Key Highlights

  • SFBS shares were trading up 2.83% at $39.85, against a prior close of $38.75.
  • Third quarter EPS of $0.80 missed a consensus of about $0.83.
  • Revenue of $172.9 million was roughly in line with estimates.
  • Loans grew 10.7% year over year, and the net interest Margin was 3.63%.
  • ServisFirst authorized its first buyback, for up to 2 million shares.

Shares Edge Up Despite a Narrow EPS Miss

ServisFirst Bancshares (NYSE:SFBS) shares were trading up 2.83% at $39.85 on Tuesday, against a prior close of $38.75, after the bank reported third quarter Earnings of $0.80 per share, below a consensus of about $0.83. Net Income of $87.3 million was 2.6% above the second quarter, and Revenue of $172.9 million was roughly in line with estimates.

The Birmingham-based bank serves middle-market businesses and real estate operators across the Southeast and is expanding into Texas. Its shares are outpacing a regional bank group that has been under pressure, with a regional bank index on a six-week losing streak and 10-year Treasury yields above 5.1%.

Margin Expansion and Loan Growth Support the Rebound

The net interest margin was 3.63%. Excluding a recovery of about 5 basis points booked in the second quarter, it widened by roughly 5 basis points, and it stands 54 basis points above a year ago. Management expects further widening of 5 to 7 basis points per quarter into 2027.

Loans reached $14.7 billion, up 10.7% from a year earlier, although growth was only 7.1% annualized in the quarter because of unexpected payoffs and delayed closings. The efficiency ratio was 30.20%, and tangible Book Value per share rose 14.4% to $18.51.

The company also authorized its first buyback, for up to 2 million shares through 2027, and its common Equity tier one ratio was 11.98%.

Deposit Outflows, Multifamily Losses and Valuation

Total deposits fell 3.2% to $14.09 billion after municipal deposits left for higher rates elsewhere. Noninterest expense rose 4.5% from the prior quarter to $52.2 million, including about $2 million of one-off items.

Credit was less tidy. A $7.7 million charge-off was the first loss on a group of eight large multifamily credits that management expects to liquidate over two to four quarters, and the allowance edged up to 1.28% of loans, even as nonaccrual loans fell $9.6 million to $161.8 million.

ServisFirst has a market Capitalization of $4.36 billion, a forward price-to-earnings ratio of 11.61 and a trailing ratio of 12.69, with trailing EPS of $3.00 and a Dividend Yield of 1.91%. The shares trade about 13% below the 52-week high of $46.04, and the average analyst price target is roughly $46.50.

Multifamily Resolution and Loan Reacceleration Are the Next Tests

ServisFirst paired a narrow earnings miss with a widening margin, rising book value and an efficiency ratio near 30%. Investors may watch whether loan growth can reaccelerate without deposit costs or Credit losses absorbing the benefit, and how the multifamily credits are resolved. The new buyback and strong capital provide flexibility if the pipeline converts.