07:17 AM EDT, 07/16/2024 (MT Newswires) -- ServisFirst Bancshares ( SFBS ) second-quarter earnings declined year over year but the lender's total deposits and loans grew as it expanded into a new market in Alabama.

Adjusted earnings came in at $0.95 a share for the three-month period ending June 30, down from $0.98 the year before. Three analysts polled by Capital IQ expected normalized EPS of $0.91. Revenue, expressed as the sum of net interest income and noninterest income, rose to $114.8 million from $109.8 million last year, just ahead of the $114.6 million consensus according to the same number of analysts.

Net interest income increased to $105.9 million from $101.3 million in the prior-year quarter. Noninterest income rose 3.6% to $8.9 million. Service charges on deposit accounts moved 7% higher to $2.3 million, while credit card income decreased 3% to $2.3 million. Shares of the lender gained 1.9% in Tuesday's premarket activity.

Total deposits rose to $13.26 billion from $12.29 billion a year ago, while loans grew 6.3%, as the company expanded its banking team and entered the Auburn-Opelika, Alabama market. "That is a $4.5 billion deposit market that's pretty well fragmented," Chief Executive Tom Broughton said on the call. The company is also seeing "broad-based" loan growth, he said.

"We think many of our customers delayed projects last year after rates had risen a great deal in a short period of time, or they decided to make capital expenditures from cash," he said. "We are seeing them borrow again, which led to an increase in our C&I loans."

Total assets reached $16.05 billion in the second quarter, up 6.5% annually. The provision for credit losses was $5.4 million versus $6.7 million in the prior-year period.

"Both loans and deposits had strong growth during the second quarter and the pipelines continue to grow," Chief Financial Officer Kirk Pressley told analysts. "We don't anticipate a significant increase in the cost of funds going forward, while we expect the yield on interest-earning assets to continue to increase as we grow loans and fixed rate loans and investments repriced."

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