Earnings call transcript Q4 2022

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Operator

Greetings and welcome to ServisFirst Bancshares Fourth Quarter Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, David Mange, Director of Investor Relations. David. you, Thank

begin. You may

David Mange

and welcome quarter afternoon, our to call. earnings Good fourth

highlights CEO; Tom Chief our some and have will your Bud we'll Credit the take then Broughton, covering our We Abbott, our Foshee, questions. quarter, Henry CFO; Officer, from and

cover disclosure. our statements forward-looking now I'll

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

they speak are and only no as to statements date duty the Forward-looking assumes made of ServisFirst update them.

call I'll turn to that, With the over Tom.

Tom Broughton

and Thank straight XXXX you, XX%. comments David. to share outlook. year pleased with We order second before of quarter Good want per growth in exceeded a think, afternoon, conference do call. certainly year. few are to we I make It's results a welcome I that the move the fourth to the earnings year, the our on our on

ratio exceeded to Also, And the equity due do bankers our of say return hard was I in on our work XX% They the was pretty good trifecta XXs a look actually appreciate industry. must than best us our for CEO XX%. they average job an I they've make this them so successful our of of do the to thank efficiency for company and bank what and average, everything better for making done shareholders. and

deposits forward. middle to about do -- so year there the our celebrate what And going is we'll shareholders about and as want on plan have know on focused liquidity, about little XXXX. talking though, to However little talking the building bankers to in move since time we and of our bit do XXXX, success

we're in the in pipeline, did consistently the months. progress our deposit and at over a of very seen will fourth pleased with last XXX% pipeline cover, deposit the this four pipeline grow we're the seeing have liquidity there. and pleased Bud the process with we We loan steady quarter We're certainly the increase

brokered we've the Federal sheet Fortunately, Loan which Advances, deposits, any Bank current CDs and with in commercial, not tremendous balance environment. bank our Home asset clean built core is a are primarily our

did side, robust we in we quarter, strong. On company year-end that demand did We draws loan always pipeline, loan the on and fourth see front. than there position always see loan we many balance it’s growth Banks see terms due better loan sheet quarter, loan in more are much some our on core the our are that's focusing fourth in the see, selective years on and to mostly a being our the some good for so customers. rate slowdown structure purposes in

stronger to but in yields, it see next it will improvement couple in the of certainly position, are years. will the loan take in come We time

quarter outstanding in we XXX we team brought now the in a standpoint, fourth producers. have From and bikers new

While focused open is door XXXX, bankers. we are on always the for cost in containment outstanding

it will I So to turn Foshee now. Bud over

Bud Foshee

to liquid Thanks, assets by Tom. million XX XX. afternoon. Liquidity, September from our Good $XXX December increased

single-digit high continue positive double-digit versus trend in to anticipate XXXX, we deposit growth. loan We low expect as growth this

in quarter Our ‘XX. fees net in compared fourth were of PPP income interest margin of fourth the $XXX,XXX interest and quarter XXXX, $X.X million to the

the is income fee and XXXX. Alright, fourth PPP were in $XXX million anticipated in by no $X.X million interest increased quarter. Year-to-date fees XXXX. income Deposits PPP for

was ‘XX first third the fourth margin X.XX%, quarter ’XX quarter fourth X.XX%, quarter was the Our ‘XX, of net X.XX%, and interest with it quarter X.XX%, of of by of it then quarter, X.XX%. starting quarter the second

XX is XXXX. unchanged from loss of December Our credit and provision, for allowance was loan losses to XX, ‘XX total at our loans X.XX% September that

the loans average offs net Our X.XX% quarter XXXX. charge fourth for were of

the was card credit fourth $X.X in quarter, fourth million in the income versus XXXX. million $X.X income, quarter Non-interest of

$XXX,XXX for cap and XXXX. We was income in in $X matures the million the zero income May net the cap XXXX anticipate to as Our year-to-date. fourth be of net quarter interest

benefits non-interest year-over-year. the Our by a of quarter and total $X salaries salaries by fourth increased expenses, result and expansions, as million our $XXX,XXX in market

Fourth $X.X X.XX% The has Bank’s leverage we taken Tax credits, XX, million XX. December of for proprietary net year-to-date. was XXXX. of tax was extend versus and basis credits. improved for staff of XXXX and ratio ads of by capital quarter at XX benefit the ratio during XX $X.X X Capital, expense the extended points, million to have since our quarter steps to improved employees fourth XX/XX/XX, quarter to the X.XX% to period new some had XXX third XX/XX/XX. XXXX We the XX Tier

turn program over I'll Henry. the now to

Henry Abbott

in I'm the Thank Bank's performance in Bud. more fourth XXXX pleased with specifically the and quarter. you,

the is sheet roughly past basis in beyond for our in any even and on stimulus amount $XXX,XXX the stand year, borrowers prior major post to environment of balance Bank's uncertainty During years a their XX low had our COVID in XXXX own inflation. less record the OREO with that with this NPAs of government rising occurred positioned assets had of have total well well customers points. responded in without than face and and

loans with credit our our say happy Grew with and of so to be of liability be Q&A I'm prior in ton can specifics were and both balance majority size but who section detail, selective a and of the the sheet. and type pleased the new is lows, that historical continue we bank to with clients, want in line metrics go grow asset cover to to won't I'll the the call. of we clients into fund our quarter we near

for of loan increased quarter loan $XX.X portfolio to we've which not see $X.XX $XXX to to loan the weakening ALLL loans The $X.X Bank billion, million roughly were loans started million, amounts total the reserve growth, an so due of on the loss year-end our by in of As past million. at portfolio.

$XXX,XXX. The quarter the third basis were XX from OREO the for were decrease portfolio it's quarter, decreased were million less in now $X for quarter. than X million annualized $X the net points, prior over [indiscernible] points roughly quarter. Charge-offs only when basis they so

don't on as problem loans, known handling possible following proactive into We the carry issue so we are year. a

Our well the head metrics overall quarter. for the and strong to for and country. a we positioned XXXX of as banks year continue into outstanding XXXX was performing be to to maintain continue Bank in credit one the our top status improve our

will that over With hand Tom. back to

Tom Broughton

higher want while betas issues. is Thank Henry. is and One about we we point some deposit when make you, on and rates, quarter-to-quarter discussion margin I that the compression have talk interest may to

more an investment not been were it as they're a alternative And and rates some to help banks banks when they decade. stocks were have seems are rates low. that than bank higher selling interest they However, hurt selling are rates high. when certainly in bank investors now stocks interesting like It's today attractive me

them So it it some make seems. hard was of happy, kind of to

do. several on And can when the helps years ago after what we observed certainly discipline in more do be we It need to do, loan the banking also selective side, in we better on partner he first we you more you business need need it that focus deposits. and you better My do you is years always we business, deposits. when have

certainly, banks. thing needing is a deposits for good higher good So thing, is rates a

XXXX our think the investments certainly year, in see those we in made this budgets couple but and of plan the on We're significant working we finalizing next we bankers new that of benefit year. in as have the will XXXX weeks

As last had hiring of you certainly a a years we've robust could standpoint. see, couple from been

robust think footprint we particularly produce can So for go outlook what activity economic we Southeast. our we bank we to our the are see very and optimistic forward in and about continue the as can

take With that, be might questions we'll any have. happy you to

Operator

Thank you.

We conducting will a session. you. question-and-answer now Instructions] be Thank [Operator

with question. Milsaps is Please Sandler. proceed question with your Our Piper first from Brad

Brad Milsaps

afternoon. good Hey,

Bud Foshee

Good afternoon, Brad.

Tom Broughton

Brad. Hi,

Brad Milsaps

you Tom didn't data of you did spot get guys $X.X So of, wanted of, know, deposits I deposits I billion on I'm on you type deposit the bearing was of, those pipeline that sense average deposits to of brought noticed average than, talked you for that as of about? on as curious a much Bud, some interest on rate or kind higher supplemental quarter? some mentioned. and kind the just pricing have by the curious, the grow where in, was kind cost were looking you about know, just what at of you you

Tom Broughton

Yes.

end, quarter and X.XX% -- was cost of cost interest-bearing DDAs total deposits bearing interest at of our was the So Cost X.XX%. total deposits was of X.XX%.

Bud Foshee

Yes.

the not and the probably of deposits and not in You there’s of say that never comes business know, and Brad, -- a most buy business I'd the most go time we're that's a call, it's on not we of relationships just deposits -- price sort not standpoint theirs not customers. the money and we're in. a and is of there. the the with in That's we're development business of We're up, when And the uniformity business. time buy not -- lot

you kind of that. any hard good better than Brad, it's So give to answer, a

Brad Milsaps

Got momentum kind enter interest some you net bit day only of, sense net enter you as we might want of, just kind got enough as deposit spot a differently, the of sort it. margin, in months curious quarter quarter but where I the of, income. of sort recent a interest month to a past the kind those quite would kind give you've seem that first do to Just, of provide, It it your Maybe kind of are? headwind of, NII? as it. to been Bud not you've the Got count, of ask given most want most be if first us get relates to rates recent

Bud Foshee

right Like the in a large the count we month I December, continue at cost much I to for manage Tom don't don't we -- -- this grow you I don’t look said, Fed good got don't for the I to I is when we it's do there’s just we our slowing down, were at margin like analysis you of really quarter, quarterly a bottom front quarter. and Like mean, thing with think the major the is or we and that. mean, X.XX% what of X.XX% right? how think a that's me, What the game really standpoint. (ph) gauge have that, margin a at is this from I [data] I line as there's But know, margin Yes. looked gifting not just the X.XX% deposits, we're deposit of going increases. be the mean, where we've still

Brad Milsaps

net just high know for talk in up had? comp me, And in for year I challenging lot like where might bit that to some of question total kind the of XXXX, incentive there in kind your interest to different the have expenses line? final see you I Okay. little managed guess takes income Can were of, a teens maybe XXXX? you a given in maybe about, more then you maybe and would number maybe that you puts there's

Tom Broughton

I X% We should a that do that in so anything increases much will conversion the money save had like think but anticipate else. in staff as third up. if to from that really We will from some quarter, you don't in expenses be net unusual. guys we We so the had XXXX. our that X% or an We don't much range the come with that, IT reoccur anticipate additions lawsuits in XXXX, standpoint, some salary other like had

So alright, Henry?

Brad Milsaps

no, -- provision quarter that of reading you kind might commitments. also that a from that's the am no, have -- But year-over-year this for Was reversal correctly? -- or unfunded like a it I benefited of looks maybe

Tom Broughton

did. one, We reversal know just did We going number have you the -- quarter. is in Yes, each that quarter. a really what fourth never that you

Brad Milsaps

unfunded’s your come down? Did Okay.

Bud Foshee

which decrease it the Our caused to funded then accrual. the need beat the average, for three-year

Brad Milsaps

guys. queue. Thank right. in you, hop back All Okay. I'll

om Broughton

Thanks, Brad.

Operator

you. Thank

next Please from Bishop the Our question is Hovde with your Group. with question. David proceed

David Bishop

evening, gentlemen. Yes. Good

Tom Broughton

Dave. Hey,

David Bishop

just or the maybe now look quarter you Hey, the about loan said at not pretty the of out was stops over up the in quarter, Fed the next like two but end the terms direction at impact of market? loan Bud, curious on the just curious hear looks the I'm what's X.XX% you of you I this year quarter terms you're least next? but at right? I felt outlook pre-envelope, of heard It maybe in the I right yields booking in for I'm it just as and right, catch the lagging the or think what or so? loan yields you assuming maybe in rate in sure good Did

Bud Foshee

talking reprice loans change? or the new just from You’re Fed mix about what will

David Bishop

Yes, how next the new loans may yield into and loan overall that over rolled few average quarters? the

Bud Foshee

were when at that have we that -- prime on reprices standpoint. new our raises Fed least at And should at $X.X we Well, Yes. month that X.X% period, loan rates from one repricing. go about billion over

take billion $X.X that of next take either reprices the reprices million and -- you during period. about You have XX-day $X

David Bishop

think -- Over the I next XX-days,

Bud Foshee

new don't based the projection. [Multiples have Speakers] just on loan I that volume,

David Bishop

Got think I it. And curious, and right, deposit just you're heard growth. maybe low then expecting I you double-digit

just that number to those maybe were some of quarter? in banking a part able add of division this of down drilling the quarter, As you're relationships this the correspondent maybe balances and new of trends what

Rodney Rushing

Yes. We Rushing. relationships This fourth year Rodney the is in throughout grew corresponding the the quarter.

quarter. total of think added I was the our we number banks seven new for

number is at that close. right all XXX total existing one relationships of or correspondent Our probably two

finalized, grow out. relationships liquidity I their of in couple as XX%. XXXX DDA and in for the for fourth correspondent million quarter. continues total corresponding year, still because balances a to And that banks down quarter the correspondent was as correspondent mostly the go to that to by, near my to getting which for analysis did for fundings the just moved to But markets anticipate some ’XX. and And $XXX and one we're business grew our going funds Fed continuing we they yet. The And think, into balances, grow. I were declined much looking has we're their and in as haven't moved we to as at keep work going didn't fast like has growing banks in account. of some put it new been then up it Rates We have

David Bishop

the balance have dollar end? at year you Do

Rodney Rushing

Two of million, I million. point $X.XXX just -- $X.X it's shy think

David Bishop

then the more reins And where credit conservative, underwriting perspective? for areas the from outlook Got just within and the cautious it. back on single-digit growth. loan being front, curious credit Any an high more pulling you're

Bud Foshee

have sticking across who of year. with estate seeing board us specifically kind with loans the can commercial focused more core this have our and businesses customers, real think and I we're and in deposits where

Tom Broughton

Yes. Dave, is this Tom.

we -- more selective is than today in jump ever. to Just can be

when a to So rate I more can an time. partner could pricing, not proactive selective it's better and said outstanding that? own than long time. need much we but structure because loan we that's old can be deposits, we we've in about in be be proactive today been and certainly How on better we we give certainly more side ever very structure, are really the my than why mean, try you ever make decisions things

David Bishop

color. the Appreciate it. Got

Operator

[Operator you. Thank Instructions]

Tom Broughton

Well, are more if question there -- sorry. no

Operator

comments. this floor There are no just further I'd Broughton questions at Tom any to time. like the closing to for turn

Tom Broughton

Thank we got earlier, working week better give bit our you, interrupting. on we about [indiscernible], and sorry after expense for run started we XXXX them. on idea just a management we're budgets ago. -- you a finish But XX on little first Brad we

even time we beginning yet. the our the anything we're close and first that's finish line So saw to not point to

in proactive very -- management much as forward. are we go expense we the for So year

work something on. certainly to that's So going we're

we're us say we analysts for outperform high is And show there. a you are. think this standards that to are set a based say of probably for performance and lot see industry. growth great always we company we think low I out going And I year what we disciplined probably very on banks goals throwing what sets the are And that I

call. the good we us great year So a is do and you. on Hope everybody joining appreciate Thank evening. a has to it, it everybody

Operator

conference. today's This concludes

your participation. may lines you disconnect for You Thank your time. at this

ServisFirst Bancshares (SFBS) 23 Jan 222022 Q4 Earnings call transcript