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ServisFirst Bancshares(SFBS) - 2019 Q1 - Earnings Call Transcript
SFBSServisFirst Bancshares(SFBS)2019-04-16 00:09

Financial Data and Key Metrics Changes - The company reported annualized deposit growth of 10% for the quarter, which is above average compared to previous years [7] - Year-over-year loans grew by 12.3% and deposits increased by 18.5% [12] - The net interest margin decreased from 3.63% in the fourth quarter to 3.56% in the first quarter [12] Business Line Data and Key Metrics Changes - Loan growth was solid, with an annualized increase of 8% in the first quarter, compared to 5% in the same period last year [8] - Credit card income grew by 321,000from2018,whilemortgagebankingremainsasmallportionoftotalinterestincome[15]MarketDataandKeyMetricsChanges−ThebestgrowthindepositswasobservedinAtlanta,Tampa,Mobile,Huntsville,andPensacola[7]−Thecompanyhasastrongloanpipeline,whichisupsignificantlyfromthebeginningoftheyear[9]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonbuildingcorerelationshipsandhasseenstrongnewaccountopenings,particularlyinAtlantaandTampaBay[7]−Themanagementisactivelyhiringnewproducersandhasaddedproductionofficestosupportgrowth[10][14]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismaboutthefirstquarter′sperformance,notingitwasbetterthantypicalforthisperiod[6]−ThecompanyanticipatesthatdepositpricingmaynormalizewithexpectedFedrateincreases,butcompetitionindepositcostsremainsaconcern[25][26]OtherImportantInformation−Thecompanyaddedmanagersforpurchasecardsandmerchantservicesin2018,contributingtoayear−over−yearsalaryincreaseof321,000 from 2018, while mortgage banking remains a small portion of total interest income [15] Market Data and Key Metrics Changes - The best growth in deposits was observed in Atlanta, Tampa, Mobile, Huntsville, and Pensacola [7] - The company has a strong loan pipeline, which is up significantly from the beginning of the year [9] Company Strategy and Development Direction - The company is focusing on building core relationships and has seen strong new account openings, particularly in Atlanta and Tampa Bay [7] - The management is actively hiring new producers and has added production offices to support growth [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter's performance, noting it was better than typical for this period [6] - The company anticipates that deposit pricing may normalize with expected Fed rate increases, but competition in deposit costs remains a concern [25][26] Other Important Information - The company added managers for purchase cards and merchant services in 2018, contributing to a year-over-year salary increase of 1.1 million [14] - The projected tax rate for the remainder of 2019 is 21.3% [17] Q&A Session Summary Question: Follow-up on net interest margin guidance - Management indicated that the net interest margin is projected to be in the range of 3.60% to 3.65% for the remainder of the year, influenced by excess liquidity and deposit competition [24][25] Question: Impact of BB&T and SunTrust merger - Management noted that while there may be some disruption, they are not taking any special actions but continue to meet potential bankers in existing and new markets [28][29] Question: Update on credit quality and non-accruals - Management confirmed that there are no new impairments and they are prudently working on existing relationships [44][45] Question: Changes in borrower behavior regarding loan structures - Management stated that they have not observed significant changes in borrower preferences for loan structures [63] Question: Expectations for efficiency ratio improvement - Management believes there is room for improvement in the efficiency ratio due to recent hiring and back-office expenses [66]