ServisFirst Bancshares announced earnings and operating results for the third quarter and nine months ended September 30, 2015. Net income was $16.3 million and net income available to common stockholders of $16.2 million.
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This compares to net income of $14 million and net income available to common stockholders of $13.9 million for the same quarter in 2014. Basic and diluted earnings per common share were $0.63 and $0.61, respectively, for the third quarter of 2015, compared to $0.56 and $0.54, respectively, for the third quarter of 2014.
Return on average assets was 1.38% and return on average common stockholders' equity was 15.52% for the third quarter of 2015, compared to 1.45% and 15.89%, respectively, for the third quarter of 2014.
Net interest income was $41.9 million for the third quarter of 2015, compared to $40.2 million for the second quarter of 2015 and $33.3 million for the third quarter of 2014. The net interest margin in the third quarter of 2015 was 3.77%, an 11 basis point decrease from the second quarter of 2015 and 12 basis point increase from the third quarter of 2014.
The increase in net interest income on a linked quarter basis is attributable to a $183.9 million increase in average loans outstanding and a $80.7 million increase in non-interest-bearing deposits, both resulting in a positive mix change in our balance sheet.
The Company completed a private placement of $34.75 million of its 5% Subordinated Notes due July 15, 2025 during the third quarter of 2015, which partially offset the positive mix change attributable to the increase in average loans and non-interest-bearing deposits.
The average yield on loans decreased 3 basis points to 4.48% on a linked quarter basis. Two basis points of this decrease are attributable to a $176,000 decrease in the accretion on acquired loans. Excluding accretion on acquired loans, the net interest margin decreased nine basis points from the second quarter to the third quarter of 2015.
Average rates paid on interest-bearing liabilities increased from 0.53% in the second quarter to 0.57% in the third quarter of 2015. Half of this increase is attributable to the rate paid on the subordinated notes issued during the third quarter.
Average loans for the third quarter of 2015 were $3.93 billion, an increase of $183.9 million, or 5%, over average loans of $3.74 billion for the second quarter of 2015, and an increase of $832.1 million, or 27%, over average loans of $3.09 billion for the third quarter of 2014.
Average total deposits for the third quarter of 2015 were $4.17 billion, an increase of $233.8 million, or 6%, over average total deposits of $3.94 billion for the second quarter of 2015, and an increase of $769.3 million, or 23%, over average total deposits of $3.40 billion for the third quarter of 2014.
Non-performing assets to total assets were 0.34% for the third quarter of 2015, a decrease of four basis points compared to 0.38% for the second quarter of 2015 and a decrease of 27 basis points compared to 0.61% for the third quarter of 2014.
Net credit charge-offs to average loans were 0.05%, a 10 basis point decrease compared to 0.15% for the second quarter of 2015 and a 12 basis point decrease compared to 0.17% for the third quarter of 2014.
The company recorded a $3.1 million provision for loan losses in the third quarter of 2015 compared to $4.1 million in the second quarter of 2015 and $2.7 million in the third quarter of 2014. The allowance for loan loss as a percentage of total loans was 1.05% at September 30, 2015, an increase of one basis point compared to 1.04% at June 30, 2015 and a decrease of four basis points compared to 1.09% at September 30, 2014.
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 loss.
Non-interest income increased $816,000 during the third quarter of 2015, or 27%, compared to the third quarter of 2014.
Mortgage banking revenue increased $291,000, or 50%, resulting from a 22% increase in the number of loans originated and sold, and improved pricing on loans originated. Increases in the cash surrender value of our life insurance contracts resulted from added investments in contracts during the third quarter of 2014.
Non-interest expense for the third quarter of 2015 increased $3 million, or 20%, to $18.3 million from $15.3 million in the third quarter of 2014, and increased $119,000, or less than 1%, on a linked quarter basis.
Salary and benefit expense for the third quarter of 2015 increased $2.7 million, or 34%, to $10.6 million from $7.9 million in the third quarter of 2014, and increased $169,000, or 2%, on a linked quarter basis.
The year-over-year increase is primarily the result of the Metro Bank employees coming on board in February 2015 and employee hires in our newer markets and Birmingham. ■