ServisFirst Bancshares, Inc.

Greetings and welcome to the Service First Bank Shares fourth quarter and full year earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your cell phone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Davis Mange. Thank you. You may begin.

Good afternoon. and welcome to our fourth quarter earnings call. Today's speakers will cover some highlights from the quarter and then take your questions. We'll have Tom Broadman, our CEO, Henry Abbott, our Chief Credit Officer, and Ed Woody, our Interim CFO. 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 factors described in our most recent 10-K and 10-Q filings. forward-looking statements speak only at 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, Davis. Good afternoon, and thank you for joining our fourth quarter conference call. We were really pleased with the quarter, and all of our trends turned out to be positive. You know, if we recap the year, we ended with earnings per share, deleted earnings per share, up 10% over 2023. And our net interest margin did climb steadily from 2.57% in the fourth quarter of 2023 to 2.96% in the fourth quarter of 2024. And also our book value, more importantly, grew 12% year over year. So in any event, we're really happy how the year ended up and it got better as the year went on. And, you know, a year ago on the call, I said that loan losses were low and would probably normalized. And here we are a year later, and the loan losses are still low, and I'm still saying they're going to normalize. But we are, you know, Henry will talk about credit in a few minutes, but we don't really see any industries with problems. We just see weak companies that have problems and are used to the borrowers we see that we have to deal with. So on the loan front, we were concerned about We knew we had a pretty good loan pipeline for the fourth quarter, but we were concerned about payoffs in the fourth quarter. Now, loan payoffs turned out to be about 40% of our gross loan growth. So we had a net loan growth of $268 million for the quarter. And I will say, not all those payoffs were a bad thing. About half those Payoffs were low fixed rate loans, so we're glad to see those payoffs. But we will have some more payoffs in the first quarter, but at a much lower level than we saw in the fourth quarter, we believe. So from a C&I loan growth standpoint, we did see some. It was encouraging, and we saw the increase in loan line utilization from 36.7% to 38.4% quarter over quarter. Our loan pipeline increased $150 million after the election, which is very positive. We do expect loan growth to normalize more over the course of 2025. I will mention our two new markets, Memphis and Auburn, Memphis, Tennessee, and Auburn, Alabama, are making very good progress. And they've been working out of their cars until the last couple of months. So they've just now got an office. So we are proud of how they're doing and optimistic for their future. I think we'll do really well and have great leadership in both of those cities. We did add four new producers in the fourth quarter. It's not common to add many in the fourth quarter. You usually see them in the first half of the year. So in any event, we are pleased with those markets. From a deposit standpoint, we did see very nice deposit growth in the quarter, including our non-transparent deposits. We did see some good growth in our correspondent channel with year-over-year growth in 28% in funding. Now we have 378 banks in 30 states that are correspondent customers. We added 24 new banks in 2024. And 65% of the funding comes from banks that are settled with us or settlement banks. So that was very much a positive. So that's a quick overview and I'm going to turn it over to Henry now to discuss credit in more detail.

Thank you, Tom. I'm extremely pleased with the bank's performance in 2024 and more specifically in the fourth quarter. The bank's loan portfolio continued to perform at an exceptional level and our commercial-focused business model continues to outform our peers. As we exited the COVID stimulus era, our bank was at historical lows for most credit metrics a few years ago, and remarkably, we've been able to continue to stay at or near these historic low figures, punctuated by a very strong 2024. Annualized net charge-offs for the fourth quarter were nine basis points, and we had nine basis points in charge-off for the entire year. This is less than the 10 basis points we had in 2023. I'm very proud and pleased with these minimal charge-offs that we experienced in 2024. Our ALLL to total loans was stable throughout the course of 2024, and we ended the year with an allowance for loan loss reserve to total loans of 1.30. Non-performing assets to total assets or 26 basis points, which is generally in line with the results for the third quarter. We continue to proactively monitor the portfolio to ensure we appropriately understand the potential risk and act accordingly as well as conservatively. 2024 was a very strong and stable year from a credit perspective, and with the new administration in place in Washington, we look forward to growing and prospering in 2025 and beyond. Ed, I'll turn it over to you.