Yahoo Finance Servisfirst Bancshares Inc (SFBS) Q1 2024 Earnings Call Transcript Highlights: Robust Growth ...
Net Loan Growth: Over $200 million in the quarter.
Loan Pipeline Increase: Increased 63% since year-end.
Owner-Occupied Real Estate Segment Growth: Grew by $120 million.
Charge-offs: Annualized at 6 basis points, down from 9 basis points in the previous quarter.
Past-Due Loans: Decreased to $17 million, down 35% from year-end 2023.
Allowance to Total Loans: 1.31%, nearly flat from 1.32% at year-end.
Non-Performing Assets (NPAs): Increased due to one specific credit, NPAs to total assets at 22 basis points.
Net Interest Margin: Increased to 2.66%, up 9 basis points.
Net Interest Income: Reached $102.5 million, highest since Q1 2023.
Deposit Optimization: Reduced more than $220 million of high-cost transactional deposits.
Loan Repricing: Approximately $120 million of loans had rates restructured, increasing yield by 2.56%.
Securities Maturation: $139 million of low-rate securities matured; $120 million maturing in Q2 and $25 million in Q3.
Bank-Owned Life Insurance (BOLI): Realized a $1.2 million death benefit.
Capital Ratios: CET1 ratio at 11.07%, Tier 1 capital to average assets ratio at 9.44%.
Release Date: April 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Maybe just starting here, Tom, with the uptick in the loan pipeline after a good quarter of production. Just curious how you're thinking about total loan growth for 2024? A: Tom Broughton - ServisFirst Bancshares Inc - Chairman, President, & Chief Executive Officer: The pipeline is awfully good. It's just that it never seems to close when you think it's -- it always takes longer than you think it's going to. So if I looked at our pipeline, I'd say it's going to close $150 million a month. But I know things can go wrong with that and it drags out and it takes weeks and months longer than you think it's going to because if you had asked me what was going to close in the first quarter, I would have told you gross loan production of $150 million a month.
Q: And in terms of just the business mix of the pipeline, just curious as to what types of opportunities you're seeing in geographically presenting concentration. A: Tom Broughton - ServisFirst Bancshares Inc - Chairman, President, & Chief Executive Officer: Well, if you had to pick one area that's strongest, you'd say Florida, obviously. With the population boom they're having down there, they need to build everything except assisted living facilities. Those are overbuilt everywhere, including Florida, but it's strong. But it's not -- I'd say it's pretty localized -- I mean not localized at all in terms of we see increased activity in most of our markets.
Q: Just curious, you said you're obviously keeping a close eye on expenses in this environment. Held in pretty closely at $44 million, but you've been adding, bankers -- commercial bankers being opportunistic. Just curious where maybe you receive operating expenses trending over the near to intermediate term, maybe from a growth rate or dollar basis. A: Kirk Pressley - ServisFirst Bancshares Inc - Chief Financial Officer: I think what we were saying last quarter is probably still holding true that we expect the full year to be probably within the $180 million to $185 million. It's really hard to dial it in closer than that but a little bit higher than the current run rate as compensation increases happen throughout the year, but not a whole lot more than where we're running.
Q: Just curious if you look at the earning assets side, maybe where you see the yields on earning assets maybe trending to and is there sort of a terminal peak that maybe hit this year and that's just curious where you see those trending too over the near and intermediate term as well. A: Kirk Pressley - ServisFirst Bancshares Inc - Chief Financial Officer: I'm not going to give you a whole lot of detail on that but it's next year that it'll peak. It's not this year, but we'll have really nice growth this year. I mean, if you think about around $2 billion is rolling to more current rates, we should have a nice lift this year and it'll continue into next year. So holding these funding costs in this relevant range is really important and we've got a nice tailwind. We just have to see it through.
Q: And, Tom, does that -- the visibility or the optimism of the pipeline, you said things are improving from maybe a customer basis. Just curious, what do you think's driving that as you get financials? Are the borrowers just maybe in better shape than they realized from a liquidity and cash flow perspective that's giving them optimism to think about M&A or new business plan investments? Just curious what you think's driving that across your markets. A: Tom Broughton - ServisFirst Bancshares Inc - Chairman, President, & Chief Executive Officer: I think the recession fears are receding, I think is the number one thing. And people are -- that have shelved projects for up to a year or looking at moving forward with projects, whether it's C&I or commercial real estate. And, one problem we've had with C&I loan demand, the profits have been so strong with C&I and Ag borrowers for the last couple of years, they've had a lot of [droughts out].
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
