Stock to Track: ServisFirst Bancshares Inc. (NASDAQ: SFBS)

Financial
Jamie Welch

BIRMINGHAM, Ala, April 7, 2020 – Shares of ServisFirst Bancshares Inc. (NASDAQ: SFBS) inclined 7.72% to $29.17. The stock grabbed the investor’s attention and traded 399.018K shares as compared to its average daily volume of 263.81K shares. The stock’s institutional ownership stands at 50.60%.

for the quarter ended September 30, 2019, ServisFirst Bancshares Inc. (NASDAQ: SFBS) reported net income and net income available to common stockholders of $37.60M, contrast to net income and net income available to common stockholders of $34.60M for the same quarter in 2018. Basic and diluted earnings per common share were $0.70 and $0.69, respectively, for the third quarter of 2019, contrast to $0.65 and $0.64, respectively, for the third quarter of 2018.

Net interest income was $73.00M for the third quarter of 2019, contrast to $70.10M for the second quarter of 2019 and $66.90M for the third quarter of 2018. The net interest margin in the third quarter of 2019 was 3.36% contrast to 3.44% in the second quarter of 2019 and 3.77% in the third quarter of 2018. Linked quarter decreases in average rates paid on deposits in excess of decreases in loan yields drove a favorable rate change and increases in average balances in loans and equity drove favorable volume change. Increases in average balances in interest-bearing deposits in excess of increases in average balances in loans drove an unfavorable mix change as this excess was invested in lower yielding interest-bearing balances with other banks.

Average loans for the third quarter of 2019 were $6.96B, a boost of $172.20M, or 10% annualized, over average loans of $6.79B for the second quarter of 2019, and a boost of $727.90M, or 12%, over average loans of $6.23B for the third quarter of 2018.

Average total deposits for the third quarter of 2019 were $7.58B, a boost of $399.00M, or 22% annualized, over average total deposits of $7.18B for the second quarter of 2019, and a boost of $1.25B, or 20%, over average total deposits of $6.33B for the third quarter of 2018.

Non-interest income for the third quarter of 2019 increased $1.10M, or 23%, to $6.20M from $5.10M in the third quarter of 2018. Deposit service charges increased $140,000 in the third quarter of 2019, or 9%, contrast to the third quarter of 2018. The number of transaction deposit accounts increased about 11% from September 30, 2018 to September 30, 2019. Mortgage banking revenue increased $544,000, or 69%, from the third quarter of 2018 to the third quarter of 2019. Mortgage loan originations increased about 64% during the third quarter of 2019 when contrast to the same quarter in 2018. Credit card revenue increased $454,000, or 32%, to $1.90M during the third quarter of 2019, contrast to $1.40M during the third quarter of 2018. The number of accounts increased about 35% and the aggregate amount of sales on all accounts increased 41% during the third quarter of 2019. Other income for the third quarter of 2019 increased $159,000, or 54%, to $453,000 from $294,000 in the third quarter of 2018.

Non-interest expense for the third quarter of 2019 increased $2.50M, or 11%, to $25.20M from $22.60M in the third quarter of 2018, and reduced $861,000, or 3%, on a linked quarter basis. During the third quarter of 2019 we recognized a credit in the amount of $1.70M to our FDIC and other regulatory assessments expense as a result of the Federal Deposit Insurance Corporation’s (“FDIC”) Small Bank Assessment Credit. This credit is discussed further below in “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures.” Salary and benefit expense for the third quarter of 2019 increased $2.40M, or 19%, to $15.50M from $13.10M in the third quarter of 2018, and increased $1.20M, or 8%, on a linked quarter basis. The number of FTE employees increased from 456 at September 30, 2018 to 506 at September 30, 2019, or 11%. Equipment and occupancy expense increased $194,000, or 9%, to $2.40M in the third quarter of 2019, from $2.20M in the third quarter of 2018, and increased $100,000 on a linked-quarter basis. Professional services expense increased $34,000, or 4%, to $887,000 in the third quarter of 2019, from $853,000 in the third quarter of 2018, and reduced $304,000, or 26%, from $1.20M on a linked-quarter basis. FDIC and other regulatory assessments reduced $971,000 to a credit amount of $296,000 in the third quarter of 2019, from $675,000 in the third quarter of 2018. As mentioned above, we recognized an assessment credit during the third quarter of 2019. Expenses associated with other real estate owned reduced $211,000, or 73%, to $78,000 in the third quarter of 2019, from $289,000 in the third quarter of 2018. We had one write-down of a commercial warehouse building in 2018. Other operating expenses for the third quarter of 2019 increased $1.10M, or 19%, to $6.60M from $5.50M in the third quarter of 2018, and reduced $306,000, or 4%, on a linked-quarter basis. Increases in data processing and Federal Reserve Bank service charges contributed to this increase in other operating expenses for the year-over-year comparison. Decreases in business development expenses contributed to the decrease in the linked-quarter comparison. The efficiency ratio was 31.76% during the third quarter of 2019 contrast to 31.45% during the third quarter of 2018 and contrast to 34.30% during the second quarter of 2019.

Income tax expense increased $1.40M, or 17%, to $9.50M in the third quarter of 2019, contrast to $8.10M in the third quarter of 2018. Our effective tax rate was 20.20% for the third quarter of 2019 contrast to 19.03% for the third quarter of 2018. 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 2019 and 2018 of $231,000 and $539,000, respectively.

SFBS has a market value of $1.65B while its EPS was booked as $2.76 in the last 12 months. The stock has 56.65M shares outstanding. In the profitability analysis, the company has net profit margin of 38.20%. Beta value of the company was 1.26; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.80.

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