ServisFirst Bancshares (SFBS)

Regional banking company ServisFirst Bancshares (NYSE:SFBS) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 22.9% year on year to $162.2 million. Its non-GAAP profit of $1.58 per share was 14.2% above analysts’ consensus estimates.

Company Overview

Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE:SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

ServisFirst Bancshares competes with larger regional and national banks in its markets, with its five primary competitors being Regions Financial Corporation (NYSE:RF), Wells Fargo & Company (NYSE:WFC), PNC Financial Services Group, Inc. (NYSE:PNC), Truist Financial Corporation (NYSE:TFC), and Synovus Financial Corp. (NYSE:SNV).

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Over the last five years, ServisFirst Bancshares grew its revenue at a mediocre 9.4% compounded annual growth rate. This was below our standard for the banking sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. ServisFirst Bancshares’s annualized revenue growth of 14.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, ServisFirst Bancshares reported robust year-on-year revenue growth of 22.9%, and its $162.2 million of revenue topped Wall Street estimates by 6.8%.

Net interest income made up 92.8% of the company’s total revenue during the last five years, meaning ServisFirst Bancshares lives and dies by its lending activities because non-interest income barely moves the needle.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

The underlying profitability of top-line growth determines the actual bottom-line impact. Banking institutions measure this dynamic using the efficiency ratio, which is calculated by dividing non-interest expenses like personnel, facilities, technology, and marketing by total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last five years, ServisFirst Bancshares’s efficiency ratio has increased by 2.7 percentage points, going from 31.8% to 33.1%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

ServisFirst Bancshares’s efficiency ratio came in at 28.8% this quarter, beating analysts’ expectations by 297.9 basis points (100 basis points = 1 percentage point). This result was 6.8 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects ServisFirst Bancshares to rein in some of its expenses as it anticipates an efficiency ratio of 30.4%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

ServisFirst Bancshares’s decent 10.9% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For ServisFirst Bancshares, its two-year annual EPS growth of 15.6% was higher than its five-year trend. This acceleration made it one of the faster-growing banking companies in recent history.

In Q4, ServisFirst Bancshares reported adjusted EPS of $1.58, up from $1.19 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects ServisFirst Bancshares’s full-year EPS of $5.25 to grow 16.5%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

ServisFirst Bancshares’s TBVPS grew at an incredible 13.1% annual clip over the last five years. The last two years show a similar trajectory as TBVPS grew by 13.3% annually from $26.19 to $33.62 per share.

Over the next 12 months, Consensus estimates call for ServisFirst Bancshares’s TBVPS to grow by 13.5% to $38.14, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, ServisFirst Bancshares has averaged a Tier 1 capital ratio of 11.3%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, ServisFirst Bancshares has averaged an ROE of 17.2%, excellent for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for ServisFirst Bancshares.

We were impressed by how significantly ServisFirst Bancshares blew past analysts’ revenue expectations this quarter. We were also glad its net interest income outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock remained flat at $76.38 immediately following the results.

Updated: January 20, 2026 at 11:11 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own ServisFirst Bancshares, you should also grasp the company’s longer-term business quality and valuation.

We think ServisFirst Bancshares is a solid business. Although its revenue growth was mediocre over the last five years, its growth over the next 12 months is expected to be higher. And while ServisFirst Bancshares’s net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal., its TBVPS growth was exceptional over the last five years. On top of that, its estimated net interest income growth for the next 12 months is great.

ServisFirst Bancshares’s P/B ratio based on the next 12 months is 2x. When scanning the banking space, ServisFirst Bancshares trades at a fair valuation. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $88 on the company (compared to the current share price of $76.50), implying they see 15% upside in buying ServisFirst Bancshares in the short term.