ServisFirst Bancshares (NYSE:SFBS) reported third-quarter 2026 net income of $87.3 million, or $0.80 per diluted share, as higher net interest income, loan growth and continued margin expansion supported results. Diluted earnings per share increased from $0.78 in the second quarter and rose 23% from adjusted earnings of $0.65 in the prior-year period, according to Chief Financial Officer David Sparacio.
For the first nine months of 2026, net income totaled $256 million. Sparacio said pre-provision net revenue reached $120.7 million in the third quarter, increasing 1.8% from the prior quarter and 26% from the adjusted prior-year period.
Margin Expansion and Revenue Growth
Net interest income rose $4.2 million from the second quarter to $159.8 million, and was up nearly 20% from a year earlier. Net interest margin was 3.63%, unchanged on a reported basis from the prior quarter. However, Sparacio noted that the second quarter included approximately 5 basis points of margin benefit from recovered interest income tied to a nonaccrual-loan payoff. Excluding that item, margin expanded about 5 basis points in the third quarter.
The company’s margin was up 54 basis points from 3.09% a year earlier. Sparacio said ServisFirst expects further margin expansion into 2027, though at a slower pace than earlier in 2026. He projected increases in the range of 5 to 7 basis points per quarter, supported by loan repricing and disciplined deposit pricing.
ServisFirst had approximately $1.5 billion of fixed-rate loans repricing over the next 12 months, with a weighted average yield of 5.08%. The average rate on new loans and renewals during the third quarter was 6.59%, Sparacio said. Additionally, 53% of the loan portfolio was variable rate, providing potential yield increases if benchmark rates rise.
Average interest-bearing deposit costs remained flat from the prior quarter at 2.80%, down 61 basis points year over year. Average interest-bearing checking balances increased by about $378 million during the quarter, carrying a 1.58% cost. Management said it allowed certain large municipal deposits to leave because it did not want to match pricing offered by global systemically important banks.
Loan Growth, Pipeline and Texas Expansion
Ending loans totaled $14.7 billion, increasing $259 million from the second quarter, or 7.1% on an annualized basis. Loans were up $1.43 billion, or 10.7%, from a year earlier. Chief Credit Officer Jim Harper said year-to-date loan growth exceeded $1 billion and represented a 10% annualized growth rate.
Chief Executive Officer Tom Broughton said third-quarter loan growth fell short of management’s expectations due to unexpected payoffs and loans that did not close during the period. Still, he cited growth in commercial and industrial lending and said the company’s pipeline suggests stronger future closings. The pipeline of loans less than 90 days old increased 58% from the prior quarter, while 40% of the pipeline three months earlier was more than 90 days old.
Growth during the past year was balanced between C&I loans, which increased 15%, and investor real estate loans, which rose about 16%, Sparacio said. Management also indicated loan pricing has become more rational in certain markets as customers increasingly choose floating-rate structures over higher fixed-rate quotes.
ServisFirst added six bankers during the quarter, including two in Houston, where it now has 22 bankers. Broughton described Houston as the company’s largest startup effort and said its pipeline continues to build. He said the Houston team had roughly $200 million in its pipeline for the remainder of the year and could reach breakeven during the first or second quarter of the following year. Management said Texas lending activity has been split relatively evenly between commercial real estate and C&I lending so far.
Credit Metrics and Expenses
Nonaccrual loans declined about $9.6 million during the quarter to $161.8 million, aided by the resolution of two problem credits and the transfer of two loans into other real estate owned. Total nonperforming assets increased slightly from the prior quarter.
Third-quarter net charge-offs totaled $7.7 million, while year-to-date charge-offs were $19.8 million, or 21 basis points annualized. Harper said one large multifamily portfolio accounted for a charge of slightly more than $7 million during the quarter. The company is working through an orderly liquidation process for eight credits in that portfolio, which management expects could take two to four quarters.
The allowance for loan losses increased approximately $7.2 million to $189 million, or 1.28% of loans, up 2 basis points from June. The reserve covered 118% of nonaccrual loans, compared with 107% in the prior quarter.
Non-interest expense was $52.2 million, up 4.5% sequentially and 8.8% from a year earlier. About 40% of the year-over-year increase reflected the full impact of the Houston expansion, while the remainder largely reflected nonrecurring costs. Sparacio said expenses were approximately $2 million above the company’s expected run rate, putting a normalized quarterly level in the $50 million to $51 million range. The efficiency ratio was 30.20%, compared with 29.65% in the second quarter and 35.22% a year earlier.
Capital, Liquidity and Share Repurchases
Stockholders’ equity surpassed $2 billion for the first time, ending the quarter at $2.04 billion. The preliminary common equity Tier 1 capital ratio was 11.98%, while tangible common equity to tangible assets was 11.05%. Tangible book value per share was $18.51, up 14.4% from a year ago.
ServisFirst ended the quarter with $1.19 billion in cash and cash equivalents and $1.56 billion in securities, with no Federal Home Loan Bank advances or brokered deposits. The company also has a newly approved share repurchase plan for 2 million shares. Broughton said management would proceed cautiously with repurchases, prioritizing capital needed to support organic growth while seeking to remain among the better-capitalized banks in its peer group.
About ServisFirst Bancshares (NYSE:SFBS)
ServisFirst Bancshares, Inc is the bank holding company for ServisFirst Bank, a regional financial institution headquartered in Birmingham, Alabama. Founded in 2005, the company provides banking services primarily to businesses, professionals, and individuals through a relationship-focused operating model.
ServisFirst Bank offers commercial and consumer lending, deposit accounts, cash-management and treasury services, online and mobile banking, mortgage lending, and wealth-management solutions.
