Shares of ServisFirst Bancshares Inc. (SFBS), a bank with offices in the southern U.S., experienced a drop of 7.5% in after-hours trading on Monday following the release of their third-quarter financial results. The company reported a net interest income of $99.7 million, falling short of Wall Street’s expectations of $102.5 million according to FactSet estimates.
Impact of Federal Reserve Interest Rate Increases
The narrowing of ServisFirst Bancshares’ net interest spread, caused by the interest rate hikes implemented by the Federal Reserve over the last year, significantly affected their net interest income. The bank acknowledged this as the reason for the shortfall.
Surpassing Earnings Estimates
Despite the lower net interest income, ServisFirst Bancshares managed to exceed earnings forecasts. They earned 98 cents per share during the period, surpassing FactSet’s prediction of 96 cents.
Steady Growth in Loans and Deposits
The bank experienced a 3% growth in loans, highlighting a positive trend in this area. Total deposits reached $13.1 billion, compared to approximately $11 billion in the same quarter last year.
Optimistic Outlook for Future Profitability
Chief Financial Officer Bud Foshee expressed optimism in a statement, stating that loan pipelines and activity are beginning to rebuild. This improvement is expected to enhance profitability in the coming quarters.