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

Bay Street

6 years ago

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

Fourth Quarter 2018 Highlights:

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

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

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
		Period Ending December 31, 2018			Period Ending September 30, 2018			% Change From Period Ending September 30, 2018 to Period Ending December 31, 2018		Period Ending December 31, 2017			% Change From Period Ending December 31, 2017 to Period Ending December 31, 2018
QUARTERLY OPERATING RESULTS
Net Income		$	36,237		$	34,560		5	%	$	21,150		71	%
Net Income Available to Common Stockholders		$	36,205		$	34,560		5	%	$	21,119		71	%
Diluted Earnings Per Share		$	0.67		$	0.64		5	%	$	0.39		72	%
Return on Average Assets			1.85	%		1.87	%				1.20	%
Return on Average Common Stockholders’ Equity			21.13	%		20.42	%				13.97	%
Average Diluted Shares Outstanding			54,109,450			54,191,222					54,161,788

Net Income – adjusted for non-routine expenses *		$	36,237							$	24,424		48	%
Net Income Available to Common Stockholders – adjusted for
	non-routine expenses*	$	36,205							$	24,393		48	%
Diluted Earnings Per Share – adjusted for non-routine expenses *		$	0.67							$	0.45		49	%
Return on Average Assets – adjusted for non-routine expenses *			1.85	%							1.39	%
Return on Average Common Stockholders’ Equity – adjusted for
	non-routine expenses*		21.13	%							16.13	%

YEAR-TO-DATE OPERATING RESULTS
Net Income		$	136,940							$	93,092		47	%
Net Income Available to Common Stockholders		$	136,877							$	93,030		47	%
Diluted Earnings Per Share		$	2.53							$	1.72		47	%
Return on Average Assets			1.88	%							1.43	%
Return on Average Common Stockholders’ Equity			20.95	%							16.37	%
Average Diluted Shares Outstanding			54,169,879								54,123,957

Net Income – adjusted for non-routine expenses *		$	136,940							$	96,366		42	%
Net Income Available to Common Stockholders – adjusted for
	non-routine expenses*	$	136,877							$	96,304		42	%
Diluted Earnings Per Share – adjusted for non-routine expenses *		$	2.53							$	1.78		42	%
Return on Average Assets – adjusted for non-routine expenses *			1.88	%							1.48	%
Return on Average Common Stockholders’ Equity – adjusted for
	non-routine expenses*		20.95	%							16.95	%

BALANCE SHEET
Total Assets		$	8,007,382		$	7,517,833		7	%	$	7,082,384		13	%
Loans			6,533,499			6,363,531		3	%		5,851,261		12	%
Non-interest-bearing Demand Deposits			1,557,341			1,504,447		4	%		1,440,326		8	%
Total Deposits			6,915,708			6,505,351		6	%		6,091,674		14	%
Stockholders’ Equity			715,203			681,510		5	%		607,604		18	%

* Non-routine expenses during the comparative periods presented in this press release as more fully described in “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” below.

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $36.2 million for the quarter ended December 31, 2018, compared to net income of $21.2 million and net income available to common stockholders of $21.1 million for the same quarter in 2017. Basic and diluted earnings per common share were $0.68 and $0.67, respectively, for the fourth quarter of 2018, compared to $0.40 and $0.39, respectively, for the fourth quarter of 2017.

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

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

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

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

Non-performing assets to total assets were 0.41% for the fourth quarter of 2018, an increase of 14 basis points compared to 0.27% for the third quarter of 2018 and an increase of 16 basis points compared to 0.25% for the fourth quarter of 2017. $10.4 million of the previously mentioned $16.7 million of loans added to nonaccrual status were classified as accruing TDRs at September 30, 2018. Net credit charge-offs to average loans were 0.30%, a five basis point increase compared to 0.25% for the third quarter of 2018 and a decrease of 26 basis points compared to 0.56% for the fourth quarter of 2017. Year-to-date net credit charge-offs to average loans were 0.20%, a nine basis point decrease compared to 0.29% for the same period in 2017. We recorded a $6.5 million provision for loan losses in the fourth quarter of 2018 compared to $6.6 million in the third quarter of 2018 and $9.1 million in the fourth quarter of 2017. The allowance for loan loss as a percentage of total loans was 1.05% at December 31, 2018 compared to 1.05% at September 30, 2018 and 1.02% at December 31, 2017. In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.

Non-interest income increased $712,000 during the fourth quarter of 2018, or 15%, compared to the fourth quarter of 2017. Deposit service charges increased $215,000 in the fourth quarter of 2018, or 14%, compared to the fourth quarter of 2017. The number of transaction deposit accounts increased approximately 8% from December 31, 2017 to December 31, 2018, and the amount of overdraft fees increased $175,000, or 24%, from the fourth quarter of 2017 to the fourth quarter of 2018. Mortgage banking revenue decreased $206,000, or 23%, from the fourth quarter of 2017 to the fourth quarter of 2018. Increases in market rates have slowed originations and refinancing activity during 2018. Credit card revenue increased $695,000, or 54%, to $2.0 million during the fourth quarter of 2018, compared to $1.3 million during the fourth quarter of 2017, driven by increased numbers of accounts and increased purchases per account.

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

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

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

We recorded $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets at December 31, 2017 due to lower corporate income tax rates provided by the Tax Cuts and Jobs Act passed into law in December 2017. During the fourth quarter of 2017 we also recorded expenses of $347,000 related to terminating the lease agreement on our previous headquarters building in Birmingham, Alabama and expenses of moving into our new headquarters building. Financial measures included in this press release that are presented adjusted for these non-routine expenses are net income, net income available to common stockholders, diluted earnings per share, return on average assets and return on average common stockholders’ equity. Each of these five financial measures excludes the impact of the non-routine expenses attributable to our net deferred tax asset revaluation, lease termination and moving expenses, and are all considered non-GAAP financial measures. In addition to these financial measures adjusted for non-routine expenses, this press release contains certain non-GAAP financial measures, including tangible common stockholders’ equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015. We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures as of and for the comparative periods presented in this press release. Dollars are in thousands, except share and per share data.

											Three Months ended December 31, 2017			Year ended December 31, 2017
Return on average assets – GAAP												1.20	%		1.43	%
Net income – GAAP											$	21,150		$	93,092
	Adjustments:
	Revaluation of net deferred tax assets											3,059			3,059
	Lease termination and moving expenses											347			347
	Tax (benefit) of adjustments											(132	)		(132	)
Net income adjusted for non-routine expenses, net of tax
	benefit – non-GAAP										$	24,424		$	96,366
Average assets											$	6,988,731		$	6,495,067
Return on average assets adjusted for non-routine
	expenses – non-GAAP											1.39	%		1.48	%

Return on average common stockholders’ equity – GAAP												13.97	%		16.37	%
Net income available to common stockholders – GAAP											$	21,119		$	93,030
	Adjustments:
	Revaluation of net deferred tax assets											3,059			3,059
	Lease termination and moving expenses											347			347
	Tax (benefit) of adjustments											(132	)		(132	)
Net income available to common stockholders – adjusted for
	non-routine expenses – non-GAAP										$	24,393		$	96,304
Average common stockholders’ equity											$	599,947		$	568,228
Return on average common stockholders’ equity – adjusted
	for non-routine expenses – non-GAAP											16.13	%		16.95	%
Diluted earnings per share											$	0.39		$	1.72
Weighted average shares outstanding, diluted – GAAP												54,161,788			54,123,957
Diluted earnings per share – adjusted for non-routine
	expenses – non-GAAP										$	0.45		$	1.78

		At December 31, 2018			At September 30, 2018			At June 30, 2018			At March 31, 2018			At December 31, 2017
Book value per share – GAAP		$	13.40		$	12.81		$	12.33		$	11.84		$	11.47
Total common stockholders’ equity – GAAP			715,203			681,510			655,114			629,297			607,604
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,449			14,517			14,584			14,652			14,719
Tangible common stockholders’ equity – non-GAAP		$	700,754		$	666,993		$	640,530		$	614,645		$	592,885
Tangible book value per share – non-GAAP		$	13.13		$	12.54		$	12.05		$	11.56		$	11.19

Stockholders’ equity to total assets – GAAP			8.93	%		9.07	%		9.25	%		8.98	%		8.58	%
Total assets – GAAP		$	8,007,382		$	7,517,833		$	7,084,562		$	7,011,735		$	7,082,384
	Adjustments:
	Adjusted for goodwill and core deposit intangible asset		14,449			14,517			14,584			14,652			14,719
Total tangible assets – non-GAAP		$	7,992,933		$	7,503,316		$	7,069,978		$	6,997,083		$	7,067,665
Tangible common equity to total tangible assets – non-GAAP			8.77	%		8.89	%		9.06	%		8.78	%		8.39	%

About ServisFirst Bancshares, Inc.

ServisFirst Bancshares, Inc. is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, ServisFirst Bancshares, Inc. provides business and personal financial services from locations in Birmingham, Huntsville, Montgomery, Mobile and Dothan, Alabama, Pensacola and Tampa Bay, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee.

ServisFirst Bancshares, Inc. files periodic reports with the U.S. Securities and Exchange Commission (SEC). Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.servisfirstbancshares.com.

Statements in this press release that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The words “believe,” “expect,” “anticipate,” “project,” “plan,” “intend,” “will,” “would,” “might” and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. ServisFirst Bancshares, Inc. cautions that such forward-looking statements, wherever they occur in this press release or in other statements attributable to ServisFirst Bancshares, Inc., are necessarily estimates reflecting the judgment of ServisFirst Bancshares, Inc.’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, including: general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and non-bank financial institutions. The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. ServisFirst Bancshares, Inc. assumes no obligation to update or revise any forward-looking statements that are made from time to time.

More information about ServisFirst Bancshares, Inc. may be obtained over the Internet at www.servisfirstbancshares.com or by calling (205) 949-0302.

Contact: ServisFirst Bank
Davis Mange (205) 949-3420
dmange@servisfirstbank.com


SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except share and per share data)
	4th Quarter 2018			3rd Quarter 2018			2nd Quarter 2018			1st Quarter 2018			4th Quarter 2017
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	90,164		$	84,058		$	78,396		$	74,009		$	72,060
Interest expense		21,306			17,195			13,874			11,573			10,652
Net interest income		68,858			66,863			64,522			62,436			61,408
Provision for loan losses		6,518			6,624			4,121			4,139			9,055
Net interest income after provision for loan losses		62,340			60,239			60,401			58,297			52,353
Non-interest income		5,617			5,591			5,459			4,869			4,905
Non-interest expense		23,299			23,150			24,010			23,512			21,255
Income before income tax		44,658			42,680			41,850			39,654			36,003
Provision for income tax		8,421			8,120			8,310			7,051			14,853
Net income		36,237			34,560			33,540			32,603			21,150
Preferred stock dividends		32			–			31			–			31
Net income available to common stockholders	$	36,205		$	34,560		$	33,509		$	32,603		$	21,119
Earnings per share – basic	$	0.68		$	0.65		$	0.63		$	0.61		$	0.40
Earnings per share – diluted	$	0.67		$	0.64		$	0.62		$	0.60		$	0.39
Average diluted shares outstanding		54,109,450			54,191,222			54,196,023			54,183,400			54,161,788

CONSOLIDATED BALANCE SHEET DATA
Total assets	$	8,007,382		$	7,517,833		$	7,084,562		$	7,011,735		$	7,082,384
Loans		6,533,499			6,363,531			6,129,649			5,928,327			5,851,261
Debt securities		590,184			578,271			583,799			560,885			538,330
Non-interest-bearing demand deposits		1,557,341			1,504,447			1,481,447			1,407,592			1,440,326
Total deposits		6,915,708			6,505,351			6,085,682			5,977,387			6,091,674
Borrowings		64,666			64,657			64,648			64,739			64,832
Stockholders’ equity	$	715,203		$	681,510		$	655,114		$	629,297		$	607,604

Shares outstanding		53,375,195			53,197,807			53,150,733			53,147,169			52,992,586
Book value per share	$	13.40		$	12.81		$	12.33		$	11.84		$	11.47
Tangible book value per share (1)	$	13.13		$	12.54		$	12.05		$	11.56		$	11.19

SELECTED FINANCIAL RATIOS
Net interest margin		3.63	%		3.77	%		3.82	%		3.81	%		3.66	%
Return on average assets		1.85	%		1.87	%		1.91	%		1.91	%		1.20	%
Return on average common stockholders’ equity		21.13	%		20.42	%		20.89	%		21.40	%		13.97	%
Efficiency ratio		31.28	%		31.95	%		34.31	%		34.93	%		32.05	%
Non-interest expense to average earning assets		1.23	%		1.30	%		1.42	%		1.43	%		1.26	%

CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		10.12	%		10.08	%		10.08	%		9.88	%		9.51	%
Tier 1 capital to risk-weighted assets		10.13	%		10.09	%		10.08	%		9.88	%		9.52	%
Total capital to risk-weighted assets		12.05	%		12.05	%		12.10	%		11.91	%		11.52	%
Tier 1 capital to average assets		9.07	%		9.28	%		9.21	%		8.95	%		8.51	%
Tangible common equity to total tangible assets (1)		8.77	%		8.89	%		9.06	%		8.78	%		8.39	%

(1) See “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a discussion of these Non-GAAP financial measures.
(2) Regulatory capital ratios for most recent period are preliminary.

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

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

LOANS BY TYPE (UNAUDITED)
(In thousands)

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

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
			4th Quarter 2018				3rd Quarter 2018				2nd Quarter 2018				1st Quarter 2018				4th Quarter 2017
Allowance for loan losses:
Beginning balance			$	66,879			$	64,239			$	62,050			$	59,406			$	58,459
Loans charged off:
	Commercial, financial and agricultural			4,685				3,923				1,732				1,088				7,064
	Real estate – construction			–				–				–				–				–
	Real estate – mortgage			173				48				440				381				1,134
	Consumer			72				76				47				88				137
		Total charge offs		4,930				4,047				2,219				1,557				8,335
Recoveries:
	Commercial, financial and agricultural			120				52				173				4				64
	Real estate – construction			4				4				97				7				126
	Real estate – mortgage			1				1				2				42				26
	Consumer			8				6				15				9				11
		Total recoveries		133				63				287				62				227
	Net charge-offs			4,797				3,984				1,932				1,495				8,108
	Provision for loan losses			6,518				6,624				4,121				4,139				9,055
	Ending balance		$	68,600			$	66,879			$	64,239			$	62,050			$	59,406

	Allowance for loan losses to total loans			1.05		%		1.05		%		1.05		%		1.05		%		1.02		%
	Allowance for loan losses to total average
		loans		1.07		%		1.07		%		1.07		%		1.05		%		1.04		%
	Net charge-offs to total average loans			0.30		%		0.25		%		0.13		%		0.10		%		0.56		%
	Provision for loan losses to total average
		loans		0.40		%		0.42		%		0.28		%		0.29		%		0.63		%
	Nonperforming assets:
		Nonaccrual loans	$	21,926			$	9,153			$	8,022			$	9,271			$	10,765
		Loans 90+ days past due and accruing		5,844				5,714				6,081				678				60
		Other real estate owned and
		repossessed assets		5,169				5,714				5,937				5,748				6,701
	Total		$	32,939			$	20,581			$	20,040			$	15,697			$	17,526

	Nonperforming loans to total loans			0.43		%		0.23		%		0.23		%		0.17		%		0.19		%
	Nonperforming assets to total assets			0.41		%		0.27		%		0.28		%		0.22		%		0.25		%
	Nonperforming assets to earning assets			0.43		%		0.28		%		0.29		%		0.23		%		0.25		%
	Reserve for loan losses to nonaccrual loans			312.87		%		730.68		%		800.79		%		669.29		%		551.84		%

	Restructured accruing loans		$	3,073			$	15,495			$	15,572			$	15,838			$	16,919

	Restructured accruing loans to total loans			0.04		%		0.24		%		0.25		%		0.27		%		0.29		%

	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
			4th Quarter 2018				3rd Quarter 2018				2nd Quarter 2018				1st Quarter 2018				4th Quarter 2017
	Beginning balance:		$	16,584			$	17,257			$	18,792			$	20,572			$	16,354
		Additions		–				100				–				–				4,233
		Net (paydowns) / advances		(11	)			(177	)			(267	)			(1,080	)			(15	)
		Charge-offs		(2,018	)			(596	)			(1,268	)			(700	)			–
			$	14,555			$	16,584			$	17,257			$	18,792			$	20,572

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

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)

						4th Quarter 2018					3rd Quarter 2018					2nd Quarter 2018					1st Quarter 2018					4th Quarter 2017
						Average Balance			Yield / Rate		Average Balance			Yield / Rate		Average Balance			Yield / Rate		Average Balance			Yield / Rate		Average Balance		Yield / Rate
Assets:
Interest-earning assets:
		Loans, net of unearned income (1)
			Taxable			$	6,403,139		5.13	%	$	6,203,372		5.03	%	$	5,958,377		4.94	%	$	5,847,443		4.81	%	$	5,680,227	4.68	%
			Tax-exempt (2)				29,656		3.26			30,005		3.94			30,246		3.94			36,357		4.06			36,992	4.95
				Total loans, net of
					unearned income		6,432,795		5.12			6,233,377		5.03			5,988,623		4.93			5,883,800		4.80			5,717,219	4.68
		Mortgage loans held for sale					3,364		3.30			3,538		4.15			3,770		4.26			3,698		4.50			6,199	3.52
		Debt securities:
			Taxable				498,138		2.82			482,571		2.72			475,777		2.63			435,747		2.52			406,488	2.43
			Tax-exempt (2)				98,027		2.34			105,592		2.45			112,145		2.60			120,270		2.56			128,201	3.27
				Total securities (3)			596,165		2.74			588,163		2.67			587,922		2.62			556,017		2.53			534,689	2.63
		Federal funds sold					156,884		2.44			163,453		2.17			141,915		1.96			131,472		1.70			143,905	1.40
		Restricted equity securities					879		1.35			993		2.80			1,022		1.18			1,030		1.57			1,030	1.93
		Interest-bearing balances with banks					334,065		2.45			61,867		1.98			73,714		1.79			96,012		1.60			310,289	1.31
		Total interest-earning assets				$	7,524,152		4.76	%	$	7,051,391		4.74	%	$	6,796,966		4.64	%	$	6,672,029		4.51	%	$	6,713,331	4.29	%
Non-interest-earning assets:
		Cash and due from banks					74,272					76,800					68,190					68,309					68,444
		Net premises and equipment					58,521					58,873					59,262					59,709					57,320
		Allowance for loan losses, accrued
			interest and other assets				128,054					127,850					129,585					140,558					149,636
				Total assets		$	7,784,999				$	7,314,914				$	7,054,003				$	6,940,605				$	6,988,731

Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	908,416		0.74	%	$	819,807		0.67	%	$	827,540		0.56	%	$	899,311		0.52	%	$	899,334	0.46	%
		Savings					52,443		0.54			53,835		0.52			54,842		0.34			53,269		0.31			49,697	0.31
		Money market					3,537,522		1.56			3,305,293		1.33			3,089,595		1.10			3,027,176		0.90			3,065,298	0.80
		Time deposits					687,361		1.92			643,260		1.65			596,450		1.36			576,857		1.21			576,010	1.16
			Total interest-bearing deposits				5,185,742		1.45			4,822,195		1.25			4,568,427		1.03			4,556,613		0.86			4,590,339	0.77
		Federal funds purchased					263,125		2.36			229,016		2.09			295,309		1.87			297,051		1.60			271,248	1.37
		Other borrowings					64,665		4.79			64,652		4.79			64,699		4.85			64,805		4.89			60,829	4.98
		Total interest-bearing liabilities				$	5,513,532		1.53	%	$	5,115,863		1.33	%	$	4,928,435		1.13	%	$	4,918,469		0.95	%	$	4,922,416	0.86	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			demand				1,551,366					1,511,410					1,469,194					1,389,217					1,444,338
		Other liabilities					40,185					16,333					13,079					15,007					22,029
		Stockholders’ equity					689,525					678,839					650,641					621,004					599,754
		Accumulated other comprehensive
			(loss) income				(9,609	)				(7,531	)				(7,346	)				(3,092	)				194
				Total liabilities and
					stockholders’ equity	$	7,784,999				$	7,314,914				$	7,054,003				$	6,940,605				$	6,988,731
Net interest spread									3.23	%				3.41	%				3.51	%				3.56	%			3.43	%
Net interest margin									3.63	%				3.77	%				3.82	%				3.81	%			3.66	%

(1	)	Average loans include loans on which the accrual of interest has been discontinued.
(2	)	Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21% for the quarters in 2018 and 35% for the quarter in 2017.
(3	)	Unrealized (losses) gains on available-for-sale debt securities are excluded from the yield calculation.