SFBS - Earnings call transcript Q3 2024 | ServisFirst Bancshares, Inc.

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Operator

Greetings, and welcome to the ServisFirst Bancshares Third 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

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

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

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

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

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

Thomas Broughton

you, Good sort our and future, quarter's the We outlook of pleased Thank David. you with afternoon, for and the the third were I'll there. and joining start with metrics, thank pleased for call. and by we're quarter talking earnings outlook loans very about

great very in third quarter. Our strong, growth quarter not had we and in loan and is the second the pipeline

not have we of million I in at rate our X.XX%. loan We more election are an of waiting did than in the here until on expected. average $XXX Though early after payoffs grow the the would loans line balances had quarter,

that good So shareholders. for was the news

fourth see strong and typical, election industry. we'll The is limits is I strong do but also a In loans. very our one I'm our margin in we in will fixed the typically that's customers wanting low-rate quarter to robust did. It had know, but very quarter, at We explain but very cuts. more projects have the sheet rate minutes. year-end, thought end in And in delay very segments. the after few in a think demand couple pencil loans closings see in on a is some -- many growth $XXX of we to the after segment, quarter. Kirk Hospitality, not borrowers If repricing at certainty the and We Fed new will many of some assuming at positive of end our a addition, million also years more issue due the third some rebound current improved see come will the as this he going in rate all was detail rate quarter. could out loan forward, would contribute on discuss commercial the where This second on last do quarter. be that certainly more product estate outlook. Loan see exposure that to explain year, segment want we'll segments have you until cuts we balance see as of Also we to in we overbuilding that in cases real one not demand for some suppressed just the of nothing, on I of got third rates

we side, larger but deposit to one the one it in the did quarter. have return third quarter municipal we the fourth On outflow, in outflow municipal account expect

loan great see continue advances had, balance to be We discipline when know, no home deposits or as from competitors. loan major disciplined more and broker you are on options have do trying do we We pricing we our to federal pricing, on our sheet.

thing. a good So that very is

always today, expect in at quarter. to Nothing some Loan higher best point long good. days. have economy to increases not because the we losses quite higher often the while continues we to and margins the see expect that any we do As line continue referred that, Henry it's not they loan but bottom we large still the need be a lumpy, for Having losses The to these losses to are expected loan benign see have as will future. said said can be quite discuss, we -- normalization and unexpected. seen is in

of last to and developer some been our experienced their Helene, workforce rate year help pinched real month larger will were as past A as tight by estate of example our a rate past cuts and to increases. housing is X that quarter delayed relationships projects the rate of mission. end the developers one cash good have we've as special Hurricane who've The in all end hedges payments expired. a their caution, Due interest bunch their downgraded flows

will was But to quarter a the to call do one one million guarantee it balance and after that sheet permitting investments. have a net personally delays very of have off They customer those The loan. capital their $XX supposed is paid solid with worth that end of require has projects does a project them debt.

of an some properties, been surprised in in is on rate complexes including form customer will this prices, warehouses. form rates. I'm able have rate pass but interest to the to higher of many their impacted increases other example customers not more higher seeing of customers by whose So rents this on apartment the flow the higher our cuts and customers of help is in how cash base,

So in we are where pleased any with from standpoint. credit a we quality event, are

the to demand in with We some future. the rebound at least, and pipeline to in fourth our expect quarter pleased extent loan and

a quarter. we from where we standpoint of -- we are in So teams, did add our new the X with bankers have

and Those total commercial We today. of XXX have a bankers. are all private frontline bankers

and progress yet, new of our one great Memphis We neither newest the and making a really they're have are on but markets, them that front. are -- are both permanent very they markets. pleased Auburn with office

Henry detail it over more talk quality. to to So I'll turn in credit about now

Henry Abbott

third saw you, with credit and ALLL. in charge-offs We loan Tom. our the increased pleased how I'm Thank quality our minimal the and performed portfolio quarter.

for to XXXX. quarter, and basis charge-offs down quarter the the average XX the only that reduction total was third XX% from in second points points the loans quarter from points basis experienced was in basis of X and a we net annualized XX Our

same first prior the period which and XXXX. We we $X We to grew of quarter Celina the percentage a the same loan special of reserve at reserve to loans million did time loan million. $X.X is the reserve and in loss increased our year loss for the create by Hurricane had total X.XX%, quarter

Hurricane impact and our of We around continue Milton. Celina to get the now, arms

our clients of on tourism. are that dependent Some businesses operate

As help Carolina. the will to repair restored, is in impacted and the North areas affected areas the Florida and rebuild our clients infrastructure be in both positioned

to to as I'm in only the Our points XX total were segments basis which the NPAs our lowest of of say And AD&C pleased a that continually capital in all assets has monitor portfolio. to we X years. more is third always, the quarter. loan than percent been dropped XX%, as also

and with and to Reserve' momentum the decrease the core point in Federal debt basis continue the a to various hand welcome pleased with continue of decreased over quarter service. I'm and we that, as mentioned, markets. With projects Tom our our new was to it sign third results XX build grow I'll our As customers Kirk. to markets positive

Kirk Pressley

you, Thank Good afternoon. Henry.

the made this so very year. progress are the with pleased far bank has We

progress great the make to continue We on margin.

comments quarter during of assets rate about margin repricing points by points, increasing fixed our X%. and while same. As more quarter Even good it up rate cash, million interest highlight at X calculation. the quarter versus impressive going and focus the interest-earning That the margin. Margin growth by to in because will quarter. positive liabilities an return approximately from points. The and while the second the from paid basis negatively linked usual, million to percentage Margin income I'm loans with did the second X we reduce XX% great basis benefits, are the interest in EPS our for job continued led from today from was increased loan the by interest-bearing yield very to is margin The holding and cost my net excluding percent. growth along on third over of on momentum. Net of second The growth We $XXX average doing meaningful impacts in is had about NIM the managing timing the XX securities the investments the benefit quarter, basis accrual percentage up diluted and on million liabilities. strong the in a was $XXX rate trends which by on these tax credit a increased net EPS. few increased tax the increased the the tax to only net $XXX prior quarter by some adjustments income quarter,

As are as loans sensitive. have we first liability in decrease benefit rate a months. We a noted over of repriced of but variable benefit in on from rate general, slightly the the the decline We past, XX-day more the in realized we about XX% early rate much few period. of the even

at impact lower Fed that had benefit benefit September drop, time rate as rates. a reprice on the will assets over decline the We'll change The current modest but rate to in the continue from positive quarter.

sheet but faster, We move means and catch As be to try you repricing the structure liabilities liability know, will sensitive asset balance eventually up. that neutral. the

making rate aren't We bets.

loans tailwind will will recent on, goes securities the from current as the margin the of and less from time lower of strong the benefit repricing Our the be rates. Obviously, the over fixed next repriced projected the and rates, higher within few more the years rate from repricing the assets continue rate more instruments.

words, have a with cost to too. think In be the funds benefit. we we Of course, of dropping, continue few left of and will happy other be tailwind, our we that years

I the today many discuss is to get about to I'd many been and second we this a resignation. is like that to environments. that in would an the resigning income future. the reasons. great amazing bank for proven from employees, which take parts statement, different bank for we personal has to of over operating great the years Before filed a I'm my positioned other X-K say has like bank, The it

have CFO. has bank long-time over and Rodney the has Ed Ed as to through talented a incredibly the consistent go like proven the is is are amazing the Henry Tom, into bank, of Woodie, of been turn job. I'd built rest and this named statement. what do today. who it it who Controller to Ed leaders been the now fantastic income interim will individual an to and

Ed Woodie

income this in revenue afternoon, during but in the usual, Credit increased volumes to return ratio weeks. noninterest of more third decreased to net originations strong of few the levels higher quarter. On good Deposit fees quarter and trend performed expect through money secondary expect quarter. expenses, purchase third loss modestly we and expenses quarter and the and year. the most as the experienced loans. card quarter We indicated efficiency to have in in we XX%. in it by fee see Noninterest Kirk, you, we market controlled below normal Thank quarter, the fourth another again past and fourth the income well quarter, mortgage We everyone. the each loans continue our fell

and income treatment we the was call, implementing for This in new during a rate the credits. We quarter noise million. discussed quarter expenses our tax. second resulted tax reminder, a some second expenses As qualifying accounting for said noninterest in run core for $XX.X

little onetime new third X.X% no being it due Alabama core but expected, we salary to quarter include expenses longer quarter. above in to services costs our was The benefit EDP exit place modestly for amount, the contracts more we and Also, quarter a for a need. did than increased staff some second Auburn, full

As Kirk benefits some did tax the we income realize mentioned, during just quarter.

the higher of to credits. new accounting Our due second quarter rate tax for was the implementation

with differential Our quarter of believe in the XX.X% back will This tax fourth related and for to investments. I'll quarter credit adjustments rate be rate the tax compared primarily turn that, to We first rate the filing some adjustments positive due call was our XXXX Tom. over to for our to to returns of rate the the was XXXX half XX%. And related XX.X%. around third tax

Thomas Broughton

it have of have Thank I And we thing, was told me that back you I will later would for would knew know think I quarter, bank believed could -- one need operate expenses the didn't like hard million not we seems but Ed. in me the XX I grow, bank expenses. $XX now with could we XX quarter to operate. grow you, all that million have we now XX core with we opened we to it's you. employees XX that would a employees. a the to years years of I ago bank thinking with when if extent comment the $XX

a the that with from done for pleased a want all very He in us retired, been of from critical has fantastic thank the coming last very some had at sure to us contributions. get helping June Foshee turnover year. making time from cases. His joined And a view He over as in CFO, and larger when especially Kirk helped came sort Bud we're back event, of back job any did do of bank a helpful growth and in great for job in we're office we and future. office I quarter. the professionalize in order with fixed, because has of job his he fantastic he a did -- So that. of us he course, then who's and helping a took many standpoint the bank it to get ready

wish contributions to any we have you. So want Kirk, ready take Kirk. we you Thank thank and be we'll questions appreciate to now. the well. And you

Operator

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

Stephen Moss

want just the on further pipeline go to Tom, a little here. loan

the very about being You strong. pipeline talked

early into curious, saw kind the think quarter, fourth like look like kind you're you Just something the quarter? to do just of we'll what about And we the of similar XXXX? see for how maybe probably thinking in second

Thomas Broughton

I going was second the the thought question. be second possible. was that I though, and fourth good outstanding, as told I quarter, it's in If you would hope than to as tracking Steve, the a was as probably more quarter really for it hard quarter,

You of sell tend fourth rates third I did in lot I to said, a Prior sales, of the some election the tax sell. saw asset sold get going buy think. concerned some People closings. assets and up companies and probably to a the we are buy Like quarter, and and -- lot see businesses. we quarter, about people in companies

fourth the I always think always good the the We've I is because quarter fourth there opportunity just in So quarter. a we're think -- had of year-end.

least amount and closing a pipeline at expect decent the to there. have I is So

too, on bit that some about loans those permanent got go them that and we've a hold staying to to of -- some When a some projects. Fannie longer everybody, people a Steve. us go and to like for in we've with coming, So few cases, payoffs and in could trying got market on talk -- Freddie, to to to we're are we're trying

answer, giving I a you good very not I'm So know, Steve.

Stephen Moss

get Tom. you what X-year of to treasury And had we've of I okay, as guys seeing here. in That's in are rate terms new Obviously, just pricing Kind loan here. then volatility the on it. just for loans? the curious

there. as you're curious to how So thinking

Thomas Broughton

with think, consistent X%. we've Well, prior where would right in to it's close been at I is -- quarters.

Kirk Pressley

It bit. little came than quarter, bit -- this changed We've done fix that's the probably quarter, a a down little but little because think, a this more mix has I yes.

looking. Sorry, just

issue well. pricing it's loan whole but going don't Obviously, -- volume this we up So I been a well. saying forward. that the but pricing held have I'm really see holding up didn't a very has new lot quarter, of

Thomas Broughton

we're had That of off. a million loans low remember, $XXX Again, pay or amount. happy fixed so that we rate was

the So there. that's shareholders win for a

Kirk Pressley

up cash the to go quarter. growth the benefited mean going more the some I I for the on. we got stuff Obviously, great we've good really us $X and second quarter the that, flows of Yes. in the that's mean loan great a third rate. million from in the quarter, But point. even fixed the was maturities in than repricing,

Stephen Moss

Right.

that. Definitely you mention. And of Okay. large the mentioned Tom, terms just on on you in you then borrower hear special a placed --

curious Just kind large how the and loans kind is for like borrower you criticized of that of what's classified guys? total and

Thomas Broughton

Go ahead, Henry.

Henry Abbott

now $XX relationship all million, a as projects. the is relationship million them Tom is So had and after up $XX payoff the size currently, into for for divided different mentioned, granular. total that quarter It's end, borrower we it's X

million, So million, are smaller, individual large million. much one the being $XX on numbers projects $X $XX

Thomas Broughton

Yes, mention, That's they're correct. substandard. special not

Stephen Moss

any and of your kind significant curious, to that substandards? any there beyond just Is special total there And one? Right. mention change is

Henry Abbott

biggest misser. the was that No,

Operator

from Our question Scouten with comes of Stephen Piper the Sandler. line next

Stephen Scouten

increase Is time, any don't special keeping assume And looking movement how about the mention credits? you're you those quarter-over-quarter. there there. expect say on fair loss this really I to to that of at kind sticking just those significant given guess and the content I in that based at thinking reserve. flat

Thomas Broughton

of no those. there's I -- project, only on one any have mentioned. reserve We Yes. as They

said the only a had with had year a my they delays they the North a is but city. with remarks, It's construction have a city. problem an project As in in problem. city, Alabama, excellent And city one because Alabama, for they I it's that problems

got they've again, that this is project. And get -- workforce relevant that out, that's with housing rehab. So straightened they'll back

We we felt downgrade to So we just because caution. like abundance asset borrower. of they're they hurricane, some the we we some like as the it had just -- when had term payment think class delays and -- of the needed short they

Stephen Scouten

Yes. Yes.

Sounds lot conservatism, Perfect. like a that's great hear. of so to

Auburn, any On markets? or expansion growth know or in hires next the growth loan newer there any new drive loan to of the I for quarter. trends, in resumption focus loan in Or the those Memphis, the that a you on markets mentioned other Are growth quarter? kind particular of incremental is

Thomas Broughton

think of other Auburn-Opelika of I Florida. X, in X maybe in forget, Nashville market or one in one I one those and those were and the

we're many expect contribution -- takes We people, from a about it X the new this for to to making So of the hired which a hire were us contribution. hires them number new months and continuing we year. and start large

So start that. seeing expect we to

Montgomery team now we're year. a last last just another X-person bank We -- hired contribution in team year. great to a from our We hired seeing we

So contribution we're now from team. the seeing just that

it So I say takes -- to a moving don't just while but seeing now it, start things. for

all optimistic Auburn-Opelika in we're large we got have. the we've producers both new pretty market. I Like Memphis they're so things and with we that And said,

future we good about the there. So feel

Stephen Scouten

Was quarter. unusual last guess, onetime yields, briefly for or nature Got loan significantly much you in move me. this of those on it. That's helpful, Tom. touched there if I'm penalties million any The did I anything or you loan And kind reverse early jump that I thing payoffs in know way? quarter then mentioned. in yields more there's maybe in that wondering anything kind of out of especially prepayment that, in kind might the just about back next $XXX up with

Kirk Pressley

I on the that the say margin signaling a would recurring the was long up for it increase, nothing There's pick velocity we this expected think this time I is a theme. and saw quarter. We've mean onetime. been I you to

growth second too. a lot, Now the quarter remember, loan helped

Stephen Scouten

in It quarter, sure. the later came

Thomas Broughton

too aware I everybody and in I course, of much. pricing we finally the -- deposit I'm up that, is are painfully the person think, On Stephen, that's terms -- paying of other is seeing says of that. think

So else. right, they're blame of but not wrong. all industry-wide. that, everything everything doing I not seeing everybody We're humility are with trying rational doing we say to pricing that I'm saying more

Stephen Scouten

Yes. just one touching question seeing CDs maybe are And pricing last currently? me. that, on you for on for new guys What

Thomas Broughton

Been is paying it pretty paying bit a if a I now X% terms -- we're right And were months trend pretty coming now seems X up of down making ago, they're sort they're treasury X.XX%. seeing days this moving below on yields. think like and the I people quickly. mean, XX I'm CD on quickly. They're of in that's down

still banks much seeing don't community CD. But you of for the operators, then we a you large are rational we're course, outliers, major have that more small underperforming some as imagine. might have price. Of CD And

the the have fourth million in maturing a rate in in think CDs $XXX high I plus at quarter, Xs. we

precise. X.XX% X.XX%, to be So

it room and real up there's there, to adds money after So a up while. to there here pick

Operator

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

David Bishop

cash preamble, noticed short-term and noted drove a little some bit. the maybe build in you margin the Tom, liquidity down or

to that Was that cash? increase. that drove of increase what maybe sort customer Just what curious curious flows? related Just in drove

Kirk Pressley

in jump I'll So a for second. here

during about was in saying balance with was quarter. that and quarter did with during $XXX So if of outflow. really same came of out quarter I look didn't municipal cash go you did was quarter third back the the second average the million about the up one the cash It the higher and the third much end the quarter. in at the at loans quarter the What

extra if breakeven cash been you can that it. the at the kind you cash, it. cash, lot as on had percentage, the the the kind that for sense? calculation NIM It dollars, of But So it normalize run-up would of see, on even have a calculation, a doesn't the Does more hurt based higher. make NIM in

David Bishop

see Then down puts about Yes. sort funding just of a this as fund talk perspective, takes should maybe and from quarter? loans you to come expect that we there

Kirk Pressley

why tries that's versus quarter has run don't reason higher and one of build that's time, where you third you and always that's the why it the he Tom We the why liquidity don't And FHLB Yes. broker the was in second. have have to ahead deposits. bank -- advances,

Thomas Broughton

That's about high at weren't The it's flowed a not days. deposits all. accretive a negative. to that income slight it. rate It's terribly too deposit we why upset out, municipal It's

may -- back we So think us, we back all when -- it's it's to not take it'll and hard it offered when -- too. if to

Davis Mange

operating for outlook expenses core from Maybe here? it. Got

Ed Woodie

We Yes, We that's quarter, Dave. -- we We second operating This accrual for still the adjustments in Woodie. fourth annual said $XX.X with some incentive about the probably is million. think think realistic. our we're have Ed in a may quarter.

think we $XX more is million. So than Certainly, still realistic. number no that

David Bishop

a up in What paid average broke line the my loans And low-yielding paid off? it. beginning, was rate the said you that that little bit, off. Got was Tom,

Thomas Broughton

X.XX%.

Davis Mange

all. there no call. questions, close that will further you Thank If are the

Thomas Broughton

Thank you, everybody.

Operator

This concludes teleconference. today's

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

ServisFirst Bancshares (SFBS) 21 Oct 242024 Q3 Earnings call transcript