ServisFirst Bancshares (SFBS) 17 Oct 222022 Q3 Earnings call transcript

Greetings. Welcome to ServisFirst Bancshares Third Quarter Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Davis Mange, Investor Relations Director. Thank you.

begin. may You

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

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

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

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

I you. Davis. Bud, to it over quarter to third am over the Thank our go going little a numbers good before and review detail. a welcome of bit turn to call. highlights more I and to conference few in afternoon, quarter, the

back payoffs and loan had expected -- the Our was growth pushed quarter later to be in that we strong to very quarters. the continue were

We terms the torrid pipeline. in are in -- looking at the we've more growing been we have keep that last in loan been what loans, certainly in can't look also seeing at selective because quarters. pace of growing And we the the lower two we're pipelines

deposits So, was the bank historical in quarters. growth general correspondent growth third we expect in while some to our the in the area coming More rates, see at loan moderate in run-off we quarter, stable. did the

correspondents loans Our buying are making They're again. securities.

general deposit to do the bank to quarter. bit than We more be in expect the to little fourth expected to we back was some extent, in that a probably So get thought. growth

and to in focus been and putting we XXXX put growth and we growth emphasis did as We to normal XXXX. will plans had heavily have consistently Incentive pandemic. deposit we are in on loan on more XXXX the it weighted deposits grown prior

quarter. this deposit focus Our had though we not did until even bank growth general growth, past on year-over-year deposit

quality charge-off detail, had in loan one Henry to recently and conversion banks new over adding that to that we this discuss of we credit One list. the very in on for certainly I more pleased the credit we the covered we metrics on completed a adding that loan credit On in moratorium think, a had area. reason our problem We agent it And continue months, just what most we strong was side, card past have six quarter in but can start get portfolio. are we're so is that done. will was Abbott a banks again see we pleased

So welcome certainly in regions. with growth news We fee that's XX bankers the in Florida -- income after new and did bankers, standpoint. last quarter from add Northwest XX Nashville quarter income Piedmont, an

seeing being very bankers quality fact, got we've and are this see bankers to community continue a but of a we time, market. We in in nice seen than opportunities morning better we are a very selective team about a in call long

coming So we in potential door. the are seeing still growth

financials. it So, Bud to the going go to turn to over I'm over

interest loan in million loans, million. of In growth PPP XXXX $XX our the of PPP loan average quarter. loans maturities three Net quarter. loans. excluding and margin decreased interest on the Liquidity. last interest a spend provision, loss we million in margin XXXX. next million to quarter loan receive the were the in exclusive to higher-yielding was quarter. were million $XX This in $XXX net third mid-June, will million, quarter. not afternoon. our so for was into by Average we fees grew net Good days $XXX,XXX paydowns to increased purchases based Net income positive Average -- the reinvest loans on PPP, growth, compared Tom. of third able until growth. PPP and Thanks, forgiveness strong of increased decided the mortgage-backed million investment the the third $XX $XXX $XXX by by we quarter, quarter third In $X.X third

to 'XX, it of quarter. Our by X.XX%. In the improve fourth continues margin quarter was

year, First quarter was X.XX%. of this it

Second on over X.XX%. decreased $XX increased third the Most period. quarter Fed by in loss to will in rate the minimal third $XXX quarter. X.XX% September Loan in million increase and provision. quarter. a Fed funds quarter third one-month the recent our purchase of banks. margin related have The decrease impact by Deposits correspondent million

income the range by to million forecast XX, Our continues $X.X range to million national X.X% quarter in increase at Spend to X.X% the the from provision X/XX/XXXX. XXXX, $XXX XXXX million versus $X.X quarter card XXXX. increased expenses. of income. X.X% in third the of in million million third in XXXX. to $XXX the in to June a versus in grow a Credit Noninterest XXXX Noninterest of was $X primary of increase related factor A X.X% quarter. third at

taxes quarter, third private the in net litigation and diluted had of a we settlement of During per resulting $X.XX Salaries million share. preliminary $X.X or income benefits. a write-down investment, of charges of and

total a year-over-year. by the $X.X $XXX,XXX expansions, by our quarter third of salaries result million in increased and As market

investment account it to September correspondent of over the due and interest year-to-date versus quarter in Henry credits. was to reduction credits Third Tax my incentive related credit million. was September quarter from turn I'll pay XXXX. versus tax The was XXXX than required rise at DDA XXXX. an remarks, were steep This Earnings tax analysis expense $X for to in XXXX, Correspondence. of XX, to Abbott. increased rate $X.X That on $X.X expenses concludes million million rates. XXXX write-down be in income offset by to Lower balances increase at X.X% X.XX% the million more second for $X.X balances $X.X XX, million to maintained XXXX.

the quarter. bank the for of XX% strong third very trend Bud. quarter. growth an you, The by Thank grew continued annualized loan Loans the for

within be on which conservative and commercial to as butter exposure, continue mere more real points, underwriting time, want equates quarter, core our versus were given being the lows. commercial par rate figure past continues to the analysis, real in the historic new million $XX.X to sensitivity is help well total which the marketplace estate with and to bread on of that inflation the prospects as due owner-occupied selective same continue footprint. interest estate. of to basis We we borrowers to second persistent Past-due At loans with and high-quality bank's and near income-producing be XX loans our

sliced our We Southwest Hurricane. Florida diced impacted portfolio in by have up and borrowers loan with followed

to in loans fared very the an $XX.X mentioned. not year. or deterioration, north of the our is we area in well. period unknown, impact more X.XX. to an are loan bulk the previously for million, of in feel with is The prior is from Bud amounts same the slightly long-term While but ALLL changes This region portfolio by outlook to which credit area loans to specific were in like rather impacted our increase any the a they three that associated To to X.XX grew economic date, X.XX as we've appropriately borrowers, increase commercial where we loss believe the only The reserve quarter loan uncovered our the reserve for second model total impacted quarter hurricane the above by We the insured. and were impacted for made landfall. severely

and an buyer. be total not While any metrics of under the loan highly of major quarter to loans prudent LOI to credit qualified historic it mere key continue our feel our NPAs in our that lows, million portfolio changes in near sold figure we over to reserves. is four seen we increase Nonperforming loans XX $X have did the fourth a basis were points in $XX.X million be to to

million XX when were quarter Net $X of for annualized. charge-offs mere one continues portfolio for charge-offs perform proactive points is a the roughly loan to level. to Charge-offs points. million on We basis in an than was million and Our year-to-date our do are borrower $XX.X basis loan billion. in specific is related charge-offs, exceptional quarter $X the at we When exposure Of while roughly a issue less the addressing charge-offs portfolio impaired, $XXX,XXX the and fully annualized, the $X X credit. elevated. to slightly the were were remaining have were

Tom. the financial diversified we good environment As reserve. I how model feel our with the it loan and in reserve it impacts institutions, serve. how I'll markets all very territory in back the CECL With dynamic portfolio loss loan current are the positioned with uncharted about in to aside, Changes large that, bank's hand to the is we

good And Henry. to we're Ian down yes, you, get Florida. after news in glad Thank Hurricane

not So could we be was bad be. turned as to thought it that possibly as out

welcome So news. that's certainly

And the thinks we've key mentioned the I've always Just deposits, not building I of that liability on well to a core home banking focused of core in certainly franchise. compared in the positioned side I sheet We're industries the building balance value deposits, because to think many general, always core anybody deposits. competitors brokered with is our and funded our deposits. advances loan thought, federal

have the XX% have deposit which XXXX. success We commercial of inception the compound any attracted of in in to We enjoyed in Our from past we've think is more it's is rate we've years. than today. and five And is last years we number bank, best history industry in time we as growth the bankers, for XXXX. have XX XX% key believe of growth for the the which we bankers bankers the think platform the reason our in a the one do opportunities since best we

outstanding on questions. efficiency the any certainly quarter with pleased are We with We'll return ratio. equity, assets to on and be answer glad return an

comes Sandler. Brad [Operator from Instructions] question proceed. Milsaps Piper Our first with Please

Hi guys.

Brad. Hi

to Tom, Monday October Happy you. third and

Henry in out but win, hi, we Decent, all you that? race we bold if Well, and will about Abbott, Georgia we as see win beat how can Atlanta. look,

that's it do. That's know don't We'll Well, right. I see if though. I right,

on I first call think a got to this winter. time is the I've

thought I anyway, So advantage. I take

a every years, I would do I XX win you. too. it It's don't blame good but

for we opening, queued As up rocky have me. top

live I Sheila here Alabama. the in through Mike Mike Deboer and

in taking So took that the we've is turn It like back for enough Tennessee box. though. sure. is looks -- we our That

ask, see. obviously, growth. I talked you of Tom, We'll see. another quarter We'll loan great wanted to

hired. loan for on of XXX%. now that's guess of year. does And how kind impact next us of in it year? you've funding already bit a would what have that billion a obviously big little focused generated You're question deposits, of the you on grow can on kind vis-à-vis more pace much the but in maybe ratio growth loan-to-deposit sort maybe mind this how $X than we sort you're a what growth all I is you dollars, pressure your at be of up pullback in frame of your second more with is part much know part the of people I for Can

normal. our to back Yes. we're And

ratio most where for loan-to-deposit were XX two periods in except 'XX, the years, back was we've time, the Our for pandemic been of 'XX last which of the recession.

I normal join had -- as to had for in back can So always one we've been. We generate been a tracked we've to we some bankers. where matter have of actually complete confidence is have outstanding that We're we've fact. our this team just us. day -- us

So we've the got time. us some great that are joining all bankers

about confidence rate I So -- can not XX% seen. growth rates I growth a is or at annualized something hopefully our Brad, sustainable. have we we've that just that think historic not grow clearly at

the to is the -- loans back by we we and had and those several targeted to levels deposits XX% sort XX% in in we'll you where think our growth over something quarters. get think So next of quarter,

the In we years. last bigger track we than deposits than really in big fact, didn't leases it got been surge pipeline a years it's deposit last already bigger the We two seeing, for because in coming. two much we're see

correspondence cordwood some in last couple weeks. has of nice So really the wins

So we we where feel good are. about

what curious, I'd on -- in are incremental bring dollar coming in those pay sort you terms deposits pipeline to of deposit average, books, having of on to new the are just be deposits? those of rates where that the

Well, our was what net interest margin Bud? in September

X.XX%.

it was... That was In flat. August

X.XX%

Yes.

to answer going try both holding gives management balance management we the growth idea, not treasury a disciplined to is still that sides a if we're by answer we treasury disciplined to you That's And grow bank mean and that are we're balance The we the company building be say sheet, Brad. service. answer. sheet. not we're on the rates of So any the

you, queue. Sure. guys, in back hop the I'll Thank color. appreciate I

You have the always. glow orange

You Brad. always, it have

Thanks, Tom. appreciate I it.

proceed. Please question next Our D.A. Fitzsimmons Kevin from is Davidson. with

Hi, good evening, everyone, or How good you are everyone. doing? evening, all

evening. Good

to I up follow just question. Brad's on wanted

forward. So stable on going -- Bud the the the I the saw relatively remain release of Page in margin should -- comment about X

believe? I I thought -- -- kind are was which heard And X.XX%. you margin, the I So margin referencing you was say of because September X.XX-ish, or quarterly were you just

the could of it rates that you if Thanks. an from beta it is accelerating or outlook a margin. on more the into offsetting little being deeper impact deposit offsetting what than about for side? Is just stable -- dig just comments your So kind rising asset

Right.

it I break what to talking guess is really to down, from one another. increase Fed So about we're

debt So we've that from standpoint, index what what billion at in to an $X reprices, that's Well, happens changes a reprices. got loan about Fed right markets and money funds. whenever correspondent has equal

are those same both rate. to going up to the going So watch. They're at go

of is Now got over the the to can, some market, market what reprice. your index a date another but money you've raise markets billion guess, have $X.X money billion is, in that going we have loans you've during month, and you're then over have in will money Whatever next the the reset $X.X you'll month, you'll increasing time. about got different that I will price

going $X.X a loans it's period. deposit -- So the the during going billion less right, go then little time side, reprice or to is to your

Okay.

just upside for third clarify, there's I'm guess, you so margin there's still 'XX based level So unless hit just I hearing -- from to correctly? quarter mean, the on still not you the I it to what said,

definitely. Yes. Yes,

Okay.

like So change see your you the going release about linked the this to quarter. more kind we're is comment saw just in of quarter not

stress Fed with... from increase a standpoint To just

deposits outlook hangover there grow. comments, But And deposits off. it. some general to Bud bank you comment total your the Got about going about to be think talked correspondent is Right. to still expect Or for earlier, do deposits the I in grow? you running from

so you would outlook And of what's that total for two deposits, or say? kind quarter next

us. Yes. few some like last now. had really feel the We the nice new going major is joined way some customers wins correspondent in They've back weeks, other have

we've like we didn't and in started we And we've also, much so year-end layer from. for So deposit when to incentive the our for headed I a bankers growth in. the got back we're -- we in added component commercial that year the core mean, feel Kevin, direction, to are correct of that all have for and we of

the So bank. is right are adding -- they on improving focused answer the building deposits. a adding not deposits rate to way, the not never and That's high-rate answer

Got it.

what market call a comments, know of from Tom, about I team getting be but early -- is you might detailed, a is currently think your to prove in or And Okay. bankers -- new mentioned today not you too in in. that that a just you're new team, a I can't get

Piedmont No. In we've community nice few number Panama added a which community Besides those of the City, just is few. team, Ashville, a the a community name last in we've bank banking region, some teams months. in to Tallahassee, added --

like So well generators. feel deposit they're as we -- generators and as loan

their fund loan get got So that They they they to it. understand own growth.

All right.

Okay.

Thanks back queue. I'll very hop in much. Okay. the

you. Thank

Hovde with Please Dave is proceed. question from Bishop Our Group. next

Terrapins Hi. in South, all on at and for could fan very football produce the someday, I'm you Good that NBA, down Look evening, sure. some on change. with that's football college good will there gentlemen. jealous I'm of Maybe you that Saturday. Maryland

I thankfully lick, It it transfer game since saw We Seattle. a [indiscernible]. we from was Alabama. leave took the

are in we do interested well. So seeing certainly him

the XX. a added holding do and terms it. Despite salaries of quarter top benefits. guys to on are Yes, Has yeoman's to you the has Noticed bankers in another do this to employee line continuing XX reach. on of that, job

in of in Remind that? line. hold Just special inflated doing there are I terms saw that the the on quarter. us line the anything really anything that Was quarter? you compensation inflation sort Or linked second of to decline unusual curious, X% maybe

total -- benefit. incentive we thing only in the a accrual the We Dave, incentive second in our had the extra from salary accrual have quarter.

I remember So benefit salaries that's biggest totals. thing the our and

Dave. Yes. all banks It year, going our became to for loan us their of the that goals obvious exceed were to

It in. was an put $X extra million. we So accrual about

second quarter? In the

Yes.

the to the just compels sort it. them to, curious ServisFirst. jump talking Got conversation of that And then you're to bankers

Is commonality Just another that obviously, down terms out bank theme a stage a their where the because, current around you in of over suitor goes. or in curious there's choose how they conversation of shares there. lot the there career, at moving a there

sort use down what other competitors curious your growth them over you there? some compels of Just the to of

Well, I think plans. the They plans. banks don't consistent have incentive changed the

changed We In people to team There a calendar and Abbott support a the work in we requests turn they way, the operating but either number it of joined the don't the the Birmingham to want out had in can. fact, the empower was down found of to about we that's as end it's weeks at everything lot people about and incentive that bankers hear. customers Henry do good turn -- are we reasons, like turn is down, we've we're putting regions, a as we're you -- in quickly, plan and going us if right management quickly through we for that ringer to a year. of of can how the that on that from. out didn't found platform and year, spend that current I every think we around people it credit what them. not that's have lot them that And

banks to branches, fix have a work got morning A try we it. try We as best to of So me compliance focused the customers Services service. not try us few person service have complaints. we're customer the we my resolve our problem, really, in with how we're like wins of just this feel don't customers we the good telling was service. what I we on and industry, is the and watching to complaints because lot It's get a sales offering problems. kind

differentiator. So XX compared has we think for -- years that's for commercial most us banks. the been to David

It there but personality, So as we a I simple have mean? what know have personality feel personality it's always it's complete, of an lot you So are so not be reasons people completes -- leave. We have as different people opportunity. usually an because that bad a could usually like opportunity.

have with credit treasury platform. P cash management program. support card a We treasury great a them card, personnel great We management management,

to A get some they'll B have we they -- can So do and don't be to want and players. players can want don't But A things with it's say B they with compensation. ancillary players not players they just additional be

So in usually to leave. players if they B of some an organization players, want

And Understood. the Understood. you stability you sort income, credit mentioned think agent this of for relationships. credit-card nice $X.X in run or rate income? then a is continued a new good growth this million Do in the card new

Probably. Rushing. Rodney is This

We gone have fact, card cards for in conversion. other besides credit our customers, through it our agent we issue And banks, credit XXX a call program.

that far because -- been hold conversion. banks last the put going as agent on we has months, is new onboarding six For were any that this as through

So adding or banks right quarter, for now. agent queue up, the around have we back X and we'll in the X ramping somewhere fourth be

question. So that answers I hope your

that growth continue. to We expect

And then the Right. maybe XX% tax rate number to into continued good I effective XXXX? the decline a is housekeeping that assume the question. noticed a in

some say We quarter that quarter an the adjustments of XX.X% No. would credits, would we to that and -- adjustment year. the make our was be annually in tax some proprietary had in of third this third -- at It take I'd XX%.

queue. back Got in I'll off and get hop thanks. it,

follow-up is Milsaps with a Brad Our next Sandler. Please Paper from question proceed.

you looks how for forward? quarter level taking for kind you'd last of thanks and the sort a your be what Hi, think that you've was liquidity on million much pierced so, Fed you $XXX thought, It or funds. through is that. to like -- changed of I going floor mentioned follow-up. that internal how much Have now policy if you willing hold cash got Bud,

take did action. is need to change of the go some I We policy. we down assets Brad, can we're Yes. before we to believe X.X% what

repo Okay. sorry. -- I'm on go ahead, And loan just

Make sure of it is assets. X.X%

seen we've or the loan in And change year. last Okay. funds over XXX just basis Fed repricing, the rate so on points

relationship the XX. XX there? book of trying about up are PPP. bigger any Is of to how funds, had a is had, repriced going I yields beta excluding your I the you that to kind to in to probably Your floors loans loan loan lag you immediately but there Is points, basis right of reprice. thinking Just forward? sense was maybe get that with think that XX% you're continuing closer through? a assume about Fed

I'll back to Yes. go let the bank. memory

time first for get because the in by below while took many the had only that Fed so rate I $XXX think floors. we loans a increased, actual It you reprice the the million had rate. flow the like

rate So beginning had very increases. of the at we Fed the a lag

the Do you kind maybe September? loan in where have of happen was to yield

Just the month of September?

sure. Yes,

don't Brad to I of e-mail e-mail I I can on side. months No, that to but guess, a No, to, -- I I'll lot can you. it that before, have bring

appreciate you, Thank good. guys. it. sounds Okay, I

I'll very and that think first a loans go back had look repriced at number increase. we I that but quarters, Fed long our of numbers

Okay, you. all right, Thank great.

you everybody everybody. today. call the thank Thank sorry. Well, I'm for being you on

outlook are the future. about excited the We in

think growth, all we're future people the our position company. about for that excited we're new and joined have I

else to anything anybody out, without close or out. we'll close it say So wants

conference. Thank you. will conclude today's That

you this You and your may time, at disconnect your for thank participation. lines