Key Points
Adjusted diluted earnings per share grew 23% year over year.
Noninterest-bearing deposits increased 12% year over year.
ServisFirst added 22 bankers to its new Houston location.
On its third-quarter 2026 earnings call, held on Oct. 19, 2026, ServisFirst (NYSE:SFBS) reported net interest margin expansion and 23% adjusted earnings growth year over year. The bank's ability to maintain high margins while controlling costs creates a durable foundation for long-term compounding.
Three key takeaways stand out for long-term investors.
1. Fixed-Rate Loan Repricing Drives Continued Margin Expansion
ServisFirst is shifting lower-yielding loans into higher market rates as existing contracts mature. This structural turnover expands the bank's net interest margin without requiring risky credit expansion.
We currently have about $1.5 billion of loans with a weighted average yield of 5.08%, plus we have a normal cash flow and covenant violation flow that allow us to gain yield in our loan portfolio.
-- David Sparacio, Chief Financial Officer
2. Regional Expansion in Texas Targets Market Share Gains
ServisFirst is expanding its footprint into Houston to pull commercial customers away from consolidating rivals. Local hiring efforts are building a substantial deal pipeline to absorb initial overhead costs.
We expect they probably have $200 million in the pipeline for the remainder of the year, and I would anticipate them trying to get to breakeven by the first or second quarter of next year in terms of the fairly sizable overhead that we have.
-- Thomas Broughton, Chief Executive Officer
3. Revenue Outpaces Expense Growth to Preserve Industry-Leading Efficiency
ServisFirst continues to limit overhead increases even as it funds geographic expansion. Higher revenue growth ensures the bank maintains an efficiency ratio, or operating expenses as a percentage of net revenue, around 30%.
This expense growth rate is a fraction of our revenue growth, which grew 20% year-over-year. Our efficiency ratio is 30.20% compared to 29.65% last quarter and 35.22% a year ago or 33.31% adjusted.
-- David Sparacio, Chief Financial Officer
Looking Ahead
Net interest margins are expanding across the business as fixed-rate assets reprice into a higher-interest rate environment. ServisFirst combines disciplined deposit pricing, minimal growth in nonperforming assets, and organic loan demand to protect core profitability. Organic growth remains the core driver of shareholder return, supported by capital generation that outpaces balance sheet expansion.
Anything we could do to create value involves expansion, right, organic growth. So you're absolutely right. We've got to keep that as our main focus.
-- Thomas Broughton, Chief Executive Officer
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