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ServisFirst Bancshares, Inc. Announces Results For Second Quarter of 2021
Source: Nasdaq GlobeNewswire / 19 Jul 2021 16:02:01 America/New_York
BIRMINGHAM, Ala., July 19, 2021 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NYSE: SFBS), today announced earnings and operating results for the quarter ended June 30, 2021.
Second Quarter 2021 Highlights:
- Total loans grew $144.7 million during the quarter, while loans, excluding the impact of Paycheck Protection Program (“PPP”) loan activity, grew $517.3 million, or 28% annualized, during the quarter
- Diluted earnings per share were $0.92 for the second quarter, an increase of 23% over the second quarter of 2020
- Deposits grew from $9.34 billion to $10.96 billion year-over-year, or 17%, and grew $381 million, or 14% annualized, on a linked-quarter basis
- Book value per share increased to $19.80, a 17% increase year-over-year
- Liquidity reached new record levels, with approximately $3.0 billion on deposit at the Federal Reserve Bank
- We transferred the listing of our common stock to the New York Stock Exchange (NYSE) during the quarter
Tom Broughton, Chairman, President and CEO, said, “Strong loan growth and a continued robust loan pipeline are evidence that we are well positioned to meet the financial needs of our customers and prospects as they return to a more normal operating environment.”
Bud Foshee, CFO, said, “Our credit quality and low expense structure has weathered the pandemic and we remain optimistic about the future.”
FINANCIAL SUMMARY (UNAUDITED) (in Thousands except share and per share amounts) Period Ending June 30, 2021 Period Ending March 31, 2021 % Change From Period Ending March 31, 2021 to Period Ending June 30, 2021 Period Ending June 30, 2020 % Change From Period Ending June 30, 2020 to Period Ending June 30, 2021 QUARTERLY OPERATING RESULTS Net Income $ 50,027 $ 51,455 (3) % $ 40,448 24 % Net Income Available to Common Stockholders $ 49,996 $ 51,455 (3) % $ 40,417 24 % Diluted Earnings Per Share $ 0.92 $ 0.95 (3) % $ 0.75 23 % Return on Average Assets 1.56 % 1.72 % 1.55 % Return on Average Common Stockholders' Equity 18.98 % 19.83 % 18.40 % Average Diluted Shares Outstanding 54,460,230 54,381,991 54,194,506 YEAR-TO-DATE OPERATING RESULTS Net Income $ 101,482 $ 75,226 35 % Net Income Available to Common Stockholders $ 101,451 $ 75,195 35 % Diluted Earnings Per Share $ 1.86 $ 1.39 34 % Return on Average Assets 1.63 % 1.54 % Return on Average Common Stockholders' Equity 19.73 % 17.31 % Average Diluted Shares Outstanding 54,421,327 54,180,960 BALANCE SHEET Total Assets $ 13,207,319 $ 12,647,374 4 % $ 11,012,195 20 % Loans 8,649,694 8,504,980 2 % 8,315,375 4 % Non-interest-bearing Demand Deposits 3,296,429 3,044,611 8 % 2,678,893 23 % Total Deposits 10,958,236 10,577,610 4 % 9,342,918 17 % Stockholders' Equity 1,073,284 1,030,485 4 % 914,588 17 % DETAILED FINANCIALS
ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $50.0 million for the quarter ended June 30, 2021, compared to net income and net income available to common stockholders of $40.4 million for the same quarter in 2020. Basic and diluted earnings per common share were $0.92 for the second quarter of 2021, compared to $0.75, for the second quarter of 2020.
Annualized return on average assets was 1.56% and annualized return on average common stockholders’ equity was 18.98% for the second quarter of 2021, compared to 1.55% and 18.40%, respectively, for the second quarter of 2020.
Net interest income was $94.7 million for the second quarter of 2021, compared to $92.4 million for the first quarter of 2021 and $83.2 million for the second quarter of 2020. The net interest margin in the second quarter of 2021 was 3.06% compared to 3.20% in the first quarter of 2021 and 3.32% in the second quarter of 2020. Accretion of net fees on PPP loans of $8.0 million during the second quarter of 2021 contributed 37 basis points of the loan yield, compared to $9.1 million of PPP loan fee accretion during the first quarter of 2021, or 43 basis points of the loan yield.
Average loans for the second quarter of 2021 were $8.64 billion, an increase of $132.4 million, or 6% annualized, with average loans of $8.51 billion for the first quarter of 2021, and an increase of $311.3 million, or 4%, with average loans of $8.33 billion for the second quarter of 2020. Origination of round-two PPP loans during the second quarter of 2021 totaled $28.0 million while forgiveness of round-one PPP loans during the second quarter of 2021 totaled $400.6 million.
Average total deposits for the second quarter of 2021 were $10.73 billion, an increase of $554.8 million, or 22% annualized, with average total deposits of $10.18 billion for the first quarter of 2021, and an increase of $1.86 billion, or 21%, with average total deposits of $8.87 billion for the second quarter of 2020.
Non-performing assets to total assets were 0.15% for the second quarter of 2021, a decrease of one basis point compared to 0.16% for the first quarter of 2021 and a decrease of 11 basis points compared to 0.26% for the second quarter of 2020. Annualized net recoveries to average loans were 0.01% for the second quarter of 2021, compared to annualized net charge-offs of 0.02% and 0.20% for the first quarter of 2021 and second quarter of 2020, respectively. The allowance for credit losses for the quarters ending June 30, 2021, March 31, 2021 and December 31, 2020 were calculated under the CECL methodology and as a percentage of total loans were 1.21%, 1.12% and 1.04%, respectively. Other quarter-end periods presented for the allowance for loan losses were not restated for CECL adoption and were calculated under the incurred loss methodology. The allowance for loan losses as a percentage of total loans was 1.10% at June 30, 2020. Excluding PPP loans, for all periods discussed, the allowance for credit losses as a percentage of total loans under the CECL methodology at June 30, 2021 and March 31, 2021 was 1.30% and 1.26%, respectively, compared to 1.26% at June 30, 2020, under the incurred loss model. We recorded a $9.7 million provision for credit losses in the second quarter of 2021 compared to $7.5 million in the first quarter of 2021 and $10.3 million in the second quarter of 2020. The $2.2 million linked-quarter increase in provision for credit losses is primarily due to loan growth and qualitative factors reflecting economic uncertainty related to the termination of the PPP.
Non-interest income for the second quarter of 2021 increased $2.6 million, or 37%, to $9.6 million from $7.0 million in the second quarter of 2020. Mortgage banking revenue increased $592,000, or 28%, to $2.7 million from the second quarter of 2020 to the second quarter of 2021. Margin pricing on mortgage loans was increased in the third quarter of 2020, increasing the per-loan revenue by approximately 18%. Net credit card revenue increased $514,000, or 37%, to $1.9 million during the second quarter of 2021, compared to $1.4 million during the second quarter of 2020. The number of credit card accounts increased approximately 36% and the aggregate amount of spend on all credit card accounts increased 47% during the second quarter of 2021 compared to the second quarter of 2020. Cash surrender value of life insurance increased $219,000, or 15%, to $1.7 million during the second quarter of 2021, compared to $1.5 million during the second quarter of 2020. Other income for the second quarter of 2021 increased $536,000, or 222%, to $777,000 from $241,000 in the second quarter of 2020. We wrote down the value of our interest rate cap by $252,000 during the second quarter of 2020 through other income. Merchant service revenue increased from $134,000 during the second quarter of 2020 to $289,000, or 15%, during the second quarter of 2021.
Non-interest expense for the second quarter of 2021 increased $2.5 million, or 9%, to $31.3 million from $28.8 million in the second quarter of 2020, and increased $2.4 million, or 8%, on a linked quarter basis. Salary and benefit expense for the second quarter of 2021 increased $1.1 million, or 7%, to $16.9 million from $15.8 million in the second quarter of 2020, and increased $1.3 million, or 9%, on a linked quarter basis. Salary expense alone only increased by $326,000 during the second quarter of 2021 compared to the second quarter of 2020. Higher loan origination cost deferrals during the second quarter of 2020 related to origination of round-one PPP loans decreased salary and benefits expenses below what they would have otherwise been during that quarter. The number of FTE employees increased by 35 to 527 at June 30, 2021 compared to 492 at June 30, 2020, and increased by 36 from the end of the first quarter of 2021. Equipment and occupancy expense increased $410,000, or 17%, to $2.8 million in the second quarter of 2021, from $2.4 million in the second quarter of 2020, and increased $190,000 on a linked-quarter basis. Third party processing and other services expense increased $324,000, or 9%, to $3.9 million in the second quarter of 2021, from $3.6 million in the second quarter of 2020 and increased $530,000 on a linked-quarter basis. FDIC and other regulatory assessments increased $830,000 to $1.4 million in the second quarter of 2021, from $595,000 in the second quarter of 2020, and decreased $157,000, or 10%, on a linked quarter basis. Lower asset growth during the second quarter of 2020 resulted in us adjusting our accrual for assessments in that quarter. Expenses associated with other real estate owned decreased $763,000 to $540,000 in the second quarter of 2021, from $1.3 million in the second quarter of 2020, and increased $383,000 on a linked quarter basis. The second quarter 2020 amount included write-downs in value of two foreclosed properties in our Birmingham region. The linked-quarter increase was due to the write-down of one property in our Nashville region during the second quarter of 2021. Other operating expenses for the second quarter of 2021 increased $581,000, or 15%, to $4.6 million from $4.0 million in the second quarter of 2020, and decreased $79,000 on a linked-quarter basis. We increased our reserve for credit losses on unfunded loan commitments by $500,000 in the second quarter of 2021 with a charge to other operating expenses. The efficiency ratio was 30.03% during the second quarter of 2021 compared to 31.92% during the second quarter of 2020 and compared to 28.68% during the first quarter of 2021.
Income tax expense increased $2.6 million, or 24%, to $13.3 million in the second quarter of 2021, compared to $10.7 million in the second quarter of 2020. Our effective tax rate was 20.97% for the second quarter of 2021 compared to 20.95% for the second quarter of 2020. 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 second quarters of 2021 and 2020 of $724,000 and $136,000, respectively.
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures, including 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 and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015. We also include total loans excluding PPP loans. 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.
At June 30, 2021 At March 31, 2021 At December 31, 2020 At September 30, 2020 At June 30, 2020 Book value per share - GAAP $ 19.80 $ 19.03 $ 18.41 $ 17.61 $ 16.98 Total common stockholders' equity - GAAP 1,073,284 1,030,485 992,852 949,589 914,588 Adjustments: Adjusted for goodwill and core deposit intangible asset 13,773 13,841 13,908 13,976 14,043 Tangible common stockholders' equity - non-GAAP $ 1,059,511 $ 1,016,644 $ 978,944 $ 935,613 $ 900,545 Tangible book value per share - non-GAAP $ 19.55 $ 18.78 $ 18.15 $ 17.35 $ 16.72 Stockholders' equity to total assets - GAAP 8.13 % 8.15 % 8.32 % 8.33 % 8.31 % Total assets - GAAP $ 13,207,319 $ 12,647,374 $ 11,932,654 $ 11,394,874 $ 11,012,195 Adjustments: Adjusted for goodwill and core deposit intangible asset 13,773 13,841 13,908 13,976 14,043 Total tangible assets - non-GAAP $ 13,193,546 $ 12,633,533 $ 11,918,746 $ 11,380,898 $ 10,998,152 Tangible common equity to total tangible assets - non-GAAP 8.03 % 8.05 % 8.21 % 8.22 % 8.19 % Total loans - GAAP $ 8,649,694 $ 8,504,980 Adjustments: Adjusted to exclude PPP loans 595,017 967,641 Loans, excluding PPP loans - non-GAAP $ 8,054,677 $ 7,537,339 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 Birmingham, Huntsville, Mobile, Montgomery and Dothan, Alabama, Northwest Florida, West Central Florida, Nashville, Tennessee, Atlanta, Georgia, and Charleston, South Carolina.
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 a number of 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: the global health and economic crisis precipitated by the COVID-19 outbreak; 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 in our loan portfolio and the deposit base; economic crisis and associated credit issues in industries most impacted by the COVID-19 outbreak, including but not limited to, the restaurant, hospitality and retail sectors; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives; 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. The foregoing list of factors is not exhaustive. 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 2021, and our other SEC filings. If one or more of the factors affecting 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.
Contact: ServisFirst Bank
Davis Mange (205) 949-3420
dmange@servisfirstbank.comSELECTED FINANCIAL HIGHLIGHTS (Unaudited) (In thousands except share and per share data) 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 CONSOLIDATED STATEMENT OF INCOME Interest income $ 102,719 $ 100,396 $ 101,065 $ 96,110 $ 95,080 Interest expense 8,051 8,031 8,984 11,028 11,846 Net interest income 94,668 92,365 92,081 85,082 83,234 Provision for credit losses 9,652 7,451 6,283 12,284 10,283 Net interest income after provision for credit losses 85,016 84,914 85,798 72,798 72,951 Non-interest income 9,598 8,463 8,237 8,172 7,033 Non-interest expense 31,309 28,914 28,202 26,573 28,816 Income before income tax 63,305 64,463 65,833 54,397 51,168 Provision for income tax 13,278 13,008 14,852 11,035 10,720 Net income 50,027 51,455 50,981 43,362 40,448 Preferred stock dividends 31 - 32 - 31 Net income available to common stockholders $ 49,996 $ 51,455 $ 50,949 $ 43,362 $ 40,417 Earnings per share - basic $ 0.92 $ 0.95 $ 0.94 $ 0.80 $ 0.75 Earnings per share - diluted $ 0.92 $ 0.95 $ 0.94 $ 0.80 $ 0.75 Average diluted shares outstanding 54,460,230 54,381,991 54,273,944 54,232,965 54,194,506 CONSOLIDATED BALANCE SHEET DATA Total assets $ 13,207,319 $ 12,647,374 $ 11,932,654 $ 11,394,874 $ 11,012,195 Loans 8,649,694 8,504,980 8,465,688 8,508,544 8,315,375 Debt securities 1,013,783 962,129 886,938 913,299 856,378 Non-interest-bearing demand deposits 3,296,429 3,044,611 2,788,772 2,762,814 2,678,893 Total deposits 10,958,236 10,577,610 9,975,724 9,673,783 9,342,918 Borrowings 64,696 64,691 64,748 64,719 64,715 Stockholders' equity $ 1,073,284 $ 1,030,485 $ 992,852 $ 949,589 $ 914,588 Shares outstanding 54,201,204 54,137,650 53,943,751 53,915,245 53,874,276 Book value per share $ 19.80 $ 19.03 $ 18.41 $ 17.61 $ 16.98 Tangible book value per share (1) $ 19.55 $ 18.78 $ 18.15 $ 17.35 $ 16.72 SELECTED FINANCIAL RATIOS (Annualized) Net interest margin 3.06 % 3.20 % 3.27 % 3.14 % 3.32 % Return on average assets 1.56 % 1.72 % 1.74 % 1.54 % 1.55 % Return on average common stockholders' equity 18.98 % 19.83 % 20.78 % 18.43 % 18.40 % Efficiency ratio 30.03 % 28.68 % 28.11 % 28.50 % 31.92 % Non-interest expense to average earning assets 1.01 % 1.00 % 1.00 % 0.98 % 1.15 % CAPITAL RATIOS (2) Common equity tier 1 capital to risk-weighted assets 10.60 % 10.73 % 10.50 % 11.24 % 11.26 % Tier 1 capital to risk-weighted assets 10.60 % 10.73 % 10.50 % 11.25 % 11.27 % Total capital to risk-weighted assets 12.36 % 12.48 % 12.20 % 13.10 % 13.27 % Tier 1 capital to average assets 8.10 % 8.25 % 8.23 % 8.22 % 8.46 % Tangible common equity to total tangible assets (1) 8.03 % 8.05 % 8.22 % 8.22 % 8.19 % (1) See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a discussion of these Non-GAAP financial measures. (2) Regulatory capital ratios for most recent period are preliminary. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in thousands) June 30, 2021 June 30, 2020 % Change ASSETS Cash and due from banks $ 72,599 $ 102,282 (29 ) % Interest-bearing balances due from depository institutions 3,100,677 1,444,293 115 % Federal funds sold 7,500 2,352 219 % Cash and cash equivalents 3,180,776 1,548,927 105 % Available for sale debt securities, at fair value 1,013,533 856,128 18 % Held to maturity debt securities (fair value of $250 at June 30, 2021 and 2020) 250 250 - Mortgage loans held for sale 6,147 14,491 (58 ) % Loans 8,649,694 8,315,375 4 % Less allowance for credit losses (104,670 ) (91,507 ) 14 % Loans, net 8,545,024 8,223,868 4 % Premises and equipment, net 67,738 55,588 22 % Goodwill and other identifiable intangible assets 13,773 14,043 (2 ) % Other assets 380,078 298,900 27 % Total assets $ 13,207,319 $ 11,012,195 20 % LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Non-interest-bearing $ 3,296,429 $ 2,678,893 23 % Interest-bearing 7,661,807 6,664,025 15 % Total deposits 10,958,236 9,342,918 17 % Federal funds purchased 1,059,474 635,606 67 % Other borrowings 64,696 64,715 - % Other liabilities 51,629 54,368 (5 ) % Total liabilities 12,134,035 10,097,607 20 % Stockholders' equity: Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at June 30, 2021 and June 30, 2020 - - Common stock, par value $0.001 per share; 100,000,000 shares authorized; 54,201,204 shares issued and outstanding at June 30, 2021, and 53,874,276 shares issued and outstanding at June 30, 2020 54 54 - % Additional paid-in capital 225,127 222,437 1 % Retained earnings 828,048 672,984 23 % Accumulated other comprehensive income 19,555 18,611 5 % Total stockholders' equity attributable to ServisFirst Bancshares, Inc. 1,072,784 914,086 17 % Noncontrolling interest 500 502 - % Total stockholders' equity 1,073,284 914,588 17 % Total liabilities and stockholders' equity $ 13,207,319 $ 11,012,195 20 % CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands except per share data) Three Months Ended June, 30 Six Months Ended June, 30 2021 2020 2021 2020 Interest income: Interest and fees on loans $ 95,451 $ 89,383 $ 189,254 $ 178,768 Taxable securities 6,315 5,092 12,122 10,246 Nontaxable securities 86 211 193 444 Federal funds sold 4 34 7 311 Other interest and dividends 863 360 1,539 2,078 Total interest income 102,719 95,080 203,115 191,847 Interest expense: Deposits 6,836 10,756 13,717 27,501 Borrowed funds 1,215 1,090 2,365 3,472 Total interest expense 8,051 11,846 16,082 30,973 Net interest income 94,668 83,234 187,033 160,874 Provision for credit losses 9,652 10,283 17,103 23,867 Net interest income after provision for credit losses 85,016 72,951 169,930 137,007 Non-interest income: Service charges on deposit accounts 1,907 1,823 3,815 3,739 Mortgage banking 2,699 2,107 5,446 3,178 Credit card income 1,912 1,398 3,104 3,163 Securities gains 620 - 620 - Increase in cash surrender value life insurance 1,683 1,464 3,341 2,917 Other operating income 777 241 1,735 710 Total non-interest income 9,598 7,033 18,061 13,707 Non-interest expense: Salaries and employee benefits 16,887 15,792 32,430 31,450 Equipment and occupancy expense 2,844 2,434 5,498 4,834 Third party processing and other services 3,946 3,622 7,362 7,079 Professional services 1,107 1,091 2,030 2,039 FDIC and other regulatory assessments 1,425 595 3,007 1,927 Other real estate owned expense 540 1,303 697 1,904 Other operating expense 4,560 3,979 9,199 7,503 Total non-interest expense 31,309 28,816 60,223 56,736 Income before income tax 63,305 51,168 127,768 93,978 Provision for income tax 13,278 10,720 26,286 18,752 Net income 50,027 40,448 101,482 75,226 Dividends on preferred stock 31 31 $ 31 $ 31 Net income available to common stockholders $ 49,996 $ 40,417 $ 101,451 $ 75,195 Basic earnings per common share $ 0.92 $ 0.75 $ 1.87 $ 1.40 Diluted earnings per common share $ 0.92 $ 0.75 $ 1.86 $ 1.39 LOANS BY TYPE (UNAUDITED) (In thousands) 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 Commercial, financial and agricultural $ 3,105,243 $ 3,323,093 $ 3,295,900 $ 3,466,189 $ 3,498,627 Real estate - construction 782,305 666,592 593,614 530,919 544,586 Real estate - mortgage: Owner-occupied commercial 1,726,888 1,698,695 1,693,428 1,725,222 1,634,495 1-4 family mortgage 707,546 685,840 711,692 671,841 665,883 Other mortgage 2,262,231 2,068,560 2,106,184 2,056,549 1,911,384 Subtotal: Real estate - mortgage 4,696,665 4,453,095 4,511,304 4,453,612 4,211,762 Consumer 65,481 62,200 64,870 57,834 60,400 Total loans $ 8,649,694 $ 8,504,980 $ 8,465,688 $ 8,508,554 $ 8,315,375 SUMMARY OF CREDIT LOSS EXPERIENCE (UNAUDITED) (Dollars in thousands) 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 Allowance for credit losses: Beginning balance $ 94,906 $ 87,942 $ 92,440 $ 91,507 $ 85,414 Impact of Adoption of ASC 326 - - (2,000 ) - - Loans charged off: Commercial financial and agricultural 150 477 8,792 11,146 1,358 Real estate - construction - - 202 - 376 Real estate - mortgage 59 12 - 200 2,520 Consumer 54 87 38 44 62 Total charge offs 263 576 9,032 11,390 4,316 Recoveries: Commercial financial and agricultural 298 26 94 12 84 Real estate - construction 2 50 30 - 1 Real estate - mortgage 62 2 114 12 13 Consumer 13 11 13 15 28 Total recoveries 375 89 251 39 126 Net charge-offs (112 ) 487 8,781 11,351 4,190 Provision for credit losses 9,652 7,451 6,283 12,284 10,283 Ending balance $ 104,670 $ 94,906 $ 87,942 $ 92,440 $ 91,507 Allowance for credit losses to total loans 1.21 % 1.12 % 1.04 % - - Allowance for credit losses to total average loans 1.21 % 1.11 % 1.04 % - - Allowance for loan losses to total loans - - - 1.09 % 1.10 % Allowance for loan losses to total average loans - - - 1.11 % 1.10 % Net (recoveries) charge-offs to total average loans (0.01 ) % 0.02 % 0.41 % 0.54 % 0.20 % Provision for credit losses to total average loans 0.45 % 0.35 % 0.30 % - - Provision for loan losses to total average loans - - - 0.58 % 0.50 % Nonperforming assets: Nonaccrual loans $ 12,301 $ 13,088 $ 13,973 $ 21,675 $ 16,881 Loans 90+ days past due and accruing 4,888 4,804 4,981 4,898 5,133 Other real estate owned and repossessed assets 2,039 2,067 6,497 6,976 6,537 Total $ 19,228 $ 19,959 $ 25,451 $ 33,549 $ 28,551 Nonperforming loans to total loans 0.20 % 0.21 % 0.22 % 0.31 % 0.26 % Nonperforming assets to total assets 0.15 % 0.16 % 0.21 % 0.29 % 0.26 % Nonperforming assets to earning assets 0.15 % 0.16 % 0.22 % 0.30 % 0.26 % Allowance for credit losses to nonaccrual loans 850.91 % 725.14 % 629.37 % - - Allowance for loan losses to nonaccrual loans - - - 426.48 % 542.07 % Restructured accruing loans $ 441 $ 794 $ 818 $ 1,800 $ 975 Restructured accruing loans to total loans 0.01 % 0.01 % 0.01 % 0.02 % 0.01 % TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED) (In thousands) 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 Beginning balance: $ 3,542 $ 1,433 $ 2,738 $ 1,568 $ 2,367 Additions - 2,146 - 1,182 - Net (paydowns) / advances (624 ) (37 ) (619 ) (12 ) (12 ) Charge-offs - - (535 ) - (412 ) Transfer to OREO - - (151 ) - (375 ) Ending balance $ 2,918 $ 3,542 $ 1,433 $ 2,738 $ 1,568 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands except per share data) 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 Interest income: Interest and fees on loans $ 95,451 $ 93,803 $ 94,332 $ 89,564 $ 89,383 Taxable securities 6,315 5,807 6,018 5,858 5,092 Nontaxable securities 86 107 129 166 211 Federal funds sold 4 3 5 16 34 Other interest and dividends 863 676 581 506 360 Total interest income 102,719 100,396 101,065 96,110 95,080 Interest expense: Deposits 6,836 6,881 7,853 9,876 10,756 Borrowed funds 1,215 1,150 1,131 1,152 1,090 Total interest expense 8,051 8,031 8,984 11,028 11,846 Net interest income 94,668 92,365 92,081 85,082 83,234 Provision for credit losses 9,652 7,451 6,283 12,284 10,283 Net interest income after provision for credit losses 85,016 84,914 85,798 72,798 72,951 Non-interest income: Service charges on deposit accounts 1,907 1,908 1,971 1,818 1,823 Mortgage banking 2,699 2,747 3,050 2,519 2,107 Credit card income 1,912 1,192 913 1,840 1,398 Securities gains 620 - - - - Increase in cash surrender value life insurance 1,683 1,658 1,660 1,733 1,464 Other operating income 777 958 643 262 241 Total non-interest income 9,598 8,463 8,237 8,172 7,033 Non-interest expense: Salaries and employee benefits 16,887 15,543 14,970 14,994 15,792 Equipment and occupancy expense 2,844 2,654 2,680 2,556 2,434 Third party processing and other services 3,946 3,416 3,418 3,281 3,622 Professional services 1,107 923 1,248 955 1,091 FDIC and other regulatory assessments 1,425 1,582 1,366 1,061 595 Other real estate owned expense 540 157 140 119 1,303 Other operating expense 4,560 4,639 4,380 3,607 3,979 Total non-interest expense 31,309 28,914 28,202 26,573 28,816 Income before income tax 63,305 64,463 65,833 54,397 51,168 Provision for income tax 13,278 13,008 14,852 11,035 10,720 Net income 50,027 51,455 50,981 43,362 40,448 Dividends on preferred stock 31 - 32 - 31 Net income available to common stockholders $ 49,996 $ 51,455 $ 50,949 $ 43,362 $ 40,417 Basic earnings per common share $ 0.92 $ 0.95 $ 0.94 $ 0.80 $ 0.75 Diluted earnings per common share $ 0.92 $ 0.95 $ 0.94 $ 0.80 $ 0.75 AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED) ON A FULLY TAXABLE-EQUIVALENT BASIS (Dollars in thousands) 2nd Quarter 2021 1st Quarter 2021 4th Quarter 2020 3rd Quarter 2020 2nd Quarter 2020 Average Balance Yield / Rate Average Balance Yield / Rate Average Balance Yield / Rate Average Balance Yield / Rate Average Balance Yield / Rate Assets: Interest-earning assets: Loans, net of unearned income (1) Taxable $ 8,618,139 4.43 % $ 8,484,914 4.47 % $ 8,435,237 4.43 % $ 8,335,087 4.26 % $ 8,301,775 4.31 % Tax-exempt (2) 26,854 4.05 27,592 4.17 29,393 4.16 30,068 4.14 31,929 4.12 Total loans, net of unearned income 8,644,993 4.43 8,512,506 4.47 8,464,630 4.43 8,365,155 4.26 8,333,704 4.31 Mortgage loans held for sale 11,470 1.92 13,601 1.94 19,459 1.37 20,053 1.41 13,278 2.09 Debt securities: Taxable 936,863 2.70 878,118 2.65 862,333 2.79 820,526 2.86 761,575 2.67 Tax-exempt (2) 16,872 2.47 21,084 2.43 25,542 2.52 31,880 2.51 38,201 2.62 Total securities (3) 953,735 2.69 899,202 2.64 887,875 2.78 852,406 2.84 799,776 2.67 Federal funds sold 8,224 0.20 11,935 0.10 16,306 0.12 41,884 0.15 83,274 0.16 Interest-bearing balances with banks 2,790,524 0.12 2,262,233 0.12 1,837,249 0.13 1,500,563 0.13 849,549 0.17 Total interest-earning assets $ 12,408,946 3.32 % $ 11,699,477 3.48 % $ 11,225,519 3.58 % $ 10,780,061 3.55 % $ 10,079,581 3.80 % Non-interest-earning assets: Cash and due from banks 85,478 71,166 91,258 75,065 76,212 Net premises and equipment 61,240 57,198 56,315 56,799 57,446 Allowance for credit losses, accrued interest and other assets 320,729 320,407 308,746 281,196 248,702 Total assets $ 12,876,393 $ 12,148,248 $ 11,681,838 $ 11,193,121 $ 10,461,941 Interest-bearing liabilities: Interest-bearing deposits: Checking $ 1,350,098 0.19 % $ 1,294,614 0.19 % $ 1,197,908 0.23 % $ 1,077,595 0.31 % $ 992,848 0.35 % Savings 104,283 0.18 93,375 0.18 86,259 0.18 82,671 0.36 72,139 0.42 Money market 5,321,338 0.26 5,057,828 0.27 4,933,285 0.31 4,739,566 0.44 4,285,907 0.52 Time deposits 801,928 1.33 808,561 1.44 810,675 1.59 841,378 1.78 877,448 1.95 Total interest-bearing deposits 7,577,647 0.36 7,254,378 0.38 7,028,127 0.44 6,741,210 0.58 6,228,342 0.69 Federal funds purchased 970,708 0.22 849,772 0.22 752,765 0.22 682,971 0.22 572,990 0.22 Other borrowings 64,694 4.28 64,689 4.33 64,701 4.41 64,717 4.78 64,711 4.85 Total interest-bearing liabilities $ 8,613,049 0.37 % $ 8,168,839 0.40 % $ 7,845,593 0.46 % $ 7,488,898 0.59 % $ 6,866,043 0.69 % Non-interest-bearing liabilities: Non-interest-bearing demand deposits 3,154,605 2,923,041 2,812,254 2,728,513 2,646,030 Other liabilities 52,027 39,442 48,642 39,537 69,061 Stockholders' equity 1,038,012 996,741 956,847 917,626 862,500 Accumulated other comprehensive income 18,700 20,185 18,502 18,547 18,307 Total liabilities and stockholders' equity $ 12,876,393 $ 12,148,248 $ 11,681,838 $ 11,193,121 $ 10,461,941 Net interest spread 2.95 % 3.08 % 3.12 % 2.96 % 3.11 % Net interest margin 3.06 % 3.20 % 3.27 % 3.14 % 3.32 % (1 ) Average loans include loans on which the accrual of interest has been discontinued. (2 ) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%. (3 ) Unrealized losses on available-for-sale debt securities are excluded from the yield calculation. 
- Total loans grew $144.7 million during the quarter, while loans, excluding the impact of Paycheck Protection Program (“PPP”) loan activity, grew $517.3 million, or 28% annualized, during the quarter