ServisFirst Bancshares, Inc. (NASDAQ:SFBS) Q3 2019 Earnings Conference Call - Final Transcript

Oct 21, 2019 • 05:15 pm ET


ServisFirst Bancshares, Inc. (NASDAQ:SFBS) Q3 2019 Earnings Conference Call - Final Transcript


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Thomas Ashford Broughton

they're going to bond financing. So the flip side of lower interest rates is that people can go to permanent market with some things that you can't do when rates are higher. So good for our clients. Some of those projects will be back. Most of those projects will be backfill where [Phonetic] new projects, they will start construction on. So we typically have good closings in the fourth quarter and we expect that there is no reason, we don't expect the same this year. We did add six new bankers in the third quarter. We added a great team in Charleston, three of them -- three bankers and one each -- three Florida cities. So we've hired 20 new bankers year-to-date, just an outstanding group of people of new bankers, where you have excluding trainees, we have 139 bankers total today. We're really proud of the new people we've added this year, we've had some substantial upgrades in staff this year. The numbers don't reflect the people that we've added this year. They certainly will in 2020 and 2021. And we've added significant new overhead for these new hires. I mentioned earlier, we do have a very strong deposit growth, is 17% annualized for the quarter and 19% year-over-year. The growth was very broad based this quarter with seven of our 10 regions have an outstanding deposit growth.

We do have a lot of flexibility to manage our margin unlike many other banks. We have -- we've never accepted broker deposits or used a listing service and we have -- never had a Federal Home Loan Bank advances. So we have substantial excess liquidity. We've been trying to manage it down, but it is -- it is a bit of a champagne problem and that's a good thing to have. One new initiative Bud is going to talk about for 2020 it will be expense control is something we've never focused on, but we think is a good time to do so. We will limit hiring to revenue production personnel in 2020.

So we're also going to look at expense control of vendor cost and look at it -- that all of our fees, and costs providing services to our clients. So, I'll now turn it over to Bud to get into more detail on the numbers.

William M. Foshee

Thanks, Tom. Good afternoon. Net interest margin did decrease in the third quarter. It went from 3.44% in the second quarter to 3.36% in the third quarter. Couple of factors, average excess funds increased by $269 million in the third quarter, also LIBOR-based loans, 30-day LIBOR, we have $879 million in loans tied to that index that rate is moving ahead of Fed rate cuts. It decreased 17 basis points from June 30th to August 1st, decreased 19 basis points from August 2nd to September 18th and has since decreased about 15 basis points.

On a positive note, we've lowered deposit rates after the Fed cut rates in July and September. The