GlobeNewswire Inc | Jul 20, 2020 04:01PM EDT

July 20, 2020

BIRMINGHAM, Ala., July 20, 2020 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ: SFBS), today announced earnings and operating results for the three and six months ended June 30, 2020.

Second Quarter 2020 Highlights:

-- Diluted EPS for the second quarter increased 14% to $0.75 year over year -- Record deposit growth of $1.5 billion during the second quarter -- Funded approximately 4,800 Payroll Protection Program (PPP) loans totaling over $1.0 billion, with 68% less than $150,000 in size -- Asset quality improved, with nonperforming loans to total loans improving to 26 basis points during the second quarter -- Total assets exceed $11.0 billion

FINANCIAL SUMMARY (UNAUDITED)(in Thousands except share and per share amounts) % % Change Change From From Period Period Ending Ending Period Ending Period Ending March Period Ending June June 30, 2020 March 31, 2020 31, June 30, 2019 30, 2020 to 2019 to Period Period Ending Ending June June 30, 30, 2020 2020QUARTERLY OPERATING RESULTSNet Income $ 40,448 $ 34,778 16 % $ 35,633 14 %Net Income Availableto Common $ 40,417 $ 34,778 16 % $ 35,602 14 %StockholdersDiluted Earnings Per $ 0.75 $ 0.64 17 % $ 0.66 14 %ShareReturn on Average 1.55 % 1.54 % 1.69 % AssetsReturn on AverageCommon Stockholders' 18.40 % 16.23 % 18.72 % EquityAverage Diluted 54,194,506 54,167,414 54,089,107 Shares Outstanding YEAR-TO-DATE OPERATING RESULTSNet Income $ 75,226 $ 70,643 6 %Net Income Availableto Common $ 75,195 $ 70,612 6 %StockholdersDiluted Earnings Per $ 1.39 $ 1.31 6 %ShareReturn on Average 1.54 % 1.72 % AssetsReturn on AverageCommon Stockholders' 17.31 % 19.06 % EquityAverage Diluted 54,180,960 54,082,857 Shares Outstanding BALANCE SHEET Total Assets $ 11,012,195 $ 9,364,882 18 % $ 8,740,237 26 %Loans 8,315,375 7,568,836 10 % 6,967,886 19 %Non-interest-bearing 2,678,893 1,925,626 39 % 1,576,959 70 %Demand DepositsTotal Deposits 9,342,918 7,832,655 19 % 7,404,794 26 %Stockholders' Equity 914,588 881,885 4 % 778,957 17 %

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $40.4 million for the quarter ended June 30, 2020, compared to net income and net income available to common stockholders of $35.6 million for the same quarter in 2019. Basic and diluted earnings per common share were $0.75 and $0.75, respectively, for the second quarter of 2020, compared to $0.67 and $0.66, respectively, for the second quarter of 2019.

Annualized return on average assets was 1.55% and annualized return on average common stockholders equity was 18.40% for the second quarter of 2020, compared to 1.69% and 18.72%, respectively, for the second quarter of 2019.

Net interest income was $83.2 million for the second quarter of 2020, compared to $77.6 million for the first quarter of 2020 and $70.1 million for the second quarter of 2019. The net interest margin in the second quarter of 2020 was 3.32% compared to 3.58% in the first quarter of 2020 and 3.44% in the second 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 $2.6 million during the second quarter of 2020 offset the decrease in loan yield by approximately 12 basis points.

Average loans for the second quarter of 2020 were $8.33 billion, an increase of $972.6 million, or 52% annualized, over average loans of $7.36 billion for the first quarter of 2020, and an increase of $1.54 billion, or 23%, over average loans of $6.79 billion for the second quarter of 2019. We originated over 4,800 PPP loans during the second quarter of 2020 for a total of $1.05 billion. Average total balances of PPP loans for the second quarter of 2020 were $885.5 million. Excluding PPP loans, average loans for the second quarter of 2020 were $7.45 billion, an increase of $87.0 million over average loans for the first quarter of 2020, and an increase of $659.1 million, or 10%, over average loans for the second quarter of 2019.

Average total deposits for the second quarter of 2020 were $8.87 billion, an increase of $1.23 billion, or 64% annualized, over average total deposits of $7.64 billion for the first quarter of 2020, and an increase of $1.69 billion, or 24%, over average total deposits of $7.18 billion for the second quarter of 2019.

Nonperforming assets to total assets were 0.26% for the second quarter of 2020, a decrease of 18 basis points compared to 0.44% for the first quarter of 2020 and a decrease of 17 basis points compared to 0.43% for the second quarter of 2019. Annualized net charge-offs to average loans were 0.20%, a six basis-point decrease compared to 0.26% for the first quarter of 2020 and a decrease of two basis points compared to 0.22% for the second quarter of 2019. We recorded a $10.3 million provision for loan losses in the second quarter of 2020 compared to $13.6 million in the first quarter of 2020 and $4.9 million in the second quarter of 2019. The allowance for loan loss as a percentage of total loans was 1.10% at June 30, 2020, a decrease of 3 basis points compared to 1.13% at March 31, 2020 and an increase of 8 basis points compared to 1.02% at June 30, 2019. Excluding PPP loans, the allowance for loan loss as a percentage of total loans was 1.26% at June 30, 2020. 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 managements opinion, the allowance is adequate and was determined by consistent application of ServisFirst Banks methodology for calculating its allowance for loan losses.

Noninterest income for the second quarter of 2020 increased $1.2 million, or 22%, to $7.0 million from $5.8 million in the second quarter of 2019. Mortgage banking revenue increased $1.0 million, or 94%, from the second quarter of 2019 to the second quarter of 2020. Mortgage loan origination volumes increased approximately 65% during the second quarter of 2020 when compared to the same quarter in 2019. Additionally, more of the originations in 2020 were sellable loans, driving higher gains on sale. Credit card revenue decreased $343,000, or 20%, to $1.4 million during the second quarter of 2020, compared to $1.7 million during the second quarter of 2019. The amount of spend on purchase cards increased $20.5 million while the amount of spend on business credit cards decreased $14.3 million during the second quarter of 2020 when compared to the second quarter of 2019. Purchase card spend carries lower profit margins than credit cards due to their higher rebates. Income on life insurance policies increased $686,000, or 88%, to $1.5 million during the second quarter of 2020, compared to $778,000 during the second quarter of 2019. We purchased an additional $75.0 million in BOLI contracts during the third quarter of 2019. Other income for the second quarter of 2020 decreased $151,000, or 39%, to $241,000 from $392,000 in the second 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 $252,000 during the second quarter of 2020 through other income and are amortizing the fee paid to our counterparty over the life of the cap.

Noninterest expense for the second quarter of 2020 increased $2.8 million, or 11%, to $28.8 million from $26.0 million in the second quarter of 2019, and increased $896,000, or 3%, on a linked quarter basis. Salary and benefit expense for the second quarter of 2020 increased $1.5 million, or 10%, to $15.8 million from $14.3 million in the second quarter of 2019, and increased $134,000, or 1%, 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. Equipment and occupancy expense increased $147,000, or 6%, to $2.4 million in the second quarter of 2020, from $2.3 million in the second quarter of 2019. Third party processing expenses increased $789,000, or 29%, to $3.5 million in the second quarter of 2020, from $2.7 million in the second quarter of 2019. Limited-term licenses were added to our loan origination systems to enable more employees to assist customers with their PPP loans. These licenses added $514,000 to third party processing expenses during the second quarter of 2020. Professional services expense decreased $100,000, or 8%, to $1.1 million in the second quarter of 2020, from $1.2 million in the second quarter of 2019, and increased $143,000, or 15%, from $948,000 on a linked-quarter basis. FDIC and other regulatory assessments decreased $486,000, or 45%, to $595,000 in the second quarter of 2020, from $1.1 million in the second quarter of 2019. Lower growth in assets during the second quarter of 2020, excluding PPP loans, resulted in us adjusting our accrual for assessments to be paid at the end of the third quarter of 2020. Expenses associated with other real estate owned increased $1.1 million to $1.3 million in the second quarter of 2020, from $212,000 in the second quarter of 2019. Updated appraisals resulted in write-downs in values on two properties in our Birmingham, Alabama market. Other operating expenses for the second quarter of 2020 decreased $100,000, or 2%, to $4.1 million from $4.2 million in the second quarter of 2019, and increased $452,000, or 12%, on a linked-quarter basis. The efficiency ratio was 31.92% during the second quarter of 2020 compared to 34.30% during the second quarter of 2019 and compared to 33.11% during the first quarter of 2020.

Income tax expense increased $1.4 million, or 15%, to $10.7 million in the second quarter of 2020, compared to $9.3 million in the second quarter of 2019. Our effective tax rate was 20.95% for the second quarter of 2020 compared to 20.74% for the second 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 second quarter of 2019 to $132,000 during 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 2020 and 2019 of $136,000 and $186,000, 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 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, At March 31, At December 31, At September At June 30, 2020 2020 2019 30, 2019 2019Book valueper share - $ 16.98 $ 16.38 $ 15.71 $ 15.13 $ 14.55 GAAPTotal commonstockholders' 914,588 881,886 842,682 810,537 778,957 equity - GAAPAdjustments: Adjusted forgoodwill andcore deposit 14,043 14,111 14,179 14,246 14,314 intangibleassetTangiblecommonstockholders' $ 900,545 $ 867,775 $ 828,503 $ 796,291 $ 764,643 equity -non-GAAPTangible bookvalue per $ 16.72 $ 16.12 $ 15.45 $ 14.86 $ 14.29 share -non-GAAP Stockholders'equity to 8.31 % 9.42 % 9.42 % 9.00 % 8.91 %total assets- GAAPTotal assets $ 11,012,195 $ 9,364,882 $ 8,947,653 $ 9,005,112 $ 8,740,237 - GAAPAdjustments: Adjusted forgoodwill andcore deposit 14,043 14,111 14,179 14,246 14,314 intangibleassetTotaltangible $ 10,998,152 $ 9,350,771 $ 8,933,474 $ 8,990,866 $ 8,725,923 assets -non-GAAPTangiblecommon equityto total 8.19 % 9.28 % 9.27 % 8.86 % 8.76 %tangibleassets -non-GAAP

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 SECs 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) 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019 2nd Quarter 2019CONSOLIDATED STATEMENT OF INCOMEInterest income $ 95,080 $ 96,767 $ 98,187 $ 101,130 $ 97,787 Interest expense 11,846 19,127 22,410 28,125 27,702 Net interest income 83,234 77,640 75,777 73,005 70,085 Provision for loan 10,283 13,584 5,884 6,985 4,884 lossesNet interest incomeafter provision for 72,951 64,056 69,893 66,020 65,201 loan lossesNon-interest income 7,033 6,674 6,936 6,202 5,778 Non-interest expense 28,816 27,920 25,503 25,153 26,022 Income before income 51,168 42,810 51,326 47,069 44,957 taxProvision for income 10,720 8,032 10,289 9,506 9,324 taxNet income 40,448 34,778 41,037 37,563 35,633 Preferred stock 31 - 32 - 31 dividendsNet income availableto common $ 40,417 $ 34,778 $ 41,005 $ 37,563 $ 35,602 stockholdersEarnings per share - $ 0.75 $ 0.65 $ 0.77 $ 0.70 $ 0.67 basicEarnings per share - $ 0.75 $ 0.64 $ 0.76 $ 0.69 $ 0.66 dilutedAverage diluted 54,194,506 54,167,414 54,149,554 54,096,368 54,089,107 shares outstanding CONSOLIDATED BALANCE SHEET DATATotal assets $ 11,012,195 $ 9,364,882 $ 8,947,653 $ 9,005,112 $ 8,740,237 Loans 8,315,375 7,568,836 7,261,451 7,022,069 6,967,886 Debt securities 856,378 827,032 759,649 688,271 658,221 Non-interest-bearing 2,678,893 1,925,626 1,749,879 1,678,672 1,576,959 demand depositsTotal deposits 9,342,918 7,832,655 7,530,433 7,724,158 7,404,794 Borrowings 64,715 64,707 64,703 64,693 64,684 Stockholders' equity $ 914,588 $ 881,885 $ 842,682 $ 810,537 $ 778,957 Shares outstanding 53,874,276 53,844,009 53,623,740 53,579,013 53,526,882 Book value per share $ 16.98 $ 16.38 $ 15.71 $ 15.13 $ 14.55 Tangible book value $ 16.72 $ 16.12 $ 15.45 $ 14.86 $ 14.29 per share (1) SELECTED FINANCIAL RATIOS (Annualized)Net interest margin 3.32 % 3.58 % 3.47 % 3.36 % 3.44 %Return on average 1.55 % 1.54 % 1.80 % 1.67 % 1.69 %assetsReturn on averagecommon stockholders' 18.40 % 16.23 % 19.75 % 18.69 % 18.72 %equityEfficiency ratio 31.92 % 33.11 % 30.83 % 31.76 % 34.30 %Non-interest expenseto average earning 1.15 % 1.29 % 1.17 % 1.16 % 1.28 %assets CAPITAL RATIOS (2) Common equity tier 1capital to 11.26 % 10.68 % 10.50 % 10.39 % 10.18 %risk-weighted assetsTier 1 capital to 11.27 % 10.68 % 10.50 % 10.39 % 10.19 %risk-weighted assetsTotal capital to 13.27 % 12.54 % 12.31 % 12.27 % 12.02 %risk-weighted assetsTier 1 capital to 9.24 % 9.56 % 9.13 % 8.88 % 9.00 %average assetsTangible commonequity to total 8.19 % 9.28 % 9.27 % 8.86 % 8.76 %tangible assets (1) (1) See "GAAP Reconciliation and Management Explanation of Non-GAAP FinancialMeasures" 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, 2020 June 30, 2019 % ChangeASSETS Cash and due from banks $ 102,282 $ 68,841 49 %Interest-bearing balances due 1,444,293 409,052 253 %from depository institutionsFederal funds sold 2,352 408,289 (99 )%Cash and cash equivalents 1,548,927 886,182 75 %Available for sale debt 856,128 657,971 30 %securities, at fair valueHeld to maturity debtsecurities (fair value of $250 250 250 - %at June 30, 2020 and 2019)Mortgage loans held for sale 14,491 9,446 53 %Loans 8,315,375 6,967,886 19 %Less allowance for loan losses (91,507 ) (71,386 ) 28 %Loans, net 8,223,868 6,896,500 19 %Premises and equipment, net 55,588 57,195 (3 )%Goodwill and other 14,043 14,314 (2 )%identifiable intangible assetsOther assets 298,900 218,379 37 %Total assets $ 11,012,195 $ 8,740,237 26 %LIABILITIES AND STOCKHOLDERS' EQUITYLiabilities: Deposits: Non-interest-bearing $ 2,678,893 $ 1,576,959 70 %Interest-bearing 6,664,025 5,827,835 14 %Total deposits 9,342,918 7,404,794 26 %Federal funds purchased 635,606 459,449 38 %Other borrowings 64,715 64,684 - %Other liabilities 54,368 32,353 68 %Total liabilities 10,097,607 7,961,280 27 %Stockholders' equity: Preferred stock, par value$0.001 per share; 1,000,000 authorized and undesignated atJune 30, 2020 and June 30, - - 2019Common stock, par value $0.001per share; 100,000,000 shares authorized; 53,874,276 sharesissued and outstanding at June30, 2020, and 53,526,882 shares issued and outstandingat June 30, 2019 54 54 - %Additional paid-in capital 222,437 218,658 2 %Retained earnings 672,984 555,425 21 %Accumulated other 18,611 4,318 331 %comprehensive incomeTotal stockholders' equityattributable to ServisFirst 914,086 778,455 17 %Bancshares, Inc.Noncontrolling interest 502 502 - %Total stockholders' equity 914,588 778,957 17 %Total liabilities and $ 11,012,195 $ 8,740,237 26 %stockholders' equity

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(In thousands except per share data) Three Months Ended June Six Months Ended June 30, 30, 2020 2019 2020 2019Interest income: Interest and fees $ 89,383 $ 88,610 $ 178,768 $ 174,134 on loansTaxable securities 5,092 4,193 10,246 7,939 Nontaxable 211 393 444 839 securitiesFederal funds sold 34 1,998 311 3,217 Other interest and 360 2,593 2,078 5,357 dividendsTotal interest 95,080 97,787 191,847 191,486 incomeInterest expense: Deposits 10,756 24,240 27,501 46,385 Borrowed funds 1,090 3,462 3,472 6,238 Total interest 11,846 27,702 30,973 52,623 expenseNet interest income 83,234 70,085 160,874 138,863 Provision for loan 10,283 4,884 23,867 9,769 lossesNet interest incomeafter provision for 72,951 65,201 137,007 129,094 loan lossesNon-interest income:Service charges on 1,823 1,786 3,739 3,488 deposit accountsMortgage banking 2,107 1,087 3,178 1,662 Credit card income 1,398 1,741 3,163 3,317 Securities losses - (6 ) - (6 )Increase in cashsurrender value 1,464 778 2,917 1,540 life insuranceOther operating 241 392 710 721 incomeTotal non-interest 7,033 5,778 13,707 10,722 incomeNon-interest expense:Salaries and 15,792 14,339 31,450 28,604 employee benefitsEquipment and 2,434 2,287 4,834 4,546 occupancy expenseThird partyprocessing and 3,513 2,724 6,858 5,135 other servicesProfessional 1,091 1,191 2,039 2,185 servicesFDIC and otherregulatory 595 1,081 1,927 2,100 assessmentsOther real estate 1,303 212 1,904 234 owned expenseOther operating 4,088 4,188 7,724 8,546 expenseTotal non-interest 28,816 26,022 56,736 51,350 expenseIncome before 51,168 44,957 93,978 88,466 income taxProvision for 10,720 9,324 18,752 17,823 income taxNet income 40,448 35,633 75,226 70,643 Dividends on 31 31 31 31 preferred stockNet incomeavailable to common $ 40,417 $ 35,602 $ 75,195 $ 70,612 stockholdersBasic earnings per $ 0.75 $ 0.67 $ 1.40 $ 1.32 common shareDiluted earnings $ 0.75 $ 0.66 $ 1.39 $ 1.31 per common share

LOANS BY TYPE (UNAUDITED) (In thousands) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2020 2020 2019 2019 2019Commercial,financial and $ 3,498,627 $ 2,771,307 $ 2,696,210 $ 2,653,934 $ 2,633,529 agriculturalReal estate - 544,586 548,578 521,392 550,871 603,779 constructionReal estate - mortgage:Owner-occupied 1,634,495 1,678,532 1,587,478 1,526,911 1,538,279 commercial1-4 family 665,883 675,870 644,188 632,346 630,963 mortgageOther mortgage 1,911,384 1,834,137 1,747,394 1,592,072 1,496,512 Subtotal: Realestate - 4,211,762 4,188,539 3,979,060 3,751,329 3,665,754 mortgageConsumer 60,400 60,412 64,789 65,935 64,824 Total loans $ 8,315,375 $ 7,568,836 $ 7,261,451 $ 7,022,069 $ 6,967,886

SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)(Dollars in thousands) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2020 2020 2019 2019 2019Allowance for loan losses:Beginning $ 85,414 $ 76,584 $ 77,192 $ 71,386 $ 70,207 balanceLoans charged off:Commercial,financial and 1,358 2,640 4,742 3,626 3,610 agriculturalReal estate - 376 454 - - - constructionReal estate - 2,520 1,678 1,689 4,974 169 mortgageConsumer 62 58 139 172 63 Total charge 4,316 4,830 6,570 8,772 3,842 offsRecoveries: Commercial,financial and 84 62 51 126 117 agriculturalReal estate - 1 1 1 1 - constructionReal estate - 13 1 2 - 4 mortgageConsumer 28 12 24 60 16 Total 126 76 78 187 137 recoveriesNet 4,190 4,754 6,492 8,585 3,705 charge-offsAllocationfrom Loan - - - 7,406 - GuaranteeProgramProvision for 10,283 13,584 5,884 6,985 4,884 loan lossesEnding $ 91,507 $ 85,414 $ 76,584 $ 77,192 $ 71,386 balance Allowance forloan losses 1.10 % 1.13 % 1.05 % 1.10 % 1.02 %to totalloansAllowance forloan losses 1.10 % 1.16 % 1.08 % 1.11 % 1.05 %to totalaverage loansNetcharge-offs 0.20 % 0.26 % 0.36 % 0.49 % 0.22 %to totalaverage loansProvision forloan losses 0.50 % 0.74 % 0.33 % 0.40 % 0.29 %to totalaverage loansNonperforming assets:Nonaccrual $ 16,881 $ 28,914 $ 30,091 $ 35,732 $ 21,840 loansLoans 90+days past due 5,133 4,954 6,021 5,317 10,299 and accruingOther realestate ownedand 6,537 7,448 8,178 5,337 5,649 repossessedassetsTotal $ 28,551 $ 41,316 $ 44,290 $ 46,386 $ 37,788 Nonperformingloans to 0.26 % 0.45 % 0.50 % 0.58 % 0.46 %total loansNonperformingassets to 0.26 % 0.44 % 0.50 % 0.52 % 0.43 %total assetsNonperformingassets to 0.26 % 0.45 % 0.50 % 0.53 % 0.44 %earningassetsReserve forloan losses 542.07 % 295.41 % 254.51 % 216.03 % 326.86 %to nonaccrualloans Restructuredaccruing $ 975 $ 975 $ 625 $ 3,468 $ 2,742 loans Restructuredaccruing 0.01 % 0.01 % 0.01 % 0.05 % 0.04 %loans tototal loans TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)(In thousands) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2020 2020 2019 2019 2019Beginning $ 2,367 $ 3,330 $ 11,248 $ 11,284 $ 12,289 balance:Additions - 350 250 - - Net(paydowns) / (12 ) (232 ) (3,481 ) 714 (12 )advancesCharge-offs (412 ) (1,081 ) (1,333 ) (750 ) (993 )Transfer to (375 ) - (3,354 ) - - OREOEnding $ 1,568 $ 2,367 $ 3,330 $ 11,248 $ 11,284 balance

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(In thousands except per share data) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 2020 2020 2019 2019 2019Interest income:Interest andfees on $ 89,383 $ 89,385 $ 89,407 $ 90,767 $ 88,610 loansTaxable 5,092 5,154 4,702 4,367 4,193 securitiesNontaxable 211 233 274 316 393 securitiesFederal 34 277 1,053 1,768 1,998 funds soldOtherinterest and 360 1,718 2,751 3,912 2,593 dividendsTotalinterest 95,080 96,767 98,187 101,130 97,787 incomeInterest expense:Deposits 10,756 16,745 19,786 24,787 24,240 Borrowed 1,090 2,382 2,624 3,338 3,462 fundsTotalinterest 11,846 19,127 22,410 28,125 27,702 expenseNet interest 83,234 77,640 75,777 73,005 70,085 incomeProvisionfor loan 10,283 13,584 5,884 6,985 4,884 lossesNet interestincome afterprovision 72,951 64,056 69,893 66,020 65,201 for loanlossesNon-interest income:Servicecharges on 1,823 1,916 1,806 1,735 1,786 depositaccountsMortgage 2,107 1,071 1,366 1,333 1,087 bankingCredit card 1,398 1,765 1,891 1,868 1,741 incomeSecurities(losses) - - (1 ) 34 (6 )gainsIncrease incashsurrender 1,464 1,453 1,419 787 778 value lifeinsuranceOtheroperating 241 469 455 445 392 incomeTotalnon-interest 7,033 6,674 6,936 6,202 5,778 incomeNon-interest expense:Salaries andemployee 15,792 15,658 13,680 15,499 14,339 benefitsEquipmentand 2,434 2,400 2,339 2,387 2,287 occupancyexpenseThird partyprocessing 3,513 3,345 3,176 2,923 2,724 and otherservicesProfessional 1,091 948 1,163 887 1,191 servicesFDIC andother 595 1,332 1,171 (296 ) 1,081 regulatoryassessmentsOther realestate owned 1,303 601 103 78 212 expenseOtheroperating 4,088 3,636 3,871 3,675 4,188 expenseTotalnon-interest 28,816 27,920 25,503 25,153 26,022 expenseIncomebefore 51,168 42,810 51,326 47,069 44,957 income taxProvisionfor income 10,720 8,032 10,289 9,506 9,324 taxNet income 40,448 34,778 41,037 37,563 35,633 Dividends onpreferred 31 - 32 - 31 stockNet incomeavailable to $ 40,417 $ 34,778 $ 41,005 $ 37,563 $ 35,602 commonstockholdersBasicearnings per $ 0.75 $ 0.65 $ 0.77 $ 0.70 $ 0.67 common shareDilutedearnings per $ 0.75 $ 0.64 $ 0.76 $ 0.69 $ 0.66 common share

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED)ON A FULLY TAXABLE-EQUIVALENT BASIS(Dollars in thousands) 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019 2nd Quarter 2019 Average Yield / Average Yield / Average Yield / Average Yield / Average Balance Yield / Balance Rate Balance Rate Balance Rate Balance Rate RateAssets: Interest-earning assets:Loans, net of unearned income (1)Taxable $ 8,301,775 4.31 % $ 7,328,594 4.89 % $ 7,066,576 5.00 % $ 6,927,075 5.18 % $ 6,756,927 5.24 %Tax-exempt (2) 31,929 4.12 32,555 4.04 35,563 4.00 34,195 3.98 32,124 3.83 Total loans, net of 8,333,704 4.31 7,361,149 4.88 7,102,139 4.99 6,961,270 5.17 6,789,051 5.23 unearned incomeMortgage loans held 13,278 2.09 4,282 2.16 6,505 2.44 6,482 2.45 5,208 3.85 for saleDebt securities: Taxable 761,575 2.67 750,413 2.75 670,732 2.81 595,405 2.93 565,491 2.97 Tax-exempt (2) 38,201 2.62 44,029 2.33 50,825 2.17 59,992 2.21 77,364 2.10 Total securities (3) 799,776 2.67 794,442 2.72 721,557 2.76 655,397 2.87 642,855 2.86 Federal funds sold 83,274 0.16 105,423 1.06 238,927 1.75 312,968 2.24 323,714 2.48 Interest-bearing 849,549 0.17 469,199 1.47 602,755 1.81 690,973 2.25 411,481 2.53 balances with banksTotalinterest-earning $ 10,079,581 3.80 % $ 8,734,495 4.46 % $ 8,671,883 4.49 % $ 8,627,090 4.65 % $ 8,172,309 4.80 %assetsNon-interest-earning assets:Cash and due from 76,212 66,140 70,381 71,418 76,988 banksNet premises and 57,446 58,066 57,986 58,243 58,607 equipmentAllowance for loanlosses, accrued 248,702 241,479 233,885 162,654 156,264 interest and otherassetsTotal assets $ 10,461,941 $ 9,100,180 $ 9,034,135 $ 8,919,405 $ 8,464,168 Interest-bearing liabilities:Interest-bearing deposits:Checking $ 992,848 0.35 % $ 956,803 0.57 % $ 961,258 0.69 % $ 900,754 0.84 % $ 909,847 0.88 %Savings 72,139 0.42 67,380 0.50 62,311 0.53 57,431 0.60 54,391 0.57 Money market 4,285,907 0.52 4,061,286 1.10 4,189,283 1.34 4,265,435 1.76 3,932,459 1.88 Time deposits 877,448 1.95 805,924 2.09 712,155 2.15 703,278 2.20 694,414 2.16 Totalinterest-bearing 6,228,342 0.69 5,891,393 1.14 5,925,007 1.32 5,926,898 1.66 5,591,111 1.74 depositsFederal funds 572,990 0.22 492,638 1.31 420,066 1.74 441,526 2.30 418,486 2.57 purchasedOther borrowings 64,711 4.85 64,707 4.85 64,698 4.79 64,689 4.79 64,680 4.84 Totalinterest-bearing $ 6,866,043 0.69 % $ 6,448,738 1.19 % $ 6,409,771 1.39 % $ 6,433,113 1.73 % $ 6,074,277 1.83 %liabilitiesNon-interest-bearing liabilities:Non-interest-bearing 2,646,030 1,749,671 1,759,671 1,654,928 1,591,722 checkingOther liabilities 69,061 39,801 41,112 34,070 35,161 Stockholders' equity 862,500 853,800 818,320 792,284 763,742 Accumulated othercomprehensive income 18,307 8,170 5,261 5,010 (734 ) (loss)Total liabilitiesand stockholders' $ 10,461,941 $ 9,100,180 $ 9,034,135 $ 8,919,405 $ 8,464,168 equityNet interest spread 3.11 % 3.27 % 3.10 % 2.92 % 2.97 %Net interest margin 3.32 % 3.58 % 3.47 % 3.36 % 3.44 % (1) Average loans include loans on which the accrual of interest has beendiscontinued.(2) Interest income and yields are presented on a fully taxable equivalentbasis using a tax rate of 21%.(3) Unrealized losses on available-for-sale debt securities are excluded fromthe yield calculation.