ServisFirst Bancshares, Inc. Q4 FY2024 earnings call

• Loan and Credit: Loan portfolio performed exceptionally, no significant industry problems seen, just weak companies. Loan pipeline increased $150 million post-election. New markets in Memphis and Auburn making progress, added 4 new producers in Q4.
• Net Interest Income: Net interest income increased 28% annualized. Margin rose to $123.2 million in Q4 from $115.1 million in Q3. Earning asset yields down 25 bps, interest bearing liability rates down 46 bps.
• Non-Interest Income: Deposit service charges up, mortgage income up, credit card net revenue slightly down. Expenses: Core expenses directed to $44.8 million per quarter, efficiency ratio improved. Tax rate affected by a positive adjustment but expected 19% overall.

Loan Performance: Net loan growth was $268 million for the quarter. Net interest margin climbed from 2.57% in Q4 2023 to 2.96% in Q4 2024. Book value grew 12% year-over-year. Deposit Performance: Strong deposit growth, including non-interest bearing deposits. Correspondent channel had year-over-year funding growth of 28% with 378 banks in 30 states. Credit Metrics: Annualized net charge-offs for Q4 2024 were 9 basis points, full-year charge-offs 9 basis points. ALLL to total loans was 1.30%, non-performing assets to total assets 26 basis points.

• Expect loan demand to continue improving and margins to improve a bit. Anticipate rate cuts over the next year to aid project feasibility. Loan growth to normalize more in 2025.

• Potential for higher loan losses if weak companies/industries deteriorate further. Impact of interest rate changes on funding costs and loan demand. Uncertainty around resolution of non-performing assets.

Q: Stephen Scouten from Piper Sandler asked about deposit betas and NIM trajectory.

A: Tom Broughton discussed disciplined interest rate expense management and expectation of rate cuts aiding projects.

Q: Steve Moss from Raymond James asked about loan growth and margin trends.

A: Tom Broughton and Ed Woodie talked about inconsistent loan growth, margin around mid-2.90%s due to excess liquidity, and fixed rate loan repricing.

Q: Dave Bishop from Hovde Group asked about loan originations and credit risks.

A: Tom Broughton and Henry Abbott discussed cyclical nature of correspondent banking, potential loan loss spikes, and weak borrowers in various industries