ServisFirst Bancshares Q1 2025 Earnings Report

ServisFirst Bancshares EPS Results

• Actual EPS: $1.16
• Consensus EPS: $1.18
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: $0.94

ServisFirst Bancshares Revenue Results

• Actual Revenue: $131.83 million
• Expected Revenue: $134.13 million
• Beat/Miss: Missed by -$2.30 million
• YoY Revenue Growth: N/A

ServisFirst Bancshares Announcement Details

• Quarter: Q1 2025
• Date: 4/21/2025
• Time: After Market Closes
• Conference Call Date: Monday, April 21, 2025
• Conference Call Time: 5:15PM ET

ServisFirst Bancshares (NYSE:SFBS) operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.

ServisFirst Bancshares Q1 2025 Earnings Call Transcript

Key Takeaways

• Reported net income of $63.2 million, diluted EPS of $1.16, with a return on average assets of 1.45% and return on common equity of 15.63% in Q1 2025.
• Achieved 9% annualized loan growth net of payoffs, driven by broad-based expansion across existing and new markets, with the loan pipeline up 10% from January.
• Deposit balances saw atypical Q1 strength—particularly in municipal and correspondent deposits—boosting liquidity but expected to normalize over the remainder of the year.
• Credit metrics included charge-offs at 19 bps, an increase in ALLL in dollars but a slight decline in the ALLL-to-loans ratio to 1.28%, and NPAs rising due to two real-estate relationships now being worked through the NPA cycle.
• Maintained expense discipline with noninterest expense flat year-over-year, an efficiency ratio below 35%, and guidance of $46–46.5 million per quarter for the rest of 2025, excluding any expansion hires.

Presentation

[Operator]

As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Davis Maines, Senior Vice President.

[Operator]

Thank you, Davis. You may begin.

[Davis Mange, Senior Vice President & Director of Investor Relations at ServisFirst Bancshares]

Good afternoon and welcome to our first quarter earnings call. We will have Tom Broughton, our CEO David Spiracio, our CFO Henry Abbott, our Chief Credit Officer and Rodney Rushing, our Chief Operating Officer, covering some highlights from the quarter and then we'll 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 factors described in our most recent 10 ks and 10 Q filings.

[Davis Mange, Senior Vice President & Director of Investor Relations at ServisFirst Bancshares]

Forward looking statements speak only as of the date they are made and Service First assumes no duty to update them. With that, I'll turn the call over to Tom.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Thank you, Davis. Good afternoon and thank you for joining our first quarter conference call. We felt we'd had a great start to the year, and I'll give a few details followed by a credit update from Henry Abbott. After Henry, David Sparecia will give us a financial update and this will be David's first quarterly conference call since joining us several weeks ago. We are pleased to have David with us today.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Ed Woody, our Controller acted as Interim CFO for the last several months and did a great job of getting us through year end and the 10 ks filing and we appreciate Ed's hard work. On the loan side, we were pleased to see very solid growth net of payoffs for the first quarter with 9% annualized growth. As often the first quarter is down or flat in the loan book, so that was very solid start to the year. The loan pipeline is up 10% from January and we do still have some projected loan payoffs roughly the same as in the prior quarter. On the deposit side, we saw strong deposit growth in the first quarter, which is atypical of what we usually see in the first quarter.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Most of the growth was in municipal and correspondent deposits. We still see COVID funds working their way through the government system, which has aided municipal deposit growth. We did exit most non core deposit relationships in the first quarter of last year. On the new markets, we did add four new producers in the first quarter around different markets. We continue to be pleased with the progress of our newer markets and they are all hitting their goals.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

We are in discussions with several potential new markets that could happen later this year. So, all in all, I'd like to say that I think it's business as usual. So far, we've seen improvement and things are going according to plan. So, I'll now turn it over to Henry Abbott for a credit update.

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

Thank you, Tom.

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

The bank got off to

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

a strong start with the loan growth Tom previously mentioned. We continue to see good loan opportunities for both new and core markets as businesses are looking to expand or in other cases, we see new opportunities due to changes with the current bank from pending mergers or other market disruption. While there is plenty of uncertainty related to the economic environment, we want to continue to lend through this cycle to high performing businesses and long time established players in our markets. Charge offs were slightly higher than we would have liked an annualized rate of 19 basis points for the first quarter. This figure is higher than the prior few quarters, but more in line with pre COVID benchmarks.

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

The overwhelming majority of the loans that were charged off were individually analyzed and impaired in prior quarters, so we charged off previous impairments based on updated information. While we did charge down some of these loans, I'm pleased to say we did grow our ALLL on a dollar amount for the quarter, but given the loan growth we previously discussed, ALLL to total loans did slightly decrease from 1.3 to 1.28 quarter over quarter. Our NPAs rose in the first quarter, but roughly 70% of the increase was related to two specific relationships. These relationships are in two different markets and both are real estate secured, but neither is related to speculative AD and C or income producing CRE. We continue to try to work loans through the NPA cycle as quickly as we can.

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

And I'm pleased to say, we even reduced our OREO to under $1,000,000 with a $1,750,000 reduction from year end. We took aggressive actions where needed in the first quarter on a handful of credits, which slightly impacted our earnings, but hopefully set us up for success in the remaining quarters of 2025. We continue to be conservative in our underwriting and diligent in our credit servicing. With that, I'll pass it over to David.

[David Sparacio, CFO at ServisFirst Bancshares]

Thank you, Henry. Good afternoon. I will echo the comments that we feel the quarter was a solid start to 2025. We reported net income of $63,200,000 diluted earnings per share of $1.16 and pre provision net revenue of $85,700,000 This represented a return on average assets of 1.45% and a return on common equity of 15.63%. Net income grew more than $13,000,000 or 26% from the first quarter of twenty twenty four.

[David Sparacio, CFO at ServisFirst Bancshares]

Compared to the fourth quarter of twenty twenty four, net income was down slightly by about $2,000,000 or 3%, mostly driven by a reduction in day count and changes in our effective tax rate. In line with the loan growth referenced by both Tom and Henry, we grew our total assets by nearly $1,300,000,000 from December 31 and ended the quarter at $18,600,000,000 This is a 7% growth from December 31 and a 19% growth from 03/31/2024. Period end cash balances at the Fed grew by about $959,000,000 and ending loan balances grew about $281,000,000 This loan growth was spread evenly throughout our portfolio with new loan yields of 6.81% and about an even split between variable and fixed rates. We ended the quarter with just slightly less than 49% of our loan book being variable rate based. We continue to see core deposit growth in our loan to deposit ratio stands at 89% with our adjusted loan to deposit ratio including correspondent Fed funds purchased of 77%.

[David Sparacio, CFO at ServisFirst Bancshares]

As I mentioned, our Fed balances increased significantly during the quarter about three eighty million dollars on average balances versus the fourth quarter, which certainly helps our liquidity, but hurts our percentage margin calculation. Additionally, we grew our tangible book value by 3% since last quarter and 13% from the same quarter a year ago, ending at $30.31 per share. We continue to be well capitalized with a common equity Tier one capital ratio of 11.4% and risk based capital ratio of 12.9% for the quarter. On net interest income for the quarter, was $123,500,000 which is $21,000,000 higher than first quarter twenty twenty four and just slightly higher than fourth quarter twenty twenty four. I will remind you that in first quarter of twenty twenty four, we had one extra day due to leap year and fourth quarter twenty twenty four, we had two extra days when compared to first quarter twenty twenty five.

[David Sparacio, CFO at ServisFirst Bancshares]

We feel good about our dollar margin given the reduction in day count. The margin percentage was diluted this quarter by our higher than normal cash balances at the Fed. This excess cash diluted our margin by six basis points this quarter. Over the next twelve months, we will have $1,500,000,000 of projected cash flow from fixed rate loans at a rate of 4.76% and projected pay downs of mortgage backed securities of $100,000,000 at the rate of 2.5%. In addition, with tax and audited statements due soon, we anticipate loan repricing opportunities.

[David Sparacio, CFO at ServisFirst Bancshares]

In 2024, total repricing was $357,000,000 Year to date for 2025, total loans repriced were $60,000,000 and $95,000,000 are pending. Thus, we anticipate over $1,900,000,000 in asset repricing over the next twelve months. Our provision expense was down this quarter due to the release of the reserve previously marked for hurricane losses. We have not seen any hurricane loss materialize. So when we unwound that and updated our CECL model, the result was a provision expense of $6,600,000 which is up $2,100,000 from first quarter twenty twenty four and $900,000 from fourth quarter.

[David Sparacio, CFO at ServisFirst Bancshares]

The allowance for credit losses ended the quarter just over $165,000,000 which is an increase of about $576,000 from fourth quarter, primarily due to the growth in the loan balances. As Henry mentioned, our allowance ratio dropped from 1.3% of total loans in the fourth quarter to 1.28% in the first quarter of twenty twenty five. I will point out that we were at 1.28% in the second quarter of twenty twenty four before the general hurricane reserve was established. So this is just a normalization of our allowance level. On non interest income, in first quarter of twenty twenty five, we were down about 7% versus first quarter twenty twenty four, but this decline was driven by a one time BOLI death benefit recorded in 2024.

[David Sparacio, CFO at ServisFirst Bancshares]

From a normalized rate, we saw an increase of about 7% in non interest income versus first quarter of twenty twenty four, primarily driven by higher service charges on deposit accounts. Versus fourth quarter twenty twenty four, non interest income was down 5 and $26,000 due to a lower day count and seasonal declines in credit card and mortgage activity. We expect non interest income to pick back up in second quarter of twenty twenty five. During the quarter, our non interest expense was down $789,000 versus fourth quarter twenty twenty four and flat versus first quarter twenty twenty four. This is a testament to our expense discipline as we have experienced growth of 5% in our number of employees since first quarter twenty twenty four.

[David Sparacio, CFO at ServisFirst Bancshares]

And first quarter always sees a seasonal spike in payroll taxes versus fourth quarter. Payroll expense was down about 5% versus fourth quarter due to the true up of 2024 incentive plan payouts. This incentive reduction was offset by a one time operational loss we experienced in the first quarter. This resulted in an efficiency ratio below 35%, which we are very proud of. For the remainder of the year, we expect our non interest expense to be in the $46,000,000 to $46,500,000 range, obviously fluctuating based on our expansion efforts that Tom mentioned earlier.

[David Sparacio, CFO at ServisFirst Bancshares]

For the first quarter, our pre tax net income was relatively flat compared to fourth quarter twenty twenty four, which we view as a win considering the fewer dates. Versus the same quarter last income is up over $18,000,000 or 30%. We continue to focus on organic loan and deposit growth priced both competitively and profitably. On our income tax provision, we saw an increase driven by less credits. Our 2024 effective tax rate, which was about 18% increased in the first quarter to about 20%, which is the expected run rate for the remainder of 2025.

[David Sparacio, CFO at ServisFirst Bancshares]

Now, I will turn it back over to Tom for additional comments.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Thank you, David. And I'm sure you've all seen the eight ks we filed a little bit ago after the market closed regarding Henry's career change. I would like to thank Henry Abbott for all his contributions to our strong credit culture and we wish him well in his next chapter of his business career. And I know Rodney wants to make Rodney Rush wants to make a few comments as well about Henry.

[Rodney Rushing, Executive VP & COO at ServisFirst Bancshares]

Thanks, Tom. And also, I'd like to thank Henry for the hard work you and all your team put in and accomplished over the last few years. As you make this transition to your next business endeavor, I want to especially thank you for making the transition a smooth, seamless one, Agreeing to work over the next few weeks full time and being in a consulting role with Jim has made this much easier for all of us. And thank you again and good luck. With your work ethic, I am sure you will be successful in whatever you do.

[Rodney Rushing, Executive VP & COO at ServisFirst Bancshares]

With that, I'll turn it

[Rodney Rushing, Executive VP & COO at ServisFirst Bancshares]

back to Tom.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Thank you, Rodney. And I think we'll now open it up for questions.

[Operator]

Thank you. We'll now be conducting a question and answer session. Our first question comes from the line of Stephen Scouten with Piper Sandler. Please proceed.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Yes, good afternoon everyone. Congrats on a great quarter here. I know you mentioned some influence from municipal deposits, but just kind of curious how you think or how you're thinking about deposit trends for the rest of the year given such a strong start here in the first quarter?

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Yes. Stephen, I wouldn't be I wouldn't project that out the next three quarters.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

I don't

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

think I think some of that is probably on the correspondent side. Rodney can address that. But I think some of the municipal deposits will probably run down as the course of the year goes on. Rodney, you want Yes.

[Rodney Rushing, Executive VP & COO at ServisFirst Bancshares]

For the first quarter, correspondent was up a little over $430,000,000 in total fundings from year end. And in the first quarter, correspondent balances tend to grow and accumulate head into the tax season. And we have seen that level off since then. So but that's where a large chunk of it came from.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Okay. So if I think about that, I mean, that should kind of normalize but still continue to grow. And when they would we would be fair to assume kind of cash balances move down in likewise fashion throughout the year and kind of the NIM maybe pulls back up as balance sheet remixes. Is that the right way to think about the trajectory of the NIM from here?

[David Sparacio, CFO at ServisFirst Bancshares]

Yes, Stephen, this is David Sparaccio. Yes, we're already actually seeing that come down a bit, the cash balances. We track them on a daily basis and we're seeing some of that retract as well. So I mean, you could see the average balances are not nearly as high as the period end balances were. So we expect that those cash balances to come down over the next few months.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Okay, great. And then just last thing for me, just kind of curious, I mean, obviously, loan growth was fantastic here in the quarter. And just anything kind of anecdotal that you're hearing from customers, if there's been any sort of change in the pipeline or demand kind of post April 2 and a little bit of this uncertainty that the market seems to be overwhelmed by?

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

I think there may be a bit of a slowdown, Stephen, but Main Street is a heck of a lot more durable than Wall Street. And I think the effect is it helps some companies, it hurts some companies. If you're a Porsche dealer and they make nothing in The United States, then you probably are pretty concerned right now. We don't like any Porsche dealers, I don't think to my knowledge. If you're a Ford dealer, you're feeling pretty good about the 80% of their models assembled and made here, parts and all.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

So we just don't see certainly, it's not the commercial real estate transactions need short term interest rates to come down to improve the environment there a bit. But we think that what we need to see is a combination of asset repricing and growth at the same time and that will get us to where we need to be in terms of growing our earnings back to more normal historical levels profitability in terms of return on assets or return on equity that we enjoyed. So we don't at this point see any significant impact from tariffs. I could be naive, but things like that that get a big carry on about it on CNBC all day long, but people on Main Street don't watch CNBC. They're running their companies and businesses.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

And obviously, there's a certainly a buy ahead aspect that people fear inflation. They tend to spend money now. So there I think there's many positive benefits as negative benefits at this point in time, Stephen. I'm just we don't see anything odd from our correspondent banks either. There's nothing there we have three ninety correspondent banks.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

So we really capture a pretty good cross section of the Southeast United States plus more. So I don't think we'd be hearing things and I think everything is we don't see anything in our card portfolio, credit card portfolio, anything odd. We don't everything, even the seems like the senior housing is healing up a bit. Obviously, if you look at the cost of new senior housing and look at what you buy, there are people out buying senior housing products projects today, the existing ones, because they're substantially cheaper than building new. So people are looking to the future a little bit.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

It had nailed up, don't get me wrong, but it's healing a bit. So, I'm reasonably optimistic about the balance of the year, Stephen.

[Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies]

Great. I like it. Appreciate all the color guys. Thanks for the time.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Steve Moss with Raymond James. Please proceed.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

Hi, good afternoon.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Hey, Steve.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

Tom, just following up on loan growth here. The pipeline is up. You had a good quarter production.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

You're still thinking like low double digits could be a good pace?

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Yes, we do. Some of that we still have some payoffs. I was kind of hoping they would go away after the first quarter, but some of it seems like they I guess not all of them paid off that I had thought would pay off in the first quarter. But we are we're not seeing any big projects. All of our growth we've had so far this year is in smaller chunks, which is good.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

And we're seeing nice steady granular growth in the loan portfolio. So we feel good about and it's broad based. This tends to be in every market. Of course, Florida is by far probably the best, but we're seeing a lot of opportunity in a lot of places. So I think I don't know, Rodney, do you have anything else you want

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

to add there?

[Rodney Rushing, Executive VP & COO at ServisFirst Bancshares]

No. It's been steady from our correspondence. I mean, the number of participation opportunities we're seeing has just we've not had a spike and we've not had a decline. It's been steady for the first quarter and we've seen several over the last two or three weeks.

[Rodney Rushing, Executive VP & COO at ServisFirst Bancshares]

I mean, it just we've not seen the slowdown in the projects from

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Again, I don't I think the tariff effect it's been nil at this point in time.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

Right. Okay. No, that's fair. That makes sense. And then in terms of just kind of curious, loan pricing for the quarter on new originations was $684,000,000 I guess, and renewals.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

Just curious, has that gotten tighter here as the quarter has gone on? Or are you kind of still holding, you think, in the high 6s on originations? Just kind of think about that roll on, roll off dynamic with loans repricing going forward.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

I think it's been the same. It's already too tight. Don't get me wrong, Steve. I mean, I'm not happy with the pricing we're achieving today. I think it should be higher given, but obviously people are projecting that we're going to see a downturn in rates and at some point in the year.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

So it's been steady at those levels.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

Okay. And then the other question for me here, just on the operating expenses, 46,000,000 to 46.5 for each quarter for the rest of the year. Is that before the potential of new hires?

[David Sparacio, CFO at ServisFirst Bancshares]

Yes, that is before any potential new hires. So I had to comment in there. Tom talked about expansion efforts. We continue to evaluate any new producers out there. And so if we hire additional, that would add to that baseline.

[David Sparacio, CFO at ServisFirst Bancshares]

Yes.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Okay. Course, we continually

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

have a doge program ongoing in terms of evaluating effectiveness of our producers. So it's you always you get some growth and then you have some reductions in force as well, Steve, so.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

I hear you I hear you there, Tom. Okay. Sounds good. And last one for me, just on the non performers. I know you guys said they were not income producing and not speculative A, B and C.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

Just kind of curious what kind of industries they were to? Or any additional color you can give around those nonperformers that were added?

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Go ahead, Andrew.

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

Yes. I mean, both are, I guess, I'd say kind of medical related in very different markets. But once again, those are C and I operating, not just income producing properties.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

Okay. Like senior assisted living or kind of curious how to

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

One's a hospital.

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

Yes, one's

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

a hospital and then one's a doctor.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

And the doctor is just he's just a doctor that's got cash flow issues, but a lot of assets. Yes. He's overextended, but we've got really good collateral and feel good about our collateral with him. He's just you only say about doctors, Steve. They get overextended.

[Steve Moss, Director - Banking & Arlington at Raymond James Financial]

That's good, Tom. I'm going to take a pass on that one. But I appreciate all the color here and thank you very much. Nice quarter.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Thank you.

[Operator]

Thank you. Our next question comes from the line of David Bissett with Hovde Group. Please proceed.

[Henry Abbott, Chief Credit Officer at ServisFirst Bancshares]

Hey, good evening gentlemen. Hi, Dave.

[David Bishop, Director at Hovde Group]

Tom, Dave, quick question. You sort of alluded to the influx of the liquidity. I think it was six basis points of NIM pressure. I appreciate the data as a supplement. Looks like your cost of interest bearing deposits were 3.42%, two basis points above the quarterly average.

[David Bishop, Director at Hovde Group]

Is that reflecting some of the pressure from that muni inflows? And just how much do you expect some of that is there a way to frame the dollar inflow that could flow out over the next couple of quarters?

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

The two funds, the largest influx was municipal and correspondent and they're higher cost funds. Is that what you mean, Dave? I mean, they're higher cost of funds. So it doesn't it's not like we have repricing of our existing deposits or anything to that. Is that where you're going with it, Dave?

[David Bishop, Director at Hovde Group]

Yes. Just sort of trying to get a sense as those muni and correspondent funds sort of trickle about out, can we expect to see that number start to move south, so to speak, that $3.42, where do you see that sort of trending over the next couple of months or so?

[David Sparacio, CFO at ServisFirst Bancshares]

Yes. I would expect, as Tom said, we don't expect that municipal deposit base to stick, right? And so we expect it to exit eventually. And so when it does that, it will drop the cost of deposits down because it is higher yielding for that bucket, right?

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Given our ongoing excess liquidity, we're always we are looking for additional levers we can pull to try to improve income without undue increases in risk. But we might deploy some liquidity if we can find some avenues to do so, Dave. So we're looking I don't it won't be huge amounts of effect on net income, but it will be a little bit. So when you got that much cash, every little bit helps.

[David Bishop, Director at Hovde Group]

Got it. And then Dave, I think you gave some doubt about the amount number of loans you expect to reprice over the next twelve months. If I just go through that again real quick. Thanks.

[David Sparacio, CFO at ServisFirst Bancshares]

Yes. We have about $900,000,000 right now that's going to reprice in a year or less. And the weighted average rate right now is 4.76% and that's on the fixed rate book. On the variable rate book, we have about $2,200,000,000 that's going to reprice in the next year or less and the weighted average rate on that is 7.52% right now.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

And then we've got the cash flow on fixed rate loans as The cash flow on fixed rate loans is I mean and paid ounces of $1,000,000,000 4 point 7 6 billion dollars

[David Bishop, Director at Hovde Group]

Got it. Perfect. Appreciate the color.

[Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares]

Okay, Dave. Thank you.

[Operator]

Thank you. There are no further questions at this time. With that, that concludes today's teleconference call. You may disconnect your lines at this time. Thank you everyone for your participation.

Participants

Executives

• Davis Mange, Senior Vice President & Director of Investor Relations
• David Sparacio, CFO
• Rodney Rushing, Executive VP & COO

Analysts

• Thomas Broughton, Chairman, President & CEO at ServisFirst Bancshares
• Henry Abbott, Chief Credit Officer at ServisFirst Bancshares
• Stephen Scouten, MD & Senior Research Analyst at Piper Sandler Companies
• Steve Moss, Director - Banking & Arlington at Raymond James Financial
• David Bishop, Director at Hovde Group