basic and diluted earnings per common share were $0.99 for the fourth quarter of 2021, compared to $0.94 for the fourth quarter of 2020.

Annualized return on average assets was 1.40% and annualized return on average common stockholders’ equity was 18.75% for the fourth quarter of 2021, compared to 1.74% and 20.78%, respectively, for the fourth quarter of 2020.

Net interest income was $101.2 million for the fourth quarter of 2021, compared to $96.3 million for the third quarter of 2021 and $92.1 million for the fourth quarter of 2020. The net interest margin in the fourth quarter of 2021 was 2.71% compared to 2.85% in the third quarter of 2021 and 3.27% in the fourth quarter of 2020. Accretion of net fees on PPP loans of $5.1 million during the fourth quarter of 2021 contributed 22 basis points of the loan yield, compared to $5.2 million of PPP loan fee accretion during the third quarter of 2021, or 24 basis points of the loan yield and $7.5 million during the fourth quarter of 2020, or 35 basis points of the loan yield.

Average loans for the fourth quarter of 2021 were $9.06 billion, an increase of $378.9 million, or 17.3% annualized, over average loans of $8.68 billion for the third quarter of 2021, and an increase of $594.4 million, or 7.0%, over average loans of $8.46 billion for the fourth quarter of 2020. Forgiveness of PPP loans during the fourth quarter of 2021 totaled $157.8 million. PPP loans outstanding as of December 31, 2021 were $230.2 million.

Average total deposits for the fourth quarter of 2021 were $12.39 billion, an increase of $897.5 million, or 31.0%, annualized, over average total deposits of $11.49 billion for the third quarter of 2021, and an increase of $2.55 billion, or 25.9%, over average total deposits of $9.84 billion for the fourth quarter of 2020.

Non-performing assets to total assets were 0.09% for the fourth quarter of 2021, a decrease of two basis points compared to 0.11% for the third quarter of 2021 and a decrease of 12 basis points compared to 0.21% for the fourth quarter of 2020. Annualized net charge-offs to average loans were 0.03% for the fourth quarter of 2021, compared to 0.08% and 0.41% for the third quarter of 2021 and fourth quarter of 2020, respectively. The allowance for credit losses for each quarter-end period presented was calculated under the CECL methodology. The allowance for credit losses as a percentage of total loans at December 31, 2021, September 30, 2021 and December 30, 2020 was 1.22%, 1.24% and 1.04%, respectively. Excluding PPP loans, the allowance for credit losses as a percentage of total loans at December 31, 2021, September 30, 2021 and December 31, 2020 was 1.25%, 1.29%, and 1.16%, respectively. We recorded an $8.5 million provision for credit losses in the fourth quarter of 2021 compared to $6.0 million in the third quarter of 2021 and $6.3 million in the fourth quarter of 2020.

Non-interest income decreased $872,000, or 10.6%, to $7.4 million for the fourth quarter of 2021 from $8.2 million in the fourth quarter of 2020. Service charges on deposit accounts decreased $674,000, or 34.2%, to $1.3 million from the fourth quarter of 2020 to the fourth quarter of 2021. Mortgage banking revenue decreased $2.6 million, or 84.6%, to $471,000 from the fourth quarter of 2020 to the fourth quarter of 2021. We started retaining our mortgage loans in the second quarter of 2021 to increase earning assets and use excess liquidity. As of December 31, 2021, we had retained a total of 202 1-4 family mortgages for an aggregate balance of $76.9 million. Net credit card revenue increased $1.3 million, or 141.0%, to $2.2 million during the fourth quarter of 2021, compared to $913,000 during the fourth quarter of 2020. The number of credit card accounts increased approximately 6.4% and the aggregate amount of spend on all credit card accounts increased 36% during the fourth quarter of 2021 compared to the fourth quarter of 2020. Other operating income for the fourth quarter of 2021 increased $1.1 million, or 174.8%, to $1.8 million from $643,000 in the fourth quarter of 2020. We wrote up the value of our interest rate cap by $839,000 during the fourth quarter of 2021 through other income compared to a write down of $61,000 during the fourth quarter of 2020. Increased probabilities of Fed rate increases contributed to the recovery in the fair value of our interest rate cap during the fourth quarter of 2021. Merchant service revenue increased from $168,000 during the fourth quarter of 2020 to $376,000, or 124.1%, during the fourth quarter of 2021.

Non-interest expense for the fourth quarter of 2021 increased $10.3 million, or 36.5%, to $38.5 million from $28.2 million in the fourth quarter of 2020, and increased $4.1 million, or 12.0%, on a linked quarter basis. Salary and benefit expense for the fourth quarter of 2021 increased $2.3 million, or 15.6%, to $17.3 million from $15.0 million in the fourth quarter of 2020, and decreased $692,000, or 3.8%, on a linked quarter basis. Salary expense alone increased 6.2% year over year. We increased our annual incentive accrual based on the increased loan production in 2021 and on final anticipated payouts for 2021 PPP loan originations. Total incentive accruals increased $2.4 million to $4.4 million for the fourth quarter of 2021 compared the same quarter in 2020. The number of FTE employees increased by 9 to 502 at December 31, 2021 compared to 493 at December 31, 2020, and decreased by 16 from the end of the third quarter of 2021. Equipment and occupancy expense increased $230,000, or 8.6%, to $2.9 million in the fourth quarter of 2021, from $2.7 million in the fourth quarter of 2020, and decreased $86,000, or 2.9% on a linked-quarter basis. We moved our office in Nashville, Tennessee in early 2021 to expand our space and improve visibility and we opened our new office in Orlando, Florida in the third quarter of 2021. The linked-quarter decrease is primarily attributable to adjustments of accrued property taxes. Third party processing and other services expense increased $1.4 million, or 42.1%, to $4.9 million in the fourth quarter of 2021, from $3.4 million in the fourth quarter of 2020 and increased $712,000, or 17.2%, on a linked-quarter basis. We increased the number of correspondent banks for which we are processing transactions through the Federal Reserve Bank. Professional services expense decreased $335,000, or 26.8%, to $913,000 in the fourth quarter of 2021, from $1.2 million in the fourth quarter of 2020, primarily due to adjustments in accrued professional services fees during the fourth quarter of 2021. FDIC and other regulatory assessments decreased $324,000 to $1.0 million in the fourth quarter of 2021, from $1.4 million in the fourth quarter of 2020, and decreased $588,000, or 36.1%, on a linked quarter basis. ServisFirst Bank was reclassified as a large financial institution by the FDIC as of September 30, 2021. Other operating expenses for the fourth quarter of 2021 increased $7 million, or 160.7%, to $11.4 million from $4.4 million in the fourth quarter of 2020, and increased $4.9 million on a linked-quarter basis. This increase in other operating expenses includes a $3.0 million charge for expenses associated with the conversion to a new core operating system scheduled to take place in the third quarter of 2022. See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” below for more discussion of these expenses. We invested $24.5 million in a new market tax credit during the fourth quarter of 2021. We wrote down the investment by $3.1 million during the fourth quarter of 2021 as we recognize the tax credits. We decreased our reserve for credit losses on unfunded loan commitments by $1.7 million in the fourth quarter of 2021. The efficiency ratio was 35.47% during the fourth quarter of 2021 compared to 28.11% during the fourth quarter of 2020 and compared to 32.95% during the third quarter of 2021. The efficiency ratio was 32.70% when adjusted for the core system conversion costs discussed above.

Income tax expense decreased $7.0 million, or 47.3%, to $7.8 million in the fourth quarter of 2021, compared to $14.9 million in the fourth quarter of 2020. Our effective tax rate was 12.70% for the fourth quarter of 2021 compared to 22.56% for the fourth quarter of 2020. We recognized an aggregate of $7.4 million in credits during the fourth quarter of 2021 related to investments in new market tax credits. We 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 2021 and 2020 of $363,000 and $170,000, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

During the fourth quarter of 2021, we recorded $3.0 million of expenses associated with our core operating system conversion scheduled to be completed during the third quarter of 2022. The expenses relate to negotiated liquidated damages of our existing system contracts and the procurement of our data from those providers. Financial measures included in this press release that are presented adjusted for these expenses are net income, net income available to common stockholders, diluted earnings per share, return on average assets, return on average common stockholders’ equity and efficiency ratio. Each of these six financial measures excludes the impact of this item, net of tax, and are all considered non-GAAP financial measures. This press release also 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 also include total loans adjusted for the impact of PPP loan activities. 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, 2021					Year Ended December 31, 2021
Net income – GAAP				$	53,753				$	207,734
	Adjustments:
	Core system conversion expenses				3,007					3,007
		Tax on adjustment			(756	)				(756	)
Adjusted net income – non-GAAP				$	56,004				$	209,985
Net income available to common stockholders – GAAP				$	53,722				$	207,672
	Adjustments:
	Core system conversion expenses				3,007					3,007
		Tax on adjustment			(756	)				(756	)
Adjusted net income available to common stockholders –
	non-GAAP			$	55,973				$	209,923
Diluted earnings per share – GAAP				$	0.99					3.82
	Adjustments:
	Core system conversion expenses				0.05					0.05
		Tax on adjustment			(0.01	)				(0.01	)
Adjusted diluted earnings per share – non-GAAP				$	1.03				$	3.86
Return on average assets – GAAP					1.40		%			1.53		%
Net income – GAAP				$	53,753				$	207,734
	Adjustments:
	Core system conversion expenses				3,007					3,007
		Tax on adjustment			(756	)				(756	)
Adjusted net income – non-GAAP				$	56,004				$	209,985
Average assets – GAAP				$	15,250,671				$	13,555,221
Adjusted return on average assets – non-GAAP					1.46		%			1.55		%
Return on average common stockholders’ equity – GAAP					18.75		%			19.26		%
Net income available to common stockholders – GAAP				$	53,722				$	207,672
	Adjustments:
	Core system conversion expenses				3,007					3,007
		Tax on adjustment			(756	)				(756	)
Adjusted net income available to common stockholders –
	non-GAAP			$	55,973				$	209,923
Average common stockholders’ equity – GAAP				$	1,136,610				$	1,078,075
Adjusted return on average common stockholders’ equity –					19.54		%			19.47		%
	non-GAAP
Efficiency ratio					35.47		%
Non-interest expense – GAAP				$	38,489
	Adjustments:
	Core system conversion expenses				3,007
Adjusted non-interest expense					35,482
Net interest income plus non-interest income – GAAP				$	108,515
Adjusted efficiency ratio – non-GAAP					32.70		%
				At December 31, 2021					At September 30, 2021					At June 30, 2021					At March 31, 2021					At December 31, 2020
Book value per share – GAAP				$	21.24				$	20.56				$	19.80				$	19.03				$	18.41
Total common stockholders’ equity – GAAP					1,152,015					1,114,293					1,073,284					1,030,485					992,852
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset				(13,638	)				(13,705	)				(13,773	)				(13,841	)				(13,908	)
Tangible common stockholders’ equity – non-GAAP				$	1,138,377				$	1,100,588				$	1,059,511				$	1,016,644				$	978,944
Tangible book value per share – non-GAAP				$	20.99				$	20.30				$	19.55				$	18.78				$	18.15
Stockholders’ equity to total assets – GAAP					7.46		%			7.63		%			8.13		%			8.15		%			8.32		%
Total assets – GAAP				$	15,448,806				$	14,602,228				$	13,207,319				$	12,647,374				$	11,932,654
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset				(13,638	)				(13,705	)				(13,773	)				(13,841	)				(13,908	)
Total tangible assets – non-GAAP				$	15,435,168				$	14,588,523				$	13,193,546				$	12,633,533				$	11,918,746
Tangible common equity to total tangible assets – non-GAAP					7.38		%			7.54		%			8.03		%			8.05		%			8.21		%
Total loans – GAAP				$	9,532,934				$	8,812,811				$	8,649,694				$	8,504,980				$	8,465,688
	Adjustments:
	Adjusted to exclude PPP loans				(230,184	)				(387,725	)				(595,017	)				(967,641	)				(900,493	)
Loans, excluding PPP loans – non-GAAP				$	9,302,750				$	8,425,086				$	8,054,677				$	7,537,339				$	7,565,195

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, Mobile, Montgomery and Dothan, Alabama, Northwest Florida, West Central Florida, Nashville, Tennessee, Atlanta, Georgia, and Charleston, South Carolina.

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,” “could,” “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, but not limited to: the global health and economic crisis precipitated by the COVID-19 outbreak; 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 as a result of our reclassification as a large financial institution by the FDIC; changes in our loan portfolio and the deposit base; economic crisis and associated credit issues in industries most impacted by the COVID-19 outbreak, including but not limited to, the restaurant, hospitality and retail sectors; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives and the ability of the U.S. Congress to increase the U.S. statutory debt limit as needed; 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, in our Quarterly Reports on Form 10-Q for fiscal year 2021, 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
[email protected]

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except share and per share data)
		4th Quarter 2021				3rd Quarter 2021				2nd Quarter 2021				1st Quarter 2021				4th Quarter 2020
CONSOLIDATED STATEMENT OF INCOME
Interest income		$	108,954			$	104,236			$	102,719			$	100,396			$	101,065
Interest expense			7,804				7,916				8,051				8,031				8,984
Net interest income			101,150				96,320				94,668				92,365				92,081
Provision for credit losses			8,451				5,963				9,652				7,451				6,283
Net interest income after provision for credit losses			92,699				90,357				85,016				84,914				85,798
Non-interest income			7,365				8,026				9,598				8,463				8,237
Non-interest expense			38,489				34,377				31,309				28,914				28,202
Income before income tax			61,575				64,006				63,305				64,463				65,833
Provision for income tax			7,822				11,507				13,278				13,008				14,852
Net income			53,753				52,499				50,027				51,455				50,981
Preferred stock dividends			31				–				31				–				32
Net income available to common stockholders		$	53,722			$	52,499			$	49,996			$	51,455			$	50,949
Earnings per share – basic		$	0.99			$	0.97			$	0.92			$	0.95			$	0.94
Earnings per share – diluted		$	0.99			$	0.96			$	0.92			$	0.95			$	0.94
Average diluted shares outstanding			54,493,959				54,477,740				54,460,230				54,381,991				54,273,944
CONSOLIDATED BALANCE SHEET DATA
Total assets		$	15,448,806			$	14,602,228			$	13,207,319			$	12,647,374			$	11,932,654
Loans			9,532,934				8,812,811				8,649,694				8,504,980				8,465,688
Debt securities			1,305,527				984,600				1,013,783				962,129				886,938
Non-interest-bearing demand deposits			4,799,767				4,366,654				3,296,429				3,044,611				2,788,772
Total deposits			12,452,836				12,078,670				10,958,236				10,577,610				9,975,724
Borrowings			64,706				64,701				64,696				64,691				64,748
Stockholders’ equity			1,152,015				1,114,293				1,073,284				1,030,485				992,852
Shares outstanding			54,227,060				54,207,147				54,201,204				54,137,650				53,943,751
Book value per share		$	21.24			$	20.56			$	19.80			$	19.03			$	18.41
Tangible book value per share (1)		$	20.99			$	20.30			$	19.55			$	18.78			$	18.15
SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin			2.71	%			2.85	%			3.06	%			3.20	%			3.27	%
Return on average assets			1.40	%			1.50	%			1.56	%			1.72	%			1.74	%
Return on average common stockholders’ equity			18.75	%			18.93	%			18.98	%			19.83	%			20.78	%
Efficiency ratio			35.47	%			32.95	%			30.03	%			28.68	%			28.11	%
Non-interest expense to average earning assets			1.03	%			1.01	%			1.01	%			1.00	%			1.00	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets			9.95	%			10.46	%			10.60	%			10.73	%			10.50	%
Tier 1 capital to risk-weighted assets			9.96	%			10.47	%			10.60	%			10.73	%			10.50	%
Total capital to risk-weighted assets			11.58	%			12.18	%			12.36	%			12.48	%			12.20	%
Tier 1 capital to average assets			7.39	%			7.80	%			8.10	%			8.25	%			8.23	%
Tangible common equity to total tangible assets (1)			7.38	%			7.54	%			8.03	%			8.05	%			8.22	%
(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, 2021				December 31, 2020				% Change
ASSETS
Cash and due from banks				$	56,934			$	93,655			(39	)	%
Interest-bearing balances due from depository institutions					4,106,790				2,115,985			94		%
Federal funds sold					58,372				1,771			3,196		%
	Cash and cash equivalents				4,222,096				2,211,411			91		%
Available for sale debt securities, at fair value					842,570				886,688			(5	)	%
Held to maturity debt securities (fair value of $466,286 at December 31, 2021 and $250 at December 31, 2020)					462,957				250			NM
Restricted equity securities					7,311				–
Mortgage loans held for sale					1,114				14,425			(92	)	%
Loans					9,532,934				8,465,688			13		%
Less allowance for credit losses					(116,660	)			(87,942	)		33		%
	Loans, net				9,416,274				8,377,746			12		%
Premises and equipment, net					60,300				54,969			10		%
Goodwill and other identifiable intangible assets					13,638				13,908			(2	)	%
Other assets					429,859				373,256			15		%
	Total assets			$	15,448,806			$	11,932,654			29		%
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
	Non-interest-bearing			$	4,799,767			$	2,788,772			72		%
	Interest-bearing				7,653,069				7,186,952			6		%
		Total deposits			12,452,836				9,975,724			25		%
Federal funds purchased					1,711,777				851,545			101		%
Other borrowings					64,706				64,748			–		%
Other liabilities					67,472				47,785			41		%
	Total liabilities				14,296,791				10,939,802			31		%
Stockholders’ equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
		December 31, 2021 and December 31, 2020			–				–
	Common stock, par value $0.001 per share; 100,000,000 shares authorized; 54,227,060 shares
		issued and outstanding at December 31, 2021, and 53,943,751 shares issued and outstanding
		at December 31, 2020			54				54			–		%
	Additional paid-in capital				226,397				223,856			1		%
	Retained earnings				911,008				748,224			22		%
	Accumulated other comprehensive income				14,056				20,218			(30	)	%
		Total stockholders’ equity attributable to ServisFirst Bancshares, Inc.			1,151,515				992,352			16		%
	Noncontrolling interest				500				500			–		%
		Total stockholders’ equity			1,152,015				992,852			16		%
	Total liabilities and stockholders’ equity			$	15,448,806			$	11,932,654			29		%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
				Three Months Ended December 31,						Year Ended December 31,
				2021			2020			2021			2020
Interest income:
	Interest and fees on loans			$	100,348		$	94,332		$	385,721		$	362,664
	Taxable securities				6,747			6,018			25,413			22,122
	Nontaxable securities				47			129			302			739
	Federal funds sold				18			5			29			332
	Other interest and dividends				1,794			581			4,840			3,165
	Total interest income				108,954			101,065			416,305			389,022
Interest expense:
	Deposits				6,271			7,853			26,569			45,230
	Borrowed funds				1,533			1,131			5,233			5,755
	Total interest expense				7,804			8,984			31,802			50,985
	Net interest income				101,150			92,081			384,503			338,037
Provision for credit losses					8,451			6,283			31,517			42,434
	Net interest income after provision for credit losses				92,699			85,798			352,986			295,603
Non-interest income:
	Service charges on deposit accounts				1,297			1,971			6,839			7,528
	Mortgage banking				471			3,050			7,340			8,747
	Credit card income				2,200			913			7,347			5,916
	Securities gains				–			–			620			–
	Increase in cash surrender value life insurance				1,630			1,660			6,642			6,310
	Other operating income				1,767			643			4,664			1,615
	Total non-interest income				7,365			8,237			33,452			30,116
Non-interest expense:
	Salaries and employee benefits				17,303			14,970			67,728			61,414
	Equipment and occupancy expense				2,910			2,680			11,404			10,070
	Third party processing and other services				4,856			3,418			16,362			13,778
	Professional services				913			1,248			3,891			4,242
	FDIC and other regulatory assessments				1,042			1,366			5,679			4,354
	Other real estate owned expense				48			140			868			2,163
	Other operating expense				11,417			4,380			27,157			15,490
	Total non-interest expense				38,489			28,202			133,089			111,511
	Income before income tax				61,575			65,833			253,349			214,208
Provision for income tax					7,822			14,852			45,615			44,639
	Net income				53,753			50,981			207,734			169,569
	Dividends on preferred stock				31			32			62			63
	Net income available to common stockholders			$	53,722		$	50,949		$	207,672		$	169,506
Basic earnings per common share				$	0.99		$	0.94		$	3.83		$	3.15
Diluted earnings per common share				$	0.99		$	0.94		$	3.82		$	3.13

LOANS BY TYPE (UNAUDITED)
(In thousands)
			4th Quarter 2021			3rd Quarter 2021			2nd Quarter 2021			1st Quarter 2021			4th Quarter 2020
Commercial, financial and agricultural			$	2,984,053		$	2,927,845		$	3,105,243		$	3,323,093		$	3,295,900
Real estate – construction				1,103,076			887,938			782,305			666,592			593,614
Real estate – mortgage:
	Owner-occupied commercial			1,874,103			1,809,840			1,726,888			1,698,695			1,693,428
	1-4 family mortgage			826,765			765,102			707,546			685,840			711,692
	Other mortgage			2,678,084			2,357,812			2,262,231			2,068,560			2,106,184
Subtotal: Real estate – mortgage				5,378,952			4,932,754			4,696,665			4,453,095			4,511,304
Consumer				66,853			64,274			65,481			62,200			64,870
Total loans			$	9,532,934		$	8,812,811		$	8,649,694		$	8,504,980		$	8,465,688

SUMMARY OF CREDIT LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
					4th Quarter 2021					3rd Quarter 2021					2nd Quarter 2021					1st Quarter 2021					4th Quarter 2020
Allowance for credit losses:
Beginning balance					$	108,950				$	104,670				$	94,906				$	87,942				$	92,440
	Impact of Adoption of ASC 326					–					–					–					–					(2,000	)
Loans charged off:
	Commercial financial and agricultural					1,285					1,541					150					477					8,792
	Real estate – construction					14					–					–					–					202
	Real estate – mortgage					–					208					59					12					–
	Consumer					141					86					54					87					38
		Total charge offs				1,440					1,835					263					576					9,032
Recoveries:
	Commercial financial and agricultural					671					140					298					26					94
	Real estate – construction					–					–					2					50					30
	Real estate – mortgage					18					4					62					2					114
	Consumer					10					8					13					11					13
		Total recoveries				699					152					375					89					251
	Net charge-offs					741					1,683					(112	)				487					8,781
	Provision for credit losses					8,451					5,963					9,652					7,451					6,283
	Ending balance				$	116,660				$	108,950				$	104,670				$	94,906				$	87,942
	Allowance for credit losses to total loans					1.22		%			1.24		%			1.21		%			1.12		%			1.04		%
	Allowance for credit losses to total average
		loans				1.29		%			1.26		%			1.21		%			1.11		%			1.04		%
	Net charge-offs (recoveries) to total average loans					0.03		%			0.08		%			(0.01	)	%			0.02		%			0.41		%
	Provision for credit losses to total average
		loans				0.37		%			0.27		%			0.45		%			0.35		%			0.30		%
	Nonperforming assets:
		Nonaccrual loans			$	6,762				$	9,145				$	12,301				$	13,088				$	13,973
		Loans 90+ days past due and accruing				5,335					5,326					4,888					4,804					4,981
		Other real estate owned and
		repossessed assets				1,208					2,068					2,039					2,067					6,497
	Total				$	13,305				$	16,539				$	19,228				$	19,959				$	25,451
	Nonperforming loans to total loans					0.13		%			0.16		%			0.20		%			0.21		%			0.22		%
	Nonperforming assets to total assets					0.09		%			0.11		%			0.15		%			0.16		%			0.21		%
	Nonperforming assets to earning assets					0.09		%			0.11		%			0.15		%			0.16		%			0.22		%
	Allowance for credit losses to nonaccrual loans					1,725.23		%			1,191.36		%			850.91		%			725.14		%			629.37		%
	Restructured accruing loans				$	431				$	437				$	441				$	794				$	818
	Restructured accruing loans to total loans					–		%			–		%			0.01		%			0.01		%			0.01		%
	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
					4th Quarter 2021					3rd Quarter 2021					2nd Quarter 2021					1st Quarter 2021					4th Quarter 2020
	Beginning balance:				$	2,893				$	2,918				$	3,542				$	1,433				$	2,738
		Additions				–					–					–					2,146					–
		Net (paydowns) / advances				(303	)				(25	)				(624	)				(37	)				(619	)
		Charge-offs				(14	)				–					–					–					(535	)
		Transfer to OREO				–					–					–					–					(151	)
	Ending balance				$	2,576				$	2,893				$	2,918				$	3,542				$	1,433

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
				4th Quarter 2021			3rd Quarter 2021			2nd Quarter 2021			1st Quarter 2021			4th Quarter 2020
Interest income:
	Interest and fees on loans			$	100,348		$	96,119		$	95,451		$	93,803		$	94,332
	Taxable securities				6,747			6,544			6,315			5,807			6,018
	Nontaxable securities				47			62			86			107			129
	Federal funds sold				18			4			4			3			5
	Other interest and dividends				1,794			1,507			863			676			581
	Total interest income				108,954			104,236			102,719			100,396			101,065
Interest expense:
	Deposits				6,271			6,581			6,836			6,881			7,853
	Borrowed funds				1,533			1,335			1,215			1,150			1,131
	Total interest expense				7,804			7,916			8,051			8,031			8,984
	Net interest income				101,150			96,320			94,668			92,365			92,081
Provision for credit losses					8,451			5,963			9,652			7,451			6,283
	Net interest income after provision for credit losses				92,699			90,357			85,016			84,914			85,798
Non-interest income:
	Service charges on deposit accounts				1,297			1,727			1,907			1,908			1,971
	Mortgage banking				471			1,423			2,699			2,747			3,050
	Credit card income				2,200			2,043			1,912			1,192			913
	Securities gains				–			–			620			–			–
	Increase in cash surrender value life insurance				1,630			1,671			1,683			1,658			1,660
	Other operating income				1,767			1,162			777			958			643
	Total non-interest income				7,365			8,026			9,598			8,463			8,237
Non-interest expense:
	Salaries and employee benefits				17,303			17,995			16,887			15,543			14,970
	Equipment and occupancy expense				2,910			2,996			2,844			2,654			2,680
	Third party processing and other services				4,856			4,144			3,946			3,416			3,418
	Professional services				913			948			1,107			923			1,248
	FDIC and other regulatory assessments				1,042			1,630			1,425			1,582			1,366
	Other real estate owned expense				48			123			540			157			140
	Other operating expense				11,417			6,541			4,560			4,639			4,380
	Total non-interest expense				38,489			34,377			31,309			28,914			28,202
	Income before income tax				61,575			64,006			63,305			64,463			65,833
Provision for income tax					7,822			11,507			13,278			13,008			14,852
	Net income				53,753			52,499			50,027			51,455			50,981
	Dividends on preferred stock				31			–			31			–			32
	Net income available to common stockholders			$	53,722		$	52,499		$	49,996		$	51,455		$	50,949
Basic earnings per common share				$	0.99		$	0.97		$	0.92		$	0.95		$	0.94
Diluted earnings per common share				$	0.99		$	0.96		$	0.92		$	0.95		$	0.94

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
							4th Quarter 2021						3rd Quarter 2021						2nd Quarter 2021						1st Quarter 2021						4th Quarter 2020
							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				$	9,032,914		4.40	%		$	8,653,632		4.40	%		$	8,618,139		4.43	%		$	8,484,914		4.47	%		$	8,435,237		4.43	%
			Tax-exempt (2)					26,148		4.07				26,542		4.05				26,854		4.05				27,592		4.17				29,393		4.16
				Total loans, net of
					unearned income			9,059,062		4.40				8,680,174		4.39				8,644,993		4.43				8,512,506		4.47				8,464,630		4.43
		Mortgage loans held for sale						998		1.99				7,050		1.69				11,470		1.92				13,601		1.94				19,459		1.37
		Debt securities:
			Taxable					1,134,378		2.38				969,715		2.70				936,863		2.70				878,118		2.65				862,333		2.79
			Tax-exempt (2)					9,823		2.36				12,382		2.39				16,872		2.47				21,084		2.43				25,542		2.52
				Total securities (3)				1,144,201		2.38				982,097		2.70				953,735		2.69				899,202		2.64				887,875		2.78
		Federal funds sold						39,445		0.18				8,551		0.19				8,224		0.20				11,935		0.10				16,306		0.12
		Restricted equity securities						873		3.18				–		–				–		–				–		–				–		–
		Interest-bearing balances with banks						4,561,662		0.16				3,761,652		0.16				2,790,524		0.12				2,262,233		0.12				1,837,249		0.13
		Total interest-earning assets					$	14,806,241		2.92			$	13,439,524		3.08			$	12,408,946		3.32			$	11,699,477		3.48			$	11,225,519		3.58
Non-interest-earning assets:
		Cash and due from banks						79,293						90,034						85,478						71,166						91,258
		Net premises and equipment						61,837						62,845						61,240						57,198						56,315
		Allowance for credit losses, accrued
			interest and other assets					303,300						315,178						320,729						320,407						308,746
				Total assets			$	15,250,671					$	13,907,581					$	12,876,393					$	12,148,248					$	11,681,838
Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking					$	1,499,918		0.19	%		$	1,431,420		0.19	%		$	1,350,098		0.19	%		$	1,294,614		0.19	%		$	1,197,908		0.23	%
		Savings						123,179		0.18				122,579		0.17				104,283		0.18				93,375		0.18				86,259		0.18
		Money market						5,100,192		0.26				5,328,291		0.26				5,321,338		0.26				5,057,828		0.27				4,933,285		0.31
		Time deposits						807,342		1.05				806,108		1.15				801,928		1.33				808,561		1.44				810,675		1.59
			Total interest-bearing deposits					7,530,631		0.33				7,688,398		0.34				7,577,647		0.36				7,254,378		0.38				7,028,127		0.44
		Federal funds purchased						1,608,349		0.21				1,205,327		0.21				970,708		0.22				849,772		0.22				752,765		0.22
		Other borrowings						64,704		4.23				64,694		4.23				64,694		4.28				64,689		4.33				64,701		4.41
		Total interest-bearing liabilities					$	9,203,684		0.34	%		$	8,958,419		0.35	%		$	8,613,049		0.37	%		$	8,168,839		0.40	%		$	7,845,593		0.46	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			demand deposits					4,856,243						3,800,972						3,154,605						2,923,041						2,812,254
		Other liabilities						54,134						48,060						52,027						39,442						48,642
		Stockholders’ equity						1,121,578						1,078,987						1,038,012						996,741						956,847
		Accumulated other comprehensive
			income					15,032						21,143						18,700						20,185						18,502
				Total liabilities and
					stockholders’ equity		$	15,250,671					$	13,907,581					$	12,876,393					$	12,148,248					$	11,681,838
Net interest spread										2.58	%					2.73	%					2.95	%					3.08	%					3.12	%
Net interest margin										2.71	%					2.85	%					3.06	%					3.20	%					3.27	%
(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%.
(3	)	Unrealized losses on available-for-sale debt securities are excluded from the yield calculation.

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