Servisfirst Bancshares (NYSE:SFBS) released first-quarter financial results and hosted an earnings call on Monday. Read the complete transcript below.
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Access the full call at https://event.choruscall.com/mediaframe/webcast.html?webcastid=OGwVSQiN
Summary
Servisfirst Bancshares reported strong loan growth and a 33% year-over-year increase in earnings per share for Q1 2026, with net income at $83 million.
The company achieved a net interest margin expansion to 3.53% and maintained a best-in-class efficiency ratio below 30%, indicating strong operational leverage.
Strategic expansion in Texas is underway with 18 bankers onboarded and the first loan closed; expectations are high for this market to contribute significantly over the next few years.
Loan payoffs have decreased, and the company is optimistic about future loan growth, supported by a robust pipeline and new relationships across markets.
Management highlighted a solid capital position, with common equity tier 1 reaching 11.86% and a strong liquidity position, underscoring the company’s capacity for continued growth.
Full Transcript
OPERATOR
Greetings and welcome to the service. First Bancshare’s first quarter earnings conference call. At this time all participants are in listen only mode. If anyone should require operator assistance, please press Star zero on your telephone keypad. A question and answer session will follow the formal presentation and you may press Star one to be placed into question queue. It’s now my pleasure to turn the call over to Davis Mains, Director of Investor Relations. Davis, please go ahead.
Davis Mains (Director of Investor Relations)
Good afternoon and welcome to our first quarter earnings call. We’ll have Tom Broughton, our CEO, Jim Harper, our Chief Credit Officer and David Sporacio, our CFO covering some highlights from the quarter and then 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 Bancshares assumes no duty to update them. With that, I’ll turn the call over to Tom Broughton. Thank you. Good afternoon and thank you for joining our first quarter conference call. We’re really pleased with our start to the year and I’m going to highlight a few things before I turn it over to Jim Harper to give credit update. On the loan side, we had pretty solid loan growth for the quarter. Loan growth is usually not very robust in the first quarter, but we did see some pretty good loan growth. We are seeing loan payoffs begin to diminish compared to the last two years. Certainly a great thing. You know, I don’t know what kind of trend we’ll see in the second quarter, but on a quarter to date basis we’ve seen some very nice growth in the first 20 days or so of the quarter. On the forward line pipeline, over 90 days it’s 90 plus days. It’s the strongest we’ve ever had in our history. And of course on a 90 day loan pipeline the closing rate is much lower than on a, you know, 30 day loan pipeline, for example. So. But it is great to see a long list of new relationships across all of our markets in a variety of industries on that list. On the deposit side they grew by 8% annualized in the first quarter which is exceeded our expectations. As we typically see our deposit growth in the second half of the year. We continue to try to manage our deposit cost to improve margins. We continue to attract new clients with our strong financial condition, our profitability and our personal service that we provide to commercial clients and Correspondent banks David will elaborate in a few minutes, but our net interest margin continues to improve. Our efficiency ratio continues to be the best in class as we dropped below 30% in the first quarter. We do have 161 producers at quarter end. We’ve hired over the last 12 months 32 new FTEs and 75% of those FTEs are frontline employees. So we should see, you know, obviously some improved productivity over time and profitable growth there. Our Houston team has found an office they policed it, not ready to move into yet, but they got a 26,000 square feet to build out. We do have 18 bankers on board there today and their pipelines are building quite nicely. We actually closed our first loan in Texas, which is a large supply chain company with long term contracts in March, so we’re pleased with the start there.
Jim Harper (Chief Credit Officer)
And now I’m going to turn it over to Jim Harper for a credit update. Thanks Tom. As noted, loan growth for the quarter was solid at 7% annualized, though we definitely experienced an uptick in loan activity beginning late in the quarter, which reinforces Tom’s comments about our forward pipeline. From a credit metric standpoint, net charge offs for the first quarter were around $8.3 million, most of which was associated with the remaining balance of one credit, with the charge representing the final resolution of a loan to a longtime troubled borrower. Our allowance to total loans remained static when compared to the end of 2025 (should be 2026), ending the quarter with an allowance compared to total loans of 125 basis points. Non performing assets to total assets at quarter end were 100 basis points, which was slightly higher than the 97 basis points we reported at fiscal year end 25. However, we are confident in some near term reductions in NPAs of approximately $17 million, or just over 9% of our 33126 NPAs stemming from the U.S. coast Guard’s purchase of a private university campus and the assumption of two other loans by a long term customer. As always, we continue to actively and aggressively manage our NPAs and this portfolio and David will be next with a discussion of our first quarter financial performance.
David Sporacio (Chief Financial Officer)
Thank you Jim and good afternoon everyone. I will walk you through the financial details of our first quarter and I am pleased to report a strong start to 2026 across virtually every metric we track. The headline numbers reflect continued expansion in the net interest margin, disciplined expense control, solid loan and deposit growth, and a meaningful year over year improvement in operating leverage, all of which speak to the durability of the service first model for the first quarter of 2026 we’ve reported net income of $83 million or $1.52 per diluted share or $1.54 on a normalized basis. To put that in Context, we earned $1.16 per diluted share in the first quarter of 2025, so we are up 33% year over year on earnings per share. On a linked quarter basis, EPS stepped back from the $1.58 we reported in 4Q25 and I want to briefly explain why. Fourth quarter included a $4.3 million non recurring Bolly death benefit that flowed through non interest income and fourth quarter also had more calendar days to earn net interest and fee income during the first quarter. We also had a prior period adjustment to boli income of $1 million which was a headwind. Excluding those items, the core earnings trajectory is clearly upward. Our return on average assets was 1.89% for the quarter, which is essentially in line with fourth quarter and well above the 1.45% we delivered one year ago. Return on average common equity was 17.91%. These are strong industry leading returns and they reflect the operating leverage inherent in our model when loan growth, deposit repricing and expense discipline all move together in the right direction. In net interest income for the first quarter it was $148.2 million which is up from $146.5 million in the fourth quarter and up from $123.6 million a year ago. The net interest margin expanded to 3.53%, 15 basis points better than linked quarter and 61 basis points better than the same quarter last year. That progression reflects two drivers working in tandem, continued repricing of our low fixed
Tom Broughton (Chief Executive Officer)
rate loan portfolio and a full quarterly impact of the Fed rate cuts from the fourth quarter. As we have mentioned in previous quarters, we continue to see opportunities on loan repricing for the next 12 months. We have about a $2 billion opportunity for low fixed rate loans renewing normal payment cash flows, covenant violations and modifications. In fact we have about $2.9 billion in fixed rate loans maturing in the next three years at a price below our current going on rate for loans. On the deposit side, average interest bearing deposit cost fell to 2.79% down 22 basis points from fourth quarter and 61 basis points from over a year ago. That repricing is still working through the book and and we continue to expect meaningful benefit as higher rate time deposits mature and renew at current market rates on the asset side loan yields were 6.18% an 11 basis point step down from quarter four. That reflects the normal variability in the declining rate …
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