ServisFirst Bancshares (SFBS -0.78%), a regional bank focused on commercial and personal banking in the Southeast, released its Q2 2025 results on July 21, 2025. The headline news: non-GAAP earnings per share reached $1.21 for Q2 2025, matching analyst projections and rising 27% from the second quarter of 2024 with stronger loan growth and improved net interest margin. However, non-interest income (GAAP) declined sharply due to a one-time securities portfolio loss, and asset quality metrics—such as non-performing assets—deteriorated somewhat. Overall, the period reflected disciplined operations, but signaled rising credit risks and future volatility in top-line results.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Adjusted EPS | $1.21 | $1.21 | $0.95 | 27.4% |
| Net Income | $61.4 million | $52.1 million | 17.8% | |
| Net Interest Margin | 3.10% | 2.79% | 0.31 pp | |
| Book Value per Share | $31.52 | $27.71 | 13.7% |
Source: ServisFirst Bancshares. Note: Analyst estimates for the quarter provided by FactSet.
Company Overview and Critical Success Factors
ServisFirst Bancshares operates as a regional bank, offering commercial and personal banking, with an emphasis on business lending and treasury services. Its operating model centers on organic growth through attentive customer service. The bank empowers local leaders to make decisions, while controlling risk from a central team. This allows it to be flexible in addressing local needs while ensuring consistency and risk oversight.
The company’s core strengths come from its cost efficiency, disciplined risk management, and conservative approach to capital. It continues expanding organically, aiming to hire experienced bankers, increase its presence across the Southeast, and maintain a lean branch network. Recent business priorities have included maintaining high credit standards and expanding new market teams to accelerate loan and deposit growth. Efficiency, local market agility, loan portfolio discipline, and talent retention are all key to its performance.
Quarter in Review: What Drove the Results
Loan growth accelerated to 7.3% year over year in Q2 2025, with balances rising across both real estate and commercial loans. The bank reported $346 million in new loans. Net interest income was $131.7 million, a 24% increase from the second quarter of 2024, fueled by higher loan balances and a strong net interest margin. That margin, a crucial measure of profitability, expanded to 3.10% (GAAP) in Q2 2025—improved by repricing of assets and reduced deposit costs. Deposit growth lagged, staying relatively flat on average and falling by $566.7 million at quarter end, which nudged the loan-to-deposit ratio higher—a trend the company is monitoring.
Non-interest income, which typically includes service charges and card fees, fell sharply—down 95.3% year over year (GAAP) in Q2 2025. The main reason was a one-off $8.6 million GAAP loss from restructuring the securities portfolio. Non-interest expenses (GAAP) grew by 3.2% to $44.2 million, but operational efficiency still improved; the efficiency ratio dropped to 33.46%, meaning it spent a smaller share of revenues on operating costs versus the previous year.
On the balance sheet, ServisFirst maintained a strong capital position. Book value per share increased 14% from $27.71 to $31.52 compared to the second quarter of 2024, and the common equity Tier 1 capital ratio rose to 11.38%. The bank had $1.7 billion in cash and equivalents, accounting for 10% of total assets, and reported no outstanding advances from the Federal Home Loan Bank or brokered deposits. Liquidity measures reflect a conservative stance in funding operations. Loan yields were 6.37% in the second quarter of 2025, compared to 6.28% in the first quarter of 2025 and 6.48% in the second quarter of 2024. Average interest-bearing deposit rates were 3.33% in the second quarter of 2025, compared to 4.09% in the second quarter of 2024, helping protect profitability in a competitive rate environment.
Asset quality was a mixed story. Non-performing assets—a measure of loans in trouble—rose to 0.42% of total assets from 0.23% in Q2 2024. This increase stemmed mostly from two commercial loans, each secured by real estate. Net charge-offs, which show the portion of loans written off as unrecoverable, doubled to an annualized 0.20%. The allowance for credit losses as a percentage of loans remained stable at 1.28%. The provision for loan losses was $11.4 million in the second quarter of 2025, compared to $6.5 million in the first quarter of 2025 and $5.4 million in the second quarter of 2024. The majority of the year-over-year increase in non-performing assets was attributable to two relationships, both secured by real estate.
Human capital also shifted as the bank increased hiring. Full-time equivalent employees reached 659, up 5.4% as of June 30, 2025. Salary and benefit expense decreased 6.8% to $22.6 million in the second quarter of 2025 from $24.2 million in the second quarter of 2024.
Looking Ahead: Outlook and Key Watch Points
For financial guidance, management declined to provide formal quantitative targets for either the next quarter or full-year. Instead, executives expressed confidence in continued margin expansion as more assets reprice at higher rates and as high-cost municipal deposits run off the books. The bank plans to keep expenses in check but will invest in talent as needed to support expansion ambitions.
Investors should watch deposit trends, as period-end balances are now trailing loan growth, which could affect future funding costs if this persists. Asset quality will also be a focus, given the rise in non-performing assets and net charge-offs from isolated but significant credits. Non-interest income could swing depending on management’s approach to securities portfolio restructuring.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
