Servisfirst Bancshares, Inc. · NYSE:SFBS
Servisfirst Bancshares — Investor Presentation (September 2020)
38 slides from Servisfirst Bancshares's investor presentation, Sep 8, 2020
Slide 1: ServisFirst Bancshares, Inc. September 2020
ServisFirst Bancshares, Inc. NASDAQ: SFBS September 2020
Slide 2: Forward-Looking Statements
Forward - Looking Statements This presentation contains forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 . In addition, ServisFirst Bancshares, Inc . may file or furnish documents with the Securities and Exchange Commission which contain forward
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) : $11.0 billion ▪ Stockholders’ Equity (1) : $915 million High Growth Coupled with Pristine Credit Metrics (3) ▪ Gross Loans CAGR: 17% ▪ Total Depo
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, $5
Slide 7: Our Footprint
Our Footprint 7 ServisFirst Branches (21) ServisFirst LPO (3)
Slide 8: Our Regions
Our Regions 8 Total Offices (2) Total MSA Deposits (3) ($ in billions) Market Share (3) (%) 3 41.4 7.3 2 8.2 10.8 2 8.5 8.8 3 7.3 4.6 2 3.4 16.2 1 87.1 0.3 North Port-Sarasota-Bradenton (4) 1 22.0 0.0 2 7.4 5.3 Crestview-Fort Walton Beach-Destin 1 5.7 0.0 1 64.1 0.7 Atlanta-Sandy Springs-Roswell 3 1
Slide 9: 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 $467 million average deposits per banking center – Leverage technology and centralized infrastructure – H
Slide 10: 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 11: 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; formal
Slide 12: 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 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 6/30/20 ▪ The Bank does not have any leveraged loans ▪ As of 6/30/20, CRE as a percent of capital w
Slide 14: Portfolios Potentially Impacted by Pandemic
Portfolios Potentially Impacted by Pandemic ▪ 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 49% of capital ▪ CRE (excluding OO CRE) is 224% of
Slide 15: Deferrals Resulting from COVID-19
Deferrals Resulting from COVID - 19 ▪ As of 8/31/20 second deferrals totaled $49 million; of that, approximately $3 million is in the SBA 504 program ▪ Top deferral industries as of 8/31/2020 include – Hotels $21 million – Assisted Living Facilities $12.2 million – Breweries $7.9 million – Oil & Gas
Slide 16: Correspondent Banking Footprint
Correspondent Banking Footprint 16 6/30/2019 # of Relationships Balance ($000s) Avg Rel Bal ($) 6/30/2020 # of Relationships Balance ($000s) Avg Rel Bal ($) Total Active Relationships 292 1,141,556 3.91 MM Total Active Relationships 301 1,621,418 5.39 MM Deposit Accounts 682,107 2.34 MM Deposit Acco
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 15 William M.
Slide 18: 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 ) ▪ 57 years old 18 Andrew N. Kattos EVP and Regional CEO Huntsville ▪ Previously EVP/Senior Lender for First Commercial Bank ▪ 51 years old J
Slide 19: Financial Results
Ist Bank Financial Results
Slide 20: Balance Sheet Growth
$3,398 $4,224 $5,420 $6,092 $6,916 $7,530 $9,343 2014 2015 2016 2017 2018 2019 6/30/2020 Balance Sheet Growth ▪ 5 - year (1) CAGR of gross loans and total deposits = 17% ▪ 5 - year (1) CAGR of non - interest bearing deposits = 17% 20 5 - year (1) CAGR = 17% 5 - year (1) CAGR = 17% Gross Loans ($mm)
Slide 21: Income Growth
1.05 1.20 1.52 1.72 2.53 2.76 1.39 2014 2015 2016 2017 2018 2019 6/30/2020 $51.9 $63.3 $81.4 $93.0 $136.9 $149.2 $75.2 2014 2015 2016 2017 2018 2019 6/30/2020 Income Growth ▪ Rare combination of balance sheet growth and earnings power ▪ EPS growth includes impact of $55.1 million of common stock iss
Slide 22: Balance Sheet Makeup
Balance Sheet Makeup ▪ Primary focus on building core deposits, highlighted by non - interest bearing accounts and non - reliance on CDs ▪ C&I lending expertise within a well balanced loan portfolio 22 Deposit Mix (1) .69% Cost of Interest Bearing Deposits (2 ) Loan Portfolio (1) 4.31% Yield on Loan
Slide 23: Loan Growth by Region
Loan Growth by Region 23 YTD Annualized Region 12/31/2019 6/30/2020 YTD Growth Growth Rate Birmingham, AL 3,007,758$ 3,279,180$ 271,422$ 18% Atlanta, GA 416,425$ 540,039$ 123,614$ 60% Huntsville, AL 605,271$ 714,981$ 109,710$ 36% Charleston, SC 264,319$ 361,623$ 97,304$ 74% Pensacola, FL 437,221$ 52
Slide 24: Loan Growth by Type
Loan Growth by Type 24 Dollars in Thousands Loan Type 12/31/2019 6/30/2020 2,696,210$ 3,498,627$ 802,417$ 76% 521,392$ 544,586$ 23,194$ 2% 1,587,478$ 1,634,495$ 47,017$ 4% 644,188$ 665,883$ 21,695$ 2% 1,747,394$ 1,911,384$ 163,990$ 16% 3,979,060$ 4,211,762$ 232,702$ 22% 64,789$ 60,400$ (4,389)$ 0% 7
Slide 25: Credit Trends
Credit Trends (In Thousands) 2014 2015 2016 2017 2018 2019 6/30/2020 1-4 Family Construction Speculative 13,608$ 25,794$ 27,835$ 31,230$ 34,594$ 47,809$ 59,184$ 1-4 Family Construction Sold 28,124$ 29,086$ 45,051$ 47,441$ 46,467$ 56,105$ 44,239$ Resi Acquisition & Development 20,009$ 18,693$ 17,681$
Slide 26: Credit Quality
Credit Quality ▪ Strong loan growth while maintaining asset quality discipline 26 Allowance for Loan Losses / Total Loans Net Charge Offs / Total Average Loans Non - Performing Assets / Total Assets Non - Performing Loans / Total Loans 0.41% 0.26% 0.34% 0.26% 0.41% 0.50% 0.26% 2014 2015 2016 2017 20
Slide 27: Profitability Metrics
Profitability Metrics ▪ Consistent earnings results and strong momentum 27 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 28: Efficiency
45.54% 41.54% 38.69% 38.75% 40.60% 39.47 34.71% 32.57% 33.31% 32.50% 1.79% 1.64% 1.51% 1.47% 1.55% 1.41 1.32% 1.26% 1.20% 1.17% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2011 2012 2013 2014 2015 2016 2017 2018 2019 6/30/2020 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Core Efficiency Ratio Core
Slide 29: Interest Rate Risk Profile
Interest Rate Risk Profile 29 Change in Net Interest Income Scenario Based on parallel shift in yield curve and a static balance sheet Variable - Rate Loans 39% of loans are variable rate (excluding PPP loans) Deposit Mix 29% of deposits are held in non - interest bearing demand deposit accounts 0.4
Slide 30: Appendix
ee. Bank” Appendix
Slide 31: 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 32: 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 Alabama Medical Center, Wayne Farms, Southern Nuclear, Michelin Tire, Pemco World Air Services, Globe Motors, and AAA Cooper Transpor
Slide 33: 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 34: Our Financial Performance: Key Operating and Performance Metrics
Our Financial Performance: Key Operating and Performance Metrics 34 2012 2013 2014 2015 2016 2017 2018 2019 6/30/2020 Balance Sheet Total Assets $2,906 $3,521 $4,099 $5,096 $6,370 $7,082 $8,007 $8,948 $11,012 Net Loans $2,337 $2,828 $3,324 $4,173 $4,860 $5,792 $6,465 $7,185 $8,224 Deposits $2,512 $3
Slide 35: Our Financial Performance: Asset Quality
Our Financial Performance: Asset Quality 35 Dollars in Thousands 2012 2013 2014 2015 2016 2017 2018 2019 6/30/2020 Nonaccrual Loans: 1-4 Family 453 1,878 1,596 198 74 459 2,046 1,440 683 Owner-Occupied Commercial Real Estate 2,786 1,435 683 -- -- 556 3,358 10,826 1,714 Other Real Estate Loans 240 24
Slide 36: Our Financial Performance: Loan Loss Reserve and Charge-Offs
Our Financial Performance: Loan Loss Reserve and Charge - Offs 36 Dollars in Thousands 2017 2018 20196/30/2020 Allowance for Loan Losses: Beginning of Year $ 22,030 $ 26,258 $ 30,663 $ 35,629 $ 43,419 $51,893 $ 59,406 $ 68,600 $ 76,584 Charge-Offs: Commercial, Financial and Agricultural (1,106) (1,9
Slide 37: 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 38: GAAP Reconciliation
GAAP Reconciliation 38 Dollars in Thousands Provision for income taxes - GAAP $ 37,618 $ 44,258 $ 25,465 $ 21,601 Adjustment for non-routine expense/credit 421 -132 829 865 Core provision for income taxes - non-GAAP $ 38,039 $ 44,126 $ 26,294 $ 22,466 Return on average assets - GAAP 1.73 % 1.43 % 1.
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