ServisFirst Bancshares, Inc. Q4 FY2025 earnings call

Loans - Loan growth in line with pipeline projection, annualized 12% QoQ. Pipeline QoQ up 11%, net of payoffs up 80%. Payoff headwind diminishing. ### Deposits - Managed down high-cost deposits, especially municipal. Can attract back if loan demand robust. ### Texas Banking - Excited about new Texas team in Houston, opening office, 9 members, anticipating more hires. Texas correspondent division has 35 active relationships and 2 bankers. ### Credit Update - Loan growth solid, C&I book up nearly 10% YTD. Net charge-offs Q4 $6.7M, full year 2025 21 basis points. Allowance to total loans 1.25%. Nonperforming assets 97 basis points, driven by single merchant developer exposure. ### Financial Performance - EPS $1.58 Q4, 32% increase QoQ; full year EPS $5.25 operating, $5.06 GAAP. Net interest margin grew from 2.92% Q1 to 3.38% Q4. Efficiency ratio below 30% Q4, adjusted 32% YTD. Asset yields 5.79% Q4. Noninterest revenue up 12% YTD. Noninterest expense flat QoQ, up 2% YTD. Loan growth split C&I and real estate.

Loans: Annualized loan growth was 12% for the quarter. Loan pipeline QoQ increased by 11%, net of projected payoffs by 80%. Deposit side: Continued to manage down high-cost deposits, primarily municipal. Product segments: C&I and real estate portfolios each had about 10% annual loan growth. Texas banking team: New team in Houston with 9 members, anticipating more hires in 2026; Texas correspondent division has 35 active correspondent banking relationships and 2 correspondent bankers. Asian credit card program: 150 Asian credit card banks, 27 states, endorsed by multiple state banking associations.

Loan Growth - Expected to continue, with pipeline indicating trend. ### Texas Franchise - Expect expense growth in 2026 but neutral to efficiency ratio as book grows. ### Repricing Opportunity - ~$2B in repricing opportunity in next 12 months from loan repricing, cash flows, covenant violations, etc. ### Expense Growth - Expected high single-digit in 2026, driven by building Texas franchise but offset by revenue generation.

Payoff Headwind - Still a factor, though diminishing. ### Fed Rate Uncertainty - Uncertainty around Fed rate cuts in 2026 as per market and Fed projections. ### Multifamily Assets - Slow process in selling multifamily workforce housing nonperforming assets, working with borrowers to find orderly outcome.

Q: Last quarter mentioned half of like new loans going out back door in payoffs, how's payoff trend this quarter?

A: Net pipeline way up this quarter, projected payoffs dropped substantially QoQ, payoff headwind diminishing but not gone.

Q: Loan demand on C&I and CRE front?

A: A minus, better than before, C&I demand picked up during quarter.

Q: Margin, fee collection juiced margin, is Dec margin good run rate?

A: December spot margin good starting point, loan fees up due to banker incentives, expect margin expansion in 2026.

Q: $5M charge-off in quarter, which NCL?

A: Related to health care asset, largely reserved before, not surprise. Multifamily assets: working with borrower to manage 8 loans, slow process to sell.

Q: Thoughts on tax rate 2026?

A: Continue to take advantage of tax credits, evaluate opportunities like solar credits.

Q: Texas team size, expense drag?

A: Budgeted growth higher than other regions, expense drag short term until book builds, efficiency ratio expected low-30s.

Q: Expense growth 2026?

A: High single-digit, built in additional hires for producers generating revenue.

Q: M&A and hiring?

A: Many mergers, will hire as many good bankers as can find, prioritize hiring over budget adjustments.