ServisFirst Bancshares (SFBS) 20 Jul 232023 Q2 Earnings call transcript

Greetings, and welcome to the ServisFirst Bancshares Second Quarter Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Davis Mange, IR Director. Thank you, David.

begin. may You

welcome and Second Earnings Quarter Good to Call. afternoon, our

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

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

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

really satisfied Davis. you pleased do We're very of that's and quarter, thank we're generally Good and results. as but that pleased we saying for we with the you, and the never year we of the forward. afternoon, results a the better going -- satisfied, think true. of quarter. have were always course, we with quarterly really us Thank never much We can And joining review the

I'll overview give -- about. some of things a we're talk to of the going few few

quality. review credit is is them give Abbott a of One to in going minute. a Henry

real have commercial We estate. we a few really we credit minutes, industry-leading continue the will to and with issues don't as quality discuss all in see any

our March book read the see estate in issues headlines, real about you with this don't If point. we at any

deposits Loan on We sheet. don't few a make Our and deposits. core of any banks grow strong balance of broker opportunities relationships claim. a lot opportunities, and balance does lot our or we're Bank seeing with that sheet Very provide Home us core can advances Federal have to

and correspondent level on ratio XX% back rates. you Fed of -- Fed between loan and the account loan-to-deposit date adjusted in based the the deposit funds is Fed funds bearing to as is flows correspondent forth noninteresting funds include our the ratio our If interest

very very we're banking pleased was number. in with good growth second our did ratio relationships. decline deposit see loan in good good the the deposit We core a with So growth in It at XX%. quarter

seeing are on growing deposit very not core as which The Again, we robust and past be our year. on the deposit We results the focus primary focused service date. the the to deposits, we pipeline over rate of to pay continues driver.

pleased a which treasuries with term are billion, up. got our $X and We're cash We where good ended in is liquidity We've [indiscernible] of that. level. our proud short

we bars guess, side, few some little over economy been cautious months I more a of on we've and kind economy. last events recent demand seeing effect loan are slowdown, as the we of the assess bit the normal the as On assess than the again,

a borrower is starting and normalization to little banking normalization next being think a demand months. I more in So But cautious. industry is see more credit and the see few whole and cautious I bit the bit think we're we'll

will in in few focus efforts, been main on Bud repricing Our discuss minutes. loan more as detail a Foshee has

of efficiency our banking the We addressing team. are focused on

industry-leading and We efficiency are year-to-date XX ratio, of we've our one proud of basis. the is ratio reduced on a producers efficiency

in the loan about more see with talk pricing as over is we'll And to quarters Bud our loan few repricing, we'll more about next but -- again, going the improvement rate talk continue. margin

correspondent to over Rodney update. it give now turn to going a Rushing to I'm So

from XXX the balances fundings increased balances. months both the were remained quarter. corresponding that correspondent Thank billion, during at operating Total with during in stabilization stable quarter. we're of news very correspondent with you, and a BDA banks X $X.XX slight last increase the Biggest is quarter. Total relationships had where to active happy division the during Basically, we Tom. the results growth

and credit as expand which card third should vendors our X here quarter, their revenue pipeline, Texas relationships the New Bud to ServisFirst we in of additional X XXXX. X. of issue new first endorsements markets. X making will in during association progress banks continue added to the added Association the quarters we X second from Bankers which agent are for cards. fourth bringing during XXXX, in for element correspondent both Credit XX, a Kentucky that and half X Oklahoma increased state in banks from The quarter the the Bank quarter, those plus the list of of close But endorse were minute. added

Oklahoma, Minnesota. agent New Kansas, in banks card programs Wisconsin the Vermont, were and to added

ranging show to just Chief quarter are endorsements with our it wide to And Credit Officer, over us. and second American Abbott. how and turn state that, broad the the Henry During for Bankers Association I'll

Rodney. to related the continued Thank pleased its rather and in versus of credit credit in strong second strong conservative as bank the increase the with total but had This quarter quality our quarter. you, XXXX. of continuation any X.XX% bank's we've very second ALLL a in X.XX% very loans first a quarter. quarter is I'm outlook specific results grew not to of The the

We quarter trend the where decreased consecutive capital entire continued bucket of the quarter. a as started and second the CRE for both in AD&C percent first the

from XX%. dropped a to of as first AD&C at percent the risk-based the XX% quarter of capital end

have we specifics or at managing our year-to-date, into risk. We the ensure are we of CRE get any where call, the I had portfolio no in office deterioration. material appropriately stress the Q&A and closely to can section major continue not have we But exposure. look to shifts

for years. basis point to points basis bank. down charge-offs on the record year-to-date I've in were charge-offs to quarter points, dues have past, been lows annualized XX loans for total for that be basis a As mentioned X and few XX our low when decrease near is we for first from the the Past the our Net were basis record XXXX quarter. which X.X par at with annualized, would points, past NPAs

quarter. were one specific recoveries for remaining the figure X was the I specific credit. given for charge-off the the not of If one this second to in would the related XX% had have for quarter net credit, quarter, the we exposure would Over it charge-offs our markets diverse C&I relationships to moved to note on. at lending and no and I bank relationship, we've and we continue the granular about lick serve have we also good ServisFirst taken the feel very this has Bank.

turn On pleased I'm with and very results second the whole, the quarter Bud. over to it

really growth progress The Thank the you, capital deposit growth, and Good Henry. liquidity afternoon. made good in quarter. bank in

were Our of short-term our in compression growth. treasury billion momentum from bills, $X X.XX% the deposit in and to a and with the we quarter, X.XX%. the the goal We liquidity seeing and margin in reached pleased cash we goal. growth We're quarter. did of see with some second had noninterest-bearing were in quarter deposit growth that deposits We stable great in

We are assuming one Fed more increase rate for XXXX.

in and in to expect the and improve margin flat stabilize quarter We the fourth remain third begin the quarter. to

bearing year. million loan repriced initiative Loans our off Examples $XXX and have repricing loans that rate early repricing. to efforts, $XXX of Our contribute in year-to-date will later repricing is and we paid are pending loan in that million, are million. fixed fruit are the margin expansion $XXX

will loans of loan new portfolio and annually you and duration. total rate include today. these from by of XXX on a are if XX% improve we about loans about have are normal and has short the rate billion our repricing loans We an fixed rate flow basis floating floating annualized basis XX% $X.X cash points, loans

to one XX points think with for close basis improvement of We forward. an increase Fed were neutral outlook today going

being replaced that are is there a lot are growth at flat year-to-date, rates. maturities better of loan Although much

improved ratio from We X continue our Consolidated X.XX% XX.XX% growth ratio XX.XX%. value per book in leverage CETX from XX.XX%. bank share, to to Tier improved

in improvement credit card expect capital in a continued and Our continues We balance over the saw the with quarter mortgage year. strength. and both be in improvement noninterest the to of improvement income we

on In hold an discussing growth XXXX. we've to line made effort in expense noninterest expense, the

on head year-to-date held basis. We have a flat count

we While other management, few in risk reductions staffing. a have added we in have made employees

assessment XXXX today I results. expect, a we be know point, what will a not it we modest at do While FDIC expect special on impact to some but think possible

staffing our expect head new have We do our and for count offices offices. built and any existing additional not

well grown XX% Our and teams year-over-year. performing quite are have accounts new

and by the remarks. rate I'll first to in turn with in quarter, my concludes Tom. declined back it third That expenses line expect quarter. quarter $X.X be million run core the second Our we to

Thank you, Bud.

these week. doing on great the from continue business we see look at comments, did as open with go a you job team and them up a forward. this results As We to from as there great Beach Virginia quarter. we I They're all office there We've got ground. ServisFirst. forward usual can our fantastic was last

and has they am really proud I what event, need. this shareholders any what in delivered produce the quarter, always our So team of

answer to any happy with have. I'll you So be that, questions might

with our come [Operator from will Instructions]. Graham And first Dick Sandler. question Piper

wanted this quarter, just of kind flat. strong to balance sheet. and that that couple start the with loans really you Obviously, So much are growth pretty on was I deposit

and quarters on for you you the high how balance to talked be a rest lot think to then throughout just loan loan You the the the would the the about guys breathing number on got of expecting I a about year will update year? loan deposit but you front deposit few helpful. are a can growth growth a growth front. ago, out know provide bit single-digit Can of level any talk the play deposit little more you between the room and very growth maybe rest produce you of

getting been that we I just said we cautious business to goes we're but is. obviously, -- every every about pretty we've more feel and this and usual. the better where Graham, week as as again, we've day are, We're date, confidence in we been much, I that said, cautious, where economy that, by,

in is resume Florida, we'll in Nashville, whole Charlotte, like So Carolina, there's the again. always loans tremendous making loan loan Florida. places North demand There Tennessee; demand state, always

loans we can So can we find to the make.

give we to but hard feel usual. our need they we've produce. always deposit start of -- as about good always it's -- we pipeline to Whatever I we -- going we're and -- you kind can number, produce, our produced. a business can't I to has don't resuming team So

better we is the at quarter. a we we today end of than industry Graham. a the about the in lot feel than lot So again, last where about quarter, did better where we last And feel are the

think can you guess year? deposit matches be is growth do there safe different you the -- I any framing to a loan of I Or imagine. color can I way, growth rest assume it Yes, for there provide? would mean, it the just

Yes.

you're I I think re-ask didn't if job good your that. answer guess obviously, to question, having I that -- a do

of a fair I in deposits, $X bring loans. think, yes, we'll statement. $X of probably we if That's make

Okay. Great. right. the question bad. fine job. asked That's helpful. probably I a No, you All did

are what than So seen I mean, on we've better then driving those doing Any some -- those held then I guys that noninterest-bearing heard think quarter. versus I were banks a And guess up that's I just balances. the actually you on that the have in balances color on what front, noninterest-bearing, from quarter-over-quarter, were your other peers? else they of might lot this correspondent

sense trend continue you if Just think division. wanted that a for get that able in be to to might

Rushing, funding slightly. noninterest-bearing May total This Total quarter Graham. -- quarter leveled two the fundings up the for for down. is we're from quarter, Yes, the the was last for June, of good correspondent correspondent was the is in, and Rodney news off. correspondent and banking the quarter for The and into months correspondent

we of XXX I number of in has of now, total community their stop. have all think liquidity to banks, my so my And that runoff the banks seemed comments

And been stable has for balances the last with months. X us their so

So markets, and new with Texas the that Kentucky fourth the we and we're accounts in other if hopefully, can third for that -- if that grow. will that quarter and maintain opening

Bank, for I think. Graham, the It's General on noninterest-bearing,

bank. We are a business

so size we And significant have accounts.

and could or at end. goes down be quarter million one $XX we in have the that quarter So might a up it

we we quarter. the we next we might steady, -- next million down might at the could $XXX end in might up So $XXX of or million quarter, be held -- but be

can't we are because do significant we sized have bank I customers. business So a and represent

-- don't banks. to we a But the had older fall bit. less far a of lot vary we can it So than

we was meant Harry and at got say, ago, your years what remember I was do. I got I was what a Bank. lot money -- of just they've about CEO you've over than lazy for AmSouth Chairman lot and the Regions understand fall lazy he working And is And the a when It quite I -- he I Bank, a meant, noninterest-bearing founder and but now money. bank, they've of to further what Compass I didn't got Harry time, higher bank Brock, who Tom, and he'll think is learned of Bank, deposits, bank. charter XXX-year-old that's got the he

us. good So for news it's probably

portfolio for me I would rates on or the Yes, behind that quarter. guys definitely. decision bonds to just maybe you process just of added the to like like great. at last -- what little it And color get question and is you thought bond anything a this then those that. duration bought your and the them looks And wanted be

Really, had do it's of Bud. pledging. that Graham, lot a Yes, to with

to pledge do need did. got got for we million months didn't in it we've what We but case collateral. in $XXX treasuries? we We add -- and anything, in X we just less We needed add

also and the it yield entire X.XX%, the on our And X.XX%, X.X Yes. to reduced years portfolio. life average

Little the than you at better yield get Fed.

it don't We it. that's for pledging. logic So behind the need

Hovde Group. Our with next David is Bishop question from

that but that and function was [indiscernible] of on those in sort the average end deposits much quarter. than that and up higher couldn't help notice period of Is correspondent balance. Follow even coming some the balances the relationships question, on later I online investment of a

there any quarter late a surge of timing in curious sort -- was was it growth? Just around of sort the funding if

in I the late the It quarter deposit quarter. of I when municipal surge a came had know in end don't know not correspondent large exactly in we at balances. -- the was that a right

You Bud, exactly remember was....

[Indiscernible].

to the municipalities. and stimulus will its state municipal. it's local is here lot federally to Pretty quarter. COVID-money in late down federal way a the of stimulus It money A starting a -- while, be make

affected -- that's date. that it So to what

Okay. Got you terms give the Rodney like away it. the guys don't to plumbing of sensitive, staying know I always in Then interworking.

no So decline correspondent service remain you more the what's charges, of are know down Tends I handling maybe on last service accounts, third-party you relatively here a despite the to processing driving what the division fees. into in But that Fed is that quarter-to-quarter that basis, on the had we the rates road more a I sweeping or profitable function doing. month. third-party noticed

wasn't it banks. a was It I don't -- correspondent think of fluctuation

was not to service correspondent anything that. big to charges, and that in to into if get conversion. back I have to back to that know We'll you see you you. -- have but with just the on As had decline the look do get did we'll

Okay.

an real you it's quarter on I it, a the have You -- it, know can do us puzzle maybe any book, provided public know that office part small offline. just the curious, I there? just can maybe but you the here, details you on. change And then any just book, of last if commercial estate of update, I investor know is update on inter-quarter focused the sort

material Abbott. Henry is Yes, This no change.

office And loan is comments, X.X% producing of nonowner-occupied down I is that's my AT&T kind is this down. mentioned CRE to Specific As in income still around. overall total our is office of only portfolio.

mentioned, So kind a as the not I And for quarter. amount. material of down was whole as it's a theory

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

to Just again. circle want margin back on the

was expect we then third than heard XX quarter, saw what in the then in expand just like seems And is is in we're in but you stabilize it there'll rate a with to I begin one and this be It I right. want beginning less in right, pressure heard hike, it a bps margin what if you Fed expected more that to third said you to probably more little down number make but banks of quarter, stabilize second I hearing and you to So what fourth. from sure fourth.

maybe the stabilizing whether wondering noninterest-bearing coupled margin others. -- steady your in maybe than just balance and just with the growth maybe little loan deposit overall more repricing, is is earlier a the I'm maybe little So a

dig just that's wanted I So if that, to right. into

is Kevin, right you're Yes. you're this Bud. right. on.

Okay.

Okay.

So...

or can fourth mean, More stable, steady I a but expand we're way it and starts than back. our then couple its the month affirmation, -- and start clawing point projection lot, start up loans, X mean will going we couple the repricing a it whole a next starts NIB the of the that months, not get to margin to will quarter, into at up then getting shows bps in this and something it I it keep

torture So been is has over, we think Chinese the Chinese water which water torture.

think and right we the the So over. in light we're the head end direction that at And it's tunnel. there's of

rate, hear. that And be Good right. run ask first quarter good hear. I make like going to sure say I right, second heard not to That's want quarter did could the if to maybe is if just I expenses. to quarter? Bud, the I just heard about you you third

we'll some. correct. correct. increase That's That's to Yes, have

line in first be with will quarter. it So

dots, think Tom, foresee I there's And and better your in you connect in there, best-in-class. -- as feeling later? disruption than to limited economy that is headcount the more feeling to the was the the the And one number and if backdrop mentioned of others. opportunities you're -- producers, the to it point But discussion about staff that expense revenue you're that sooner just looking economy, do reduce you to better folks? you're And if pretty might about away that loan efficiency out rather you looking growth about area, you're And Okay. produce comments given industry. hire in about new the trying to of do hiring always, ratio

Yes.

Maybe management to got something headcount talking able be we regulators We And we've we're like a to sleep. never X% And up that. or are we on always people. the much risk flat been basis. you the again, the to hire hold people, fortunate constantly annualized pretty -- to enough year-to-date --

So area. in adding have be to always staff we that to

life. of So that's just part

look bus the off get to kind to to the of find to I've try management again, more this get is other as for to continue people on right people we're And to the we to bus to said, add -- and perhaps. risk year right going have efficient trying we're the be because we ways so And a people. have And efficiencies.

hard something So worked that at. is we've

officers, are the said, about week. staffing will in we that There's existing somebody somebody we I we team right person, about week. have We our always talking, hired our feel about. tomorrow. every we with on production the mean staffing but talking we all And filled out I them constantly just last people, where are offices, our the right hire person, as existing said good to hire Bud but

in turtle in we're turtle our shell. So a mode, obviously, not

looking So group, talking always right and aboard we're we're the and welcome tomorrow. always they're

So...

And me. for last it. Got Bud, one one

So you -- capital is obviously strong.

You securities mentioned to this that quarter. you added

banks money Some put little potential issue. Is radar that evaluating they're be bond necessarily? have indicated clear a the to higher something where rates, or bit, transactions the on the work at they that for you not alleviate to maybe is able AOCI decks

No, free did how Kevin. that don't some much bit last now, did but a We year. of cleanup of we remember I that.

don't this we have that yes, for year. do So plans any to

think our so We just is mature just par. to think They going at portfolio going par. bond are mature short. at they're We

people So I much some difficult. a realize that have more

losses a our have modest in portfolio. very We

we we have and like duration. So -- feel a don't we don't have long

I the think So you're to need rates did and XXX million you securities when feel at those interest a we off is modest putting bonds. fell points par. just a as is, the something We I feel do if mean booked anything. even could ours preference months, still and bit then let have to as I on you bonds to mature X basis don't in I'll think but to $XX higher realize waited a we yield, little at foolish

question next is Raymond Steve with Our James. Moss from

maybe back the on here. margin just the starting just circling Maybe -- on

new where loan like for you curious pricing these are production? seeing Just days

Yes.

at loans for X%. on June New went

XX% favorable rate, a good point. starting that's is blended a that's yes, So That's rate. of -- that but

Okay. And of in as about we Got just think you. then terms the loan.

little a more loan constructive are here. guys growth forward going on You

is that here should weightings? Just couple we be expect You've area do of CRE bit to curious next about run as Or you about thinking dynamic? down the or grow we your kind think Curious, more C&I quarters? construction portfolio to in a of that how an

up got fund We X, our have project it customers deposits just or construction some moved look some happened need bucket here. still C&I We're construction out some But might permanent focused down, up and to of I have got same but to to bucket coming it's I quarter here pricing. we a the us to loan in relationship. the come then in value, deposits taking good if mean, and bucket got it paid do our and And -- it, we at in room so off. we've strong we're of personally corporate. at be to still that it time, a some there's our on with think CRE the with good we there, go that good

on loans, the us may construction they're they us well, if Steve, see. with Fannie long and a one a X.XX%,how going -- interest to borrow it's want That they as from are and thing X.XX%. pay I'd would paying us to time I can deal But lease-up multifamily keep to if at -- like they but go longer eventually and want they permanent. they're thinking if Fannie more we'll from they stay much borrow when they're can X.X%, money so

on for still the CRE on predict that side. payoffs Southeast course, there's on new the And the States So that's is plenty can't -- United something projects. variability demand of in the we of

of appreciate joining very year. appreciate balance forward really support We about and us much. Thank on call you today the look excited and We're the future. your very the everybody the to