ServisFirst Bancshares(US:SFBS)2024-03-01 00:42Financial Performance - Net income available to common stockholders decreased to $206.8 million in 2023 from $251.4 million in 2022, a decline of 17.8%[234] - Basic and diluted net income per common share were $3.80 and $3.79, respectively, in 2023, down from $4.63 and $4.61 in 2022, representing an 18% decrease[237] - Return on average assets was 1.37% in 2023, down from 1.71% in 2022, while return on average common stockholders' equity decreased to 15.13% from 20.73%[240] - The efficiency ratio increased to 40.67% in 2023 from 31.30% in 2022, indicating a rise in operational costs relative to income[240] Loan and Deposit Growth - Average loans increased by $1.04 billion, or 10%, to $11.60 billion in 2023 compared to the previous year[237] - Average deposits rose by $434.6 million, or 4%, to $12.26 billion in 2023[237] - Total loans, net of unearned income, rose to $11,602,812 million in 2023, an increase of 9.83% from $10,566,219 million in 2022[249] - Total deposits increased to $12.26 billion in 2023 from $11.83 billion in 2022, with a notable rise in interest-bearing demand deposits yielding 2.24%[306] Interest Income and Expenses - Net interest income fell to $410.9 million in 2023, a decrease of $60.0 million, or 12.7%, from 2022, with a net interest margin of 2.81%, down 51 basis points from 3.32%[237] - Total interest-earning assets increased to $14,619,789 million in 2023, up from $14,185,211 million in 2022, reflecting a growth of 3.06%[249] - The average yield on interest-earning assets improved to 5.56% in 2023 from 3.94% in 2022, a rise of 41.16%[249] - The average interest rate on interest-bearing liabilities rose to 3.73% in 2023 from 0.98% in 2022, an increase of 280.61%[250] Noninterest Income and Expenses - Noninterest income decreased to $30.4 million in 2023, down $2.9 million, or 9%, primarily due to the maturation of an interest rate cap[237] - Noninterest expense increased to $178.1 million in 2023, up $20.2 million, or 13%, driven by higher salaries and FDIC assessments[237] - Service charges on deposit accounts increased by $387,000, or 4.8%, to $8.4 million in 2023 compared to $8.0 million in 2022[267] - Credit card income decreased by $1.3 million, or 13.0%, to $8.6 million in 2023 compared to $9.9 million in 2022[267] Asset Quality and Credit Losses - Provision expense for credit losses decreased by 50.2% in 2023 compared to 2022, with nonperforming loans increasing to $21.5 million, or 0.18% of total loans[263] - The allowance for credit losses increased to $153,317, representing 1.32% of total loans, compared to 1.25% in 2022[292] - Nonaccrual loans rose to $19,349, accounting for 0.17% of total loans, up from 0.11% in 2022[293] - The ratio of nonperforming loans to total loans increased to 0.18% in 2023, compared to 0.15% in 2022[303] Capital and Liquidity - Stockholders' equity increased to $1,418,189 million in 2023, compared to $1,232,460 million in 2022, a growth of 15.06%[250] - The company maintained a Common Equity Tier 1 (CET1) Capital Ratio of 11.37%, significantly above the required minimum of 6.50% for "well-capitalized" status[329] - The Tier 1 Capital Ratio was reported at 11.38%, exceeding the regulatory requirement of 8.00%[329] - Liquidity position included $2.51 billion in liquid assets as of December 31, 2023, with additional funding available from loans pledged to FHLB and the Federal Reserve Bank[324] Interest Rate Risk and Economic Conditions - The Federal Reserve increased its targeted federal funds rate by 525 basis points, ending 2023 at 5.40%[344] - The economic value of equity (EVE) showed decreases across all rate shock scenarios as of December 31, 2023[344] - The company monitors economic indicators and expert opinions to develop future rate trend views[348] - The magnitude and duration of interest rate changes significantly impact net interest income[348]