ServisFirst Bancshares (SFBS) Q2 Earnings call transcript Jul 15, 2024

ServisFirst Bancshares recently held its second quarter earnings call, revealing a strong performance across various financial metrics. The call, led by CEO Tom Broughton, CCO Henry Abbott, CFO Kirk Pressley, and EVP & COO Rodney Rushing, highlighted key themes and trends that underscore the bank's robust financial health and growth prospects.

Strong Deposit Growth and Loan Demand

One of the standout highlights from the call was the strong deposit growth of 16% annualized for the quarter. This growth was unusual, as ServisFirst typically sees flat deposits in the second quarter due to April tax payments. However, the company reported solid deposit growth in the last two months of the quarter, indicating a solid pipeline of deposits. This trend is expected to continue, reflecting the bank's ability to attract new customers and retain existing ones.

The loan growth was also impressive, with a 15% annualized increase. This growth was attributed to both the level of loan demand and the profile of credit quality. ServisFirst saw many customers delay projects after rates had risen significantly in a short period, but they are now seeing these customers borrow again, leading to an increase in C&I loans. The loan pipeline has also increased by 10%, signaling a strong pipeline of loan opportunities for the bank.

Strategic Expansion and Market Opportunities

ServisFirst has been expanding its footprint, adding new correspondent banking relationships and entering new markets. The bank now has 377 current correspondent bank relationships and has added 14 new bankers in the quarter, including in the $4.5 billion deposit market in Auburn-Opelika, Alabama. These strategic moves are expected to contribute to the bank's growth and expansion, positioning it well for future opportunities.

Financial Performance and Credit Quality

ServisFirst's financial performance has been strong, with net income up 17% annualized and a margin increase of 13%. This growth can be attributed to the bank's strong liquidity and its ability to acquire new customers. The bank's credit quality also remains strong, with non-performing assets stable quarter-over-quarter, and annualized net charge-offs at 8 basis points, down from the previous year.

Looking Ahead

ServisFirst's outlook for the remainder of the year is optimistic, with a focus on growing the balance sheet and earnings. The bank expects to maintain its strong capital ratios and liquidity, positioning it well for future growth opportunities. The bank's strategic expansion into new markets and its focus on loan demand and credit quality are expected to drive continued growth and success.

In conclusion, ServisFirst Bancshares' second quarter earnings call underscored the company's strong financial performance and strategic expansion efforts. The company's focus on deposit growth, loan demand, and credit quality, along with its strategic expansion into new markets, positions it well for continued growth and success.