Servisfirst Bancshares, Inc. · NYSE:SFBS
Servisfirst Bancshares — Investor Presentation (May 2020)
39 slides from Servisfirst Bancshares's investor presentation, May 7, 2020
Slide 1: ServisFirst Bancshares, Inc. May 2020
ServisFirst Bancshares, Inc. NASDAQ: SFBS May 2020
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) : $9.4 billion ▪ Stockholders’ Equity (1) : $882 million High Growth Coupled with Pristine Credit Metrics (3) ▪ Gross Loans CAGR: 17% ▪ Total Depos
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, $5
Slide 7: Our Footprint
Our Footprint 7 ServisFirst Branches (20) ServisFirst LPOs (2)
Slide 8: Our Regions
Our Regions 8 Total Branches (2) Total MSA Deposits (3) ($ 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 (4) 1 5.7 0.0 1 64.1 0.7 Atlanta-Sandy Springs-Roswel
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 $392 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. Relationship 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 SNCs. We do participate in 9 relationships that are classified as SNCs with current balances of $65MM. • The Bank does not have any Leveraged Loans. • As of 3/31/2020, CRE as a percent of capital was 228% and AD&C as a percent of capital wa
Slide 14: Correspondent Banking Footprint
Correspondent Banking Footprint 14 3/31/2019 # of Relationships Balance ($000s) Avg Rel Bal ($) 3/31/2020 # of Relationships Balance ($000s) Avg Rel Bal ($) Total Active Relationships 293 1,030,267 3.52 MM Total Active Relationships 298 1,375,648 4.62 MM Deposit Accounts 656,889 2.25 MM Deposit Acco
Slide 15: 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 ▪ 64 years old 15 William M.
Slide 16: 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 16 Andrew N. Kattos EVP and Regional CEO Huntsville ▪ Previously EVP/Senior Lender for First Commercial Bank ▪ 51 years old J
Slide 17: Financial Results
coli Bank Financial Results
Slide 18: Balance Sheet Growth
$3,398 $4,224 $5,420 $6,092 $6,916 $7,530 $7,833 2014 2015 2016 2017 2018 2019 3/31/2020 Balance Sheet Growth ▪ 5 - year (1) CAGR of gross loans and total deposits = 17% ▪ 5 - year (1) CAGR of non - interest bearing deposits = 17% 18 5 - year (1) CAGR = 17% 5 - year (1) CAGR = 17% Gross Loans ($mm)
Slide 19: Income Growth
$ 1.05 $ 1.20 $ 1.52 $ 1.72 $ 2.53 $ 2.76 $ 0.64 2014 2015 2016 2017 2018 2019 3/31/2020 $51.9 $63.3 $81.4 $93.0 $136.9 $149.2 $34.8 2014 2015 2016 2017 2018 2019 3/31/2020 Income Growth ▪ Rare combination of balance sheet growth and earnings power ▪ EPS growth includes impact of $55.1 million of co
Slide 20: Balance Sheet Makeup
Balance Sheet Makeup ▪ Primary focus on building core deposits, highlighted by non - interest bearing accounts and non - reliance on CDs ▪ C&I lending expertise within a well balanced loan portfolio 20 Deposit Mix (1) 1.14% Cost of Interest Bearing Deposits (2 ) Loan Portfolio (1) 4.88% Yield on Loa
Slide 21: Loan Growth by Region
Loan Growth by Region 21 12/31/2019 3/31/2020 YTD Growth YTD Annualized Growth Rate 3,007,758$ 3,079,514$ 71,756$ 10% 416,425$ 473,057$ 56,632$ 55% 712,945$ 768,659$ 55,714$ 31% 264,319$ 306,506$ 42,187$ 64% 308,382$ 337,643$ 29,261$ 38% 437,221$ 456,393$ 19,172$ 18% 401,743$ 413,846$ 12,103$ 12% 65
Slide 22: Loan Growth by Type
Loan Growth by Type 22 Dollars in Thousands Loan Type 12/31/2019 3/31/2020 2,696,210$ 2,771,307$ 75,097$ 24% 521,392$ 548,578$ 27,186$ 9% 1,587,478$ 1,678,532$ 91,054$ 30% 644,188$ 675,870$ 31,682$ 10% 1,747,394$ 1,834,137$ 86,743$ 28% 3,979,060$ 4,188,539$ 209,479$ 68% 64,789$ 60,412$ (4,377)$ -1%
Slide 23: Credit Trends
Credit Trends (In Thousands) 2014 2015 2016 2017 2018 2019 3/31/2020 1-4 Family Construction Speculative 13,608$ 25,794$ 27,835$ 31,230$ 34,594$ 47,809$ 63,594$ 1-4 Family Construction Sold 28,124$ 29,086$ 45,051$ 47,441$ 46,467$ 56,105$ 40,257$ Resi Acquisition & Development 20,009$ 18,693$ 17,681$
Slide 24: Credit Quality
Credit Quality ▪ Strong loan growth while maintaining asset quality discipline 24 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% 0.44% 2014 2015 2016 2017 20
Slide 25: Profitability Metrics
Profitability Metrics ▪ Consistent earnings results and strong momentum 25 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 26: Efficiency
45.54% 41.54% 38.69% 38.75% 40.60% 39.47 34.71% 32.57% 33.31% 33.11% 1.79% 1.64% 1.51% 1.47% 1.55% 1.41 1.32% 1.26% 1.20% 1.23% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2011 2012 2013 2014 2015 2016 2017 2018 2019 3/31/2020 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Core Efficiency Ratio Core
Slide 27: Interest Rate Risk Profile
Interest Rate Risk Profile 27 Change in Net Interest Income Scenario Based on parallel shift in yield curve and a static balance sheet Variable - Rate Loans 41% of loans are variable rate Deposit Mix 25% of deposits are held in non - interest bearing demand deposit accounts - 0.8% 0.1% 0.7% - 5.2% 2
Slide 28: SFBS Adjusted Funding Cost Comparative Analysis
SFBS Adjusted Funding Cost Comparative Analysis Description of Analysis ▪ The following analysis was conducted in an effort to assess the value assigned by the market to ServisFirst’s branch delivery system relative to its reported cost of deposits ▪ Fundamental to the analysis is the approximation
Slide 29: SFBS Adjusted Funding Cost Comparative Analysis
SFBS Adjusted Funding Cost Comparative Analysis 29 1) Selected Major Exchange Southeast Banks with Total Assets $5 Billion - $15 Billion 2) Selected Major Exchange Nationwide Banks with Total Assets $5 Billion - $30 Billion, TCE / TA > 8.0%, and LTM Core ROAA > 1.60% 3) Selected Major Exchange Natio
Slide 30: Appendix
. 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 20193/31/2020 Balance Sheet Total Assets $2,906 $3,521 $4,099 $5,096 $6,370 $7,082 $8,007 $8,948 $9,365 Net Loans $2,337 $2,828 $3,324 $4,173 $4,860 $5,792 $6,465 $7,185 $7,483 Deposits $2,512 $3,0
Slide 35: Our Financial Performance: Asset Quality
Our Financial Performance: Asset Quality 35 Dollars in Thousands 2012 2013 2014 2015 2016 2017 2018 2019 3/31/2020 Nonaccrual Loans: 1-4 Family 453 1,878 1,596 198 74 459 2,046 1,440 1,736 Owner-Occupied Commercial Real Estate 2,786 1,435 683 -- -- 556 3,358 10,826 10,235 Other Real Estate Loans 240
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 20193/31/2020 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 1) Adjustment includes 41 . 4 % of reported compensation and benefits expense and 78 . 2 % of reported occupancy and equipment expense . Percentages were derived from SFBS management’s internal analysis ; inclusive of management estimates of salary and benefits expense for dep
Slide 39: Selected Peer Groups
Selected Peer Groups Southeast Peer Group High Performing Peer Group High Priced Peer Group Selected Major Exchange Nationwide Banks with Total Assets $5 Billion - $30 Billion and Price/TBV > 190% Ticker Company Name City, State BOH Bank of Hawaii Corp. Honolulu, HI CHCO City Holding Co. Cross Lanes
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