SFBS ServisFirst Bancshares Inc

ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three and nine months ended September 30, 2020.

Third Quarter 2020 Highlights:

• Diluted EPS for the third quarter increased 16% to $0.80 year over year
• Deposits grew 14% annualized during the third quarter
• Loans, excluding Paycheck Protection Program (“PPP”) loans, grew 10% annualized during the third quarter
• Efficiency ratio improved to 28.50% during the third quarter 2020
• Liquidity remains strong with liquid assets to total deposits of 22%
• Our $34.5 million of 5% Subordinated Notes due July 15, 2025 are being refinanced with a $37 million offering of subordinated notes with an interest rate of 4% during the fourth quarter of 2020

Tom Broughton, Chairman, President and CEO, said, “I am pleased to see a rebound in loan demand from the early months of the pandemic. This is a very positive sign for the Southeastern US economy.”

Bud Foshee, CFO, said, “We continue to have a strong balance sheet with good credit quality and strong liquidity. This strong balance sheet has enabled us to perform above our peers during the pandemic.”

FINANCIAL SUMMARY (UNAUDITED)
(in Thousands except share and per share amounts)
				Period EndingSeptember 30,2020				Period EndingJune 30, 2020				% ChangeFrom PeriodEnding June30, 2020 toPeriod EndingSeptember 30, 2020			Period EndingSeptember 30,2019				% ChangeFrom PeriodEndingSeptember 30, 2019 to PeriodEndingSeptember 30,2020
QUARTERLY OPERATING RESULTS
Net Income				$	43,362			$	40,448			7	%		$	37,563			15	%
Net Income Available to Common Stockholders				$	43,362			$	40,417			7	%		$	37,563			15	%
Diluted Earnings Per Share				$	0.80			$	0.75			7	%		$	0.69			16	%
Return on Average Assets					1.54	%			1.55	%						1.67	%
Return on Average Common Stockholders' Equity					18.43	%			18.40	%						18.69	%
Average Diluted Shares Outstanding					54,232,965				54,194,506							54,096,368
YEAR-TO-DATE OPERATING RESULTS
Net Income				$	118,588										$	108,206			10	%
Net Income Available to Common Stockholders				$	118,557										$	108,175			10	%
Diluted Earnings Per Share				$	2.19										$	2.00			9	%
Return on Average Assets					1.54	%										1.70	%
Return on Average Common Stockholders' Equity					17.73	%										18.93	%
Average Diluted Shares Outstanding					54,198,422											54,087,410
BALANCE SHEET
Total Assets				$	11,394,874			$	11,012,195			3	%		$	9,005,112			27	%
Loans					8,508,554				8,315,375			2	%			7,022,069			21	%
Non-interest-bearing Demand Deposits					2,762,814				2,678,893			3	%			1,678,672			65	%
Total Deposits					9,673,783				9,342,918			4	%			7,724,158			25	%
Stockholders' Equity					949,589				914,588			4	%			810,537			17	%

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $43.4 million for the quarter ended September 30, 2020, compared to net income and net income available to common stockholders of $37.6 million for the same quarter in 2019. Basic and diluted earnings per common share were $0.80 and $0.80, respectively, for the third quarter of 2020, compared to $0.70 and $0.69, respectively, for the third quarter of 2019.

Annualized return on average assets was 1.54% and annualized return on average common stockholders’ equity was 18.43% for the third quarter of 2020, compared to 1.67% and 18.69%, respectively, for the third quarter of 2019.

Net interest income was $85.1 million for the third quarter of 2020, compared to $83.2 million for the second quarter of 2020 and $73.0 million for the third quarter of 2019. The net interest margin in the third quarter of 2020 was 3.14% compared to 3.32% in the second quarter of 2020 and 3.36% in the third quarter of 2019. Origination of PPP loans and increased excess liquidity drove unfavorable rate and mix changes while lower deposit rates and increases in noninterest bearing demand balances drove favorable rate and mix changes, respectively. Accretion of net fees on PPP loans of $4.0 million during the third quarter of 2020 offset the decrease in loan yield by approximately 19 basis points.

Average loans for the third quarter of 2020 were $8.36 billion, an increase of $31.5 million, or 2% annualized, over average loans of $8.33 billion for the second quarter of 2020, and an increase of $1.40 billion, or 20%, over average loans of $6.96 billion for the third quarter of 2019. We originated over 4,900 PPP loans during 2020 for a total of $1.05 billion. Excluding PPP loans, average loans for the third quarter of 2020 were $7.31 billion, a decrease of $136.0 million compared to the second quarter of 2020, and an increase of $350.6 million, or 5%, over average loans for the third quarter of 2019.

Average total deposits for the third quarter of 2020 were $9.47 billion, an increase of $595.4 million, or 27% annualized, over average total deposits of $8.87 billion for the second quarter of 2020, and an increase of $1.89 billion, or 25%, over average total deposits of $7.58 billion for the third quarter of 2019.

Nonperforming assets to total assets were 0.29% for the third quarter of 2020, an increase of three basis points compared to 0.26% for the second quarter of 2020 and a decrease of 23 basis points compared to 0.52% for the third quarter of 2019. Annualized net charge-offs to average loans were 0.54%, a 34 basis-point increase compared to 0.20% for the second quarter of 2020 and an increase of five basis points compared to 0.49% for the third quarter of 2019. The increase in net charge-offs for the third quarter of 2020 was due to a $7.2 million loan charge-off on a borrower severely impacted by the COVID-19 pandemic. We recorded a $12.3 million provision for loan losses in the third quarter of 2020 compared to $10.3 million in the second quarter of 2020 and $7.0 million in the third quarter of 2019. The allowance for loan loss as a percentage of total loans was 1.09% at September 30, 2020, a decrease of one basis point compared to 1.10% at June 30, 2020 and September 30, 2019, respectively. Excluding PPP loans, for all periods discussed, the allowance for loan loss as a percentage of total loans was 1.24% at September 30, 2020, a decrease of two basis points compared to 1.26% at June 30, 2020 and an increase of 14 basis points compared to 1.10% at September 30, 2019. The CARES Act, passed into law on March 27, 2020 as a result of the COVID-19 outbreak, allows companies to delay their adoption of Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments (CECL), including the current expected credit losses methodology for estimating allowances for credit losses. We have elected to delay adoption of ASU 2016-13 until the date on which the national emergency concerning the COVID-19 outbreak terminates or December 31, 2020, with an effective retrospective implementation date of January 1, 2020. In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.

Noninterest income for the third quarter of 2020 increased $2.0 million, or 32%, to $8.2 million from $6.2 million in the third quarter of 2019. Mortgage banking revenue increased $1.2 million, or 89%, from the third quarter of 2019 to the third quarter of 2020. Mortgage loan origination volumes increased approximately 96% during the third quarter of 2020 when compared to the same quarter in 2019. Credit card revenue decreased $28,000, or 2%, to $1.8 million during the third quarter of 2020, compared to the third quarter of 2019. The amount of spend on purchase cards increased $23.0 million while the amount of spend on business credit cards decreased $8.0 million during the third quarter of 2020 when compared to the third quarter of 2019. Purchase card spend carries lower profit margins than credit cards due to their higher rebates. Income on life insurance policies increased $946,000, or 120%, to $1.7 million during the third quarter of 2020, compared to $787,000 during the third quarter of 2019. We purchased $75.0 million in BOLI contracts at the end of the third quarter of 2019 and another $40.0 million in July 2020. Other income for the third quarter of 2020 decreased $191,000, or 42%, to $262,000 from $453,000 in the third quarter of 2019. On May 4, 2020 we bought an interest rate cap with a term of three years and a notional amount of $300 million. The cap is tied to one-month LIBOR with a strike rate of 0.50%. We wrote down the value of the cap by $342,000 during the third quarter of 2020 and by $595,000 year-to-date through other income and are amortizing the fee paid to our counterparty over the life of the cap.

Noninterest expense for the third quarter of 2020 increased $1.4 million, or 6%, to $26.6 million from $25.2 million in the third quarter of 2019, and decreased $2.2 million, or 8%, on a linked quarter basis. Salary and benefit expense for the third quarter of 2020 decreased $505,000, or 3%, to $15.0 million from $15.5 million in the third quarter of 2019, and decreased $798,000, or 5%, on a linked quarter basis. Costs to originate PPP loans totaling $2.4 million were incurred during the second quarter of 2020. These costs were credited against salary and benefits as a deferred expense and will be amortized over the life of the loans by netting them against accretion of deferred origination fees. Bonuses of approximately $2.5 million were paid during the second quarter of 2020 related to work performed on the PPP. Additional bonuses of $71,000 were paid to front-line employees who continued to assist customers during the peak of the pandemic. The number of FTE employees decreased to 486 as of September 30, 2020 compared to 492 as of June 30, 2020 and 506 as of September 30, 2019. Equipment and occupancy expense increased $169,000, or 7%, to $2.6 million in the third quarter of 2020, from $2.4 million in the third quarter of 2019. Third party processing expenses increased $358,000, or 12%, to $3.3 million in the third quarter of 2020, from $2.9 million in the third quarter of 2019. Professional services expense increased $68,000, or 8%, to $955,000 in the third quarter of 2020, from $887,000 in the third quarter of 2019, and decreased $136,000, or 12%, from $1.1 million on a linked-quarter basis. FDIC and other regulatory assessments were $1.1 million in the third quarter of 2020 compared to a credit of $296,000 in the third quarter of 2019. The net assessment credit for the third quarter of 2019 resulted from the FDIC’s Small Bank Assessment Credit recorded by the Bank. Expenses associated with other real estate owned increased $41,000 to $119,000 in the third quarter of 2020, from $78,000 in the third quarter of 2019. Other operating expenses for the third quarter of 2020 decreased $76,000, or 2%, to $3.6 million from $3.7 million in the third quarter of 2019, and decreased $481,000, or 12%, on a linked-quarter basis. The efficiency ratio was 28.50% during the third quarter of 2020 compared to 31.76% during the third quarter of 2019 and compared to 31.92% during the second quarter of 2020.

Income tax expense increased $1.5 million, or 16%, to $11.0 million in the third quarter of 2020, compared to $9.5 million in the third quarter of 2019. Our effective tax rate was 20.29% for the third quarter of 2020 compared to 20.20% for the third quarter of 2019. State of Alabama tax credit investments matured at the end of 2019, causing our state credit amounts to decrease from $497,000 during the third quarter of 2019 to $132,000 during the third 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 third quarters of 2020 and 2019 of $180,000 and $231,000, respectively.

The Company’s 5% Subordinated Notes due July 15, 2025 became redeemable in July 2020. Those Notes are being redeemed in the fourth quarter of 2020 and replaced with up to $37 million in 4% subordinated notes to be offered to holders of the redeemed Notes.

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 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.

	September 30,2020				June 30, 2020				March 31, 2020				December 31,2019				September 30,2019
Book value per share - GAAP	$	17.61			$	16.98			$	16.38			$	15.71			$	15.13
Total common stockholders' equity - GAAP		949,589				914,588				881,885				842,682				810,537
Adjustments:
Adjusted for goodwill and core deposit intangible asset		13,976				14,043				14,111				14,179				14,246
Tangible common stockholders' equity - non-GAAP	$	935,613			$	900,545			$	867,775			$	828,503			$	796,291
Tangible book value per share - non-GAAP	$	17.35			$	16.72			$	16.12			$	15.45			$	14.86
Stockholders' equity to total assets - GAAP		8.33	%			8.31	%			9.42	%			9.42	%			9.00	%
Total assets - GAAP	$	11,394,874			$	11,012,195			$	9,364,882			$	8,947,653			$	9,005,112
Adjustments:
Adjusted for goodwill and core deposit intangible asset		13,976				14,043				14,111				14,179				14,246
Total tangible assets - non-GAAP	$	11,380,898			$	10,998,152			$	9,350,771			$	8,933,474			$	8,990,866
Tangible common equity to total tangible assets - non-GAAP		8.22	%			8.19	%			9.28	%			9.27	%			8.86	%

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, Montgomery, Mobile and Dothan, Alabama, Pensacola, Sarasota and Tampa Bay, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee.

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 2020, 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 BankDavis Mange (205) 949-3420dmange@servisfirstbank.com

SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(In thousands except share and per share data)
	3rd Quarter 2020				2nd Quarter 2020				1st Quarter 2020				4th Quarter 2019				3rd Quarter 2019
CONSOLIDATED STATEMENT OF INCOME
Interest income	$	96,110			$	95,080			$	96,767			$	98,187			$	101,130
Interest expense		11,028				11,846				19,127				22,410				28,125
Net interest income		85,082				83,234				77,640				75,777				73,005
Provision for loan losses		12,284				10,283				13,584				5,884				6,985
Net interest income after provision for loan losses		72,798				72,951				64,056				69,893				66,020
Non-interest income		8,172				7,033				6,674				6,936				6,202
Non-interest expense		26,573				28,816				27,920				25,503				25,153
Income before income tax		54,397				51,168				42,810				51,326				47,069
Provision for income tax		11,035				10,720				8,032				10,289				9,506
Net income		43,362				40,448				34,778				41,037				37,563
Preferred stock dividends		-				31				-				32				-
Net income available to common stockholders	$	43,362			$	40,417			$	34,778			$	41,005			$	37,563
Earnings per share - basic	$	0.80			$	0.75			$	0.65			$	0.77			$	0.70
Earnings per share - diluted	$	0.80			$	0.75			$	0.64			$	0.76			$	0.69
Average diluted shares outstanding		54,232,965				54,194,506				54,167,414				54,149,554				54,096,368
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	11,394,874			$	11,012,195			$	9,364,882			$	8,947,653			$	9,005,112
Loans		8,508,554				8,315,375				7,568,836				7,261,451				7,022,069
Debt securities		913,299				856,378				827,032				759,649				688,271
Non-interest-bearing demand deposits		2,762,814				2,678,893				1,925,626				1,749,879				1,678,672
Total deposits		9,673,783				9,342,918				7,832,655				7,530,433				7,724,158
Borrowings		64,719				64,715				64,707				64,703				64,693
Stockholders' equity	$	949,589			$	914,588			$	881,885			$	842,682			$	810,537
Shares outstanding		53,915,245				53,874,276				53,844,009				53,623,740				53,579,013
Book value per share	$	17.61			$	16.98			$	16.38			$	15.71			$	15.13
Tangible book value per share (1)	$	17.35			$	16.72			$	16.12			$	15.45			$	14.86
SELECTED FINANCIAL RATIOS (Annualized)
Net interest margin		3.14	%			3.32	%			3.58	%			3.47	%			3.36	%
Return on average assets		1.54	%			1.55	%			1.54	%			1.80	%			1.67	%
Return on average common stockholders' equity		18.43	%			18.40	%			16.23	%			19.75	%			18.69	%
Efficiency ratio		28.50	%			31.92	%			33.11	%			30.83	%			31.76	%
Non-interest expense to average earning assets		0.98	%			1.15	%			1.29	%			1.17	%			1.16	%
CAPITAL RATIOS (2)
Common equity tier 1 capital to risk-weighted assets		11.24	%			11.26	%			10.68	%			10.50	%			10.39	%
Tier 1 capital to risk-weighted assets		11.25	%			11.27	%			10.68	%			10.50	%			10.39	%
Total capital to risk-weighted assets		13.10	%			13.27	%			12.54	%			12.31	%			12.27	%
Tier 1 capital to average assets		8.22	%			8.46	%			9.56	%			9.13	%			8.88	%
Tangible common equity to total tangible assets (1)		8.22	%			8.19	%			9.28	%			9.27	%			8.86	%
(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)
			September 30,2020				September 30,2019				% Change
ASSETS
Cash and due from banks			$	70,472			$	108,804			(35	)	%
Interest-bearing balances due from depository institutions				1,551,597				463,625			235		%
Federal funds sold				1,302				474,298			(100	)	%
	Cash and cash equivalents			1,623,371				1,046,727			55		%
Available for sale debt securities, at fair value				913,049				688,021			33		%
Held to maturity debt securities (fair value of $250 at September 30, 2020 and 2019)				250				250			-		%
Mortgage loans held for sale				21,472				8,691			147		%
Loans				8,508,554				7,022,069			21		%
Less allowance for loan losses				(92,440	)			(77,192	)		20		%
	Loans, net			8,416,114				6,944,877			21		%
Premises and equipment, net				55,273				56,570			(2	)	%
Goodwill and other identifiable intangible assets				13,976				14,246			(2	)	%
Other assets				351,369				245,730			43		%
	Total assets		$	11,394,874			$	9,005,112			27		%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
	Non-interest-bearing		$	2,762,814			$	1,678,672			65		%
	Interest-bearing			6,910,969				6,045,486			14		%
		Total deposits		9,673,783				7,724,158			25		%
Federal funds purchased				669,350				370,231			81		%
Other borrowings				64,719				64,693			-		%
Other liabilities				37,433				35,493			5		%
	Total liabilities			10,445,285				8,194,575			27		%
Stockholders' equity:
	Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at
		September 30, 2020 and September 30, 2019		-				-
	Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,915,245 shares
		issued and outstanding at September 30, 2020, and 53,579,113 shares issued and outstanding
		at September 30, 2019		54				54			-		%
	Additional paid-in capital			223,280				219,234			2		%
	Retained earnings			706,924				584,968			21		%
	Accumulated other comprehensive income			18,831				5,779			226		%
		Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		949,089				810,035			17		%
	Noncontrolling interest			500				502			-		%
		Total stockholders' equity		949,589				810,537			17		%
	Total liabilities and stockholders' equity		$	11,394,874			$	9,005,112			27		%

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
			Three Months Ended September 30,							Nine Months Ended September 30,
			2020			2019				2020			2019
Interest income:
	Interest and fees on loans		$	89,564		$	90,767			$	268,332		$	264,901
	Taxable securities			5,858			4,367				16,104			12,306
	Nontaxable securities			166			316				610			1,155
	Federal funds sold			16			1,768				327			4,985
	Other interest and dividends			506			3,912				2,584			9,269
	Total interest income			96,110			101,130				287,957			292,616
Interest expense:
	Deposits			9,876			24,787				37,377			71,172
	Borrowed funds			1,152			3,338				4,624			9,576
	Total interest expense			11,028			28,125				42,001			80,748
	Net interest income			85,082			73,005				245,956			211,868
Provision for loan losses				12,284			6,985				36,151			16,754
	Net interest income after provision for loan losses			72,798			66,020				209,805			195,114
Non-interest income:
	Service charges on deposit accounts			1,818			1,735				5,557			5,223
	Mortgage banking			2,519			1,333				5,697			2,995
	Credit card income			1,840			1,868				5,003			5,185
	Securities gains			-			34				-			28
	Increase in cash surrender value life insurance			1,733			787				4,650			2,327
	Other operating income			262			453				972			1,172
	Total non-interest income			8,172			6,210				21,879			16,930
Non-interest expense:
	Salaries and employee benefits			14,994			15,499				46,444			44,103
	Equipment and occupancy expense			2,556			2,387				7,390			6,933
	Third party processing and other services			3,281			2,923				10,360			8,058
	Professional services			955			887				2,994			3,072
	FDIC and other regulatory assessments (credits)			1,061			(296	)			2,988			1,804
	Other real estate owned expense			119			78				2,023			312
	Other operating expense			3,607			3,683				11,110			12,227
	Total non-interest expense			26,573			25,161				83,309			76,509
	Income before income tax			54,397			47,069				148,375			135,535
Provision for income tax				11,035			9,506				29,787			27,329
	Net income			43,362			37,563				118,588			108,206
	Dividends on preferred stock			-			-				31			31
	Net income available to common stockholders		$	43,362		$	37,563			$	118,557		$	108,175
Basic earnings per common share			$	0.80		$	0.70			$	2.20		$	2.02
Diluted earnings per common share			$	0.80		$	0.69			$	2.19		$	2.00

LOANS BY TYPE (UNAUDITED)
(In thousands)
		3rd Quarter 2020			2nd Quarter 2020			1st Quarter 2020			4th Quarter 2019			3rd Quarter 2019
Commercial, financial and agricultural		$	3,466,189		$	3,498,627		$	2,771,307		$	2,696,210		$	2,653,934
Real estate - construction			530,919			544,586			548,578			521,392			550,871
Real estate - mortgage:
	Owner-occupied commercial		1,725,222			1,634,495			1,678,532			1,587,478			1,526,911
	1-4 family mortgage		671,841			665,883			675,870			644,188			632,346
	Other mortgage		2,056,549			1,911,384			1,834,137			1,747,394			1,592,072
Subtotal: Real estate - mortgage			4,453,612			4,211,762			4,188,539			3,979,060			3,751,329
Consumer			57,834			60,400			60,412			64,789			65,935
Total loans		$	8,508,554		$	8,315,375		$	7,568,836		$	7,261,451		$	7,022,069

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)
(Dollars in thousands)
				3rd Quarter 2020					2nd Quarter 2020					1st Quarter 2020					4th Quarter 2019					3rd Quarter 2019
Allowance for loan losses:
Beginning balance				$	91,507				$	85,414				$	76,584				$	77,192				$	71,386
Loans charged off:
	Commercial, financial and agricultural				11,146					1,358					2,640					4,742					3,626
	Real estate - construction				-					376					454					-					-
	Real estate - mortgage				200					2,520					1,678					1,689					4,974
	Consumer				44					62					58					139					172
		Total charge offs			11,390					4,316					4,830					6,570					8,772
Recoveries:
	Commercial, financial and agricultural				12					84					62					51					126
	Real estate - construction				-					1					1					1					1
	Real estate - mortgage				12					13					1					2					-
	Consumer				15					28					12					24					60
		Total recoveries			39					126					76					78					187
	Net charge-offs				11,351					4,190					4,754					6,492					8,585
	Allocation from Loan Guarantee Program				-					-					-					-					7,406
	Provision for loan losses				12,284					10,283					13,584					5,884					6,985
	Ending balance			$	92,440				$	91,507				$	85,414				$	76,584				$	77,192
	Allowance for loan losses to total loans				1.09		%			1.10		%			1.13		%			1.05		%			1.10		%
	Allowance for loan losses to total average
		loans			1.11		%			1.10		%			1.16		%			1.08		%			1.11		%
	Net charge-offs to total average loans				0.54		%			0.20		%			0.26		%			0.36		%			0.49		%
	Provision for loan losses to total average
		loans			0.58		%			0.50		%			0.74		%			0.33		%			0.40		%
	Nonperforming assets:
		Nonaccrual loans		$	21,675				$	16,881				$	28,914				$	30,091				$	35,732
		Loans 90+ days past due and accruing			4,898					5,133					4,954					6,021					5,317
		Other real estate owned and
		repossessed assets			6,976					6,537					7,448					8,178					5,337
	Total			$	33,549				$	28,551				$	41,316				$	44,290				$	46,386
	Nonperforming loans to total loans				0.31		%			0.26		%			0.45		%			0.50		%			0.58		%
	Nonperforming assets to total assets				0.29		%			0.26		%			0.44		%			0.50		%			0.52		%
	Nonperforming assets to earning assets				0.30		%			0.26		%			0.45		%			0.50		%			0.53		%
	Reserve for loan losses to nonaccrual loans				426.48		%			542.07		%			295.41		%			254.51		%			216.03		%
	Restructured accruing loans			$	1,800				$	975				$	975				$	625				$	3,468
	Restructured accruing loans to total loans				0.02		%			0.01		%			0.01		%			0.01		%			0.05		%
	TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)
	(In thousands)
				3rd Quarter 2020					2nd Quarter 2020					1st Quarter 2020					4th Quarter 2019					3rd Quarter 2019
	Beginning balance:			$	1,568				$	2,367				$	3,330				$	11,248				$	11,284
		Additions			1,182					-					350					250					-
		Net (paydowns) / advances			(12	)				(12	)				(232	)				(3,481	)				714
		Charge-offs			-					(412	)				(1,081	)				(1,333	)				(750	)
		Transfer to OREO			-					(375	)				-					(3,354	)				-
	Ending balance			$	2,738				$	1,568				$	2,367				$	3,330				$	11,248

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
			3rd Quarter 2020			2nd Quarter 2020			1st Quarter 2020			4th Quarter 2019				3rd Quarter 2019
Interest income:
	Interest and fees on loans		$	89,564		$	89,383		$	89,385		$	89,407			$	90,767
	Taxable securities			5,858			5,092			5,154			4,702				4,367
	Nontaxable securities			166			211			233			274				316
	Federal funds sold			16			34			277			1,053				1,768
	Other interest and dividends			506			360			1,718			2,751				3,912
	Total interest income			96,110			95,080			96,767			98,187				101,130
Interest expense:
	Deposits			9,876			10,756			16,745			19,786				24,787
	Borrowed funds			1,152			1,090			2,382			2,624				3,338
	Total interest expense			11,028			11,846			19,127			22,410				28,125
	Net interest income			85,082			83,234			77,640			75,777				73,005
Provision for loan losses				12,284			10,283			13,584			5,884				6,985
	Net interest income after provision for loan losses			72,798			72,951			64,056			69,893				66,020
Non-interest income:
	Service charges on deposit accounts			1,818			1,823			1,916			1,806				1,735
	Mortgage banking			2,519			2,107			1,071			1,366				1,333
	Credit card income			1,840			1,398			1,765			1,891				1,868
	Securities (losses) gains			-			-			-			(1	)			34
	Increase in cash surrender value life insurance			1,733			1,464			1,453			1,419				787
	Other operating income			262			241			469			455				445
	Total non-interest income			8,172			7,033			6,674			6,936				6,202
Non-interest expense:
	Salaries and employee benefits			14,994			15,792			15,658			13,680				15,499
	Equipment and occupancy expense			2,556			2,434			2,400			2,339				2,387
	Third party processing and other services			3,281			3,513			3,345			3,176				2,923
	Professional services			955			1,091			948			1,163				887
	FDIC and other regulatory assessments (credits)			1,061			595			1,332			1,171				(296	)
	Other real estate owned expense			119			1,303			601			103				78
	Other operating expense			3,607			4,088			3,636			3,871				3,675
	Total non-interest expense			26,573			28,816			27,920			25,503				25,153
	Income before income tax			54,397			51,168			42,810			51,326				47,069
Provision for income tax				11,035			10,720			8,032			10,289				9,506
	Net income			43,362			40,448			34,778			41,037				37,563
	Dividends on preferred stock			-			31			-			32				-
	Net income available to common stockholders		$	43,362		$	40,417		$	34,778		$	41,005			$	37,563
Basic earnings per common share			$	0.80		$	0.75		$	0.65		$	0.77			$	0.70
Diluted earnings per common share			$	0.80		$	0.75		$	0.64		$	0.76			$	0.69

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)
ON A FULLY TAXABLE-EQUIVALENT BASIS
(Dollars in thousands)
						3rd Quarter 2020						2nd Quarter 2020						1st Quarter 2020						4th Quarter 2019						3rd Quarter 2019
						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			$	8,335,087		4.26	%		$	8,301,775		4.31	%		$	7,328,594		4.89	%		$	7,066,576		5.00	%		$	6,927,075		5.18	%
			Tax-exempt (2)				30,068		4.14				31,929		4.12				32,555		4.04				35,563		4.00				34,195		3.98
				Total loans, net of
					unearned income		8,365,155		4.26				8,333,704		4.31				7,361,149		4.88				7,102,139		4.99				6,961,270		5.17
		Mortgage loans held for sale					20,053		1.41				13,278		2.09				4,282		2.16				6,505		2.44				6,482		2.45
		Debt securities:
			Taxable				820,526		2.86				761,575		2.67				750,413		2.75				670,732		2.81				595,405		2.93
			Tax-exempt (2)				31,880		2.51				38,201		2.62				44,029		2.33				50,825		2.17				59,992		2.21
				Total securities (3)			852,406		2.84				799,776		2.67				794,442		2.72				721,557		2.76				655,397		2.87
		Federal funds sold					41,884		0.15				83,274		0.16				105,423		1.06				238,927		1.75				312,968		2.24
		Interest-bearing balances with banks					1,500,563		0.13				849,549		0.17				469,199		1.47				602,755		1.81				690,973		2.25
		Total interest-earning assets				$	10,780,061		3.55	%		$	10,079,581		3.80	%		$	8,734,495		4.46	%		$	8,671,883		4.49	%		$	8,627,090		4.65	%
Non-interest-earning assets:
		Cash and due from banks					75,065						76,212						66,140						70,381						71,418
		Net premises and equipment					56,799						57,446						58,066						57,986						58,243
		Allowance for loan losses, accrued
			interest and other assets				281,196						248,702						241,479						233,885						162,654
				Total assets		$	11,193,121					$	10,461,941					$	9,100,180					$	9,034,135					$	8,919,405
Interest-bearing liabilities:
		Interest-bearing deposits:
		Checking				$	1,077,595		0.31	%		$	992,848		0.35	%		$	956,803		0.57	%		$	961,258		0.69	%		$	900,754		0.84	%
		Savings					82,671		0.36				72,139		0.42				67,380		0.50				62,311		0.53				57,431		0.60
		Money market					4,739,566		0.44				4,285,907		0.52				4,061,286		1.10				4,189,283		1.34				4,265,435		1.76
		Time deposits					841,378		1.78				877,448		1.95				805,924		2.09				712,155		2.15				703,278		2.20
			Total interest-bearing deposits				6,741,210		0.58				6,228,342		0.69				5,891,393		1.14				5,925,007		1.32				5,926,898		1.66
		Federal funds purchased					682,971		0.22				572,990		0.22				492,638		1.31				420,066		1.74				441,526		2.30
		Other borrowings					64,717		4.77				64,711		4.85				64,707		4.85				64,698		4.79				64,689		4.79
		Total interest-bearing liabilities				$	7,488,898		0.59	%		$	6,866,043		0.69	%		$	6,448,738		1.19	%		$	6,409,771		1.39	%		$	6,433,113		1.73	%
Non-interest-bearing liabilities:
		Non-interest-bearing
			checking				2,118,889						2,646,030						1,749,671						1,759,671						1,654,928
		Other liabilities					649,161						69,061						39,801						41,112						34,070
		Stockholders' equity					917,626						862,500						853,800						818,320						792,284
		Accumulated other comprehensive
			income				18,547						18,307						8,170						5,261						5,010
				Total liabilities and
					stockholders' equity	$	11,193,121					$	10,461,941					$	9,100,180					$	9,034,135					$	8,919,405
Net interest spread									2.96	%					3.11	%					3.27	%					3.10	%					2.92	%
Net interest margin									3.14	%					3.32	%					3.58	%					3.47	%					3.36	%
(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.