ServisFirst Bancshares, Inc. Announces Results For Fourth Quarter of 2024

ServisFirst Bancshares, Inc. (NYSE:SFBS), today announced earnings and operating results for the quarter ended December 31, 2024.

Fourth Quarter 2024 Highlights:

• Diluted earnings per share of $1.19 for the quarter.
• Diluted earnings per share increased 8% from the third quarter of 2024, and 31% from the year-ago quarter on an adjusted basis*.
• Net interest margin increased 12 basis points from the third quarter of 2024.
• Net interest income increased by $8.0 million, or 28% annualized, during the quarter.
• Deposits grew by $397 million, or 12% annualized, during the quarter.
• Loans grew by $268 million, or 9% annualized, during the quarter.
• Cash dividend increased from $0.30 to $0.335 per share, a 12% increase.
• Book value per share of $29.63, up 12.0% from the fourth quarter of 2023 and 11.6% annualized, from the third quarter of 2024.
• Liquidity remains solid with $2.4 billion in cash on hand and no FHLB advances or brokered deposits.
• Consolidated common equity tier 1 capital to risk-weighted assets increased from 10.91% to 11.42% year-over-year.
• Credit quality continues to be strong with non-performing assets to total assets of 0.26%.

Tom Broughton, Chairman, President, and CEO, said, "With a solid loan pipeline, an improving margin, strong liquidity and strong credit quality, we are optimistic about the outlook for the bank for 2025."

Ed Woodie, Interim CFO, said, "We continue to enjoy higher net interest income. Our margin expanded $8.0 million, a 28% annualized linked quarter increase. Operating efficiency remains a focus for us as we enter 2025."

* This press release includes certain non-GAAP financial measures: adjusted net income, adjusted net income available to common stockholders, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average common stockholders' equity, adjusted efficiency ratio, tangible common stockholders' equity, total tangible assets, tangible book value per share, and tangible common equity to total tangible assets. Please see "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income of $65.2 million and net income available to common stockholders of $65.1 million for the quarter ended December 31, 2024, compared to net income and net income available to common stockholders of $59.9 million for the third quarter of 2024 and net income of $42.1 million and net income available to common stockholders of $42.0 million for the fourth quarter of 2023. Basic and diluted earnings per common share were both $1.19 in the fourth quarter of 2024, compared to $1.10 for both in the third quarter of 2024 and $0.77 for both in the fourth quarter of 2023.

Annualized return on average assets was 1.52% and annualized return on average common stockholders' equity was 16.29% for the fourth quarter of 2024, compared to 1.04% and 11.78%, respectively, for the fourth quarter of 2023.

Net interest income was $123.2 million for the fourth quarter of 2024, compared to $115.1 million for the third quarter of 2024 and $101.7 million for the fourth quarter of 2023. The net interest margin in the fourth quarter of 2024 was 2.96% compared to 2.84% in the third quarter of 2024 and 2.57% in the fourth quarter of 2023. Loan yields were 6.43% during the fourth quarter of 2024 compared to 6.62% during the third quarter of 2024 and 6.32% during the fourth quarter of 2023. Investment yields were 3.49% during the fourth quarter of 2024 compared to 3.57% during the third quarter of 2024 and 3.08% during the fourth quarter of 2023. Average interest-bearing deposit rates were 3.63% during the fourth quarter of 2024, compared to 4.12% during the third quarter of 2024 and 4.06% during the fourth quarter of 2023. Average federal funds purchased rates were 4.80% during fourth quarter of 2024, compared to 5.42% during the third quarter of 2024 and 5.49% during the fourth quarter of 2023.

Average loans for the fourth quarter of 2024 were $12.43 billion, an increase of $60.6 million, or 1.9% annualized, from average loans of $12.37 billion for the third quarter of 2024, and an increase of $828.8 million, or 7.1%, from average loans of $11.60 billion for the fourth quarter of 2023. Ending total loans for the fourth quarter of 2024 were $12.61 billion, an increase of $267.6 million, or 8.7% annualized, from $12.34 billion for the third quarter of 2024, and an increase of $947.0 million, or 8.1%, from $11.66 billion for the fourth quarter of 2023.

Average total deposits for the fourth quarter of 2024 were $13.48 billion, a decrease of $32.6 million, or 1.0% annualized, from average total deposits of $13.52 billion for the third quarter of 2024, and an increase of $256.7 million, or 1.9%, from average total deposits of $13.23 billion for the fourth quarter of 2023. Ending total deposits for the fourth quarter of 2024 were $13.54 billion, an increase of $396.9 million, or 12.1% annualized, from $13.15 billion for the third quarter of 2024, and an increase of $269.9 million, or 2.0%, from $13.27 billion for the fourth quarter of 2023.

Non-performing assets to total assets were 0.26% for the fourth quarter of 2024, compared to 0.25% for the third quarter of 2024 and 0.14% for the fourth quarter of 2023. The increase in non-performing assets to total assets year-over-year can primarily be attributed to a single relationship that moved to non-accrual status during the first quarter of 2024. Annualized net charge-offs to average loans were 0.09% for the fourth quarter of 2024, compared to 0.09% for the third quarter of 2024 and 0.09% for the fourth quarter of 2023. The allowance for credit losses as a percentage of total loans at December 31, 2024, September 30, 2024, and December 31, 2023, was 1.30%, 1.30%, and 1.32%, respectively. We recorded a $6.4 million provision for credit losses in the fourth quarter of 2024 and $5.4 million in the third quarter of 2024, $2.7 million of which is a provision for the potential impact of Hurricane Helene and Milton during the third quarter of 2024. Management is still assessing the effects of both hurricanes and has decided to leave the current provision unchanged while determining if additional provisions are warranted. We recorded provisions for credit losses of $3.6 million in the fourth quarter of 2023.

Non-interest income increased $1.4 million, or 19.3%, to $8.8 million for the fourth quarter of 2024 from $7.4 million in the fourth quarter of 2023, and increased $254,000, or 3.0%, on a linked quarter basis. Service charges on deposit accounts increased $469,000, or 21.5%, to $2.7 million for the fourth quarter of 2024 from $2.2 million in the fourth quarter of 2023, and increased $309,000, or 13.2%, on a linked quarter basis. Mortgage banking revenue increased $721,000, or 91.0%, to $1.5 million for the fourth quarter of 2024 from $792,000 in the fourth quarter of 2023, and increased $161,000, or 11.9%, on a linked quarter basis. Closed loans increased 55% during the fourth quarter of 2024 compared to the fourth quarter of 2023. Net credit card income decreased $137,000, or 6.8%, to $1.9 million for the fourth quarter of 2024 from $2.0 million in the fourth quarter of 2023, and decreased $58,000, or 3.0%, on a linked quarter basis. Bank-owned life insurance ("BOLI") income increased $492,000, or 30.0%, to $2.1 million for the fourth quarter of 2024 from $1.6 million in the fourth quarter of 2023, and increased $18,000, or 0.9%, on a linked quarter basis. Other operating income decreased $121,000, or 15.9%, to $642,000 for the fourth quarter of 2024 from $763,000 in the fourth quarter of 2023, and decreased $176,000, or 21.5%, on a linked quarter basis.

Non-interest expense decreased $11.4 million, or 19.5%, to $46.9 million for the fourth quarter of 2024 from $58.3 million in the fourth quarter of 2023, and increased $1.3 million, or 2.8%, on a linked quarter basis. Salary and benefit expense increased $1.0 million, or 4.5%, to $24.1 million for the fourth quarter of 2024 from $23.0 million in the fourth quarter of 2023, and decreased $995,000, or 4.0%, on a linked quarter basis. The number of full-time equivalent ("FTE") employees increased by 39, or 6.60% to 630 at December 31, 2024 compared to 591 at December 31, 2023, and increased by 10, or 1.61%, from the end of the third quarter of 2024. Equipment and occupancy expense decreased $260,000, or 6.7%, to $3.6 million for the fourth quarter of 2024 from $3.9 million in the fourth quarter of 2023, and decreased $195,000, or 5.1%, on a linked quarter basis. Third party processing and other services expense increased $674,000, or 8.6%, to $8.5 million for the fourth quarter of 2024 from $7.8 million in the fourth quarter of 2023, and increased $480,000, or 6.0%, on a linked quarter basis. Professional services expense increased $564,000, or 39.8%, to $2.0 million for the fourth quarter of 2024 from $1.4 million in the fourth quarter of 2023, and increased $266,000, or 15.5%, on a linked quarter basis. FDIC and other regulatory assessments decreased $7.3 million, or 76.6%, to $2.2 million for the fourth quarter of 2024 from $9.5 million in the fourth quarter of 2023, and decreased $130,000, or 5.5%, on a linked quarter basis. In the first quarter of 2024 and fourth quarter of 2023, the FDIC implemented a special assessment adjustment to recapitalize the Deposit Insurance Fund, see "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for more discussion. Other operating expenses decreased $6.1 million, or 48.7%, to $6.5 million for the fourth quarter of 2024 from $12.6 million in the fourth quarter of 2023, and increased $1.9 million, or 41.2%, on a linked quarter basis. An incremental expense in the fourth quarter of 2023 related to tax credit investments of $3.3 million, contributed to the decrease in other operating expenses year-over-year. In addition, the following items, which management viewed as unusual, infrequent, or not reflective of future normal operating expenses within the control of management, contributed to non-interest expense during the fourth quarter of 2023: the FDIC special assessment expense of $7.2 million, an EDP contract termination and related capitalized cost write-offs of $1.1 million to other operating expenses, and an adjustment to a privilege tax accrual resulting in a $2.2 million expense to other operating expenses. See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below for more discussion of these expenses. The efficiency ratio was 35.54% during the fourth quarter of 2024 compared to 55.23% during the fourth quarter of 2023 and 36.90% during the third quarter of 2024.

Income tax expense increased $9.0 million, or 175.6%, to $14.2 million in the fourth quarter of 2024, compared to $5.2 million in the fourth quarter of 2023. Our effective tax rate was 17.89% for the fourth quarter of 2024 compared to 10.91% for the fourth quarter of 2023. We recognized a reduction in provision for income taxes resulting from excess tax benefits from the exercise and vesting of stock options and restricted stock during the fourth quarters of 2024 and 2023 of $624,000 and $252,000, respectively.

About ServisFirst Bancshares, Inc.

ServisFirst Bancshares, Inc. is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, ServisFirst Bancshares, Inc. provides business and personal financial services from locations in Alabama, Florida, Georgia, North and South Carolina, Tennessee, and Virginia. We also operate loan production offices in Florida and Tennessee. Through the ServisFirst Bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions.

ServisFirst Bancshares, Inc. files periodic reports with the U.S. Securities and Exchange Commission (SEC). Copies of its filings may be obtained through the SEC's website at www.sec.gov or at www.servisfirstbancshares.com.

Statements in this press release 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 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The words "believe," "expect," "anticipate," "project," "plan," "intend," "will," "could," "would," "might" and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. ServisFirst Bancshares, Inc. cautions that such forward-looking statements, wherever they occur in this press release or in other statements attributable to ServisFirst Bancshares, Inc., are necessarily estimates reflecting the judgment of ServisFirst Bancshares, Inc.'s senior management and involve risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Such forward-looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, including, but not limited to: general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes as a result of our reclassification as a large financial institution by the FDIC; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, the Federal Reserve policies in connection with continued or re-emerging inflationary pressures and the ability of the U.S. Congress to increase the U.S. statutory debt limit as needed; computer hacking or cyber-attacks resulting in unauthorized access to confidential or proprietary information; substantial, unexpected or prolonged changes in the level or cost of liquidity; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and non-bank financial institutions. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to "Cautionary Note Regarding Forward-looking Statements" and "Risk Factors" in our most recent Annual Report on Form 10-K, in our Quarterly Reports on Form 10-Q for fiscal year 2024, and our other SEC filings. If one or more of the assumption forming the basis of our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. ServisFirst Bancshares, Inc. assumes no obligation to update or revise any forward-looking statements that are made from time to time.

More information about ServisFirst Bancshares, Inc. may be obtained over the Internet at www.servisfirstbancshares.com or by calling (205) 949-0302.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures, including adjusted net income, adjusted net income available to common stockholders, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average common stockholders' equity, and adjusted efficiency ratio. During the fourth quarter of 2023, we recorded a one-time expense of $7.2 million associated with the FDIC's special assessment to recapitalize the Deposit Insurance Fund following bank failures in the spring of 2023. This assessment was updated in the first quarter of 2024 resulting in additional expense of $1.8 million. Additionally, during the fourth quarter of 2023 we experienced expenses for the termination of an EDP contract and related capitalized cost write-offs resulting in $1.1 million in expenses, and an adjustment to a privilege tax accrual resulting in a $2.2 million expense. The EDP contract termination costs were related to a planned systems conversion that was canceled. We determined the benefits to our clients were less than expected and the disruption outweighed the benefits. We can continue to provide best-in-class products with our current service provider. The adjustment to the privilege tax accrual was due to an under-accrual in previous years, and the correction resulted in duplicate expenses for 2023. These expenses are unusual, or infrequent, in nature and not part of the noninterest expense run rate. Each of adjusted net income, adjusted net income available to common stockholders, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average common stockholders' equity and adjusted efficiency ratio excludes the impact of these items, net of tax, and are all considered non-GAAP financial measures. This press release also contains the non-GAAP financial measures of tangible common stockholders' equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill associated with our acquisition of Metro Bancshares, Inc. in January 2015.

We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use. The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures as of and for the comparative periods presented in this press release. Dollars are in thousands, except share and per share data.