ServisFirst Bancshares, Inc.

and welcome to the Service First Bank Shares Incorporated Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ed Woody, Controller. Please go ahead, sir.

Good afternoon, and welcome to our Second Quarter Earnings Call. CEO Tom Broughton will share his thoughts on the quarter, and then we will hear from Henry Abbott, our Chief Credit Officer, and Bud Foshee, Chief Financial Officer, for their detailed reviews. We will then take your questions. I'll now cover our forward-looking statements disclosure. Some of the discussion in today's earnings call may include forward-looking statements. Actual results may differ from any projections shared today due to forecasts described in our most recent 10-K and 10-Q filings. Forward-looking statements speak only as to the date they are made, and service first assumes no duty to update them. With that, I'll turn the call over to Tom.

Thank you, Ed, and thank you for joining our second quarter conference call. We were very pleased with the quarter, and before I talk a little bit about our results, I'll give you a little bit of background on the Southeast economy. And again, we, in our conference call, we won't read to you off our press release. We assume you can read it yourself. So if you need our call, our practice is not to read from the press release. In the southeast, we do continue to see lower unemployment compared to the rest of the country. And we hear from all of our customers as employers that they cannot find the needed workers in almost all industries. It's not just fast food. It's almost every industry. So hopefully, as unemployment benefits expire, we will see job openings filled. We do, in the Birmingham area, for example, of large metro areas, we have the lowest unemployment rate in the United States at 2.2%. So it's pretty much a full employment economy in many areas of the southeast. So the economy is robust and continuing to improve greatly. I was talking with a customer last night. We had an open house. our new office in Full Walton Beach, Florida. He said, you know, we can't keep boats in inventory. And, you know, he was wondering why, you know, why are people spending so much money? And I said, well, the government says it's stimulus money. He said it can't be a couple of $1,200 stimulus checks. So it is a good question. His theory is that people are just, after the pandemic, just said, you know, I want to enjoy the things I've always wanted to enjoy. And the pandemic made people spend money. So it would be interesting to see as we move forward, how the economy moves along. In talking about our results, we saw loan growth surge to a record level in the quarter. Line utilization is still well below year-end 2019 levels. The line utilization has not improved, and the customers continue to report that supply chains are still disrupted. You know, I've been saying that we thought we would see improvement in line utilization this year. It has not happened yet. From talking with customers, the Fed acts like the supply chains are going to be repaired in just a few months' time, but from talking with customers, we don't see that happening. It may be towards next year before we see substantial improvement in line utilization. We're glad we had some organic loan growth to fill the gap. We do We expect to see a second half in 2022 tailwind from construction line draws. We have a number of projects underway where we expect substantial draws. And, of course, we do expect line utilization just to improve from inflationary effects of higher prices for steel, lumber, and many other raw materials. So that will be helpful as well. Our loan pipeline is down 10%. from April, but it's still 77% higher than it was at year-end 2020, and it's at the second highest level ever. Our loan growth is broad-based and is centered around commercial real estate and commercial industrial loans. We do continue to see deposit inflows, though they are more the normal historical growth rates of the mid-teens for our bank rather than the large surge in deposits we saw during the pandemic. Our liquidity continues to build to historic levels despite the record loan growth in the quarter. You know, we were very pleased with asset quality. You know, as Henry will talk about in a few minutes, we, you know, had negative charge-offs in the quarter, and, you know, I thought we should have a celebration, and Henry has asked that we postpone the celebration until we can see what happens when we have the withdrawal of government stimulus to whether it will lead to some uptake in future losses in some loan categories. But personally, I don't see many businesses struggling. It's up for some that are poorly managed. And now we'll turn it over to Henry Abbott, our chief credit officer, to give a little bit more detail on our credit outlook. Henry?