Servisfirst Bancshares Q2 2026 Earnings Call Transcript

On Monday, Servisfirst Bancshares (NYSE: SFBS ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. 4% quarter-over-quarter and 40% year-over-year.

Loan growth was robust with an annualized rate of over 15%, supported by broad-based demand across regions, particularly in Florida and Tennessee. 63%, with future margin expansion expected to slow slightly due to narrowing yield gaps. Noninterest income increased significantly, driven by service charges, mortgage banking, and bank-owned life insurance income. The company added nine bankers, focused on expanding in key regions like Houston, while maintaining a strong emphasis on customer service.

65% efficiency ratio, while capital levels continued to build, supporting organic growth. Management expressed optimism about the economic and regulatory environment, with a cautious outlook on geopolitical risks impacting loan demand. Full Transcript OPERATOR Greetings and welcome to the Servisfirst Bancshares Second Quarter Earnings 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 during the conference, please press star-0 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Davis Maines, Director of Investor Relations.

Thank you. Davis, you may begin. Davis Maines, Director of Investor Relations Good afternoon and welcome to our second quarter earnings call. We will have Tom Broughton, our CEO; Jim Harper, our Chief Credit Officer; and David Sporacio, our CFO, 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-K and 10-Q filings. Forward-looking statements speak only as of the date they are made, and Servisfirst assumes no duty to update them.

With that, I'll turn the call over to Tom. Tom Broughton, CEO Thank you, Davis. Good afternoon. Thank you for joining our second quarter earnings conference call.

We are generally pleased with the results, and I want to give you a few highlights of the quarter, and I'll be followed by Jim Harper, our Chief Credit Officer, and Dave Espressio, our Chief Financial Officer. On the loan side, we saw improved loan demand with annualized loan growth of over 15%. Almost all of our 13 regions or segments had really solid loan growth. The best growth was in our two Florida regions and Tennessee, though really no region contributed more than 15% of the total growth, and almost none of them were less than 10% of the total growth.

So it really was very granular and was not due to several large credits, which was really good. And we also saw some improvement in our C&I line utilization in the quarter, and that was encouraging as well. Our loan pipeline did grow quarter over quarter and is now at a record level. Projected payoffs this quarter are 17%, which is roughly the same as last quarter and is down from around 33% over the last two years, in rough numbers.

So we are seeing payoffs diminish and return closer to historical levels of typical payoffs. You know, you tend not to notice payoffs when you have robust loan demand. So hopefully we're seeing loan demand rebuild and begin to normalize a bit on that side. Our Houston pipeline is beginning to build, and we are seeing increased activity in Texas.

On the deposit side, our growth rate was constrained by some large income tax payments due to the sale of some properties and companies by our clients. Our noninterest-bearing deposits grew 20% annualized in the quarter and 14% year over year, as we continue to emphasize our treasury management services, and we benefit from the continued trend of bank mergers, as none of these bank mergers are done to improve customer service. On the new employee front, we added nine bankers in the quarter. We added two in the Piedmont region, three in Northwest Florida, and three in Houston, including a new Market President under the Regional CEO in Houston.

Our goal is never to set a numerical goal for new bankers, but we try to make our bankers more productive and successful and grow their loan and deposit portfolios and be very responsive to our customers' needs. With a name like ServisFirst, customer service is our primary goal, and we want bankers who embrace the culture of ServisFirst. I'll now turn it over to Jim Harper for a credit update. Jim Harper, Chief Credit Officer Thanks, Tom.

As mentioned, lending activity definitely picked up as we progressed through the quarter, as we experienced solid loan growth across most markets. While growth was granular, it was driven by CRE activity. As a result, we experienced an uptick in our CRE outstandings relative to capital, moving from 298% of capital at 3/31 to 307% at 6/30/26. That lending momentum and activity has continued into the early third quarter across our footprint and including Texas, where the team continues to grow and source new opportunities.

With regard to NPAs, as noted following the first quarter, we did have successful resolution of several credits early in the second quarter. For the quarter, we saw a net decrease of NPAs of just under $7 million on a net basis, and we don't see any systemic weakening in any particular sector of lending, and our credit