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    SFBS
    Earnings call· Jun 2026(Q2 FY26)

    ServisFirst Bancshares, Inc. SFBS

    Jul 20, 2026 Source

    Executive summary

    ServisFirst Bancshares Q2 FY26 — Strong Loan Growth and NIM Expansion

    ServisFirst Bancshares delivered a strong second quarter, driven by robust, broad-based loan growth and continued net interest margin expansion. While deposit growth moderated due to specific client events and competition, the bank's focus on treasury management and core relationships supported noninterest-bearing deposit expansion. Management expressed confidence in continued margin improvement, albeit at a slower pace, and is actively managing capital to fund growth and explore shareholder return options.

    Highlights

    5

    • Annualized loan growth exceeded 15% in Q2 FY26, with ending loans at $14.48 billion, up $533 million from Q1.

    • Net interest margin expanded to 3.63%, up 10 basis points linked-quarter and 53 basis points year-over-year.

    • Noninterest-bearing deposits grew 5.6% linked-quarter and 13.8% year-over-year, emphasizing core relationships.

    • Efficiency ratio improved to 29.65%, marking the third consecutive quarter below 30%.

    • Net income increased 40% year-over-year to $85.8 million, or $1.57 per diluted share.

    Concerns

    4

    • Deposit growth was more measured this quarter, up $62 million linked-quarter, due to competitive landscape and large client tax payments.

    • The Houston market expansion is currently a drag on the efficiency ratio as expenses ramp faster than revenue.

    • The pace of NIM expansion is expected to slow from 7-9 bps to 4-6 bps towards year-end.

    • Loan payoffs, while diminishing, remain at 17% of the pipeline, impacting net growth.

    Guidance & targets

    3
    CategoryTargetConfidence
    Net Interest Margin Expansion
    4-6 basis points of expansion
    high materiality
    Medium
    Effective Tax Rate
    below 20%
    medium materiality
    Medium
    Noninterest Expense Run Rate
    $50 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Florida Regions
    Two Florida regions experienced the best loan growth among all segments. West Central Florida had more payoffs due to heavy real estate concentration.
    Loan growth: best growth
    		————
    Tennessee
    Tennessee experienced the best loan growth among all segments.
    Loan growth: best growth
    		————
    Houston
    The Houston market is starting to ramp up in both loan and deposit generation. It is currently a drag on the efficiency ratio as expenses ramp up faster than revenue, but is expected to improve.
    Loans funded: $50 millionDeposits funded: $25 million - $30 million
    		————

    Operational metrics

    27
    Return on average assets
    1.91%up from 1.89% in Q1 FY26, up from 1.40% in Q2 FY25
    Q2 FY26

    Management's goal is to reach 2% ROAA.

    Diluted EPS (Adjusted)
    $1.57up 3.4% QoQ from $1.52, up 30% YoY from $1.21 (adjusted)
    Q2 FY26

    Reported diluted EPS was $1.57 for Q2 FY26, compared to $1.52 in Q1 FY26 and $1.12 in Q2 FY25. Adjusted EPS for Q2 FY25 was $1.21.

    Net Income (H1 FY26)
    $168.8 millionup 35% from $124.6 million H1 FY25
    H1 FY26

    Net income for the first six months of 2026.

    Diluted EPS (H1 FY26)
    $3.09up from $2.28 H1 FY25
    H1 FY26

    Diluted EPS for the first six months of 2026.

    Total Capital to Risk-Weighted Assets
    13.09%
    Q2 FY26

    Total capital to risk-weighted assets at quarter end.

    Tier 1 Leverage Ratio
    10.93%
    Q2 FY26

    Tier 1 leverage ratio at quarter end.

    Tangible Common Equity to Tangible Total Assets
    10.72%
    Q2 FY26

    Tangible common equity to tangible total assets at quarter end.

    Book Value per Share
    $36.19up from $34.99 Q1 FY26, up nearly 15% from $31.52 Q2 FY25
    Q2 FY26

    Book value per share at quarter end.

    Tangible Book Value per Share
    $35.94
    Q2 FY26

    Tangible book value per share at quarter end.

    Cash and Cash Equivalents
    $1.46 billion
    Q2 FY26

    Represents total liquidity resources at quarter end.

    Mortgage Repos
    —
    Q2 FY26

    Short-term investments that can be unwound for liquidity if needed, as an alternative to running down the securities book.

    Interest Rate Sensitivity (NII impact +25bps)
    -$240,000
    First year

    Nominal impact on net interest income in the first year under a 25 basis point rate increase scenario.

    Interest Rate Sensitivity (NII impact -25bps)
    $105,000
    First year

    Nominal impact on net interest income in the first year under a 25 basis point rate decrease scenario.

    Loan Pipeline
    record levelgrew QoQ
    Q2 FY26

    The loan pipeline grew quarter-over-quarter and is now at a record level.

    Projected Loan Payoffs
    17%roughly same as last quarter, down from ~33% over last 2 years
    Q3 FY26

    Payoffs are diminishing and returning closer to historical levels.

    C&I Line Utilization
    improved
    Q2 FY26

    Improved C&I line utilization was observed in the quarter, which was encouraging.

    New Bankers Added
    9
    Q2 FY26

    The company added 9 bankers in the quarter, focusing on making them productive and responsive to customer needs.

    Full-Time Equivalent Headcount
    663up 22 YoY, up 3 QoQ
    Q2 FY26

    Modest growth in headcount relative to balance sheet expansion, with most additions being customer-facing.

    Unpledged Securities
    $260 million
    Q2 FY26

    The bank applies a haircut to unpledged securities when reporting available liquidity, in agreement with regulators.

    Going-on Loan Rate
    6.32%
    Q2 FY26

    The going-on rate for loans, compared to the adjusted portfolio yield of 6.18%, indicates continued room for yield expansion, though the gap is narrowing.

    Interest-Bearing Deposit Cost
    2.80%essentially flat to 2.79% Q1 FY26, down 53 bps YoY
    Q2 FY26

    Reflects the impact of last year's rate cuts working through the deposit portfolio.

    Investment Yields
    3.81%up modestly from 3.78% Q1 FY26
    Q2 FY26

    Investment yields for the quarter.

    Federal Funds Purchased Rate
    3.74%unchanged QoQ, down from 4.49% YoY
    Q2 FY26

    Direct correlation to Fed funds rates.

    Service Charges on Deposit Accounts
    $3.3 millionup 25% YoY, roughly flat QoQ
    Q2 FY26

    Reflects treasury management pricing changes implemented in July last year.

    Mortgage Banking Revenue
    $2.2 millionup 68% YoY, 17% QoQ
    Q2 FY26

    Driven by higher secondary market loan sales and an administrative fee increase.

    Credit Card Income
    $2.5 millionup 18% YoY
    Q2 FY26

    Credit card income for the quarter.

    Bank-Owned Life Insurance (BOLI) Income
    $4.1 millionup 94% YoY, 47% QoQ
    Q2 FY26

    Reflects recent purchases of BOLI contracts.

    Industry KPIs

    13
    MetricValueDetails
    Loans$14.48 billionUSD
    Deposits$14.55 billionUSD
    Rotce ROE17.71%%
    Cet1 ratio11.83%%
    Capital returns—
    Fee income lines$12.9 millionUSD
    Allowance reserves1.26%% of total loans
    Net interest income$155.6 millionUSD
    Net interest margin3.63%%
    Net charge offs npls11 bps annualizedbps
    Total operating expenses$50 millionUSD
    Provision for credit losses$11.4 millionUSD
    Efficiency ratio operating leverage29.65%%

    Risks & headwinds

    5
    Moderated Deposit GrowthQ2 FY26

    Up $62 million linked-quarter

    Mitigation: Emphasis on treasury management services and core relationships; expectation of stronger deposit growth in H2 FY26.

    Slowing Pace of NIM ExpansionTowards year-end FY26

    Expected to slow from 7-9 bps to 4-6 bps per quarter

    Mitigation: Continued aggressive repricing on fixed-rate loans and disciplined deposit pricing.

    Initial Drag from Houston Market ExpansionNear-term

    Houston is a drag on the efficiency ratio

    Mitigation: Expectation that Houston will improve its efficiency ratio as loans and deposits ramp up, and income grows.

    Geopolitical Events and Economic UncertaintyUncertain

    Not quantified

    Mitigation: Positioned for rates to go up or down; management notes past instances of slowdowns due to external events.

    Inflationary Pressure and Fed Rate PolicyRemainder of FY26

    Not quantified

    Mitigation: Bank is largely neutral to interest rate sensitivity; expects a stagnant rate environment barring major geopolitical events.

    What to watch in Q3 FY26

    5

    NIM Expansion Pace

    Q3 FY26
    Current10 bps linked-quarter (3.63%)
    Target4-6 bps of expansion

    Why it matters

    The pace of net interest margin expansion is a key driver of profitability and indicates the bank's ability to manage funding costs and asset yields.

    Yes. We may get one more quarter of the 7 to 9 range, but I would start to think about the 5 -- 4 to 6 kind of range of expansion as we get towards the end of the year.

    Q&A highlights

    8

    What does the hiring pipeline for new bankers look like, especially given market consolidation?

    Management is constantly talking to potential hires from various banks, especially in Texas where mergers are active. While there's no specific numerical goal, they are optimistic about attracting talent, though many potential candidates have stay-pay clauses post-merger.

    “I really can't give you a very good answer, Dave. We talk to people all the time, and we're talking to a lot of different people from a lot of different banks, and there are mergers going on that you don't see because they're private banks margin or a private bank selling to a public bank, you don't notice that.”

    asked by David Bishop · answered by Thomas Broughton

    2 min read6 chapters

    Detailed Narrative

    01

    Loan Growth and Pipeline Strength

    ServisFirst experienced robust loan growth, with annualized growth exceeding 15% in the second quarter, driven by broad-based activity across its 13 regions. The loan pipeline reached a record level, growing quarter-over-quarter. Management noted a significant decrease in projected payoffs, returning closer to historical levels, which supports sustained loan demand. The Houston market is also beginning to contribute to this growth.

    02

    Net Interest Margin Expansion and Drivers

    The bank achieved further net interest margin expansion to 3.63%, a 10 basis point increase linked-quarter. This was primarily driven by aggressive repricing of fixed-rate loans and disciplined deposit pricing. A $1.9 million interest income recovery from a nonaccrual credit also contributed 5 basis points to the improvement. While expansion is expected to continue, the pace is projected to slow in the latter half of the year.

    03

    Deposit Trends and Funding Strategy

    Deposit growth was more moderate in Q2, impacted by large client income tax payments and a competitive landscape. However, noninterest-bearing deposits showed strong growth, increasing 5.6% linked-quarter and 13.8% year-over-year, reflecting successful treasury management services. Management anticipates stronger deposit growth in the second half of the year and prioritizes generating deposits to meet loan demand.

    04

    Credit Quality and Reserve Coverage

    Credit quality remains strong, with a net decrease of NPAs by nearly $7 million in the quarter due to successful resolutions. Net charge-offs were modest at 11 basis points annualized. The allowance for loan losses stood at 1.26% of total loans, slightly up from the prior quarter, with increases in both the pool portfolio and individually impaired loans. Management expressed comfort with the current reserve coverage.

    05

    Efficiency and Strategic Investments

    ServisFirst maintained strong efficiency, with an efficiency ratio of 29.65%, marking the third consecutive quarter below 30%. This reflects operating leverage and expense discipline. The bank continues to invest in strategic growth, adding 9 bankers in the quarter, including a new market president in Houston. While the Houston expansion is an initial drag on efficiency, it is expected to improve as the market ramps up.

    06

    Capital Management and Shareholder Returns

    Capital continued to build meaningfully, with the Common Equity Tier 1 ratio at 11.83% and tangible common equity to tangible total assets at 10.72%. The bank is generating capital organically to comfortably fund loan growth. Management views excess capital as a 'champagne problem' and considers all options for shareholder returns, including acquisitions or share repurchases, to maximize shareholder value.

    AI-generated summary of the company’s earnings call. Not investment advice.