ServisFirst Bancshares (SFBS) Q3 2026 Earnings Call: Core NIM Expands, EPS Rises

Key Takeaways

• ServisFirst Bancshares reported Q3 2026 net income of $87.3 million and diluted EPS of $0.80, up 2.6% from $0.78 in Q2. EPS increased 23% from the adjusted prior-year figure of $0.65.
• Net interest income rose 2.7% sequentially and nearly 20% year over year to $159.8 million. Reported net interest margin was unchanged at 3.63%, but the company said core margin expanded by approximately 5 basis points.
• Loans reached $14.7 billion, increasing $259 million from Q2 and $1.43 billion, or 10.7%, year over year. Management highlighted stronger C&I activity and a 58% sequential increase in the loan pipeline scheduled to close within 90 days.
• Credit reserves increased to $189 million, or 1.28% of loans. Nonaccrual loans declined by $9.6 million to $161.8 million, while net charge-offs totaled $7.7 million.
• The efficiency ratio remained low at 30.20%. Management estimated that one-time costs added approximately $2 million to quarterly expenses and indicated a normalized expense run rate of $50 million to $51 million.
• Management expects continued margin expansion and anticipates that the Houston operation could reach break-even in Q1 or Q2 2027. Houston had 22 bankers and an approximately $200 million loan pipeline for the remainder of 2026.

Core Financial Data

Per-share figures were adjusted for the company’s 2-for-1 stock split completed during the quarter.

Business and Operating Performance

Loan growth slowed from Q2 because of unexpected payoffs and delayed closings. Nevertheless, average loans increased $320 million, or 8.9% annualized, while ending balances grew at a 7.1% annualized rate. Over the past year, C&I loans increased 15% and investor real estate loans rose approximately 16%.

Management said near-term loan activity had improved. The portion of the pipeline expected to close within 90 days increased 58% from the previous quarter. Houston continued to build its pipeline, with activity divided relatively evenly between commercial real estate and C&I lending. Management also cited emerging energy lending opportunities with strong credit quality and pricing.

Funding costs remained controlled. The average cost of interest-bearing deposits was unchanged sequentially at 2.80% and declined 61 basis points year over year. Average interest-bearing checking balances increased approximately $378 million at an average cost of 1.58%. Noninterest-bearing deposits grew 12% year over year.

The company allowed some large municipal deposits to leave because of pricing competition. Management said it expects stronger seasonal deposit growth in Q4 and has region-specific deposit initiatives underway.

Bank-owned life insurance income increased 81% year over year to $4.3 million. ServisFirst is evaluating exchanges involving approximately $465 million of BOLI assets to improve yields, following a favorable U.S. Treasury ruling. Management emphasized that it is not planning a securities restructuring that would require recognizing losses.

Capital and liquidity remained strong. Preliminary common equity Tier 1 capital was 11.98% of risk-weighted assets, total risk-based capital was 13.26%, and tangible common equity to tangible assets rose to 11.05%. The company ended Q3 with $1.19 billion in cash and cash equivalents and $1.56 billion in securities, with no FHLB advances or brokered deposits.

Management Outlook

Management reiterated an expectation for approximately 5 to 7 basis points of additional margin expansion, although at a slower pace than earlier in 2026. Approximately $1.5 billion of fixed-rate loans carrying an average yield of 5.08% are scheduled to reprice over the next 12 months. New and renewed loans averaged 6.59% during Q3, while 53% of the loan portfolio remained variable rate.

For operating expenses, management indicated a normalized quarterly run rate of approximately $50 million to $51 million and said the efficiency ratio would likely remain below 30% in a normalized environment.

Houston start-up losses are expected to decline over the next several quarters. Management anticipates that the operation could reach break-even in Q1 or Q2 2027, supported by an approximately $200 million pipeline for the rest of 2026.

ServisFirst has authorized the repurchase of up to 2 million shares. Management said repurchases would be executed cautiously, with capital for organic growth remaining the priority.

Risks and Points to Watch

• Loan payoffs remained uneven and difficult to forecast, contributing to slower Q3 loan growth.
• Total nonperforming assets increased slightly despite the decline in nonaccrual loans.
• More than $7 million of Q3 charge-offs related to a portfolio of eight large multifamily credits. Management expects the orderly liquidation process to take another two to four quarters.
• Deposit competition remained intense, particularly for municipal balances, and could affect funding growth or pricing.
• Management acknowledged uncertainty over whether higher rates could reduce loan demand, particularly if rates rise materially further.
• Houston remains a sizable start-up investment and has not yet reached break-even.

Analyst Q&A Highlights

Analysts focused heavily on margin sustainability. Management pointed to fixed-rate loan repricing, the variable-rate loan portfolio and disciplined deposit pricing as the main drivers of further expansion.

On loan funding, management said deposit availability should not restrict lending if attractive loan demand continues. ServisFirst expects normal Q4 seasonality and its regional deposit initiatives to support funding growth.

Regarding credit, management said the quarterly reserve increase was primarily portfolio-based rather than driven by a single impaired asset. The large multifamily portfolio remains in an orderly marketing and liquidation process.

On capital deployment, management emphasized that organic expansion takes precedence over share repurchases. The company intends to remain among the better-capitalized banks in its peer group while evaluating buybacks selectively.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Greetings. Welcome to the ServisFirst Bancshares Third Quarter Earnings Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Mr. Davis Mange, Treasurer. Thank you. You may begin.

Davis Mange

Good afternoon, and welcome to our third quarter earnings call. We'll have Tom Broughton, our CEO; Jim Harper, our Chief Credit Officer; and David Sparacio, our CFO, covering some highlights from the quarter, and then we'll 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. ServisFirst assumes no duty to update them.

With that, I'll turn the call over to Tom.

Thomas Broughton

Thank you, David. Good afternoon, and thank you for joining our third quarter conference call. I'll give you a few quick highlights of the quarter followed by Jim Harper, our Chief Credit Officer; and David Sparacio, our Chief Financial Officer. On the loan side, while the growth in the loan book was lower than we would like. We think it was a combination of unexpected payoffs and loans not closing as expected during the quarter. We did see some low fixed rate loans pay off in the quarter, which is always good for our earnings per share. So that's a very much positive.

We did see some good growth in C&I loans in the third quarter, which is very positive and like seeing that. On the loan pipeline, I went back and looked at the pipeline 3 months ago, and it was very solid, and it was at record levels, but 40% of the total pipeline was over 90 days. So this quarter, the total pipeline, less than 90 days is up 58% over last quarter. So we think that is a good indicator of future closings over the next few months.

We do see the -- our Houston pipeline continues to build. We have a large -- we're talking about it as a large group of bankers out there. They're doing a great job and getting off to a good start. On the deposit side, we did allow some large municipal deposits to roll off in the quarter due to rate competition. And the rate competition is primarily coming from GC banks rather than original buying. So we couldn't compete at that rate and chose to not compete. We do have some deposit initiatives underway and expect good results in the fourth quarter.

We have emphasized noninterest-bearing deposits, and we have seen good growth year-over-year of 12% in noninterest-bearing deposits. So that's a positive for the bank. We did add 6 new bankers during the quarter, including 2 in Houston. We do have, as I mentioned, we have 22 bankers there now, and it's the largest start-up in our history even larger than when we started the Birmingham bank. So it's very much of a work in progress, but we're very optimistic about the future there. We do expect the start-up losses begin to decline over the next few quarters as they do have a solid loan and deposit pipeline.

So with that, I'll turn it over to Jim Harper for a credit update.

Jim Harper

Good afternoon. As Tom mentioned, third quarter loan growth was muted relative to second quarter 2026 performance as we ended the quarter with just over $14.7 billion in outstanding loans versus just under $14.5 billion of loans at 6/30 '26. However, those figures did represent loan growth year-to-date of over $1 billion and produced an annualized growth rate of 10%.

Anecdotally, loan activity does seem to have picked up in recent weeks. So early indications are that we're on pace to finish the year strong. On the top of payoffs, we did experience higher payoffs in the third quarter versus the second quarter. And while we do our best to handicap expected payoff activity on a forward-looking basis, given the uneven nature of payoffs over the course of this year and the current rate environment, it continues to be challenging to pin down a reliable estimate of payoff activity.

Turning to credit quality, while total nonperforming assets increased slightly on a quarter-over-quarter basis, nonaccrual loans decreased by approximately $9.6 million during the quarter to $161.8 million. The net decline in nonaccruals was driven by the successful resolution of 2 problem credits during the quarter as well as the movement of 2 loans into our OREO portfolio.

Lastly, I'll address net charge-offs and provision activity for the quarter. Charge-offs totaled $7.7 million for the third quarter and our $19.8 million year-to-date, equating to 21 basis points annualized. Regarding provisions, we increased our allowance for loan losses by approximately $7.2 million to $189 million as of the end of the quarter, and that allowance increased slightly to 1.28% of loans, which was up 2 basis points from June and covers our nonaccrual loans 118%, up from 107% last quarter.

David's up next with an overview of our quarterly financial performance.

David Sparacio

Thank you, Jim, and good afternoon, everyone. Before I get into the numbers, a quick housekeeping note. We completed our 2-for-1 stock split during the quarter, so every per share figure that I referenced today, including prior periods, is adjusted for that split. The story of the third quarter is consistent with what we have been telling you all year. We continue to increase our revenue through asset growth and a wider margin while holding a best-in-class efficiency ratio and that combination continues to produce top quartile returns.

For the third quarter of 2026, we reported net income of $87.3 million or $0.80 per diluted share. That compares to $0.78 in the second quarter, up 2.6% on a linked-quarter basis. Last year's third quarter included a $7.8 million pretax loss on securities. Excluding that, adjusted diluted EPS from a year ago, $0.65. So on an adjusted basis, we grew earnings per share 23%.

For the first 9 months of 2026, net income was $256 million, up 28% from adjusted EPS of $1.84 in 2025. Freight provision net revenue was $120.7 million, up 1.8% from the second quarter and up 26% from an adjusted preprovision net revenue a year ago. Net interest income was $159.8 million, up $4.2 million or 2.7% from the second quarter and up $26.4 million or nearly 20% from a year ago. Net interest margin was 3.63%, unchanged from last quarter on a GAAP basis.

But as you'll recall, the second quarter included a recovery of interest income from a payoff on a nonaccrual relationship which added about 5 basis points to margin. Excluding that recovery, our margin expanded about 5 basis points this quarter, and it is up 54 basis points from 3.09% a year ago.

On the asset side, total loan yields were 6.24% compared to 6.23% last quarter. Investment yields were 3.85%, up from 3.82% last quarter and 3.60% a year ago. The securities portfolio was $1.56 billion at quarter end, down nearly $290 million from a year ago as we continue to deploy portfolio cash flows into loans.

As we have mentioned in the past, we continue to have low fixed rate loans repricing in the next 12 months. 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 wound portfolio. Additionally, we are restructuring some securities and other non-lending assets in the fourth quarter to improve the margin in future periods. So we expect to continue our margin expansion into 2027.

On the funding side, despite the increase in benchmark rates, our average cost of interest-bearing deposits was flat at 2.80% and is down 61 basis points from a year ago. We were also encouraged to see average interest-bearing checking balances grow by about $378 million in the quarter at a cost of 1.58%. Our average rate on federal funds purchased, which is primarily our correspondent banking funding was 3.78%, compared to 3.74% last quarter and 4.46% a year ago.

On noninterest income, we came in at $13.1 million for the quarter which was up from $12.9 million in the second quarter and up 23% from $10.6 million on an adjusted basis a year ago. Bank-owned life insurance income was the biggest driver at $4.3 million, up 81% year-over-year and 5% linked quarter, reflecting the policies we added over the past year.

Service charges on deposit accounts was $3.4 million, up 4% year-over-year and 3% linked quarter, and credit card income held steady at $2.4 million for the quarter. Noninterest expense was $52.2 million for the year, up 4.5% on a linked-quarter basis and 8.8% year-over-year or $4.2 million. Of this year-over-year increase, 40% of that is the full impact of the Houston market. The remaining expense increase of $2.4 million is composed of mostly nonrecurring expenses experienced during the quarter.

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% adjustment. Our effective tax rate for the quarter was 17.20% compared to 19.94% last quarter and 16.81% a year ago. The linked quarter decline reflects investment tax credits we purchased during the quarter. These continue to give us a meaningful benefit, and we will keep evaluating similar opportunities.

Turning to the balance sheet. As Jim mentioned, our ending loans were $14.7 billion, up $259 million from the second quarter or 7.1% annualized, and up $1.43 billion or 10.7% from a year ago. Average loans grew $320 million or 8.9% annualized.

Over the past year, growth has been balanced between C&I loans up 15% and investor real estate up about 16%. Capital continued to build. Stockholders' equity passed $2 billion for the first time at $2.04 billion. Common equity Tier 1 capital to risk-weighted assets was 11.98% on a preliminary basis, up 49 basis points from 11.49% a year ago. Total risk-based capital was 13.26%. Our Tier 1 leverage ratio was 11.1% and tangible common equity to tangible assets rose to 11.05%, up 33 basis points on a linked quarter and nearly 100 basis points year-over-year.

Tangible book value per share was $18.51, up 14.4% year-over-year. On liquidity, we ended the quarter with $1.19 billion in cash and cash equivalents along with $1.56 billion in securities. We continue to have no FHLB advances and no broker deposits. Our funding remains core and relationship driven.

To sum up the third quarter, earnings per share grew 33% year-over-year. Our core margin expanded again, loans grew more than 10%. Our efficiency ratio stayed around 30%. Credit metrics improved and book value per share is up 14%. We are generating capital faster than we were using it, which gives us real flexibility as we head into the fourth quarter. And with our newly approved share repurchase plan, we expect to deploy some of that excess capital in a value-added way.

With that, we will now take your questions.

Operator

[Operator Instructions] Our first question is from Stephen Scouten of Piper Sandler.

Question-and-Answer Session

Stephen Scouten

Maybe if I could start on the margin. I know, David, you said it feels like you have additional upside into '27 and it looks like the margin was maybe 3.68% in the final month, so up another 5 basis points. Just kind of wondering magnitude change if you still think we're kind of in this 4 to 5 bps a quarter range or if it was the potential for another December hike, if any of that math changes would you guys being slightly liability sensitive and kind of any underlying assumptions within that would be great.

David Sparacio

Yes. No, Stephen. This is David. And I still expect it in the 5 to 7 basis point increase range. I mentioned it, we still have about $1.5 billion of fixed rate, low fixed rate loans, repricing. The average rate on those is about 5.08%. Our going on rate or the average rate for renewals and new loans was 6.59% in the quarter. So we still have some room to grow there. The more important piece of it, I think, is deposit costs, we were able to be selective on deposit costs as the Fed raise rates this quarter. And so we were able to tap down any increases in our deposit costs, and we expect to do the same thing for any future hikes.

Tom mentioned in his comments about the expense of municipal deposits that we walk away because we were being outdated by a GSIB. And so it's going to be an opportunistic pricing on deposits, and it's going to be disciplined on the asset side as we get those repricing opportunities in front of us. And so yes, I don't expect anything. I mean we still -- 53% of our loan book is variable rate.

And so we're going to have some upside potential in existing variable rate loans as well. that get a higher yield as well as the Fed is raising rates. So I mean, you throw all that in, and we still have room for expansion. It's just going to be at a slower pace than what we saw earlier in this year. But the point is, it's still expansion at the end of the day.

Stephen Scouten

Okay. That's really helpful. And then it sounds like the pipelines are building loan demand is good. I guess Houston is still in relatively early stages. So if we have like continued strong loan growth, how much of an impediment is the loan-to-deposit ratio where it sits today? And could deposit growth be a constraint on loan growth if it can't match the robust loan growth you guys have been delivering?

Thomas Broughton

Given a choice, this is Tom, before, Steve. Given a choice, we always prefer to need deposits for the need loans because we can find the deposits. But you can't just go find the loans, as you well know, is they just don't -- you've got to have the loan demand. And so given if we can have the loan demand, and we'll come up with ways to match off with deposits. So -- and this is typically the time of the year we have really good deposit growth in the fourth quarter. So we anticipate that again, and our deposit pipeline is good. So we're optimistic on that front. We've always found a way to grow deposits.

Stephen Scouten

Yes. No, that's fair. And I think, Tom, you mentioned some deposit initiatives underway. Anything specific there that you can comment on, just give us an idea of where you might look to drive deposit growth here?

Thomas Broughton

No. Well, we do it individually by region and each region has our own unique goals and ways to grow deposits. So that is something we work all 12 regions on -- 13, including correspondent. So we feel like we have some good initiatives underway. And you got to go to where you find deposits, first of all. Where is the money?

Operator

Our next question is from David Bishop of the Hovde Group.

David Bishop

Yes. There's a preamble. It sounded like Tom or David mentioned that maybe you're contemplating some restructurings, either in the securities portfolio or not earning assets, maybe what you're thinking along the lines there and how large this could be as a percent of the portfolio?

David Sparacio

Yes. Absolutely, David. This is David again. We did -- you'll notice in the financials, we had a small securities gain. We had some treasuries that were maturing in the fourth quarter. And just in light of the interest rate environment and what was available in the third quarter, we decided to accelerate those and swap those out. And so we did that in the third quarter. We'll continue. We've got some smaller subsets of securities that are maturing in the fourth quarter. So we'll be opportunistic on those as well.

But the big thing is, in July, the treasury had a ruling on exchanges on bank-owned life insurance on BOLI. And so we have about $465 million in assets in BOLI. That's -- we have some pretty low yields on policies that were put on the books in 2011, 2012, 2013. And so we have an opportunity now with that favorable ruling from the treasury to structure a deal where we can improve those yields and do some swap outs on those. So that's the part that we're looking at as we move into the fourth quarter.

Thomas Broughton

We're not contemplating any restructuring where we take security losses. David?

David Bishop

More of a function of better yield on the BOLI policies, is that correct?

David Sparacio

That is correct. Yes.

David Bishop

Got it. Got it. And then I think, David, you mentioned there were some noise in operating expenses this quarter probably looks like other expenses that were not recurring -- any way to size it up from a dollar perspective and perhaps what those pertain to?

David Sparacio

Yes, David, I mean, I would focus on the efficiency ratio, right? I mean we ticked up above 30% this quarter when we had been sub 30% for a couple of quarters. In a normalized environment, I would say we would stay below 30%. We were probably about $2 million over our expense run rate that I would expect due to those onetime nonrecurring costs. And so if you model that out, I think that gets you somewhere around $50 million, $51 million a quarter is what I expect our run rate to be.

Thomas Broughton

So it was just a catch all, David, just a bunch of stuff. I mean we had -- we repeat going to be for sale for soon, interested. We never own the yacht, but it will be our first one. So we have some expenses to get the yacht back in the states and get it operational. It's a fairly expensive proposition. So -- but any we had some other ORE type expenses and some NPA expenses. So we just went ahead and took all those and expensed everything rather than capitalizing them, David.

Operator

Our next question is from Steve Moss of Raymond James.

Stephen Moss

When we were talking a couple of weeks ago, spreads were pretty tight here for new loans -- just kind of curious, have you seen spreads improve enough to be more optimistic on lending? Or just kind of curious on your thoughts in terms of loan pricing here going forward?

Thomas Broughton

That's a really good question. And when I talk to other bankers, which we talk to other bankers all the time, absolutely, we have 400 correspondent banks. And our people doing being more -- our competitors be more rational. And I think I would say definitely, yes, on the -- because when customers ask us for a fixed rate loan quote, I think it blows them back a little bit when we tell them, okay, here's the curve today, and here's your 5-year rate, and they don't like that. They immediately would opt today for a floating rate.

So -- and I think other banks are doing the same thing. So we're seeing a lot less. That's the good part of higher rates is I think you get a little bit rationalized a little bit better competition than we saw. And I don't know, Rodney, do you think?

Rodney Rushing

Yes. It's market reach in the region, market to market, but I think here in Birmingham, we had a number of new banks come into our market 2, 3, 4 years ago that we're doing some irrational things, and that seems to have gone by the wayside for the last 6 months, certainly here in Birmingham.

Thomas Broughton

Yes. I think that's true. So I think there is an upside to higher interest rates, Steve. Of course, will there be demand destruction? Who knows the answer to that question. I think rates were already high enough that it made a lot of projects uneconomical to start. So I don't think it's another 25 or 50 basis points. Now another 100 basis points will be another a whole another matter, right? So I'm optimistic that we'll see continued a little bit more rational competition out there than what we've seen over the last 6 months.

I mean you shouldn't be having an intense loan, the deposit competition at exactly the same time, should you? That seems highly irrational, but that's what we've seen to an extent. So people may be they're going to figure it out. They don't compete on deposits, they need to have higher loan yields. And that's what I tell our people internally, is okay, if you got to pay up for deposits you're going to have to charge more for loans in your region, so that we have an adequate margin within each region.

Stephen Moss

Right. No, I hear you there. Okay. And then maybe just kind of thinking about -- just on to credit here with regard to the reserve about 2 basis points quarter-over-quarter. Just kind of curious, was there -- were there any specific reserves for some credits this quarter that maybe drove that reserve higher? And any update you can provide on the roughly $100 million relationship?

Thomas Broughton

So with regard to specific credits that may have moved the needle over the quarter, quite frankly, we had one notable credit action that was unexpected that we had to address, but even it didn't come close to a basis point of movement. So it was actually across the board and more portfolio based than it was specifically impaired assets.

Stephen Moss

Okay, got it. And in terms of the large credit, just any update you guys have there?

Thomas Broughton

Large credits. Yes. Yes, we took a charge. Just over $7 million this quarter that represents the first true charge-off we've taken with respect to that portfolio of large multifamily properties. We're continuing to work through an orderly liquidation process with those 8 credits and are working with a broker to identify potential sales opportunities to get those marketed and liquidated. And so, so far, so good. We'll hope to kind of execute this in an orderly fashion over the next 2 to 4 quarters.

Stephen Moss

Okay. Got you. And then on the share repurchase announcement here for 2 million shares, curious on your appetite to repurchase shares and just kind of how you're thinking about buy back stock?

Thomas Broughton

That's a real good question, Steve. Once you execute, it's done, right? I mean, you can't -- we can't remarket those shares. We can't -- I'm sure we can figure out how to remarket those shares. But once we repurchase and spend the money, so we're going to be -- we've never done this before. we're going to be very careful about how we do it and when we do it.

And I'm not sure that as insiders, I'm not sure we know we have a present value analysis, but I'm not sure we all know exactly what the future holds and what bank stock prices will do over the next year. But any you meant we're going to be reasonably cautious would be my answer to you, Steve, we try to make good decisions for the shareholders.

Stephen Moss

Maybe put it this way, given where the loan pipeline is and just the economic activity you're seeing in all your markets in Texas expansion, are you just a little more hesitant to deploy that capital near term, combined with moving rates? Or to buy back stock near-term lease?

Thomas Broughton

Yes, given not from a liquidity standpoint, but just from a capital standpoint, we want to make it sure that we always have adequate capital to be able to fund our growth. And that's clearly the number #1 goal. And clearly, it's the #1 thing to send the shareholders' best interest to create value. 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 all the time.

David Sparacio

Thank you, everybody. Thank you for your questions and...

Operator

We do have one question left. Our next question is from David Bishop of the Hovde Group.

David Bishop

Sorry to keep you a little longer, Tom, but staying on that topic of expansion. Just curious in terms of maybe an update in terms of the dollar volume of maybe outstandings in Texas in terms of loans and deposits? And maybe what you're seeing in terms of pricing in that state relative to some of your other regions?

Thomas Broughton

Yes. We found that the pricing is stronger in Texas than we've seen the credits the loans and deposits are larger. Everything is bigger in Texas. As I say, we're optimistic that they'll continue to you lead with credit, the deposits follow, but they are certainly focused on generating net deposit relationships as well as lending relationship. So 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.

And so we're optimistic. There's a lot of -- there's a lot of stuff in the hopper. They're doing a great job. The team is doing a great job of making contact and seeing prospects. And I think with all the mergers in the market out there. I think that's -- certainly makes it a target-rich environment for a good, stable, growing bank. So we're optimistic on that front, Dave.

David Bishop

I'm curious, you've noted the good C&I growth this quarter. And I think the bankers should be hired out of Woodforest were mostly C&I. Is Texas driving the bulk of the C&I growth you're seeing lately? Or is that out across the broader footprint of the company?

David Sparacio

Interestingly, I'd say that they've originated more real estate activity than they ever would have imagined so far. So actually been pretty evenly split out of Texas so far from real estate and C&I. So we have some C&I growth in other regions to over the quarter, which was good to see.

Thomas Broughton

The first thing they run across were commercial real estate opportunities because you talk to developers say, I've got a knee immediate need, and that's the thing that you that's why bankers like to book CRE deals because they're more immediate, right? So C&I takes longer, takes a good bit longer, but we do see a lot of C&I opportunities coming our way, including some energy credits with that are strong credits with very good pricing on them.

David Bishop

Got it. Appreciate that color. And I guess my final question, Tom, just circling back to the share repurchase level. just curious or remind us, are there any sort of enumerated targeted capital levels that lets you sleep better at night, that sort of factor into that decision?

Thomas Broughton

I think we -- the thought was that we could -- unless we see extraordinary organic growth opportunities we can, over time, maybe repurchase some stock in our capital not decline as a percent of assets or CT1. So we feel confident we can do both. And don't want to certainly -- we want to be in the top tier of capitalized banks, well-capitalized banks, and we are, and we want to stay that way. So that's -- we think that contributes to our position as one of the more recognized banks in our peer group. Thank you. Well, thank you, everybody, for joining us today. Have a good evening.

Operator

Thank you. That concludes our question-and-answer and our call. You may disconnect your lines at this time.