Servisfirst Bancshares, Inc. · NYSE:SFBS
Servisfirst Bancshares — Investor Presentation (February 2022)
39 slides from Servisfirst Bancshares's investor presentation, Feb 15, 2022
Slide 1: ServisFirst Bancshares, Inc. February 2022
ServisFirst Bancshares, Inc. NYSE: SFBS February 2022
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) : $15.45 billion ▪ Stockholders’ Equity (1) : $1.15 billion High Growth Coupled with Pristine Credit Metrics (3) ▪ Gross Loans CAGR: 14% ▪ 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
March ’11: Correspondent Banking April ’13: Nashville, TN January ‘15: Metro Bank Acquisition August ’06: Huntsville, AL September ’08: Dothan, AL January ‘17: Fairhope, AL August '19: SW Florida LPO April ’21: Orlando, FL LPO May ’05: Founded in Birmingham, AL June ’07: Montgomery, AL April ’11: Pe
Slide 7: Consistently Building Shareholder Value
9.65 11.19 13.13 15.45 18.15 20.99 2016 2017 2018 2019 2020 2021 $0.15 $0.19 $0.38 $0.60 $0.70 $0.80 $0.23 $ 0.92 (4) 2016 2017 2018 2019 2020 2021 2022 Consistently Building Shareholder Value ▪ Tangible Book Value has increased year/year by a minimum of 10% every year since the bank opened in 2005
Slide 8: Our Footprint
Our Footprint 8 ServisFirst Branches (23) ServisFirst LPO (2)
Slide 9: Our Regions
Our Regions 9 Total Offices (2) Total MSA Deposits (3) ($ in billions) Market Share (3) (%) 3 54.5 8.9 2 11.5 9.9 3 10.7 4.2 2 10.3 10.7 2 4.4 17.0 1 117.0 0.3 Orlando-Kissimmee-Sanford (4) 1 73.5 0.0 North Port-Sarasota-Bradenton (5) 2 28.5 0.5 2 8.7 6.4 Crestview-Fort Walton Beach-Destin 1 7.8 0.7
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 $541.4 million average deposits per banking center – Leverage technology and centralized infrastructure –
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 89% 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 12/31/21 was $72 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 ▪ 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 relationships
Slide 15: Risk Management Credit Process
Risk Management Credit Process ▪ The Bank does not lead any Share National Credits (SNCs); the Bank does participate in 11 relationships that are classified as SNCs with current balances of $ 124.5M M as of 12/31/21 ▪ As of 12/31/21, CRE as a percent of capital was 283% and AD&C as a percent of capi
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 12/31/2020 # of Relationships Balance ($000s) Avg Rel Bal ($) 12/31/2021 # of Relationships Balance ($000s) Avg Rel Bal ($) Total Active Relationships 310 1,986,849 6.41 MM Total Active Relationships 329 3,914,943 11.90 MM Deposits (Non Interest Bearing) 412,864 1.
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 ▪ 66 years old William M. Fos
Slide 19: Our Regions
Our Regions Rex D. McKinney EVP and Regional CEO Northwest Florida ▪ Previously EVP/Senior Commercial Lender for First American Bank/Coastal Bank and Trust ( Synovus ) ▪ 59 years old Andrew N. Kattos EVP and Regional CEO Huntsville ▪ Previously EVP/Senior Lender for First Commercial Bank ▪ 52 years
Slide 20: Financial Results
we. Bank* Financial Results
Slide 21: Balance Sheet Growth
$5,420 $6,092 $6,916 $7,530 $9,976 $12,453 2016 2017 2018 2019 2020 2021 Balance Sheet Growth ▪ 5 - year (1) CAGR of gross loans = 14% ▪ 5 - year (1) CAGR of total deposits = 18% ▪ 5 - year (1) CAGR of non - interest bearing deposits = 30% 21 5 - year (1) CAGR = 14% 5 - year (1) CAGR = 18% Gross Loa
Slide 22: Income Growth
1.52 1.72 2.53 2.76 3.13 3.13 2016 2017 2018 2019 2020 2021 $81.4 $93.0 $136.9 $149.2 $169.5 $169.5 2016 2017 2018 2019 2020 2021 Income Growth ▪ Rare combination of balance sheet growth and earnings power ▪ EPS growth includes impact of $55.1 million of common stock issued in five private placement
Slide 23: Balance Sheet Makeup
Balance Sheet Makeup ▪ Primary focus on building core deposits, highlighted by non - interest bearing accounts and non - reliance on CDs ▪ C&I lending expertise within a well balanced loan portfolio 23 Deposit Mix (1) .33% Cost of Interest Bearing Deposits (2 ) Loan Portfolio (1) 4.40% Yield on Loan
Slide 24: Loan Growth by Type (Excluding PPP)
Loan Growth by Type (Excluding PPP) 24 Dollars in Thousands Loan Type 12/31/2020 12/31/2021 2,395,407$ 2,753,869$ 358,462$ 593,614$ 1,103,076$ 509,462$ 1,693,428$ 1,874,103$ 180,675$ 711,692$ 826,765$ 115,073$ 2,106,184$ 2,678,084$ 571,900$ 4,511,304$ 5,378,952$ 867,648$ 64,870$ 66,853$ 1,983$ 7,565
Slide 25: Loan Growth by Type
Loan Growth by Type 25 Dollars in Thousands Loan Type 12/31/2020 12/31/2021 3,295,900$ 2,984,053$ (311,847)$ 593,614$ 1,103,076$ 509,462$ 1,693,428$ 1,874,103$ 180,675$ 711,692$ 826,765$ 115,073$ 2,106,184$ 2,678,084$ 571,900$ 4,511,304$ 5,378,952$ 867,648$ 64,870$ 66,853$ 1,983$ 8,465,688$ 9,532,93
Slide 26: Credit Trends
Credit Trends 26 Commercial Real Estate Trends Year Ended December 31, Current Year (In Thousands) 2016 2017 2018 2019 2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 1 - 4 Family Construction Speculative $ 27,835 $ 31,230 $ 34,594 $ 47,809 $ 62,383 $ 59,408 $ 66,960 $ 73,781 $ 74,811 1 - 4 Family Con
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% 0.09% 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% 31.84% 1.79% 1.64% 1.51% 1.47% 1.55% 1.41 1.32% 1.26% 1.20% 1.05% 0.98% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Core Efficien
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 36% of loans are variable rate (excluding PPP loans) Deposit Mix 39% of deposits are held in non - interest bearing demand deposit accounts - 4
Slide 31: Appendix
we. 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, Sh
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 ▪ Northwest 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 1) For a reconciliation of these non - GAAP measures to the most comparable GAAP measure, see "GAAP Reconciliation and Management Exp lanation of Non - GAAP Financial Measures" included at the end of this presentation. 2) Non - GAAP
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 2021 Nonaccrual Loans: 1-4 Family 453 1,878 1,596 198 74 459 2,046 1,440 771 1,398 Owner-Occupied Commercial Real Estate 2,786 1,435 683 -- -- 556 3,358 10,826 1,259 1,021 Other Real Estate
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 2021 Allowance for Credit Losses: Beginning of Year $ 22,030 $ 26,258 $ 30,663 $ 35,629 $ 43,419 $51,893 $ 59
Slide 38: GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
GAAP Reconciliation and Management Explanation of Non - GAAP Financial Measures During the fourth quarter of 2021 , we recorded $ 3 . 0 million of expenses associated with our core operating system conversion scheduled to be completed during the third quarter of 2022 . The expenses relate to negotia
Slide 39: GAAP Reconciliation
GAAP Reconciliation 39 Dollars in Thousands Provision for income taxes - GAAP $ 45,615 $ 37,618 $ 44,258 $ 25,465 Adjustment for non-routine expense/credit 756 421 -132 829 Core provision for income taxes - non-GAAP $ 46,371 $ 38,039 $ 44,126 $ 26,294 Return on average assets - GAAP 1.53 1.73 % 1.43
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