SFBS - Earnings call transcript Q1 2018 | ServisFirst Bancshares, Inc.

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Operator

Good afternoon and welcome to the ServisFirst Bancshares’ Inc.

First Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to conference like Mange. to now would turn over the Davis I go Please ahead.

Davis Mange

Good to I then and started. and earnings you, then disclosure from afternoon, Thank Austin. and we and welcome cover CFO some have will our Broughton, the statements quarter our your call. Tom get our now our we Foshee, CEO questions. can Bud take covering highlights will We’ll quarter first forward-looking

to assumptions, of shared include subject Some described discussion forward-looking may recent results filings. earnings in today most and XX-K factors projections and may call risks, differ the today’s to in any Actual our XX-Q uncertainties. statements from due

I only speak and no update statements will ServisFirst Forward-looking call assumes that, to turn to over of are the the Tom. date they duty made With as them.

Thomas Broughton

good a we and it in I that I year, will talk was numbers. afternoon. things start growth To a for first about and Bud pretty from will quarter. pretty cover normal the the a few the standpoint, then what Davis, loan the you, call had Thank a of good that quarter. the typical call conference cover We

some of in first pretty we for quarter. loan construction This declined $XX have the better category by the had had growth, loan million good the in was growth we but loan estate real years, quarter. C&I we fact, reduction In a balances. That

construction some as payoffs had tends me, when So on market know. to some be commercial going permanent you many that excuse lumpy some payoffs you they’re -- to payoffs of when get had

good zero average normally we subtraction, growth we’ve pay five years, construction the quarter. addition in On years on real the zero last have off the standpoint, quarter. average. and Bay five deposit Tampa in growth, just have for offset growth sometime no loan no growth And last some the had markets run Our first by in did was seasonal a best in From Huntsville the loans again downs. C&I we pretty estate and

run course off balances were was Of of Those off. a before run that account companies quarter. in off. a that Two flows and first a had the large ran accounted for The that also money first has the seasonal -- we company another year had sale money the this out is some on deposit. Three in quarter. accounts very co-op were is -- we account and money the year-end,

of three if from So took there hundred all runoff you were couple dollars accounts. those those in together, a million

the and the quarters, where the with best which pipeline consistent been Atlanta For the quarter, was year-end above had pipeline is the strong. last the the has standpoint, it Mobile best -- year-to-date. markets deposit From is with consistent Correspondent in a -- is is in growth slightly strong its several pipeline

don’t of our sure scrub think certainly around can XXX% make to the keep -- we continue that to trying I will keep here that. not is that’s that, a stale of in there -- XX there's for accurate on never pipeline sure track to have we just represented make are about the department We we build a anything accurate. I'm employees and pipeline misleading. but if And shareholders pay it never

added is at six it of do quarter production of it. down number the the which in and new had we've the been we The way XXX, from five to quarter, eliminated X continue we doing producers the We bankers So end people. year-end.

static. the consistent the we’ve probably that's has quarters, several been in number where last with So been but

I’m then about very in of and talk turn ahead, stop for them, the industry, us. the probably now to, Bud. numbers to very the have as upgrade We do else. of a are we’re just proud staple our in bit trying sure anything which I questions we think say there you some of what it some numbers people best of will are production they over to to going Bud of Go and some and I’m around the more some

William Foshee

afternoon. Good Tom. Thanks,

X.XX from impact minimal from quarter had first quarter to the and yield reform. margin we and in fourth Our X.XX our tax after increased very muni

Our investment X% margin. portfolio exempt tax impact our only XX% only total assets is and minimal portfolio, on of so our munis the total of are very

had X-year the X floating by million LIBOR. $XXX $XXX .XX posted rate basis It that XX% went to by standpoint, in a LIBOR. reset will we of have increases our in two increased that total cost, an me, Our we year. expenses, excuse those is April. quarter, a $X.X we They $XXX from basis yield X From increased together portfolio will -- we points. $XXX to Noninterest our increase excess of March. their salaries which our did rate the million loans liquidity XXX,XXX And first X%. floating points in by Also did date. by tied from quarter. March. And reset had .XX. increase December They loan our rate which improvement. to and From April We this have decreased is portfolio, from of fourth in million to increased million added the January margin XX-day quarter. rate fed XX in for reset to Deposit a rates tied LIBOR. margin not million year-over-year, is in

hired accrued we We people XXXX, in production we some adds, had reversal and in from who of this XXXX increased During then XXX,XXX Atlanta a President. XXXX some we Regional our under first reversal. at a we XXX,XXX of Officer. the the now in first of We year we is million Risk newer by quarter Incentives so XXXX. had a We compliance. adds had or In had had And accrued, XX%. [indiscernible], Chief of year-end over quarter three markets. added $X.X added

fourth improved option fourth nonperforming deferred it adjustment at first Without .XX was decreased was end also the of the million the by quarter and March. it that basis So .XX of March. we loans the the and to in our at $X from loans ORE this Then XXXX. first XXXX. points quarter assets at XX.X%. decreased $X first Credit, quarter And assets .XX made in the the was by XX end at at Also nonperforming and the in they’re was that a quarter. loans the XX.X%. That then adjustment .XX. stock March of year-end charge-offs of total end tax was XX.X%. credit option year standpoint, million Also to total to tax quarter XX last $XX.X to net million up of annualized million And without basis year-end, from year. rate at nonperforming credits stock assets that points. for the was and it's $X.X allowance From average

with rate back reform it by to turn our So XX.X%. decreased And tax will Tom. a I that's and recap

Thomas Broughton

will at this point. take we think I questions Yes,

Operator

first our go will Brad And Instructions] O'Neill. Sandler [Operator question Millsaps Please with from come ahead.

Brad Millsaps

Hey, good afternoon, guys.

William Foshee

Hi, Brad.

Thomas Broughton

Good afternoon, Brad.

Brad Millsaps

Bud. Hey,

Just is some on that April, commentary, fairly that what wanted writing will you said? what to the was $XXX of in that million, quickly reprice was repricing again number -- still Did of kind follow-up about of was there. I on number loans NIM you the the

William Foshee

April. in repriced million $XXX were

Brad Millsaps

a with Okay. was about expansion think you like It of kind advertised your And rate similar half of NIM expect amount quarter, looks you about or maybe basis these deposit Going expansion. that increase, to raising rates. of this do XX would you -- you forward of related points got mix? talked

of Just be want how from in to moves get opinion? not sense or may fed your further the a impactful there, may

William Foshee

Deposit of the the best of one -- now a got on bit something year we’ve to we're It's with little -- to That you’re looking to loans last up slows above rest of the the some do over from thing what going to floors. got rate a first, increase. with XX% say at. creep we’ve It's a their going the say now have Let's number just with that’s helped floors. fed are standpoint. us floors hard that’s costs, down is

banks basis to here points the are that. mean, sit a XX much and is we increase, There a to bump markets, think to our few can now look -- increase money basis have all -- of rates at -- just in our we all something I we is look fed at It's as you XX% CDs. got have rate have base deposit we points. will only up just especially as because can't each I going time.

Thomas Broughton

while. this -- common a Brad, X a not that I industry. last Tom. is I’m don’t exactly time of remember net been in It's the margin the was interest

NIM a operator low-cost cost in point to to know XXX It's be don’t to we to prime range you common high be net what and be of I the all to business get our have margin. the think goal. need Certainly that a profitable, need operator, whether make banking somewhere to you successful. that’s or basis you interest a has that So -- in successful are a

I out to all we interested X% maybe I stuff, the we see my don’t last others I I’m I'm get had I’m But mean or got branch be people are large increase, we just -- where one but come being rate it's do rational. you And in on rate where what the analysts, four going will I those guess or a and will But you -- branches. increase do got a I So, see, just what their paying any that’s regional and for all -- sure is, good know -- this or all see show prime see they the beta that’s that’s quarters be. will of like. rational think a that’s we reasonably there and of why quarter lot are in how network in more margin know something hands shareholders quarters time most question. those XXX% surprisingly there we to point with don’t it's time, three want rate. to [Indiscernible] a than time, more event -- deposit to people happen, time it's chart quarters. sure a every it part. show every we was when out would it's had and the surprisingly XX% will somewhere of if anticipate a it's two competitors whether think, banks one a for be there. we

Brad Millsaps

how a It just growth. And is thanks That’s look pipeline it's but sounds on those are Tom. as kind would kind they predict know anything Just stick that whatever? might going to predicting quarter in of up the construction follow-up of like some those offs -- forward. like this pay and are around helpful of the downs when balances quarters the or to here months the the curious to really did going hold maybe thoughts I about or going out impact building from strong, and hard funds and stuff the that else to build loan pay better happen. kind your

Thomas Broughton

huge type asset class our our real Yes, predictable. not certainly large of We we to not potential sheet. has -- the in part that sheet. balance type and predominant a we We be won't are be lower loss of C&I estate a It's think want a more multifamily to of balance bank's it downturn.

multifamily problem today So to size is manage of the projects large economically minimum units XXX the -- units. is the

a you’ve about nonperforming apartment you’re let's a -- a I big that’s loan. complex, doesn’t mean, say loan, unit project. talking a a That’s nonperforming got run if $XX So million pretty up, it XXX

have which want really would in don’t any is $XX we nonperforming loan loans, what that time. we So a million at nonperforming point

Brad, to see is pricing It the be come the now stand continue project. that’s we competitive other -- construction think of competitively think it our down got to estate seems years growth, I firmer going our it not again So emphasis that way. on for couple I a to -- real we on -- and

have not and people that be over compensated can record. developers dealt a we’re deal and we that make years -- we are are to be that with going serial with lender don’t going to to not we great So we think are the we appropriately many going -- loans disciplined track where are we’ve to a prefer

my So Brad, I’m any not but answering answer. that’s really question

Brad Millsaps

guys. you, Thank appreciate I right. All it.

Thomas Broughton

sir. Yes, Okay.

Operator

And Stephens. Please next is Stafford our go from ahead. question Tyler with

Gordon McGuire

guys. afternoon, This Hi. afternoon. Gordon actually McGuire for Good is on Tyler this

William Foshee

Hi, Gordon.

Thomas Broughton

Hi, Gordon.

Gordon McGuire

I on to back actually the loans. just reflecting on start wanted

a end trends utilization period generally more softer. hearing market expectations you’re as this what as can So anything as but of I about spend Outside nicely and basis, commercial as just a you’re precedence balances there bit your far core from and quarter far from -- borrowers? was on investment your noticed book, is anything pretty construction were the the the average of little you talk up quarter-to-quarter

Thomas Broughton

Actually is entire out We loan base. lot an we -- agree among quarter. the our points would from I mean, it have standpoint, into all up to -- translated utilization there's $XX is a a States. there bank -- plenty of from not of couple the optimism be the a for I about that's borrower for the southeast business competitors there of under from There's fourth But, billion we taking of of United Gordon, to industry demand in that strong see business and share that’s had. from market standpoint assets industry. worry a our out

So we there. -- keep pick of share plowing -- our just the just take business out of share -- and to we up banking greater trying

Gordon McGuire

it. you. Got Thank

particular, of kind in in of where newer from still and back on market kind you’re about a you half like the year. update an expectations of in sounds it So markets, how you're optimistic that just picking there? standpoint profitability at growth Nashville can of is kind on up this Maybe just of provide pretty your touching your trending, kind

Thomas Broughton

$XXX raised we in assets Yes, in million Nashville.

We but they’ve are rate but there -- But good, X% annualized solidly for market. was dynamic was great, Nashville a quarter job -- been not quarter [ph] I done outstanding an the the first not mayor's of profitable growth first -- think it has it in very today.

very all -- I’m large sector to zero, in to healthcare, bit and because it I say it's if good is -- big commercial very Our zero, shouldn’t have is almost zero largest that's but construction. A close exposure me C&I. we -- Clarence there close correct a industry of

Clarence Pouncey

We got project … one

Thomas Broughton

Okay.

there's one So project.

Clarence Pouncey

… project. one meaningful

Thomas Broughton

else million -- if we hospitality as $XX million a so if -- us. the not $XX assets, or in involve as So doesn’t so in there's project, don’t it multifamily built over there, far number out anything that’s getting $XXX but of probably million, a that’s -- or meaningful -- really Nashville, is Gordon,

Gordon McGuire

side you aggressive just or kind Okay. bit in demand deposit the differences kind little kind as be of the and pricing to sheet, any a -- deposits, to deposit balance And of more switching of are pressure see the as any discernible just footprint markets your of your funding the competition amongst seeing might point where far competition?

Thomas Broughton

if you the a my -- Atlanta. say, day out, probably and It's have career in competitive in most market day has been

always opportunity attracted lot competitive and -- the and changed always say most many -- large and say the It is banks bank Atlanta I in there is. it's front by on options have as -- most competitors remember, Atlanta and Gordon, So so so of that’s but all foreign just I that loan into -- -- it's that -- would can Atlanta, There's most days I as long been new would the to move today. remember competitive. has is a just is of of happened of in market production the that lot it's they the one markets the many competitive certainly nothing and set up there

Gordon McGuire

Sure, sure.

growth? good it, been year? talk and the you’re in this your kind deposit little I can you a expectations of generally know are optimistic had seasonality your you with do with think pretty I bit about to XX% your ability on deposits, deposit still bit, kind of seeing probably a growth growth loan highest, robust I so pretty how seeing And match around guess, loan but it's around to

Thomas Broughton

-- in quarter. just has had we to been the three of comment, inflows, new company outside we’ve seen balances, all of deposit really opening nice the the We’ve of Yes. the first two-third really strong sale account accounts

I not changed to a levels encouraging these don’t out behavior, money by for still They’re to don’t we money think take that’s take of pick Customer market people think were -- out -- buy they’re CD, low any very don’t I see don’t -- yet So -- standard. significantly. the eight change historical has there. sure. and

So stretching in like or time. we point see that customers yield anything don’t this for at do

Gordon McGuire

you whether specific know a deposit able just on posted me, or X. and much for thing portfolio the you within across last then this how bucket And was Are those to quantify you maybe base? Okay. moved the I January mentioned rates moved

Thomas Broughton

So you’re to much can increase? we -- rate how was posted the attributable say

Gordon McGuire

Yes, in. speakers] think [multiple I back

Thomas Broughton

break didn’t it we No, low. that down quite

Gordon McGuire

okay. That’s Okay.

Thomas Broughton

rates But certainly those but $X million are impact money be the -- be CDs, we’re and the were not we sure make a is CD most -- been honestly, markets obviously, competitive. it's money where of the to -- there to try markets continuing

kind bills you treasury of they’re than If at in you go industry lot rates higher a and rates. the look of at bank look

of of this So out in time. our -- getting think at is don’t certainly hand cost industry's point we funds

Gordon McGuire

Thank that’s you. all guys. Well, for me Okay.

Thomas Broughton

Thank you.

William Foshee

you, Gordon. Thank

Operator

The with ahead. Please next question go Research. Nancy Bush is from NAB

Nancy Bush

-- about little afternoon. Could you There's morning changes bit you about forth Frank? could good sort the back lot view a it right help of sorry, banks, in and banks, talk help the give you they now? just as of proposed whether smaller Dodd Good know just your a the don't smaller

William Foshee

-- the are changes as is huge level, Yes, for to would in mortgage million a us, with be DFAST bank us. $X We side what approaching there the meaningful certainly and it beneficial away I are $XX year see testing Nancy. we million think to that doing be that us some save -- that will think the we’re

there's not general too, regulatory I as between environment regulators where the certainly just think in reduced much a there's -- banks. and contentiousness

anything do mortgage bank of and mean about somebody small just my for North I loan mortgage smaller that deal I a Wilson is a the mortgage It’s But buyers. Mae all to those optimistic true. with more we’re everybody I markets, think $XX,XXX says having very Carolina. got for perhaps bank today the running leadership FDIC those having the especially under don’t shifts a a approval and a local I to XXXX comments, slowly don’t huge it is -- market, on so there, can't -- you are reduced North a We get you house huge, Senate not OCC. just the change qualified seeing if that it, rules increasingly that’s has coming Bill in rule the a huge in helpful because Fannie banks. size, see well, -- But get new Carolina is these this think on the and Wilson I see turn. bank recast for banker in is rural know

Nancy Bush

get when, in if Washington your to passed a Is start hit? gets the to XXXX about to tangible this from do real or we the it you the have contacts sense late -- of a or do industry see in wait see this real really XXXX Do it? when we impacts until benefits event

Thomas Broughton

not little a benefits our having intangible terms but inside but for won't I of just it bit those, and the industry. that Nancy [indiscernible] more would and would It just think on good of -- to I for regulatory I’m realistic lead not is optimism greater the everybody, the it's and in most industry sure environment. just cents in think good I dollar intangible cost, be just

bill possible. yes, I Hopefully, will forward it bill. the to think on move move seems So hurry in far -- with the to they as be possible no will as -- be that House the

Nancy Bush

this you the going first this Okay. year? And saw paydowns secondly, a historical CRE pattern quarter, on something or is particular there is the in that

Thomas Broughton

loan, a but is the it fixed -- No, you lower would estate do because and you mean I as typically our permanent to quarter of real the probably well originations just go it year, if market, have they first are commercial went you you market rate get project, that a to don’t know. we can the than had historical in rest permanent patterns,

You would. would. I

it doing they’re too. So

Nancy Bush

a us you uphold going forward this is Okay. do to of going seeing But now? that expect behind that of pattern think while you or most we're kind for it

Thomas Broughton

backup. that’s I -- size to second some paydown think pretty it's take we start getting will but build XX we I know new have the hard million, to good just -- are $XX it of ones, You a in while will we to say quarter know one project

Nancy Bush

Right.

Thomas Broughton

withdrawals to lumpy. pay are tend be slow. lumpy tend The to downs and very They be

paydowns So a lumpy you there can or some two. in get quarter

Nancy Bush

Thank Okay. you. right. All

Thomas Broughton

Thank you.

Operator

is Raymond James. The next Wallace question with go from William Please ahead.

William Wallace

Thanks. guys. Good afternoon,

Thomas Broughton

Hey, Bill.

William Wallace

I you give about what I’m talked you little about some while. feel seeing Nashville, haven't a just spoken little bit Charleston if similar you're Charleston? in wondering could commentary like in about So we a

Thomas Broughton

some in all. mean, of a and Yes, -- growth is lot first you don’t really certainly construction of a of of as a are tracks that we housing our is large obviously, towards have so and didn’t I north there as developments rooftop that affect We being [indiscernible] really do that bank. planned that a market are great lot as lot housing Charleston participate don’t do affect we don't What don’t are office built very of there's of developments that huge Charleston development, all buildings well. well

it attracted competitors. lot of a So has

want of the in rooftop Charleston tell they're think going market, go that around into higher can be a more areas example, I now, market. enough lot that they’ve in for to in to moved and the Charleston be in tends There growth to get of for bank anytime good market, a aren't a low banks Charleston to everybody. bankers growth they state, they the you growth analysts, have been if be can especially think the I

bankers our starting the team hitting need year. think -- is to it's be tremendous having to not running market. an So have and the have have competitive building the of -- kind somebody they’re think year not a group off we market, going branch Charleston of just we and don’t in outstanding We -- team in the just a ground best they’re a the the they

because of So that’s Charleston. one spots. think I rooftop But -- just the not of it's of bright our growth it's don’t it's --

the was Alabama, quality in same be growth think. would rate kind have growth, if of if no While same those we we a I of it doing people,

William Wallace

Okay.

William Foshee

banks -- objective , to to areas. office where you I an from years in southeast had of But streets markets it come -- had certainly think a here, into and want is the we’ve negative to town. many if the for the mean, say, Alabama open speakers] about less Alabama I one like desirable Mississippi certainly in you -- competitors think up scoop be the other go the They I almost come because it. people rural in you is and Birmingham, [multiple that it's get -- so

fast yes, like somewhere think bit is of sometimes. I a a Charleston growth So, negative a of

William Wallace

Okay. But from your balance fine, mean, the that growth sheet, positive it market of like actually your perspective year-to-date? in is sounds pretty I it's

William Foshee

We’ve raised you profitability bankers Yes, right direction reach the the we’re in know Charleston yet, we and we yes. head at we best but very in the when X% and think return assets certainly on market. have in profitability

William Wallace

Are market you but now profitable in Tampa? every

William Foshee

Yes.

William Wallace

Okay.

William Foshee

profitable. Solidly

William Wallace

I’m sorry.

William Foshee

all we’re those profitable solidly said I markets. in

William Wallace

Okay Tampa? are close you one a little bit that and you [indiscernible]? think how too lagged know that’s do I on

William Foshee

where will need on profitability standpoint from a year, this of we run be we monthly be to rate. End a

William Wallace

like -- a market you with got or you sense to currently you the thinking okay. or you you Are that Are have any about feel other runway? do pretty presence markets not enter whether good that it makes

William Foshee

the from that, but Certainly to the and bank constantly represent a no we’ve -- we about much to people non how real always prefer there's -- not on but the a shareholder C&I, more having market don’t for and talk way our probably we the a markets. continued us, most people know market are, that good all to the at the good good the part. selective cheapest market, its in there's I’ve be said to people. combination grow and matter that, for estate a commercial C&I they’re board that’s is a have very that, of people -- a in look we We If market people we bring existing who standpoint,

not with fit lot know us go type commercial just of positives for the to customers real both I it. of and a and generate along don’t that’s So you estate

our put to deposits, bankers. have C&I such generate own focus their why so of a all So type we regions on the that’s

William Wallace

Thanks. all appreciate Okay. your time. I had. That’s I

William Foshee

Thank you, Willy.

Operator

go Stephens. from next Tyler follow-up is a Your Instructions] Please question ahead. with Stafford [Operator

Gordon McGuire

Hi, guys. again. This is Gordon

Thomas Broughton

Hi.

Gordon McGuire

on basis quick Just quite year-over-year. and quarter of mortgage thought banking bit the a two was modeling seasonal both in I questions. this kind down a

kind that drivers call the of mortgage what in And softness us give just quarter view Is now last of to had revenues think I sense a changed? versus this flattish you 'XX. discussed the can 'XX were? general you

William Foshee

Yes, couple looking replace and issue a now we’ve right of Gordon, markets to I is lost those. some think the our originators in are

first think really road down on from an don’t the I rate know I with had the rates financing really standpoint. out up, a quarter. impact that there the going going especially what’s

So for great I don’t really forward have forecast be that honest. to a

Gordon McGuire

Sure. you of versus had 'XX on those much you? into I originations, of guess, remind purchase? can refi And how kind been you new Do have that

William Foshee

No, I can send that I though. look don’t that. and have to you

Gordon McGuire

year? the some speak the quarter investments. it to line. about expense just a kind And that great. question, the were be maybe and annual some my quarter thinking related into to will That primarily much those was of and And reinvesting one, last next occupancy of the I was that latter, this How if in adjustments guess new up you good bit in hires or you’re how compensation this additional versus can the franchise

William Foshee

You’re that what looking quarter, first is you’re at quarter looking at? to fourth

Gordon McGuire

Right.

it occupancy seeing up and up XX% like or about I’m expenses about looks were XX% So quarter-over-quarter. salaries

William Foshee

accrual property quarter of Yes. accrued We last quarter the over and made plus had taxes the had in We in -- year in we adjustment quarter we reversal We about the of were depreciation. incentive was two -- fourth depreciated for that fourth $XXX,XXX. an big in $XXX,XXX we adjusted were fourth we over plus were adjustments. year our

increased just was it's -- fourth really expenses the really down much, really quarter in to adjustments due have to quarter it's due increased our fourth So added was adjustments. more XXXX those and than staff we’ve that down

Thomas Broughton

X.X% Base salary is year-over-year, quarter to quarter-over-quarter, quarter-over-quarter -- first year-over-year, up first expense quarter. not

Gordon McGuire

Well, very you had. Thank right. much. all All that’s Sure. I guys

William Foshee

on for detail Yes, year. get I last refinance you will some

Gordon McGuire

Thank you.

Thomas Broughton

not for to Yes. -- The largest know, not a net on have best certainly is income us, only contributor recurring everybody industry, the refinanced but volumes basis. our to in business dropped mortgage thing the

Gordon McGuire

Thank you, Sure. guys.

Thomas Broughton

for call. everybody on thanks the Well, being

know. us appreciate our If company. you We your have questions, let any you. Thank please interest in other

Operator

now The you presentation. concluded. today's conference for attending is Thank

now may You disconnect.

ServisFirst Bancshares (SFBS) 16 Apr 182018 Q1 Earnings call transcript