Servisfirst Bancshares, Inc. · NYSE:SFBS
Servisfirst Bancshares — Investor Presentation (November 2020)
38 slides from Servisfirst Bancshares's investor presentation, Nov 6, 2020
Slide 1: ServisFirst Bancshares, Inc. November 2020
ServisFirst Bancshares, Inc. NASDAQ: SFBS November 202
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) : $11.4 billion ▪ Stockholders’ Equity (1) : $950 million High Growth Coupled with Pristine Credit Metrics (3) ▪ Gross Loans CAGR: 17% ▪ Total Depo
Slide 4: Our Business Strategy
Our Business Strategy 4 ▪ 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
Slide 5: Opportunistic Expansion
Opportunistic Expansion 5 ▪ 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
Slide 6: Milestones
M i l e st on e s 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, $4 billion in 20
Slide 7: Our Footprint
Our Footprint ServisFirst Branches (21) ServisFirst LPO (3) 7
Slide 8: Our Regions
Our Regions 3) As reported by the FDIC as of 6/30/2020 8 Region (1) Total Offices (2) Total MSA Deposits (3) ($ in billions) Market Share (3) (%) Alabama Birmingham - Hoover 3 52.1 7.6 Huntsville 2 10.5 10.2 Montgomery 2 9.4 9.6 Mobile 3 8.8 4.6 Dothan 2 4.0 17.9 Florida Tampa - St. Petersburg - Cle
Slide 9: Our Business Model
Our Business Model 9 ▪ “Loan making and deposit taking” – Traditional commercial banking services – No emphasis on non - traditional business lines ▪ Culture of cost control – “Branch light,” with $467 million average deposits per banking center – Leverage technology and centralized infrastructure –
Slide 10: Scalable, Decentralized Structure
Scalable, Decentralized Structure 10 ▪ 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
Slide 11: Risk Management
Risk Management 11 ▪ 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; for
Slide 12: Risk Management Credit Process
Risk Management Credit Process 12 ▪ 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 13: Risk Management Credit Process
Risk Management Credit Process ▪ 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 $63MM as of 9/30/20 ▪ The Bank does not have any leveraged loans ▪ As of 9/30/20, CRE as a percent of capital w
Slide 14: Portfolios Potentially Impacted by Pandemic
Portfolios Potentially Impacted by Pandemic 14 ▪ Well diversified portfolio with limited concentrations ▪ Hotel makes up less than 2% of portfolio ▪ Restaurants makes up less than 3% of portfolio ▪ Oil & Gas make up less than 1% of portfolio ▪ AD&C is 50% of capital ▪ CRE (excluding OO CRE) is 232%
Slide 15: Deferrals Resulting from COVID-19
Deferrals Resulting from COVID - 19 15 ▪ As of 10/15/20 second deferrals totaled $3.9 million; of that, approximately $2.3 million is in the SBA 504 program ▪ Top 4 first and second deferral industries as of 10/15/2020 include – Advertising Agencies – Breweries – Full - Service Restaurants – Conveni
Slide 16: Correspondent Banking Footprint
Correspondent Banking Footprint 9/30/2019 # of Relationships Balance ($000s) Avg Rel Bal ($) Total Active Relationships Deposit Accounts 293 1,026,101 655,870 3.50 MM 2.24 MM Fed Funds Purchased 370,231 1.26 MM 9/30/2020 # of Relationships Balance ($000s) Avg Rel Bal ($) Total Active Relationships D
Slide 17: 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 18: Our Regions (Regional CEOs)
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 ▪ 51 years old J. Har
Slide 19: Financial Results
we. Bank’ Financial Results
Slide 20: Balance Sheet Growth
$3,398 $4,224 $5,420 $6,092 $6,916 $7 , 53 0 $9,674 2014 2015 2019 9/30/2020 Balance Sheet Growth ▪ 5 - year (1) CAGR of gross loans and total deposits = 17% ▪ 5 - year (1) CAGR of non - interest bearing deposits = 17% 5 - year (1) CAGR = 17% 5 - year (1) CAGR = 17% 2016 2017 2018 Total Deposits ($m
Slide 21: Income Growth
1 . 0 5 1 . 2 0 1 . 5 2 1 . 7 2 2 . 5 3 2 . 7 6 2 . 1 9 2014 $51 . 9 $63 . 3 $81 . 4 $93 . 0 $136 . 9 $149 . 2 $118 . 6 2014 Income Growth ▪ Rare combination of balance sheet growth and earnings power ▪ EPS growth includes impact of $55.1 million of common stock issued in five private placements as
Slide 22: 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 22 Deposit Mix (1) .58% Cost of Interest Bearing Deposits (2 ) Loan Portfolio (1) 4.26% Yield on Loan
Slide 23: Loan Growth by Region
Loan Growth by Region 23 Dollars in Thousands Region 12/31/2019 9/30/2020 YTD Growth YTD Annualized Growth Rate Birmingham, AL $ 3,007,758 $ 3,387,040 $ 379,282 17% Atlanta, GA $ 416,425 $ 556,139 $ 139,714 45% Huntsville, AL $ 605,271 $ 715,347 $ 110,076 24% West Florida $ 308,382 $ 418,435 $ 110,0
Slide 24: Loan Growth by Type
Loan Growth by Type 24 Dollars in Thousands Loan Type 12/31/2019 9/30/2020 YTD Growth by Loan Type % of YTD Growth Commercial, Financial and Agricultural $ 2,696,210 $ 3,466,189 $ 769,979 62% Real Estate - Construction $ 521,392 $ 530,919 $ 9,527 1% Real Estate - Mortgage: Owner - Occupied Commercia
Slide 25: Credit Trends: Commercial Real Estate Trends
Credit Trends Commercial Real Estate Trends Year Ended December 31, (In Thousands) 2014 2015 2016 2017 2018 2019 9/30/2020 1 - 4 Family Construction Speculative $ 13 , 60 8 $ 25 , 79 4 $ 27 , 83 5 $ 31 , 23 0 $ 34,594 $ 47 , 80 9 $ 48 , 90 1 1 - 4 Family Construction Sold $ 28 , 12 4 $ 29 , 08 6 $ 4
Slide 26: Credit Quality
Credit Quality ▪ Strong loan growth while maintaining asset quality discipline 0 . 41 % 0 . 26 % 0 . 34 % 0 . 26 % 0 . 41 % 0 . 50 % 0 . 29 % 2014 2015 2016 2017 2018 Non - Performing Assets / Total Assets 2019 9/30/2020 0 . 30 % 0 . 18 % 0 . 34 % 0 . 19 % 0 . 43 % 0 . 50 % 0 . 31 % 2014 2015 2016 2
Slide 27: Profitability Metrics
Profitability Metrics ▪ Consistent earnings results and strong momentum 1 . 44 % 1 . 42 % 1 . 42 % 1 . 48 % 1 . 88 % 1 . 71 % 1 . 54 % 2014 2015 2016 2017 2018 2019 9/30/2020 Core Return on Average Assets (1) 16.74% 15 . 73 % 16 . 63 % 16 . 95 % 20 . 95 % 18 . 99 % 17 . 73 % 2014 2015 2016 2017 2018
Slide 28: Core Efficiency Ratio and Non-interest Expense
45 . 54 % 41 . 54 % 38.69% 38 . 75 % 40 . 60 % 39 . 4 7 34 . 71 % 32 . 57 % 33 . 28 % 31 . 10 % 1 . 79 % 1 . 64 % 1 . 51 % 1 . 47 % 1 . 55 % 1 . 4 1 1 . 32 % 1 . 26 % 1 . 20 % 1 . 09 % 0 . 00 % 1 . 00 % 2 . 00 % 3 . 00 % 4 . 00 % 5 . 00 % 2011 2012 2019 9/30/2020 0 . 00 % 10 . 00 % 20 . 00 % 30.00%
Slide 29: Interest Rate Risk Profile
Interest Rate Risk Profile Scenario Based on parallel shift in yield curve and a static balance sheet Variable - Rate Loans 38% of loans are variable rate (excluding PPP loans) Deposit Mix 29% of deposits are held in non - interest bearing demand deposit accounts ( 1 . 8 %) 2 . 6 % 6 . 1 % ( 0 . 6 %
Slide 30: Appendix
we. Bank’ Appendix
Slide 31: Our Regions: Centers for Continued Growth
Our Regions: Centers for Continued Growth 31 ▪ 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,
Slide 32: Our Regions: Centers for Continued Growth (cont.)
Our Regions: Centers for Continued Growth (cont.) 32 ▪ 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, Flor
Slide 33: Our Regions: Centers for Continued Growth (cont.)
Our Regions: Centers for Continued Growth (cont.) 33 ▪ 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 Carolin
Slide 34: Our Financial Performance: Key Operating and Performance Metrics
Our Financial Performance: Key Operating and Performance Metrics States, or GAAP. 34 Dollars in Millions Except per Share Amounts 2012 2013 2014 2015 2016 2017 2018 2019 9/30/20 Balance Sheet Total Assets $2 , 90 6 $3 , 52 1 $4 , 09 9 $5 , 09 6 $6 , 37 0 $7 , 08 2 $8 , 00 7 $8,948 $11 , 39 5 Net Loa
Slide 35: Our Financial Performance: Asset Quality
Our Financial Performance: Asset Quality 35 Dollars in Thousands 2012 2013 2014 2015 2016 2017 2018 2019 9/30/20 Nonaccrual Loans: 1 - 4 Family 453 1 , 87 8 1 , 59 6 198 74 459 2 , 04 6 1 , 44 0 614 Owner - Occupied Commercial Real Estate 2 , 78 6 1 , 43 5 683 -- -- 556 3 , 35 8 10 , 82 6 1 , 83 8 O
Slide 36: Our Financial Performance: Loan Loss Reserve and Charge-Offs
Our Financial Performance: Loan Loss Reserve and Charge - Offs 36 Dollars in Thousands 2012 2013 2014 2015 2016 2017 Allowance for Loan Losses: Beginning of Year $ 22,030 $ 26,258 $ 30,663 $ 35,629 $ 43,419 $51,893 $ 59,406 Charge - Offs: Commercial, Financial and Agricultural (1,106) (1,932) (2,311
Slide 37: GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
GAAP Reconciliation and Management Explanation of Non - GAAP Financial Measures 37 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 res
Slide 38: GAAP Reconciliation
GAAP Reconciliation 38 Dollars in Thousands As Of and For the Quarter Ended September 30, 2020 As Of and For the Year Ended December 31, 2019 As Of and For the Year Ended December 31 , 2018 As Of and For the Year Ended December 31, 2017 As Of and For the Year Ended December 31 , 2016 As Of and For t
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