SFBS - Earnings call transcript Q1 2024 | ServisFirst Bancshares, Inc.

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Operator

Greetings, and welcome to the ServisFirst Bancshares First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

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

You may begin.

Davis Mange

to quarter welcome call. and afternoon, our earnings first Good the some then Today's cover from quarter speakers will highlights and questions. take your We'll Henry CEO; and CFO. Broughton, Chief Tom Officer; our Kirk Abbott, Credit Pressley, have our our

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

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

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

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

Thomas Broughton

Davis. Good first optimistic off are the you, first do afternoon, Thank of for and we basis. is joining quarter think we'll thank see our to quarter We start and you a improvement good earnings on call. year, quarterly the a

to activity talk and going minutes. margin our in few is deposit about Pressley a Kirk

as expenses addition, talk our continued our In after credit in about are that. Henry will shortly quality strong Abbott expected. line

I'd growth net with we to loans, is had and first at normal And levels more good loans. $XXX thing over pipeline importantly, our today really is Looking loan quarter back say million the in has some increased postponed that In XX% is pipeline ramping bankers weeks, to say levels. very or I'd again. our projects up And are activity greater close since are seeing our normal year-end. and recent in

X market. we XXXX. Memphis X of quarter bankers Production producers up fortunate in in in add the side, fourth the from new of to were the X first quarter, are these

a announce to expect within few also market We a weeks. new

of obvious bankers. as support is our measure are for We well working staff. better our commercial as productivity bankers to Success

to on other who's know the You working metrics we're required and know gauge who's you productive but been to success. better inputs not,

economic given successful coming quarters environment. can in we be the optimistic are We the current

to Abbott turn over Now comments some to first on I'm credit quality. Henry make to going it

Henry Abbott

rate previously performed bank's to and owner-occupied bank I'm largest portfolio off say, has with with I'm loan interest our loan with XXXX experienced grew environment. the current strong The growth, growth loan Tom. results estate also by how you, million. to Thank real which the in mentioned. our in the start growth the we Tom segment, of pleased segment pleased a got $XXX our

Charge-offs for generally the than ended year-end $XX basis is due first line We the million with which same fourth only when less and X is the points decrease of quarter X time points from of annualized past quarter results with were XX% a down in the quarter basis and period. in from loans, which the quarter XXXX prior XXXX.

loans year-end compared total was is to consistent quarters. X.XX% flat past with few it was which The X.XX%, basically prior allowance when at to and generally the

that is move and current assets is to nonaccrual with best and on had to smooth to did do bank. been was was customer landing for one time. our with credit. primarily significant the in And loan on other felt credit conservative above payments with some our loan of while increase working the all this beyond parties find quarter, ServisFirst, borrower. we spot the and the loan the This we're changes the watch the collateral has for amount, and borrower given a recent to interest list the related Nonperforming thing We

XX were the end pre-COVID for Bank These total were of we NPAs in than this at at with which at the relates benchmarks. years quarter, good with additional our closer line XX basis peers where half end first to Even of has and or only historic one still XXXX points, the of basis is to XX was generally XXXX, we basis are points of less points. and significantly the both near at where lows end below to it assets. assets been at nonperforming past as the which few credit

group. note I end, greater will and when our allowance that is this at peer XXX% nonaccruals significantly credit than quarter for the to also compared was losses

the We loan in ended and continue to continued well about to and pace. good growth I'm that pleased portfolio how XXXX, our with XXXX at bank's better feel we is now up loan and momentum quality. beginning a tick the as bank credit

to With that, Kirk. I'll pass it

Kirk Pressley

Thank you, afternoon. Henry. Good

interest We continue are and not to deposit margin the made progress expand. stabilized to but started only with The very quarter. to the grow and has strong. pleased the and Liquidity loan pipelines first remain continue in Both fund. bank capital net has

up last as with interest is Net Net X quarter is basis income the rate highest fourth up quarter X.XX% percentage points on on its is margin X to at modestly basis quarter. liabilities paid since margin points. assets the level of XXXX. flat interest the first despite the less up the Dollar being yield there interest-earning one day. And over was is interest-bearing

in first stable XXXX XXXX. were deposits in quarter and and the noninterest-bearing QX Our margins improved in stabilized QX

our to We the during quarter million declines. the optimization and more $XXX deposit deposit seasonal Total deposits than high-cost of transactional quarter. reduced deposits down actions due during were first

balanced As loan XXXX incentives for our are Tom growth. last and mentioned deposit for quarter,

March However, want as hurt not transactional for XXXX to We growth the deposit employees' base incentives directed. for high-cost deposits was X. set at reducing did

improving quarter, and to expect when The growth, loan pipeline continue. and per loan of began fund key possible funds. is during The cost that to we our up earnings share loans first maintaining repricing the to

Net $XXX.X increased quarter to in the million XXXX. versus million of quarter in interest fourth margin $XXX.X the first

rate rate on a noted are today. floating in I the The XX% one first loans quarter rate. first X%. rate loan average QX less was QX in Approximately above day XX% loan production was just of quarter have loans of variable floor. total of the production for earlier, XXXX. was and of there As XX% variable

the the a cost peer we As quarter, to noted we as margin compared in anticipate don't forward, our banks. increasing funds throughout last see significant increase of going year. especially We

continue to loans mature interest-earning investments to While and the and as we expect assets yield increase fixed reprice. to on continue rate

for The typically first slow quarter is repricing.

received. filed are statements after For example, taxes financial and usually are covenant violations occur

our that Examples quarter the are rate of million during loans repricing the of had approximately $XXX restructured. efforts

the This increased cumulative to improve was will loans repricing of loan. quarter, and repricing and forward. reason the effect this The funds new those These repricing earnings yield additional X.XX%. by margin of going per the activities primary due share advancing

$XXX low During we had mature rate the million at securities of quarter, of first a rate X.X%.

margin maturing these We million Reinvesting X.XX% during in have million the will another approximately going yielding $XXX third improve the securities forward. $XX of X.XX% quarter yielding second quarter. and proceeds the year

fourth in reduced in a quarter. in deposit which and costs. more declines our seasonal reduction on focused $XXX optimization higher costs than We deposits transactional this during deposits Deposit small stabilized due Total the to the first We quarter. million deposit quarter. deposits, resulted began during high-cost declined review the rate effort of

we XXXX, million of bank-owned $X.X on During life realized the a our debt insurance policies. first one of benefit quarter

Our BOLI noninterest modestly income this excluding was income. up extra from QX,

first a low Accounts feel of in lower increase seasonally banks have in seen new We as the quarter. was little at about income to good added are are the increasing rest and March. pace. spend spend nice correspondent due card Credit do the year we a being

In expenses closely. discussing expense, watching noninterest we're

I quarter was around normalized the said rate expense for million. us, fourth our usual $XX that run call As in QX

million FDIC for the During $X.X updated special additional assessment, in expense. their FDIC estimate QX, of which an resulted the

expenses modestly assessment, office lingering were due to in for run was to that for this some the the contract Excluding the our costs and rate for QX. expense noninterest the quarter QX fourth EDP was $XX.X special Memphis up terminated related million. Expenses

value We continue grow book to per share.

Our quarter. XX.XX%. all At CETX to ratio capital improved increased during ratios the our quarter end,

X.XX%. I'll give increased to Tier capital-to-average expect X we what on some ratio assets year. Our color now additional this

optimistic We XXXX. are about

XXXX. compression XXXX many might QX QX banks, yield for than other during continue like XXXX. it the most banks. costs bank's was assets like a the reminder, increase funding significantly while increase a looks for in The As different other outstrip on This

fixed-rate and is cost good feel have costs to As I loans as our grow the deposit stabilized grow been the and The and about from on XX. yield reprice. We first lower assets in the securities from the expect news and percentage increase assets to growth the should largely good during loan and on it we to seem funding here naturally yield quarter expected, in we the is call, increases our as margin expected continue. the fourth in think both dollar December has said realized quarter

are wanted. we were in little first deposits a strong than the treated a in liquidity more we still quarter, Although frankly had We position.

grow of to deposits bottomed margin We throughout expect this and XXXX continue think to We quarter to our dollar here. Davis? third year. in it the grow from expect out

Davis Mange

questions. open floor With that, for up let's the

Operator

of first Our the comes Raymond James. question Instructions] line Moss Stephen from [Operator with

Stephen Moss

Maybe a pipeline loan Tom, the of quarter here, uptick with in production. just good starting the after

growth Just about loan XXXX? curious you're for thinking how total

Thomas Broughton

think you when close that -- The longer pipeline it's it than is takes to going good. never awfully it just It's think to. always you seems it's

a I'd can you was So quarter? think month. it million saw if takes months would what and close a told you know have of But longer month. asked because me close $XXX first loan drags the weeks it's Well, going and gross to it in going go it's million things that to I if you'd it's you I $XXX at production going to look and million. I say wrong out, pipeline, than our with $XXX

pandemic, -- have approaching last So is focused we're it the and we're than huge we I mean, good normalized increased will focused loan production, when it's and year it's a loans on this It's seeing growth. rate we anticipated. But I activity. levels, we I evenly the would but say And to bit less as that course, on -- it's strong. year, had Kirk say said, run that of big prior deposit

lot growth see do. We loan a opportunity And this we really so year. of -- opportunity

Stephen Moss

pipeline. business Okay. the And mix just terms of the of in

of there's Just curious to what any concentration? as and geographically seeing you're if opportunities types

Thomas Broughton

area you One pick. strong to Florida, is, have obviously. you if Well, that's say

we everything -- it's having could population know, living but add in localized overbuilt at of are Florida, need boom, most I'd they're mean including build I strong. to well down all don't pretty not I not -- facilities. it's the And in see anything everywhere, of it's assisted -- they terms increased in say activity markets. to... Rodney, in there, Those With you our localized But

Rodney Rushing

the seeing owner-occupied. obviously But Well, lot what of a been Florida quarters. named, for has with we're you is several opportunities

I think odd of owner-occupied growth, stuff. million Henry million $XXX comments was made $XXX our

seeing stuff we're evenly quality it's spread. that So pretty

Henry Abbott

on C&I cycle just instances. bring in Yes. in some markets, customers certain longer And I of sales our think it's to newer a

seem coming are sales a on So businesses, and cycle they is of markets -- just board, some coming these of maturing. on our It's some on Charlotte board. be it's to longer Florida

Stephen Moss

get appreciate Really forward. your stabilized that mean and funding price have in of seems pretty Great. going costs asset Okay. color. I you just here, it terms the benefit margin then the straightforward And that here

to give do you you to update could fixed to of in an Just us assets if curious as as XXXX? expect what reprice level

Kirk Pressley

long-term more to this the that securities, similar a rate low you're talked think the is are I securities, to just the maturing $X ones be quarter, going billion which the year. on and about loans in around about we the On year, fourth what

Stephen Moss

just one Okay. That's last one helpful. for And me.

On nonperformer quarter. the this

Just curious industry to? as what is that tied to

Henry Abbott

mean, is but loans, I is their estate. on Henry, This And the business real collateralized. We're Yes. the like they owner-occupied well said, This current are closing. by way. I is

Operator

Our next comes Bishop question line with David of Hovde the from Group.

David Bishop

a and keeping eye gentlemen, obviously Tom, environment. just this expenses you're on in curious, said you close

all You bankers, been closely commercial but being adding at $XX pretty in you've held bankers, million, opportunistic.

where curious dollar growth from near the a you trending to expenses over maybe maybe basis? term, operating intermediate Just or rate see

Kirk Pressley

a dial be a million than whole lot that we still compensation the to bit running. the $XXX higher little that, throughout probably to we're but holding I $XXX probably it more is true full but saying as think really year, run were than last than year the within happen rate in not we million. quarter It's hard to current closer expect increases the where what

David Bishop

a NIM back it. then Got the from -- discussion. And to turning

is obviously, numbers, it like side looks funding curious, Just cost the the from stabilizing.

near at the this term trending there see see Just yields and where hit maybe earning next? earning trending where over sort you year medium to you assets of Just side, and look on terminal may peak the that to be maybe curious, those the well? curious asset as or if is you the a

Kirk Pressley

rolling really a into on should more have it I'm this $X it's detail whole if think nice nice will lift of around going is year growth that about and year continue you mean but peak. lot It's have billion you year. we next this I a give it not year. year. rates, will current this we'll to not to that, next But

relevant is funding we've to holding So important. And tailwind. really it We a through. these costs got in range just nice this see have

Thomas Broughton

security the repricing to real all at really -- of turn Dave, last the low course the year over I this substantial going guess any This is we year. securities didn't turns and maturities money, have into rate we're year.

David Bishop

And is was of that inclusive securities that repricing? combination of loans -- solely that maturing, was of the sort the the billion, that? that, $X total was Or of

Kirk Pressley

that's the first total are securities like the No, That's during in it the rate the probably was low lot A year. $XXX quarter. total. million of

I think, so. or Davis help me, $XXX million

was it in the script quarter. think I for first my

So some rate for of it are to fixed of to low billion. securities we've more $X the going seen go. There's and around the be loans all But probably already. rate year

Thomas Broughton

in will have the year, about We'll mentioned. little get feel $X.X a a we That the when I be better. better a bit into feel billion first Yes, covenant for We'll have season loan last Nothing repricing. total. Kirk as loan get was the once repricing much statements. quarter better think financial matures we

get going reprise we into feel what potentially pretty there. a when have good and second quarter, the the to third will we're Dave, of So

David Bishop

And said improving the a basis. a the visibility or maybe on pipeline, are optimism customer things -- that the Tom, does from you

do Just giving that think investments. liquidity flow what get that's to and and about Are optimism financials? line new shape from them curious just think you maybe better realize M&A the or cash in is they a as than borrowers you perspective business driving

Just driving markets? curious that what across you think your is

Thomas Broughton

every thing, their [ a so the that I dropout -- for of have -- money. been [ had to projects, wish to optimistic are with last in and for loan estate. haven't don't less. out demand, strong or almost it's they C&I we at for make think too been ] ] had attitude the think, forward -- overall, #X we've been at happy more among couple are We're receding, C&I base ag most real them, we're -- problem is are years, moving has profits borrow had good. with but of too they've But lot C&I seeing fears or year a profit the many so they looking and whether course, projects a the recession I customer commercial up regards. shelf to people there of any them just in And borrowers one They've

Operator

at going say this was are to Sorry, just I questions time. there no further

Thomas Broughton

for call your you, everybody, interest. appreciate Thank joining our and

Operator

concludes This teleconference. today's

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

ServisFirst Bancshares (SFBS) 22 Apr 242024 Q1 Earnings call transcript