Servisfirst Bancshares, Inc. · NYSE:SFBS
Servisfirst Bancshares — Investor Presentation (September 2019)
36 slides from Servisfirst Bancshares's investor presentation, Sep 3, 2019
Slide 1: ServisFirst Bancshares, Inc. August 2019
ServisFirst Bancshares, Inc. NASDAQ: SFBS August 2019
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) : $8.7 billion ▪ Stockholders’ Equity (1) : $779 million High Growth Coupled with Pristine Credit Metrics (3) ▪ Gross Loans CAGR: 18% ▪ 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, $5
Slide 7: Our Footprint
Our Footprint 7 ServisFirst Branches (20) ServisFirst LPOs (2)
Slide 8: Our Regions
Our Regions 8 1) Represents metropolitan statistical areas (MSAs) 2) As of August 2019 3) As reported by the FDIC as of 6/30/2018 4) Loan production office Total Branches (2) Total MSA Deposits (3) ($ in billions) Market Share (3) (%) 3 37.7 7.1 2 8.0 9.6 2 7.9 7.1 3 7.1 3.8 2 3.3 15.6 1 85.2 0.2 Sa
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 $370 million average deposits per banking center – Leverage technology and centralized infrastructure – H
Slide 10: Scalable, Decentralized Structure
Scalable, Decentralized Structure ▪ Local decision - making – Emphasize local decision - making to drive customer revenue – Centralized, uniform risk management and support – Conservative local lending authorities, covers most lending decisions ▪ Geographic organizational structure (as opposed to li
Slide 11: Correspondent Banking Footprint
Correspondent Banking Footprint 11
Slide 12: Our Management Team
Our Management Team Thomas A. Broughton, III President and Chief Executive Officer ▪ Previously President and CEO of First Commercial Bank (acquired by Synovus Financial, 1992); subsequently, regional CEO for Synovus ▪ American Banker’s 2009 Community Banker of the Year ▪ 64 years old 12 William M.
Slide 13: Our Regions: Regional CEOs
Our Regions Rex D. McKinney EVP and Regional CEO Pensacola ▪ Previously EVP/Senior Commercial Lender for First American Bank/Coastal Bank and Trust ( Synovus ) ▪ 56 years old 13 Andrew N. Kattos EVP and Regional CEO Huntsville ▪ Previously EVP/Senior Lender for First Commercial Bank ▪ 50 years old J
Slide 14: Financial Results
seul Bank (OUR NAME IS OUR MISSION. Financial Results
Slide 15: Balance Sheet Growth
Balance Sheet Growth 15 5 - year (1) CAGR = 18% 5 - year (1) CAGR = 18% Gross Loans ($mm) Total Deposits ($mm) ▪ 5 - year (1) CAGR of gross loans and total deposits = 18% ▪ 5 - year (1) CAGR of non - interest bearing deposits = 19% ▪ 5 - year (1) CAGR of C&I loans = 14% $2,859 $3,360 $4,216 $4,912 $
Slide 16: 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 we entered new markets and $56.9 from the initial public offering Income Growth 16 5 - year (1) CAGR = 27% 5 - year (1) CAGR = 22% Net Inco
Slide 17: Balance Sheet Makeup
▪ Primary focus on building core deposits, highlighted by non - interest bearing accounts and non - reliance on CDs ▪ C&I lending expertise within a well balanced loan portfolio Balance Sheet Makeup 17 Deposit Mix (1) 1.74% Cost of Interest Bearing Deposits (2 ) Loan Portfolio (1) 5.23% Yield on Loa
Slide 18: Loan Growth by Region
Loan Growth by Region 18 12/31/2018 6/30/2019 YTD Growth YTD Annualized Growth Rate 2,772,603$ 3,003,462$ 230,859$ 17% 325,615$ 417,961$ 92,346$ 57% 357,974$ 393,805$ 35,831$ 20% 389,707$ 417,169$ 27,462$ 14% 435,318$ 450,056$ 14,738$ 7% 191,824$ 206,338$ 14,514$ 15% 623,974$ 634,175$ 10,201$ 3% 577
Slide 19: Loan Growth by Type
Loan Growth by Type 19 Dollars in Thousands Loan Type 12/31/2018 6/30/2019 2,513,225$ 2,633,529$ 120,304$ 28% 533,192$ 603,779$ 70,587$ 16% Owner-Occupied Commercial 1,463,887$ 1,538,279$ 74,392$ 17% 1-4 Family Mortgage 621,634$ 630,963$ 9,329$ 2% Other Mortgage 1,337,068$ 1,496,512$ 159,444$ 37% Su
Slide 20: Credit Trends
Credit Trends 20 (In Thousands) 2013 2014 2015 2016 2017 2018 6/30/2019 1-4 Family Construction Speculative 16,403$ 13,608$ 25,794$ 27,835$ 31,230$ 34,594$ 51,530$ 1-4 Family Construction Sold 21,414$ 28,124$ 29,086$ 45,051$ 47,441$ 46,467$ 58,981$ Resi Acquisition & Development 20,474$ 20,009$ 18,6
Slide 21: Credit Quality
▪ Strong loan growth while maintaining asset quality discipline Credit Quality 21 Allowance for Loan Losses / Total Loans Net Charge Offs / Total Average Loans Non - Performing Assets / Total Assets Non - Performing Loans / Total Loans 0.64% 0.41% 0.26% 0.34% 0.26% 0.41% 0.43% 2013 2014 2015 2016 20
Slide 22: Profitability Metrics
▪ Consistent earnings results and strong momentum Profitability Metrics 22 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 23: Efficiency
▪ Our operating structure and business strategy enable efficient, profitable growth Efficiency 23 Core Efficiency Ratio (1) and Core Non - interest Expense / Average Assets (1) (1) (1) 45.54% 41.54% 38.69% 38.75% 40.60% 39.47 34.71% 32.57% 34.33% 1.79% 1.64% 1.51% 1.47% 1.55% 1.41 1.32% 1.26% 1.25%
Slide 24: Interest Rate Risk Profile
Interest Rate Risk Profile 24 Change in Net Interest Income Scenario Based on parallel shift in yield curve and a static balance sheet Variable - Rate Loans 47% of loans are variable rate Deposit Mix 21% of deposits are held in non - interest bearing demand deposit accounts - 2.1% 1.3% 2.2% - 5.3% 6
Slide 25: 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 26: SFBS Adjusted Funding Cost Comparative Analysis
SFBS Adjusted Funding Cost Comparative Analysis 26 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 MRQ Core ROAA > 1.60% 3) Selected Major Exchange Natio
Slide 27: Appendix
seul Bank (OUR NAME IS OUR MISSION.
Slide 28: 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, and Un
Slide 29: 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 Transportati
Slide 30: 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 ▪ Key
Slide 31: Our Financial Performance: Key Operating and Performance Metrics
Our Financial Performance: Key Operating and Performance Metrics 31 2011 2012 2013 2014 2015 2016 2017 2018 6/30/2019 Balance Sheet Total Assets $2,461 $2,906 $3,521 $4,099 $5,096 $6,370 $7,082 $8,007 $8,740 Net Loans $1,809 $2,337 $2,828 $3,324 $4,173 $4,860 $5,792 $6,465 $6,897 Deposits $2,144 $2,
Slide 32: Our Financial Performance: Asset Quality
Our Financial Performance: Asset Quality 32 Dollars in Thousands 2011 2012 2013 2014 2015 2016 2017 2018 6/30/2019 Nonaccrual Loans: 1-4 Family 670 453 1,878 1,596 198 74 459 2,046 1,941 Owner-Occupied Commercial Real Estate 792 2,786 1,435 683 -- -- 556 3,358 3,558 Other Real Estate Loans 693 240 2
Slide 33: Our Financial Performance: Loan Loss Reserve and Charge-Offs
Our Financial Performance: Loan Loss Reserve and Charge - Offs 33 Dollars in Thousands 2010 2017 2018 6/30/2019 Allowance for Loan Losses: Beginning of Year $ 14,737 $ 18,077 $ 22,030 $ 26,258 $ 30,663 $ 35,629 $ 43,419 $ 51,893 $ 59,406 $ 68,600 Charge-Offs: Commercial, Financial and Agricultural (
Slide 34: GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
GAAP Reconciliation and Management Explanation of Non - GAAP Financial Measures 34 We recorded $3.1 million of additional tax expense as a result of revaluing our net deferred tax assets at December 31, 2017 due to lower corporate income tax rates provided by the Tax Cuts and Jobs Act passed into la
Slide 35: GAAP Reconciliation
GAAP Reconciliation 35 Dollars in Thousands $ 44,258 $ 25,465 $ 21,601 Adjustment for non-routine expense -132 829 865 $ 44,126 $ 26,294 $ 22,466 1.43 % 1.38 % 1.39 % $ 93,092 $ 63,540 $ 52,377 Adjustment for non-routine expense 3,274 1,767 1,612 $ 96,366 $ 65,307 $ 53,989 $ 6,495,067 $ 4,591,861 $
Slide 36: Selected Peer Groups
Selected Peer Groups Note: Financial data as of June 30, 2019 Source: S&P Global Market Intelligence 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 > 210% Ticker Company Name Loc
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