ServisFirst Q2 net income rises 40% on record loan pipeline
ServisFirst Bancshares reported strong second quarter 2026 results with net income rising 40% year-over-year to $85.8 million. Diluted EPS increased to $1.57, meeting analyst estimates, while sales of $168.529 million beat consensus. The company achieved record loan pipeline levels, with ending total loans growing 15.3% annualized to $14.48 billion. Net interest margin expanded to 3.63%, and the efficiency ratio improved to 29.65%. Non-interest income grew 43.5% year-over-year, driven by BOLI and service charges. Credit quality remained strong with net charge-offs improving to 0.11%.
*this image is generated using AI for illustrative purposes only.
ServisFirst Bancshares reported second quarter 2026 diluted earnings per share of $1.57, meeting the analyst consensus estimate. This represents a 40% increase from $1.12 in the second quarter of 2025. The company reported quarterly sales of $168.529 million, beating the analyst consensus estimate of $167.847 million by 0.41%. This sales figure reflects a 27.57% increase from $132.108 million in the same period last year. The Birmingham, Alabama-based bank holding company achieved these results with record loan pipeline levels and net income rising 39.7% year-over-year to $85.8 million.
Second Quarter 2026 Financial Highlights
The following table summarizes key performance metrics for the second quarter of 2026 compared to prior periods:
| Metric: | Q2 2026 | Q1 2026 | Q2 2025 |
|---|---|---|---|
| Net Income ($000): | $85,793 | $82,971 | $61,424 |
| Net Income Avail. to Common ($000): | $85,762 | $82,971 | $61,393 |
| Diluted EPS: | $1.57 | $1.52 | $1.12 |
| Return on Avg. Assets: | 1.91% | 1.89% | 1.40% |
| Return on Avg. Common Equity: | 17.71% | 17.91% | 14.56% |
| Net Interest Margin: | 3.63% | 3.53% | 3.10% |
| Efficiency Ratio: | 29.65% | 29.80% | 33.46% |
| Book Value Per Share: | $36.19 | $34.99 | $31.52 |
| Tangible Book Value Per Share: | $35.94 | $34.74 | $31.27 |
Tom Broughton, Chairman, President, and CEO, said, "We were pleased with the strong loan growth in the quarter and the positive momentum in virtually all our markets for growth with our loan pipeline at record levels." David Sparacio, CFO, added, "Net Income growth of 30% year-over-year, while maintaining an efficiency ratio below 30%, along with continued improvement in our net interest margin resulted in superior performance, as we have historically delivered."
Net Interest Income and Margin
Net interest income was $155.6 million for the second quarter of 2026, compared to $148.1 million for the first quarter of 2026 and $131.7 million for the second quarter of 2025. The net interest margin expanded to 3.63% from 3.53% in the first quarter of 2026 and 3.10% in the second quarter of 2025. Loan yields were 6.23% during the second quarter of 2026, compared to 6.18% in the first quarter of 2026 and 6.37% in the second quarter of 2025. During the second quarter of 2026, $1.9 million in interest income was recovered from a large credit relationship that was previously on nonaccrual status, accounting for five basis points of the increase in loan yields from the first quarter of 2026.
Investment yields were 3.81% in the second quarter of 2026, up from 3.78% in the first quarter of 2026 and 3.37% in the second quarter of 2025. Average interest-bearing deposit rates declined to 2.80% from 3.33% in the second quarter of 2025, while average federal funds purchased rates were 3.74%, down from 4.49% in the second quarter of 2025.
Loan and Deposit Growth
Ending total loans for the second quarter of 2026 were $14.48 billion, an increase of $532.6 million, or 15.3% annualized, from $13.95 billion for the first quarter of 2026, and an increase of $1.25 billion, or 9.4%, from $13.23 billion for the second quarter of 2025. Average loans for the second quarter of 2026 were $14.22 billion, an increase of $440.1 million, or 12.8% annualized, from average loans of $13.78 billion for the first quarter of 2026.
Ending total deposits for the second quarter of 2026 were $14.55 billion, an increase of $62.4 million, or 1.7% annualized, from $14.49 billion for the first quarter of 2026, and an increase of $686.4 million, or 5.0%, from $13.86 billion for the second quarter of 2025. Non-interest-bearing demand deposits rose to $2.995 billion, up 13.8% year-over-year. Liquidity remained strong with $1.46 billion in cash and cash equivalents, equaling 8% of total assets, with no FHLB advances or brokered deposits.
Non-Interest Income and Expense
Non-interest income was $12.9 million for the second quarter of 2026, compared to $0.4 million in the second quarter of 2025. Adjusted for $8.6 million of securities losses in the second quarter of 2025, this represented a $3.9 million, or 43.5%, increase. Key contributors to non-interest income included:
- Bank-owned life insurance (BOLI) income: $4.1 million, up $2.0 million, or 94.4%, year-over-year, primarily due to purchases of $150.0 million of new contracts in the third quarter of 2025 and $25.0 million of new contracts in the second quarter of 2026
- Service charges on deposit accounts: $3.3 million, up $667,000, or 25.0%, year-over-year
- Credit card income: $2.5 million, up $373,000, or 17.6%, year-over-year
- Mortgage banking revenue: $2.2 million, up $898,000, or 67.9%, year-over-year
Non-interest expense increased $5.8 million, or 13.0%, to $50.0 million for the second quarter of 2026 from $44.2 million in the second quarter of 2025. Salary and benefit expense increased $3.7 million, or 16.4%, to $26.3 million, primarily due to the full impact of the Houston market expansion. Full-time equivalent employees (excluding temporary employees) increased by 22, or 3.4%, to 663 at June 30, 2026, compared to 641 at June 30, 2025.
Credit Quality and Capital
The allowance for credit losses to total loans was 1.26% at June 30, 2026, compared to 1.25% at March 31, 2026, and 1.28% at June 30, 2025. Annualized net charge-offs to average loans improved to 0.11% for the second quarter of 2026, compared to 0.25% for the first quarter of 2026 and 0.20% for the second quarter of 2025. A provision for loan losses of $11.7 million was recorded in the second quarter of 2026, compared to $10.6 million in the first quarter of 2026 and $11.4 million in the second quarter of 2025.
Nonperforming assets to total assets were 0.96% for the second quarter of 2026, compared to 1.00% for the first quarter of 2026 and 0.42% for the second quarter of 2025, with the year-over-year increase attributable to a large real-estate secured relationship. The consolidated common equity tier 1 capital to risk-weighted assets ratio increased from 11.38% in the second quarter of 2025 to 11.83% in the second quarter of 2026.
| Capital Ratio: | Q2 2026 | Q1 2026 | Q2 2025 |
|---|---|---|---|
| CET1 to Risk-Weighted Assets: | 11.83% | 11.86% | 11.38% |
| Tier 1 Capital to Risk-Weighted Assets: | 11.83% | 11.87% | 11.38% |
| Total Capital to Risk-Weighted Assets: | 13.09% | 13.13% | 12.81% |
| Tier 1 Capital to Average Assets: | 10.93% | 10.71% | 9.78% |
| Tangible Common Equity to Total Tangible Assets: | 10.72% | 10.46% | 9.84% |
Year-to-Date Performance
For the six months ended June 30, 2026, net income totaled $168.8 million, up 35.4% from $124.6 million for the same period of 2025. Year-to-date diluted EPS was $3.09, compared to $2.28 for the six months ended June 30, 2025, representing a 35.1% increase. The year-to-date return on average assets was 1.90% versus 1.42% for the prior-year period, and the return on average common stockholders' equity was 17.81% versus 15.08%.
ServisFirst Bancshares is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, the company provides business and personal financial services from locations in Alabama, Florida, Georgia, North and South Carolina, Tennessee, Texas, and Virginia.
Can ServisFirst sustain the current 15.3% annualized loan growth rate given the potential for rising interest rates impacting borrower demand?
How will the company balance the significant loan pipeline growth against the year-over-year increase in nonperforming assets?
Will the expansion into the Houston market continue to drive salary and benefit expenses higher, potentially pressuring the efficiency ratio?
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