ServisFirst Bancshares, Inc. Q1 FY2025 earnings call

• Loan growth: 9% annualized net of payoffs, loan pipeline up 10% from January, projected loan payoffs similar to prior quarter. • Deposit growth: Strong first quarter deposit growth, mostly municipal and correspondent, aided by COVID funds. • New markets: Added 4 new producers in first quarter, newer markets hitting goals, discussing potential new markets. • Credit update: Loan growth strong, charge-offs 19% annualized (higher than desired), NPAs rose but 70% due to specific relationships, Oreo reduced to under $1M. • Financial update: Net income $63.2M, EPS $1.16, pre-provisioned net revenue $85.7M, total assets grew ~$1.3B, loan growth spread evenly, core deposits growth, tangible book value up 3.13%, net interest income $220M, provision expense down due to reserve release, noninterest income down 7% but normalized up 7%, noninterest expense down $789K vs Q4 2024.

Loan side: Solid growth net of payoffs with 9% annualized growth in first quarter, loan pipeline up 10% from January, projected loan payoffs roughly same as prior quarter. Deposit side: Strong deposit growth in first quarter, atypical for first quarter, mostly in municipal and correspondent deposits, aided by COVID funds. Absolute terms: Loan balances grew about $281 million, total assets grew nearly $1.3 billion from December 31st.

• Anticipate over $1.9 billion in asset repricing over the next twelve months. • Expect noninterest income to pick back up in the second quarter of 2025. • Noninterest expense expected to be in the $46 million to $46.5 million range for the remainder of the year, before expansion efforts.

• Economic uncertainty related to lending decisions. • Potential impact of tariffs on certain industries. • Uncertainty in the economic environment affecting credit quality.

Q: Stephen Scouten asks about deposit trends for the rest of the year given strong first quarter.

A: Tom Broughton says not to project, some municipal deposits may run down, correspondent balances leveled off since first quarter.

Q: Stephen Scouten asks about NIM trajectory.

A: David Sparacio says cash balances are already coming down, expect them to continue to come down over next few months.

Q: Steve Moss asks about loan growth and pipeline.

A: Tom Broughton says loan growth is steady in smaller chunks, pipeline up, no big projects yet.

Q: Steve Moss asks about loan pricing.

A: Tom Broughton says pricing has been steady in high sixes, not happy with current pricing.

Q: Steve Moss asks about nonperformers.

A: Henry Abbott says nonperformers are medical-related, one is a hospital and a doctor with cash flow issues but good collateral.

Q: David Bishop asks about liquidity and NIM pressure.

A: Tom Broughton and David Sparacio discuss municipal deposits being higher cost, expect them to exit, and liquidity being deployed to improve income.