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ServisFirst Bancshares, Inc. Announces Results For Fourth Quarter of 2022

SFBS

ServisFirst Bancshares, Inc. (NYSE: SFBS), today announced earnings and operating results for the quarter and year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

  • Diluted earnings per share were $1.24 for the fourth quarter of 2022, a 25% increase over the fourth quarter of 2021.
  • Diluted earnings per share were $4.61 for 2022, a 21% increase from 2021.
  • Deposits increased $494.9 million, or by 18%, annualized to $11.6 billion on a linked-quarter basis.
  • Total loans grew from $9.5 billion to $11.7 billion, or by 23%, during 2022, and grew $409.4 million, or 14% annualized, on a linked-quarter basis.
  • Efficiency ratio improved to 29.45% during the fourth quarter of 2022, down from 31.54% in the prior quarter and 35.47% in the year-ago quarter.
  • Cash dividend increased from $0.23 to $0.28 per quarter, a 22% increase.
  • Book value per share increased to $23.89, a 12% increase year-over-year.

Tom Broughton, Chairman, President and CEO, said, “2022 was a year of growth in both our footprint and profitability while maintaining credit quality. Our company has expanded to Panama City and Tallahassee, Florida, and the Piedmont region of North Carolina, with offices in Charlotte and Asheville. Diluted EPS increased 21% year-over-year, due in part to our best-in-class bankers, who continue to deliver superior growth.”

Bud Foshee, CFO, said, “We continue to see strong credit quality metrics, evidenced by our below-industry-average charge-offs and non-performing assets over the past three years. Our commitment to operational efficiency will continue in 2023.”

FINANCIAL SUMMARY (UNAUDITED)

(In thousands except share and per share amounts)

Period Ending
December 31,
2022

Period Ending
September 30,
2022

% Change
From Period
Ending
September 30,
2022 to Period
Ending
December 31,
2022

Period Ending
December 31,
2021

% Change
From Period
Ending
December 31,
2021 to Period
Ending
December 31,
2022

QUARTERLY OPERATING RESULTS

Net Income

$

67,724

$

64,031

6

%

$

53,753

26

%

Net Income Available to Common Stockholders

$

67,693

$

64,031

6

%

$

53,722

26

%

Diluted Earnings Per Share

$

1.24

$

1.17

6

%

$

0.99

25

%

Return on Average Assets

1.89

%

1.77

%

1.40

%

Return on Average Common Stockholders' Equity

21.27

%

20.49

%

18.75

%

Average Diluted Shares Outstanding

54,537,685

54,546,682

54,493,959

YEAR-TO-DATE OPERATING RESULTS

Net Income

$

251,504

$

207,734

21

%

Net Income Available to Common Stockholders

$

251,442

$

207,672

21

%

Diluted Earnings Per Share

$

4.61

$

3.82

21

%

Return on Average Assets

1.71

%

1.53

%

Return on Average Common Stockholders' Equity

23.32

%

19.26

%

Average Diluted Shares Outstanding

54,534,774

54,434,573

BALANCE SHEET

Total Assets

$

14,595,753

$

13,890,030

5

%

$

15,448,806

(6)

%

Loans

11,687,968

11,278,614

4

%

9,532,934

23

%

Non-interest-bearing Demand Deposits

3,321,347

3,661,936

(9)

%

4,799,767

(31)

%

Total Deposits

11,546,805

11,051,915

4

%

12,452,836

(7)

%

Stockholders' Equity

1,297,896

1,242,589

4

%

1,152,015

13

%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $67.7 million for the quarter ended December 31, 2022, compared to net income and net income available to common stockholders of $53.8 million and $53.7 million, respectively, for the same quarter in 2021. Basic and diluted earnings per common share were $1.25 and $1.24, respectively, for the fourth quarter of 2022, compared to $0.99 for both in the fourth quarter of 2021.

Annualized return on average assets was 1.89% and annualized return on average common stockholders’ equity was 21.27% for the fourth quarter of 2022, compared to 1.40% and 18.75%, respectively, for the fourth quarter of 2021.

Net interest income was $122.4 million for the fourth quarter of 2022, compared to $126.4 million for the third quarter of 2022 and $101.2 million for the fourth quarter of 2021. The net interest margin in the fourth quarter of 2022 was 3.52% compared to 3.64% in the third quarter of 2022 and 2.71% in the fourth quarter of 2021. Loan yields were 5.32% during the fourth quarter of 2022 compared to 4.77% during the third quarter of 2022, and 4.40% during the fourth quarter of 2021. Accretion of net fees of $103,000 on PPP loans during the fourth quarter of 2022 had a negligible impact on the loan yield, compared to $400,000 of PPP loan fee accretion during the third quarter of 2022, or one basis points of the loan yield and $5.1 million during the fourth quarter of 2021, or 22 basis points of the loan yield. Investment yields were 2.48% during the fourth quarter of 2022, compared to 2.47% during the third quarter of 2022, and 2.38% during the fourth quarter of 2021. Average interest-bearing deposit rates increased to 1.70% during the fourth quarter of 2022, compared to 0.76% during the third quarter of 2022 and 0.33% during the fourth quarter of 2021. Average borrowing rates increased to 3.75% during the fourth quarter of 2022, compared to 2.27% during the third quarter of 2022 and 0.21% during the fourth quarter of 2021.

Average loans for the fourth quarter of 2022 were $11.49 billion, an increase of $565.1 million, or 20.5% annualized, over average loans of $10.92 billion for the third quarter of 2022, and an increase of $2.43 billion, or 26.8%, over average loans of $9.06 billion for the fourth quarter of 2021.

Average total deposits for the fourth quarter of 2022 were $11.39 billion, a decrease of $146.0 million, or 5.0%, annualized, over average total deposits of $11.53 billion for the third quarter of 2022, and a decrease of $1.00 billion, or 8.1%, over average total deposits of $12.39 billion for the fourth quarter of 2021.

Non-performing assets to total assets were 0.12% for the fourth quarter of 2022, a decrease of one basis point compared to 0.13% for the third quarter of 2022 and an increase of three basis points compared to 0.09% for the fourth quarter of 2021. Annualized net charge-offs to average loans were 0.06% for the fourth quarter of 2022, compared to 0.11% and 0.03% for the third quarter of 2022 and fourth quarter of 2021, respectively. The allowance for credit losses as a percentage of total loans at December 31, 2022, September 30, 2022 and December 31, 2021 was 1.25%, 1.25%, and 1.22%, respectively. We recorded a $7.1 million provision for credit losses in the fourth quarter of 2022 compared to $15.6 million in the third quarter of 2022 and $8.5 million in the fourth quarter of 2021.

Non-interest income decreased $399,000, or 5.4%, to $7.0 million for the fourth quarter of 2022 from $7.4 million in the fourth quarter of 2021, and decreased $2.0 million, or 22.1%, on a linked quarter basis. Service charges on deposit accounts increased $569,000, or 43.9%, to $1.9 million from the fourth quarter of 2021 to the fourth quarter of 2022, and decreased $26,000, or 1.4%, on a linked quarter basis. Mortgage banking revenue increased $43,000, or 9.1%, to $514,000 from the fourth quarter of 2021 to the fourth quarter of 2022, and decreased $270,000, or 34.4%, on a linked quarter basis. Net credit card revenue increased $61,000, or 2.8%, to $2.3 million during the fourth quarter of 2022, compared to $2.2 million during the fourth quarter of 2021, and decreased $351,000, or 13.4%, on a linked quarter basis. The number of credit card accounts increased approximately 12.6% and the aggregate amount of spend on all credit card accounts increased 17.8% during the fourth quarter of 2022 compared to the fourth quarter of 2021. Cash surrender value life insurance decreased $30,000, or 1.8%, to $1.6 million during the fourth quarter of 2022, compared to $1.6 million during the fourth quarter of 2021, and decreased $37,000, or 2.3%, on a linked quarter basis. Other operating income for the fourth quarter of 2022 decreased $1.0 million, or 59.0%, to $725,000 from $1.8 million in the fourth quarter of 2021, and decreased $1.3 million, or 64.0%, on a linked quarter basis. We recognized $162,000 of income related to our interest rate cap during the fourth quarter 2022 compared to $839,000 during the fourth quarter of 2021. Merchant service revenue increased by $114,000, or 30.4%, to $490,000, during the fourth quarter of 2022, from $376,000 during the fourth quarter of 2021.

Non-interest expense for the fourth quarter of 2022 decreased $397,000, or 1.0%, to $38.1 million from $38.5 million in the fourth quarter of 2021, and decreased $4.6 million, or 10.8%, on a linked quarter basis. Salary and benefit expense for the fourth quarter of 2022 increased $1.9 million, or 11.1%, to $19.2 million from $17.3 million in the fourth quarter of 2021, and decreased $457,000, or 2.3%, on a linked quarter basis. The number of FTE employees increased by 69 to 571 at December 31, 2022 compared to 502 at December 31, 2021, and increased by 13 from the end of the third quarter of 2022. Equipment and occupancy expense increased $353,000, or 12.1%, to $3.3 million in the fourth quarter of 2022, from $2.9 million in the fourth quarter of 2021, and increased $123,000, or 3.9% on a linked-quarter basis. Third party processing and other services expense increased $3.3 million, or 68.2%, to $8.2 million in the fourth quarter of 2022, from $4.9 million in the fourth quarter of 2021, and increased $957,000, or 13.3%, on a linked-quarter basis. This increase in third party processing also includes Federal Reserve Bank charges related to correspondent bank settlement activities, which increased by $3.1 million year-over-year to $4.3 million during the fourth quarter of 2022. Professional services expense increased $9,000, or 1.0%, to $922,000 in the fourth quarter of 2022, from $913,000 in the fourth quarter of 2021. FDIC and other regulatory assessments increased $269,000 to $1.3 million in the fourth quarter of 2022, from $1.0 million in the fourth quarter of 2021, and increased $336,000, or 34.5%, on a linked quarter basis. Other operating expenses for the fourth quarter of 2022 decreased $6.5 million, or 56.6%, to $5.0 million from $11.4 million in the fourth quarter of 2021, and decreased $5.7 million on a linked-quarter basis. During the third quarter of 2022 we reached a preliminary settlement on a lawsuit and wrote down the value of a private investment resulting in combined charges of $3.1 million, or $2.4 million net of income tax. Our reserve for credit losses on unfunded loan commitments decreased by $1.4 million in the fourth quarter of 2022. The efficiency ratio was 29.45% during the fourth quarter of 2022 compared to 35.47% during the fourth quarter of 2021 and compared to 31.54% during the third quarter of 2022.

Income tax expense increased $8.6 million, or 109.7%, to $16.4 million in the fourth quarter of 2022, compared to $7.8 million in the fourth quarter of 2021. Our effective tax rate was 19.49% for the fourth quarter of 2022 compared to 12.70% for the fourth quarter of 2021. We recognized an aggregate of $3.4 million in credits during the fourth quarter of 2022 related to investments in tax credit partnerships, compared to 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 2022 and 2021 of $10,000 and $363,000, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

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 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.

At December 31,
2022

At September 30,
2022

At June 30,
2022

At March 31,
2022

At December 31,
2021

Book value per share - GAAP

$

23.89

$

22.87

$

22.32

$

21.61

$

21.24

Total common stockholders' equity - GAAP

1,297,896

1,242,589

1,211,918

1,172,975

1,152,015

Adjustments:

Adjusted for goodwill and core deposit intangible asset

(13,615

)

(13,615

)

(13,615

)

(13,615

)

(13,638

)

Tangible common stockholders' equity - non-GAAP

$

1,284,281

$

1,228,974

$

1,198,334

$

1,159,360

$

1,138,377

Tangible book value per share - non-GAAP

$

23.64

$

22.62

$

22.07

$

21.36

$

20.99

Stockholders' equity to total assets - GAAP

8.89

%

8.95

%

8.36

%

7.65

%

7.46

%

Total assets - GAAP

$

14,595,753

$

13,890,030

$

14,494,317

$

15,339,419

$

15,448,806

Adjustments:

Adjusted for goodwill and core deposit intangible asset

(13,615

)

(13,615

)

(13,615

)

(13,615

)

(13,638

)

Total tangible assets - non-GAAP

$

14,582,138

$

13,876,415

$

14,480,733

$

15,325,804

$

15,435,168

Tangible common equity to total tangible assets - non-GAAP

8.81

%

8.86

%

8.28

%

7.56

%

7.38

%

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, and Charlotte and Asheville, North 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, interest rate spread relationships and inflation; 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; 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 credit worthiness 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; the effect of data breaches, cyberattacks or other data security issues; 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 2022, 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.

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands except share and per share data)

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

1st Quarter 2022

4th Quarter 2021

CONSOLIDATED STATEMENT OF INCOME

Interest income

$

170,273

$

149,299

$

126,555

$

113,188

$

108,954

Interest expense

47,889

22,881

10,187

7,466

7,804

Net interest income

122,384

126,418

116,368

105,722

101,150

Provision for credit losses

7,135

15,603

9,507

5,362

8,451

Net interest income after provision for credit losses

115,249

110,815

106,861

100,360

92,699

Non-interest income

6,966

8,939

9,506

7,948

7,365

Non-interest expense

38,092

42,685

39,821

37,218

38,489

Income before income tax

84,123

77,069

76,546

71,090

61,575

Provision for income tax

16,399

13,038

14,410

13,477

7,822

Net income

67,724

64,031

62,136

57,613

53,753

Preferred stock dividends

31

-

31

-

31

Net income available to common stockholders

$

67,693

$

64,031

$

62,105

$

57,613

$

53,722

Earnings per share - basic

$

1.25

$

1.18

$

1.14

$

1.06

$

0.99

Earnings per share - diluted

$

1.24

$

1.17

$

1.14

$

1.06

$

0.99

Average diluted shares outstanding

54,537,685

54,528,554

54,532,385

54,522,042

54,493,959

CONSOLIDATED BALANCE SHEET DATA

Total assets

$

14,595,753

$

13,890,030

$

14,494,317

$

15,339,419

$

15,448,806

Loans

11,687,968

11,278,614

10,617,320

9,898,957

9,532,934

Debt securities

1,678,936

1,714,603

1,790,218

1,617,977

1,305,527

Non-interest-bearing demand deposits

3,321,347

3,661,936

4,686,511

4,889,495

4,799,767

Total deposits

11,546,805

11,051,915

11,772,337

12,408,755

12,452,836

Borrowings

64,726

64,721

64,716

64,711

64,706

Stockholders' equity

1,297,896

1,242,589

1,211,918

1,172,975

1,152,015

Shares outstanding

54,326,527

54,324,007

54,306,875

54,282,132

54,227,060

Book value per share

$

23.89

$

22.87

$

22.32

$

21.61

$

21.24

Tangible book value per share (1)

$

23.64

$

22.62

$

22.07

$

21.36

$

20.99

SELECTED FINANCIAL RATIOS (Annualized)

Net interest margin

3.52

%

3.64

%

3.26

%

2.89

%

2.71

%

Return on average assets

1.89

%

1.77

%

1.67

%

1.53

%

1.40

%

Return on average common stockholders' equity

21.27

%

20.49

%

20.93

%

20.09

%

18.75

%

Efficiency ratio

29.45

%

31.54

%

31.64

%

32.74

%

35.47

%

Non-interest expense to average earning assets

1.10

%

1.23

%

1.11

%

1.02

%

1.03

%

CAPITAL RATIOS (2)

Common equity tier 1 capital to risk-weighted assets

9.54

%

9.37

%

9.59

%

9.86

%

9.95

%

Tier 1 capital to risk-weighted assets

9.54

%

9.37

%

9.59

%

9.87

%

9.96

%

Total capital to risk-weighted assets

11.06

%

10.91

%

11.12

%

11.43

%

11.58

%

Tier 1 capital to average assets

9.29

%

8.84

%

8.19

%

7.67

%

7.39

%

Tangible common equity to total tangible assets (1)

8.81

%

8.86

%

8.28

%

7.56

%

7.38

%

(1) 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.

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

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

December 31,
2022

December 31,
2021

% Change

ASSETS

Cash and due from banks

$

106,317

$

56,934

87

%

Interest-bearing balances due from depository institutions

708,221

4,106,790

(83

)%

Federal funds sold

1,515

58,372

(97

)%

Cash and cash equivalents

816,053

4,222,096

(81

)%

Available for sale debt securities, at fair value

644,815

842,570

(23

)%

Held to maturity debt securities (fair value of $935,953 at 2022 and $466,286 at 2021)

1,034,121

462,957

123

%

Restricted equity securities

7,734

7,311

6

%

Mortgage loans held for sale

1,607

1,114

44

%

Loans

11,687,968

9,532,934

23

%

Less allowance for credit losses

(146,297

)

(116,660

)

25

%

Loans, net

11,541,671

9,416,274

23

%

Premises and equipment, net

59,850

60,300

(1

)%

Goodwill and other identifiable intangible assets

13,615

13,638

-

%

Other assets

476,287

422,546

13

%

Total assets

$

14,595,753

$

15,448,806

(6

)%

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits:

Non-interest-bearing

$

3,321,347

$

4,799,767

(31

)%

Interest-bearing

8,225,458

7,653,069

7

%

Total deposits

11,546,805

12,452,836

(7

)%

Federal funds purchased

1,618,798

1,711,777

(5

)%

Other borrowings

64,726

64,706

-

%

Other liabilities

67,528

67,472

-

%

Total liabilities

13,297,857

14,296,791

(7

)%

Stockholders' equity:

Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at December 31, 2022 and December 31, 2021

-

-

Common stock, par value $0.001 per share; 200,000,000 shares authorized; 54,329,527 shares issued and outstanding at December 31, 2022, and 100,000,000 shares authorized; 54,227,060 shares issued and outstanding at December 31, 2021

54

54

-

%

Additional paid-in capital

229,693

226,397

1

%

Retained earnings

1,109,902

911,008

22

%

Accumulated other comprehensive (loss) income

(42,253

)

14,056

(401

)%

Total stockholders' equity attributable to ServisFirst Bancshares, Inc.

1,297,396

1,151,515

13

%

Noncontrolling interest

500

500

-

%

Total stockholders' equity

1,297,896

1,152,015

13

%

Total liabilities and stockholders' equity

$

14,595,753

$

15,448,806

(6

)%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

Three Months Ended December 31,

Year Ended December 31,

2022

2021

2022

2021

Interest income:

Interest and fees on loans

$

153,924

$

100,348

$

499,691

$

385,721

Taxable securities

10,895

6,747

40,722

25,413

Nontaxable securities

27

47

137

302

Federal funds sold

818

18

1,556

29

Other interest and dividends

4,609

1,794

17,209

4,840

Total interest income

170,273

108,954

559,315

416,305

Interest expense:

Deposits

33,471

6,271

59,396

26,569

Borrowed funds

14,418

1,533

29,027

5,233

Total interest expense

47,889

7,804

88,423

31,802

Net interest income

122,384

101,150

470,892

384,503

Provision for credit losses

7,135

8,451

37,607

31,517

Net interest income after provision for credit losses

115,249

92,699

433,285

352,986

Non-interest income:

Service charges on deposit accounts

1,866

1,297

8,033

6,839

Mortgage banking

514

471

2,438

7,340

Credit card income

2,261

2,200

9,917

7,347

Securities (losses) gains

-

-

(6,168

)

620

Increase in cash surrender value life insurance

1,600

1,630

6,478

6,642

Other operating income

725

1,767

12,661

4,664

Total non-interest income

6,966

7,365

33,359

33,452

Non-interest expense:

Salaries and employee benefits

19,230

17,303

77,952

67,728

Equipment and occupancy expense

3,263

2,910

12,319

11,404

Third party processing and other services

8,170

4,856

27,333

16,362

Professional services

922

913

4,277

3,891

FDIC and other regulatory assessments

1,311

1,042

4,565

5,679

Other real estate owned expense

239

48

295

868

Other operating expense

4,957

11,417

31,075

27,157

Total non-interest expense

38,092

38,489

157,816

133,089

Income before income tax

84,123

61,575

308,828

253,349

Provision for income tax

16,399

7,822

57,324

45,615

Net income

67,724

53,753

251,504

207,734

Dividends on preferred stock

31

31

62

62

Net income available to common stockholders

$

67,693

$

53,722

$

251,442

$

207,672

Basic earnings per common share

$

1.25

$

0.99

$

4.63

$

3.83

Diluted earnings per common share

$

1.24

$

0.99

$

4.61

$

3.82

LOANS BY TYPE (UNAUDITED)

(In thousands)

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

1st Quarter 2022

4th Quarter 2021

Commercial, financial and agricultural

$

3,145,317

$

3,104,155

$

2,966,040

$

2,955,927

$

2,984,053

Real estate - construction

1,532,388

1,433,698

1,383,155

1,164,690

1,103,076

Real estate - mortgage:

Owner-occupied commercial

2,199,280

2,145,621

2,026,807

1,919,811

1,874,103

1-4 family mortgage

1,146,831

1,089,826

1,015,698

926,697

826,765

Other mortgage

3,597,750

3,438,762

3,160,510

2,869,158

2,678,084

Subtotal: Real estate - mortgage

6,943,861

6,674,209

6,203,015

5,715,666

5,378,952

Consumer

66,402

66,552

65,110

62,674

66,853

Total loans

$

11,687,968

$

11,278,614

$

10,617,320

$

9,898,957

$

9,532,934

SUMMARY OF CREDIT LOSS EXPERIENCE (UNAUDITED)

(Dollars in thousands)

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

1st Quarter 2022

4th Quarter 2021

Allowance for credit losses:

Beginning balance

$

140,967

$

128,387

$

119,463

$

116,660

$

108,950

Loans charged off:

Commercial financial and agricultural

2,116

2,902

1,667

2,574

1,285

Real estate - construction

-

-

-

-

14

Real estate - mortgage

-

170

23

27

-

Consumer

200

261

123

75

141

Total charge offs

2,316

3,333

1,813

2,676

1,440

Recoveries:

Commercial financial and agricultural

393

297

1,217

105

671

Real estate - construction

-

-

-

-

-

Real estate - mortgage

-

-

-

-

18

Consumer

118

12

13

12

10

Total recoveries

511

309

1,230

117

699

Net charge-offs

1,805

3,024

583

2,559

741

Provision for credit losses

7,135

15,604

9,507

5,362

8,451

Ending balance

$

146,297

$

140,967

$

128,387

$

119,463

$

116,660

Allowance for credit losses to total loans

1.25

%

1.25

%

1.21

%

1.21

%

1.22

%

Allowance for credit losses to total average loans

1.27

%

1.29

%

1.26

%

1.24

%

1.29

%

Net charge-offs to total average loans

0.06

%

0.11

%

0.02

%

0.11

%

0.03

%

Provision for credit losses to total average loans

0.25

%

0.57

%

0.37

%

0.23

%

0.37

%

Nonperforming assets:

Nonaccrual loans

$

12,450

$

11,655

$

10,540

$

14,738

$

6,762

Loans 90+ days past due and accruing

5,391

4,803

4,991

4,686

5,335

Other real estate owned and repossessed assets

248

1,245

1,207

1,989

1,208

Total

$

18,089

$

17,703

$

16,738

$

21,413

$

13,305

Nonperforming loans to total loans

0.15

%

0.15

%

0.15

%

0.20

%

0.13

%

Nonperforming assets to total assets

0.12

%

0.13

%

0.12

%

0.14

%

0.09

%

Nonperforming assets to earning assets

0.13

%

0.13

%

0.12

%

0.14

%

0.09

%

Allowance for credit losses to nonaccrual loans

1,175.08

%

1,209.50

%

1,218.05

%

826.19

%

1,725.23

%

Restructured accruing loans

$

2,480

$

236

$

421

$

426

$

431

Restructured accruing loans to total loans

-

%

-

%

-

%

-

%

-

%

TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)

(In thousands)

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

1st Quarter 2022

4th Quarter 2021

Beginning balance:

$

2,041

$

2,403

$

2,482

$

2,576

$

2,893

Additions

444

-

-

-

-

Net (paydowns) / advances

(5)

(362)

(79)

(94)

(303)

Charge-offs

-

-

-

-

(14)

Transfer to OREO

-

-

-

-

-

Ending balance

$

2,480

$

2,041

$

2,403

$

2,482

$

2,576

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands except per share data)

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

1st Quarter 2022

4th Quarter 2021

Interest income:

Interest and fees on loans

$

153,924

$

131,375

$

111,287

$

103,105

$

100,348

Taxable securities

10,895

11,089

10,515

8,223

6,747

Nontaxable securities

27

30

37

43

47

Federal funds sold

818

632

93

13

18

Other interest and dividends

4,609

6,173

4,623

1,804

1,794

Total interest income

170,273

149,299

126,555

113,188

108,954

Interest expense:

Deposits

33,471

13,655

6,427

5,843

6,271

Borrowed funds

14,418

9,226

3,760

1,623

1,533

Total interest expense

47,889

22,881

10,187

7,466

7,804

Net interest income

122,384

126,418

116,368

105,722

101,150

Provision for credit losses

7,135

15,603

9,507

5,362

8,451

Net interest income after provision for credit losses

115,249

110,815

106,861

100,360

92,699

Non-interest income:

Service charges on deposit accounts

1,866

1,892

2,133

2,142

1,297

Mortgage banking

514

784

614

526

471

Credit card income

2,261

2,612

2,672

2,372

2,200

Securities losses

-

-

(2,833)

(3,335)

-

Increase in cash surrender value life insurance

1,600

1,637

1,633

1,608

1,630

Other operating income

725

2,014

5,287

4,635

1,767

Total non-interest income

6,966

8,939

9,506

7,948

7,365

Non-interest expense:

Salaries and employee benefits

19,230

19,687

20,734

18,301

17,303

Equipment and occupancy expense

3,263

3,140

2,983

2,933

2,910

Third party processing and other services

8,170

7,213

6,345

5,605

4,856

Professional services

922

1,036

1,327

992

913

FDIC and other regulatory assessments

1,311

975

1,147

1,132

1,042

Other real estate owned expense

239

21

32

3

48

Other operating expense

4,957

10,613

7,253

8,252

11,417

Total non-interest expense

38,092

42,685

39,821

37,218

38,489

Income before income tax

84,123

77,069

76,546

71,090

61,575

Provision for income tax

16,399

13,038

14,410

13,477

7,822

Net income

67,724

64,031

62,136

57,613

53,753

Dividends on preferred stock

31

-

31

-

31

Net income available to common stockholders

$

67,693

$

64,031

$

62,105

$

57,613

$

53,722

Basic earnings per common share

$

1.25

$

1.18

$

1.14

$

1.06

$

0.99

Diluted earnings per common share

$

1.24

$

1.17

$

1.14

$

1.06

$

0.99

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)

ON A FULLY TAXABLE-EQUIVALENT BASIS

(Dollars in thousands)

4th Quarter 2022

3rd Quarter 2022

2nd Quarter 2022

1st Quarter 2022

4th Quarter 2021

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

$

11,465,538

5.32

%

$

10,900,105

4.77

%

$

10,165,470

4.38

%

$

9,621,484

4.29

%

$

9,032,914

4.40

%

Tax-exempt (2)

19,526

6.75

19,852

4.14

23,616

4.09

25,195

4.08

26,148

4.07

Total loans, net of unearned income

11,485,064

5.32

10,919,957

4.77

10,189,086

4.38

9,646,679

4.29

9,059,062

4.40

Mortgage loans held for sale

1,515

3.67

2,906

2.73

471

3.41

927

1.73

998

1.99

Debt securities:

Taxable

1,755,764

2.49

1,797,560

2.47

1,775,425

2.37

1,518,572

2.17

1,134,378

2.38

Tax-exempt (2)

4,863

2.47

5,863

2.39

7,148

2.35

8,812

2.36

9,823

2.36

Total securities (3)

1,760,627

2.49

1,803,423

2.47

1,782,573

2.37

1,527,384

2.17

1,144,201

2.38

Federal funds sold

82,656

3.93

102,028

2.46

30,721

1.21

16,639

0.31

39,445

0.18

Restricted equity securities

7,724

7.35

7,724

3.65

7,724

3.74

7,371

3.70

873

3.18

Interest-bearing balances with banks

458,115

3.83

945,142

2.56

2,332,412

0.80

3,637,882

0.20

4,561,662

0.16

Total interest-earning assets

$

13,795,701

4.90

$

13,781,180

4.30

$

14,342,987

3.54

$

14,836,882

3.06

$

14,806,241

2.92

Non-interest-earning assets:

Cash and due from banks

113,823

256,607

204,994

74,534

79,293

Net premises and equipment

60,323

60,155

60,673

61,209

61,837

Allowance for credit losses, accrued

interest and other assets

273,964

294,006

297,893

313,560

303,300

Total assets

$

14,243,811

$

14,391,948

$

14,906,547

$

15,286,185

$

15,250,671

Interest-bearing liabilities:

Interest-bearing deposits:

Checking

$

1,763,622

0.73

%

$

1,722,926

0.28

%

$

1,699,602

0.21

%

$

1,594,645

0.20

%

$

1,499,918

0.19

%

Savings

141,163

0.64

144,368

0.21

134,469

0.18

135,545

0.17

123,179

0.18

Money market

5,047,133

2.07

4,444,583

0.89

4,617,021

0.33

4,985,224

0.26

5,100,192

0.26

Time deposits

860,336

1.69

809,057

1.16

766,225

0.86

792,930

0.91

807,342

1.05

Total interest-bearing deposits

7,812,254

1.70

7,120,934

0.76

7,217,317

0.36

7,508,344

0.31

7,530,631

0.33

Federal funds purchased

1,453,445

3.75

1,493,444

2.27

1,550,805

0.79

1,620,012

0.23

1,608,349

0.21

Other borrowings

64,726

4.23

65,406

4.19

64,713

4.28

64,708

4.28

64,704

4.23

Total interest-bearing liabilities

$

9,330,425

2.04

%

$

8,679,784

1.05

%

$

8,832,835

0.46

%

$

9,193,064

0.33

%

$

9,203,684

0.34

%

Non-interest-bearing liabilities:

Non-interest-bearing demand deposits

3,572,956

4,410,318

4,824,521

4,870,701

4,856,243

Other liabilities

77,544

62,093

58,784

59,619

54,134

Stockholders' equity

1,307,553

1,263,870

1,205,551

1,156,186

1,121,578

Accumulated other comprehensive (loss) income

(44,667

)

(24,117

)

(15,144

)

6,615

15,032

Total liabilities and stockholders' equity

$

14,243,811

$

14,391,948

$

14,906,547

$

15,286,185

$

15,250,671

Net interest spread

2.86

%

3.25

%

3.08

%

2.77

%

2.58

%

Net interest margin

3.52

%

3.64

%

3.26

%

2.89

%

2.71

%

(1)

Average loans include nonaccrual loans in all periods. Loan fees of $3,630, $3,849, $5,303, $6,823, and $7,686 are included in interest income in the fourth quarter of 2022, third quarter of 2022, second quarter of 2022, first quarter of 2022, and the fourth quarter of 2021, respectively.

(2)

Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%.

(3)

Unrealized (losses) gains on debt securities of $(62,568), $(34,688), $(25,703), $8,245, and $18,974 for the fourth quarter of 2022, third quarter of 2022, second quarter of 2022, first quarter of 2022, and the fourth quarter of 2021, respectively, are excluded from the yield calculation.