Servisfirst Bancshares, Inc. · NYSE:SFBS
Servisfirst Bancshares — Investor Presentation (May 2021)
39 slides from Servisfirst Bancshares's investor presentation, May 3, 2021
Slide 1: ServisFirst Bancshares, Inc. May 2021
ServisFirst Bancshares, Inc. NASDAQ: SFBS May 2021
Slide 2: Forward-Looking Statements
Forward - Looking Statements ▪ Statements in this presentation 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
Slide 3: ServisFirst at a Glance
ServisFirst at a Glance Overview ▪ Founded in 2005 in Birmingham, AL ▪ Single bank BHC High - Performing Metropolitan Commercial Bank ▪ Total Assets (1) : $12.65 billion ▪ Stockholders’ Equity (1) : $1.03 billion High Growth Coupled with Pristine Credit Metrics (3) ▪ Gross Loans CAGR: 15% ▪ Total De
Slide 4: Our Business Strategy
Our Business Strategy ▪ Simple business model – Loans and deposits are primary drivers, not ancillary services ▪ Limited branch footprint – Technology provides efficiency ▪ Big bank products and bankers – With the style of service and delivery of a community bank ▪ Core deposit focus coupled with C&
Slide 5: Opportunistic Expansion
Opportunistic Expansion ▪ Identify great bankers in attractive markets – Focus on people as opposed to places – Target minimum of $300 million in assets within 3 years – Best bankers in growing markets ▪ Market strategies – Regional CEOs execute simple business model – Back office support and risk m
Slide 6: Milestones
Milestones 6 ▪ Founded in May 2005 with initial capital raise of $35 million ▪ Reached profitability during the fourth quarter of 2005 and have been profitable every quarter since ▪ Achieved total asset milestones of $1 billion in 2008, $2 billion in 2011, $3 billion in 2013, $4 billion in 2014, $5
Slide 7: Consistently Building Shareholder Value
8.35 9.65 11.19 13.13 15.45 18.15 18.78 2015 2016 2017 2018 2019 2020 3/31/2021 $0.12 $0.15 $0.19 $0.38 $0.60 $0.70 $0.20 $ 0.8 0 (3) 2015 2016 2017 2018 2019 2020 3/31/2021 Consistently Building Shareholder Value ▪ ServisFirst has increased its dividend every year since going public in 2014 ▪ Tangi
Slide 8: Our Footprint
Our Footprint 8 ServisFirst Branches (22) ServisFirst LPO (3)
Slide 9: Our Regions
Our Regions 9 Total Offices (2) Total MSA Deposits (3) ($ in billions) Market Share (3) (%) 3 52.1 7.6 2 10.5 10.2 2 9.4 9.6 3 8.8 4.6 2 4.0 17.9 1 101.2 0.3 Orlando-Kissimmee-Sanford (4) 1 62.0 0.0 North Port-Sarasota-Bradenton (5) 2 25.1 0.0 2 7.6 7.2 Crestview-Fort Walton Beach-Destin 1 6.4 0.0 1
Slide 10: Our Business Model
Our Business Model ▪ “Loan making and deposit taking” – Traditional commercial banking services – No emphasis on non - traditional business lines ▪ Culture of cost control – “Branch light,” with $481 million average deposits per banking center – Leverage technology and centralized infrastructure – H
Slide 11: Scalable, Decentralized Structure
Scalable, Decentralized Structure ▪ Local decision - making – Emphasize local decision - making to drive customer revenue – Centralized, uniform risk management and support – Conservative local lending authorities, covers most lending decisions – Geographic organizational structure (as opposed to li
Slide 12: Capacity For Growth
Capacity For Growth ▪ Potential for significant growth in loan book size of current calling officers – Approximately 85% of the bank’s loan book is managed by approximately 50% of the bank’s calling officers – Average outstanding loan balances per officer as of 03/31/21 was $65 million – Strive for
Slide 13: Risk Management
Risk Management ▪ Manage risk centrally while delivering products and services by each Regional Bank ▪ Centralized/Consistent: operations, compliance, risk, accounting, audit, information technology, and credit administration ▪ Investing resources in Risk Management Group – Hired CRO in 2017; implem
Slide 14: Risk Management Credit Process
Risk Management Credit Process 13 ▪ Lending focuses on middle market clients with Regional CEO and credit officers approving secured loan relationship up to $5MM; relationships greater than $5MM are approved by the CCO and/or members of executive management ▪ Centralized monitoring of ABL relationsh
Slide 15: Risk Management Credit Process
Risk Management Credit Process 15 1) Peer Group 4 as defined by The Uniform Bank Performance Report (UBPR) ▪ The Bank does not lead any Share National Credits (SNCs); the Bank does participate in 9 relationships that are classified as SNCs with current balances of $73.9MM as of 3/31/21 ▪ The Bank do
Slide 16: Impact From Crossing $10 Billion Asset Threshold
Impact From Crossing $10 Billion Asset Threshold ▪ Anticipate relatively small economic and regulatory impact due to our commercial banking focus and the staffing infrastructure put in place in recent years – The Durbin Amendment will limit debit card interchange fees ▪ Durbin Amendment will take ef
Slide 17: Correspondent Banking Footprint
Correspondent Banking Footprint 17 3/31/2020 # of Relationships Balance ($000s) Avg Rel Bal ($) 3/31/2021 # of Relationships Balance ($000s) Avg Rel Bal ($) Total Active Relationships 295 1,375,648 4.66 MM Total Active Relationships 309 2,261,362 7.32 MM Deposits (Non Interest Bearing) 305,357 1.04
Slide 18: Our Management Team
Our Management Team Thomas A. Broughton, III President and Chief Executive Officer ▪ Previously President and CEO of First Commercial Bank (acquired by Synovus Financial, 1992); subsequently, regional CEO for Synovus ▪ American Banker’s 2009 Community Banker of the Year ▪ 65 years old William M. Fos
Slide 19: Our Regions
Our Regions Rex D. McKinney EVP and Regional CEO Pensacola ▪ Previously EVP/Senior Commercial Lender for First American Bank/Coastal Bank and Trust ( Synovus ) ▪ 58 years old Andrew N. Kattos EVP and Regional CEO Huntsville ▪ Previously EVP/Senior Lender for First Commercial Bank ▪ 52 years old J. H
Slide 20: Financial Results
. Bank Financial Results
Slide 21: Balance Sheet Growth
$4,224 $5,420 $6,092 $6,916 $7,530 $9,976 2015 2016 2017 2018 2019 2020 3/31/2021 $10,578 Balance Sheet Growth ▪ 5 - year (1) CAGR of gross loans = 15% ▪ 5 - year (1) CAGR of total deposits = 19% ▪ 5 - year (1) CAGR of non - interest bearing deposits = 21% 21 5 - year (1) CAGR = 15% 5 - year (1) CAG
Slide 22: Income Growth
1.20 1.52 1.72 2.53 2.76 3.13 0.95 2015 2016 2017 2018 2019 2020 3/31/2021 $63.3 $81.4 $93.0 $136.9 $149.2 $169.5 $51.5 2015 2016 2017 2018 2019 2020 3/31/2021 Income Growth ▪ Rare combination of balance sheet growth and earnings power ▪ EPS growth includes impact of $55.1 million of common stock is
Slide 23: Balance Sheet Makeup
Balance Sheet Makeup ▪ Primary focus on building core deposits, highlighted by non - interest bearing accounts and non - reliance on CDs ▪ C&I lending expertise within a well balanced loan portfolio 23 Deposit Mix (1) .38% Cost of Interest Bearing Deposits (2 ) Loan Portfolio (1) 4.47% Yield on Loan
Slide 24: Loan Growth by Region
Loan Growth by Region 24 YTD Annualized Region 12/31/2020 3/31/2021 YTD Growth Growth Rate West Central Florida 470,527$ 505,337$ 34,810$ 30% Nashville, TN 762,286$ 783,734$ 21,448$ 11% Huntsville, AL 695,451$ 712,137$ 16,686$ 10% Birmingham, AL 3,045,495$ 3,053,278$ 7,783$ 1% Atlanta, GA 566,281$ 5
Slide 25: Loan Growth by Type
Loan Growth by Type 25 Dollars in Thousands Loan Type 12/31/2020 3/31/2021 3,295,900$ 3,323,093$ 27,193$ 593,614$ 666,592$ 72,978$ 1,693,428$ 1,698,695$ 5,267$ 711,692$ 685,840$ (25,852)$ 2,106,184$ 2,068,560$ (37,624)$ 4,511,304$ 4,453,095$ (58,209)$ 64,870$ 62,200$ (2,670)$ 8,465,688$ 8,504,980$ 3
Slide 26: Credit Trends
Credit Trends 26 (In Thousands) 2015 2016 2017 2018 2019 2020 3/31/2021 1-4 Family Construction Speculative 25,794$ 27,835$ 31,230$ 34,594$ 47,809$ 62,383$ 59,408$ 1-4 Family Construction Sold 29,086$ 45,051$ 47,441$ 46,467$ 56,105$ 55,899$ 63,972$ Resi Acquisition & Development 18,693$ 17,681$ 40,9
Slide 27: Credit Quality
Credit Quality ▪ Strong loan growth while maintaining asset quality discipline 27 Allowance for Credit Losses / Total Loans Net Charge Offs / Total Average Loans Non - Performing Assets / Total Assets Non - Performing Loans / Total Loans 0.26% 0.34% 0.26% 0.41% 0.50% 0.21% 0.16% 2015 2016 2017 2018
Slide 28: Profitability Metrics
Profitability Metrics ▪ Consistent earnings results and strong momentum 28 Core Return on Average Assets (1) Core Return on Average Equity (1) Core Return on Average Common Equity (1) Net Interest Margin 1) For a reconciliation of these non - GAAP measures to the most comparable GAAP measure, see "G
Slide 29: Efficiency
45.54% 41.54% 38.69% 38.75% 40.60% 39.47 34.71% 32.57% 33.28% 30.29% 28.68% 1.79% 1.64% 1.51% 1.47% 1.55% 1.41 1.32% 1.26% 1.20% 1.05% 0.97% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 3/31/2021 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Core Eff
Slide 30: Interest Rate Risk Profile
Interest Rate Risk Profile 30 Change in Net Interest Income Scenario Based on parallel shift in yield curve and a static balance sheet Variable - Rate Loans 37% of loans are variable rate (excluding PPP loans) Deposit Mix 29% of deposits are held in non - interest bearing demand deposit accounts - 3
Slide 31: Appendix
. Bank Appendix
Slide 32: Our Regions: Centers for Continued Growth
Our Regions: Centers for Continued Growth ▪ Birmingham, Alabama – Key Industries : Metals manufacturing, finance, insurance, healthcare services and distribution – Key Employers : Protective Life, Encompass Health, Vulcan Materials Company, AT&T, American Cast Iron Pipe Company, Southern Company, an
Slide 33: Our Regions: Centers for Continued Growth (cont.)
Our Regions: Centers for Continued Growth (cont.) ▪ Dothan, Alabama – Key Industries : Agriculture, manufacturing, and healthcare services – Key Employers : Southeast Health Medical Center, Wayne Farms, Southern Nuclear, Michelin Tire, Globe Motors, and AAA Cooper Transportation ▪ Pensacola, Florida
Slide 34: Our Regions: Centers for Continued Growth (cont.)
Our Regions: Centers for Continued Growth (cont.) ▪ Nashville, Tennessee – Key Industries : Healthcare, manufacturing, transportation, and technology – Key Employers : HCA Holdings, Nissan North America, Dollar General Corporation, Asurion , and Community Health Systems ▪ Charleston, South Carolina
Slide 35: Our Financial Performance: Key Operating and Performance Metrics
Our Financial Performance: Key Operating and Performance Metrics 35 2012 2013 2014 2015 2016 2017 2018 2019 2020 3/31/2021 Balance Sheet Total Assets $2,906 $3,521 $4,099 $5,096 $6,370 $7,082 $8,007 $8,948 $11,933 $12,647 Net Loans $2,337 $2,828 $3,324 $4,173 $4,860 $5,792 $6,465 $7,185 $8,378 $8,41
Slide 36: Our Financial Performance: Asset Quality
Our Financial Performance: Asset Quality 36 Dollars in Thousands 2012 2013 2014 2015 2016 2017 2018 2019 2020 3/31/2021 Nonaccrual Loans: 1-4 Family 453 1,878 1,596 198 74 459 2,046 1,440 771 923 Owner-Occupied Commercial Real Estate 2,786 1,435 683 -- -- 556 3,358 10,826 1,259 2,009 Other Real Esta
Slide 37: Our Financial Performance: Credit Loss Reserve and Charge-Offs
Our Financial Performance: Credit Loss Reserve and Charge - Offs 37 1) Prior periods through 2019 were estimated under the incurred loss methodology. Dollars in Thousands 2017 2018 2019 2020 3/31/2021 Allowance for Credit Losses: Beginning of Year $ 22,030 $ 26,258 $ 30,663 $ 35,629 $ 43,419 $51,893
Slide 38: GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
GAAP Reconciliation and Management Explanation of Non - GAAP Financial Measures We recorded a $ 1 . 7 million credit to our FDIC and other regulatory assessments expense in 2019 as a result of the FDIC’s Small Bank Assessment Credit . We recorded $ 3 . 1 million of additional tax expense as a result
Slide 39: GAAP Reconciliation
GAAP Reconciliation 39 Dollars in Thousands Provision for income taxes - GAAP $ 37,618 $ 44,258 $ 25,465 Adjustment for non-routine expense/credit 421 -132 829 Core provision for income taxes - non-GAAP $ 38,039 $ 44,126 $ 26,294 Return on average assets - GAAP 1.73% 1.43 % 1.38 Net income - GAAP $
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