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Key takeaways from the earnings call include:
ServisFirst Bancshares (NASDAQ:SFBS) also noted that the net interest margin stabilized at $100 million in the third quarter, compared to $101 million in the second quarter. The majority of new loans (89%) are floating rate, and around 41% of total loans are floating rate. The adjusted loan-to-deposit ratio at the end of September 2023 was 80.5%.
The bank reported an improvement in core non-interest income, particularly in credit card and mortgage sectors, and expects continued growth in non-interest income for the rest of the year. The company has managed non-interest expenses to limit growth in 2023, despite increases in non-core expenses such as legal costs related to credits, check fraud, and credit card fraud.
During the call, the company’s CEO mentioned that their rates are higher than those offered by Fannie Mae, but expressed uncertainty about future payoffs. He also discussed being selective about acquisition, development, and construction (AD&C) opportunities and focusing more on commercial and industrial (C&I) opportunities.
The company also announced its plans to allocate $1.5 billion of its $2 billion cash reserve to loans over time. However, the reserve ratio remained flat in the current quarter, with the company not providing specific reasons for this.
The bank’s capital position remained strong, with a CET1 ratio of 10.69% and a Tier-1 leverage ratio of 9.35%. ServisFirst Bancshares aims to improve its earnings per share in the future as it continues to perform well in other key metrics. The bank expects loan growth to increase, with an 8.35% rate observed in September.
Management concluded the call by expressing gratitude to the participants and ended the teleconference. They expect the tax rate for the next quarter to be around 18%.
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