ServisFirst Bancshares Stock

ServisFirst Bancshares, Inc. operates as the holding company for ServisFirst Bank that provides a range of banking services to individual and corporate customers.

The company operates full-service banking offices located in Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also operates loan production offices in Florida. Through its bank, the company originates commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions.

The company’s principal business is to accept deposits from the public and to make loans and other investments. The company’s principal sources of funds for loans and investments are demand, time, savings and other deposits and the amortization and prepayment of loans and borrowings. The company’s principal sources of income are interest and fees collected on loans, interest and dividends collected on other investments, and service charges.

Certain of the company’s subsidiaries hold and manage participations in residential mortgages and commercial real estate loans originated by the company’s bank in Alabama, Florida, Georgia and Tennessee, respectively, and has elected to be treated as a real estate investment trust, or REIT, for U.S. income tax purposes. As a bank holding company, the company is subject to regulation by the Board of Governors of the Federal Reserve System (the Federal Reserve). The company is required to file reports with the Federal Reserve and are subject to regular examinations by that agency.

Business Strategy

The company is a full service commercial bank focused on providing competitive products, state of the art technology and quality service. The company’s business philosophy is to operate as a metropolitan community bank emphasizing prompt, personalized customer service to the individuals and businesses located in its primary markets. The company aggressively markets to its target customers, which include privately held businesses generally with $2 million to $250 million in annual sales, professionals and affluent consumers.

The key elements of the company’s strategy are to focus on core banking business; deliver a broad array of core banking products to its customers; commercial bank emphasis; scalable, decentralized business model; and identify opportunities in vibrant markets.

Markets

The company’s primary markets are broadly defined as the MSAs of Birmingham-Hoover, Huntsville, Montgomery, Dothan, Daphne-Fairhope-Foley and Mobile, Alabama, Crestview-Fort Walton Beach-Destin, Pensacola-Ferry Pass-Brent, North Port-Sarasota-Bradenton, Tallahassee, and Tampa-St. Petersburg-Clearwater, Florida, Atlanta-Sandy Springs-Alpharetta and Columbus, Georgia, Asheville and Charlotte-Concord-Gastonia, North Carolina, Charleston-North Charleston, South Carolina and Nashville-Davidson-Murfreesboro, Tennessee. The company draws most of its deposits from, and conduct most of its lending transactions in, these markets.

Commercial Loans

The company’s commercial lending activity is directed principally toward businesses and professional service firms whose demand for funds falls within its legal lending limits. The company makes loans to small- and medium-sized businesses in its markets for the purpose of upgrading plant and equipment, buying inventory and for general working capital. This category of loans includes loans made to individual, partnership and corporate borrowers, and such loans are obtained for a variety of business purposes. The company offers a variety of commercial lending products to meet the needs of business and professional service firms in its service areas. These commercial lending products include seasonal loans, bridge loans and term loans for working capital, expansion of the business, or acquisition of property, plant and equipment. The company also offers commercial lines of credit. The repayment terms of the company’s commercial loans will vary according to the needs of each customer.

The company’s commercial loans usually are collateralized. Generally, collateral consists of business assets, including accounts receivable, inventory, equipment, or real estate. The company underwrites its commercial loans primarily on the basis of the borrower’s cash flow, ability to service debt, and degree of management expertise. As a general practice, the company takes as collateral a security interest in any available real estate, equipment or personal property. Under limited circumstances, the company may make commercial loans on an unsecured basis.

Real Estate Loans

The company makes commercial real estate loans, construction and development loans and residential real estate loans.

Commercial Real Estate: Commercial real estate loans are generally limited to terms of five years or less, although payments are usually structured on the basis of a longer amortization. The company generally will require personal guarantees from the principal owners of the property supported by a review by its management of the principal owners’ personal financial statements.

Construction and Development Loans: The company makes construction and development loans both on a pre-sold and speculative basis.

Residential Real Estate Loans: The company’s residential real estate loans consist primarily of residential second mortgage loans, residential construction loans and traditional mortgage lending for one-to-four family residences. The company will originate fixed-rate mortgages with long-term maturities. The majority of the company’s fixed-rate loans are sold in the secondary mortgage market. All loans are made in accordance with the company’s appraisal policy, with the ratio of the loan principal to the value of collateral as established by independent appraisal generally not exceeding 85%.

Consumer Loans

The company offers a variety of loans to retail customers in the communities it serves. Consumer loans in general carry a moderate degree of risk compared to other loans. The company’s consumer loans include home equity loans (open and closed-end), vehicle financing, loans secured by deposits, and secured and unsecured personal loans. These various types of consumer loans all carry varying degrees of risk.

Investments

In addition to loans, the company purchases investments in securities, primarily in mortgage-backed securities and state and municipal securities. The company’s investment policy provides that no more than 30% of its total investment portfolio may be composed of municipal securities.

Deposit Services

The company seeks to establish solid core deposits, including checking accounts, money market accounts, savings accounts and a variety of certificates of deposit and IRA accounts. To attract deposits, the company employs an aggressive marketing plan throughout its service areas that features a broad product line and competitive services. The primary sources of core deposits are residents of, and businesses and their employees located in, the company’s market areas. The company has obtained deposits primarily through personal solicitation by its officers and directors, through reinvestment in the community, and through its stockholders, who have been a substantial source of deposits and referrals. The company makes deposit services accessible to customers by offering traditional banking services, including direct deposit, wire transfer, night depository, banking-by-mail and remote capture for non-cash items. The company’s bank is a member of the Federal Deposit Insurance Corporation (FDIC), and thus its deposits (subject to applicable FDIC limits) are FDIC-insured.

Other Banking Services

Given client demand for increased convenience and account access, the company offers a range of products and services, including 24-hour telephone banking, direct deposit, Internet banking, mobile banking, traveler’s checks, safe deposit boxes, attorney trust accounts and automatic account transfers. The company also participates in a shared network of automated teller machines and a debit card system that its customers are able to use, and in certain accounts subject to certain conditions, it rebates to the customer the ATM fees automatically after each business day. Additionally, the company offers Visa credit cards.

Supervision and Regulation

Both the company and its bank are subject to extensive state and federal banking laws and regulations that impose restrictions on, and provide for general regulatory oversight of, its operations. These laws and regulations restrict the company’s permissible activities and investments, impose conditions and requirements on the products and services it offers and the manner in which they are offered and sold, and require compliance with protections for loan, deposit, brokerage, fiduciary, and other customers, among other things.

In addition, the company and the bank are subject to comprehensive supervision and periodic examination by the Federal Reserve, the FDIC, the Alabama State Banking Department (the Alabama Banking Department), and the U.S. Consumer Financial Protection Bureau (the CFPB), among other regulatory bodies.

Because it owns all of the capital stock of the bank, the company is a Bank holding company under the federal Bank Holding Company Act of 1956, as amended (the BHC Act). As a result, the company is primarily subject to the supervision, examination and reporting requirements of the BHC Act and the regulations of the Federal Reserve.

The bank is an Alabama state-chartered bank and, as such, is subject to examination and regulation by the Alabama Banking Department. The bank is not a member of the Federal Reserve System but is subject to various regulations and requirements promulgated by the Federal Reserve, the CFPB, the Federal Trade Commission, the Financial Crimes Enforcement Network, the Office of Foreign Assets Control (OFAC), and other federal regulatory agencies. State non-member banks are, in addition to regulation by the applicable state regulatory authority, subject to supervision and regular examination by the FDIC. The FDIC and the Alabama Banking Department regularly examine the bank’s operations and have the authority to approve or disapprove mergers, the establishment of branches and similar corporate actions. Both regulatory agencies have the power to prevent the development or continuance of unsafe or unsound banking practices or other violations of law. Additionally, the bank’s deposits are insured by the FDIC to the maximum extent provided by law. The extensive state and federal banking laws and regulations to which the bank is subject are generally intended to protect the bank’s customers (including depositors), the FDIC’s Deposit Insurance Fund and the banking system as a whole, and generally is not intended for the protection of stockholders or other investors.

The bank’s deposits are insured by the FDIC to the full extent provided in the Federal Deposit Insurance Act, and the bank pays assessments to the FDIC for that coverage. Under the FDIC’s risk-based deposit insurance assessment system, an insured institution’s deposit insurance premium is computed by multiplying the institution’s assessment base by the institution’s assessment rate. An institution's assessment base and assessment rate are determined each quarter.

The bank’s loan and deposit operations are subject to a number of federal consumer protection laws and regulations, including, among others:

the Truth-In-Lending Act, as implemented by Regulation Z issued by the CFPB, governing, among other things, the disclosure of credit terms to consumers;

the Real Estate Settlement Procedures Act, as implemented by Regulation X issued by the CFPB, prescribing, among other things, requirements in connection with residential mortgage loan applications, settlements, and servicing;

the Home Mortgage Disclosure Act, as implemented by Regulation C issued by the CFPB, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

the Equal Credit Opportunity Act, as implemented by Regulation B issued by the CFPB, prohibiting discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or certain other prohibited factors in all aspects of credit transactions, imposing certain requirements regarding credit applications, and prescribing certain disclosure obligations;

the Fair Credit Reporting Act, as implemented in part by Regulation V issued by the CFPB, governing the use and provision of information to credit reporting agencies by imposing, among other things, requirements for financial institutions to develop policies and procedures to identify potential identity theft, requirements for entities that furnish information to consumer reporting agencies (which would include the bank) to implement procedures and policies regarding the accuracy and integrity of the furnished information and respond to disputes from consumers regarding credit reporting issues, requirements for mortgage lenders to disclose credit scores to consumers, and limitations on the ability of a business that receives consumer information from an affiliate to use that information for marketing purposes;

the Fair Debt Collection Practices Act, as implemented in part by Regulation F issued by the CFPB, governing the manner in which consumer debts may be collected by debt collectors;

the Servicemembers’ Civil Relief Act, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service;

the Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

the Electronic Funds Transfer Act, as implemented by Regulation E issued by the CFPB, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and

the Truth in Savings Act, as implemented by Regulation DD issued by the CFPB, governing, among other things, the disclosure of deposit terms to consumers.

The company is subject to Section 23A of the Federal Reserve Act, which places limits on the amount of: a bank’s loans or extensions of credit to affiliates; a bank’s investment in affiliates; assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve; loans or extensions of credit made by a bank to third parties collateralized by the securities or obligations of affiliates; a bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate; a bank’s transactions with an affiliate involving the borrowing or lending of securities to the extent they create credit exposure to the affiliate; and a bank’s derivative transactions with an affiliate to the extent they create credit exposure to the affiliate.

The company is also subject to Section 23B of the Federal Reserve Act, which, among other things, prohibits an institution from engaging in these transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

The company is subject to a number of U.S. federal, state, local and foreign laws and regulations relating to consumer privacy and data protection. Under privacy protection provisions of the Gramm-Leach-Bliley Act of 1999 and its implementing regulations and guidance, it is limited in its ability to disclose certain non-public information about consumers to nonaffiliated third parties.

The company’s bank is subject to federal laws that are designed to counter money laundering and terrorist financing, and transactions with persons, companies, or foreign governments sanctioned by the United States. These include the USA Patriot Act, the Bank Secrecy Act, the Money Laundering Control Act, and the requirements of the OFAC.

In addition to regulations issued by the Alabama Banking Department and federal banking agencies, the company is subject to regulations issued by other state and federal agencies with respect to certain financial products and services it offers and its operations generally. These include, for example, the U.S. Securities and Exchange Commission (SEC), various taxing authorities, and various state insurance regulators.

Competition

In its markets, the company’s five largest competitors are Regions Bank, Wells Fargo Bank, PNC, Truist and Synovus Bank.

History

ServisFirst Bancshares, Inc. was founded in 2005. The company was incorporated in 2007.