ServisFirst Bancshares
Annual Report 2009

Plain-text annual report

ServisFirst+Bancshares+Inc. ARS 12/31/2009 Section 1: ARS Our Name is Our Mission 2009 ANNUAL REPORT Dear Fellow Stockholder, 2009 proved to be an interesting year, but not as profitable as we would have liked. If ServisFirst Bancshares were an eight-cylinder engine, I would say that we were hitting on about six cylinders for most of the year. I will cover the negatives first. On the expense side, two categories went up - FDIC premiums and credit-related expenses. FDIC premiums for all banks went up dramatically in 2009, and we have no control over that line item. Unfortunately, our stockholders are paying for the poor management of the failed banks and thrifts in the U.S. The other line item, credit-related costs, is entirely our fault. While our credit-related expenses were well below our peer group, they were high by historical standards for a well managed bank. In hindsight, we lent money to some developers and builders who had little liquidity, and I hope we remember this when the good times roll again in the building and development business. Now let me tell you the good news of 2009. Our deposit growth was tremendous as we benefited from a “flight to quality” from customers of our stressed competitors. We were fortunate to have solid growth in new core relationships that we believe will benefit our stockholders for many years. The downside of this deposit influx is that we could not identify good loans as quickly as the deposits came in, so we had negative earnings on this growth for most of 2009. Our Dothan Region opened its new main office in 2009, and enjoyed solid growth in 2009. In fact, our Dothan Region has the highest market share of any of our regions, with Birmingham having the lowest. If all of our regions achieve a market share of 10%, which is possible over time, we will be a $5 billion bank with no additional geographic expansion. We are proud of our seventeen consecutive quarters of profitability, which very few of our peers can say, much less those that are less than five years old. While we have felt a little of the pain that has hit the banking industry, the opportunities that it has created for ServisFirst are greater than I would have ever imagined possible. No one could have written a book as bizarre as the true events in our industry over the past two years. As you know, we are a public, non-traded company and file reports with the Securities and Exchange Commission like all public companies. We have made a decision not to forecast future earnings because we believe ”the proof of the pudding is in the eating.” While we have achieved some national recognition recently, of which we are proud, I can assure you that we are never satisfied with our performance, and all of our 160 employees will continue to work hard to build stockholder value. Sincerely, Thomas A. Broughton III Director, President and Chief Executive Officer 1 CONSOLIDATED FINANCIAL HIGHLIGHTS Selected Balance Sheet Data: Total assets Total loans Loans, net Securities available for sale Securities held to maturity Cash and due from banks Interest-bearing balances with banks Fed funds sold Mortgage loans held for sale Restricted equity securities Premises and equipment, net Deposits Other borrowings Trust preferred securities Other liabilities Stockholders’ equity Selected Income Statement Data: Interest income Interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Noninterest income Noninterest expense Income (loss) before income taxes Income taxes expenses (benefit) Net income (loss) Per Common Share Data: Net income (loss), basic Net income (loss), diluted Book value Weighted average shares outstanding: Basic Diluted Actual shares outstanding Selected Performance Ratios: Return on average assets Return on average stockholders’ equity Net interest margin(1) Efficiency ratio(2) Asset Quality Ratios: Net charge-offs to average loans outstanding Non-performing loans to total loans Non-performing assets to total assets Allowance for loan losses to total gross loans Allowance for loan losses to total non-performing loans Liquidity Ratios: Net loans to total deposits Net average loans to average earning assets Noninterest-bearing deposits to total deposits Capital Adequacy Ratios: Stockholders’ equity to total assets(3) Total risk-based capital(4) Tier I capital(5) Leverage ratio(6) Growth Ratios: As of and for the years ended December 31, 2009 2008 2007 2006 (Dollars in thousands except for share and per share data) As of and for the period from 05/02/05 (date of inception) to 12/31/05 $ $ 1,573,497 1,207,084 1,192,173 255,453 645 26,982 48,544 680 6,202 3,241 5,088 1,432,355 24,922 15,228 3,370 97,622 $ 1,162,272 968,233 957,631 102,339 0 22,844 30,774 19,300 3,320 2,659 3,884 1,037,319 20,000 15,087 3,082 86,784 $ 62,197 18,337 43,860 10,860 33,000 4,413 28,755 8,658 2,780 5,878 $ 5,450 20,474 34,976 6,274 28,702 2,704 20,576 10,830 3,825 7,005 $ $ $ $ 838,250 675,281 667,549 87,233 0 15,756 34,068 16,598 2,463 1,202 4,176 762,683 73 — 2,465 72,247 51,417 25,872 25,545 3,541 22,004 1,441 14,796 8,649 3,152 5,497 $ $ 528,545 440,489 435,071 28,119 0 15,706 22 37,607 2,902 805 2,605 473,348 — — 2,353 52,288 30,610 13,335 17,275 3,252 14,023 911 8,674 6,260 2,189 4,071 $ 1.07 1.02 17.71 $ 1.37 1.31 16.15 $ 1.19 1.16 14.13 $ 1.06 1.06 11.71 277,963 249,250 246,140 924 0 4,188 — 20,725 1,778 230 1,400 244,048 — — 273 33,469 6,580 2,325 4,255 3,521 734 101 3,161 (2,326) (840) (1,486) (0.42) (0.42) 9.56 5,485,972 5,787,643 5,513,482 5,114,194 5,338,883 5,374,022 4,631,047 4,721,864 5,113,482 3,831,881 3,846,111 4,463,607 3,500,000 3,500,000 3,500,000 0.43% 6.33% 3.31% 59.57% 0.60% 1.01% 1.57% 1.24% 122.34% 83.23% 80.06% 14.75% 6.10% 10.48% 8.89% 6.97% 0.71% 9.28% 3.70% 54.61% 0.41% 1.02% 1.74% 1.09% 108.17% 92.32% 85.84% 11.71% 7.38% 11.25% 10.18% 9.01% 0.78% 9.40% 3.78% 54.83% 0.23% 0.66% 0.73% 1.15% 173.94% 87.53% 77.19% 11.15% 8.50% 11.22% 10.12% 8.40% 1.02% 9.96% 4.60% 50.67% 0.28% 0.00% 0.11% 1.23% 5,418.00% 91.91% 89.34% 15.05% 9.89% 11.58% 10.49% 10.32% (1.40)% (6.65)% 4.21% 72.56% 0.53% 0.28% 0.25% 1.25% 446.20% 100.86% 76.35% 20.40% 12.04% 13.42% 12.28% 14.32% Percentage change in net income Percentage change in diluted net income per share Percentage change in assets Percentage change in net loans Percentage change in deposits Percentage change in equity -16.1% -22.5% 35.38% 24.49% 38.08% 12.49% 1. Net interest margin is the net yield on interest earning assets and is the difference between the interest yield earned on interest-earning assets 373.93% 352.38% 90.15% 76.76% 93.96% 56.23% 27.43% 12.93% 38.65% 45.45% 36.00% 20.12% 35.00% 13.21% 58.59% 53.43% 61.13% 38.18% n/a n/a n/a n/a n/a n/a and interest rate paid on interest-bearing liabilities, divided by average earning assets. 2. Efficiency ratio is the result of noninterest expense divided by the sum of net interest income and noninterest income. 3. Total stockholders’ equity excluding unrealized losses on securities available for sale, net of taxes, divided by total assets. 4. Total stockholders’ equity excluding unrealized losses on securities available for sale, net of taxes, and intangible assets plus allowance for loan losses (limited to 1.25% of risk-weighted assets) divided by total risk-weighted assets. The FDIC required minimum to be well-capitalized is 10%. 5. Total stockholders’ equity excluding unrealized losses on securities available for sale, net of taxes, and intangible assets divided by total risk- weighted assets. The FDIC required minimum to be well-capitalized is 6%. 6. Total stockholders’ equity excluding unrealized losses on securities available for sale, net of taxes, and intangible assets divided by average assets less intangible assets. The FDIC required minimum to be well-capitalized is 5%; however, the Alabama Banking Department has required that the Bank maintain a Tier 1 capital leverage ratio of 7%. 2 OFFICERS AND DIRECTORS PRINCIPAL OFFICERS: SERVISFIRST BANCSHARES, INC. Thomas A. Broughton III Chief Executive Officer and President, ServisFirst Bancshares, Inc. William M. Foshee Executive Vice President, Chief Financial Officer, Treasurer and Secretary, ServisFirst Bancshares, Inc. Clarence C. Pouncey III Executive Vice President and Chief Operating Officer, ServisFirst Bancshares, Inc. PRINCIPAL OFFICERS: SERVISFIRST BANK Thomas A. Broughton III Chief Executive Officer and President, ServisFirst Bank William M. Foshee Executive Vice President, Chief Financial Officer, Treasurer and Secretary, ServisFirst Bank Clarence C. Pouncey III Executive Vice President and Chief Operating Officer, ServisFirst Bank G. Carlton Barker Executive Vice President and Montgomery President and Chief Executive Officer, ServisFirst Bank Andrew N. Kattos Executive Vice President and Huntsville President and Chief Executive Officer, ServisFirst Bank Ronald A. DeVane Executive Vice President and Dothan President and Chief Executive Officer, ServisFirst Bank BOARD OF DIRECTORS: SERVISFIRST BANCSHARES, INC. Stanley M. Brock, Chairman of the Board Birmingham, Alabama Thomas A. Broughton III Birmingham, Alabama Michael D. Fuller Birmingham, Alabama James J. Filler Birmingham, Alabama J. Richard Cashio Birmingham, Alabama Hatton C. V. Smith Birmingham, Alabama SERVISFIRST BANCSHARES, INC.: COMMITTEES NOMINATING AND CORPORATE GOVERNANCE Stanley M. Brock Michael D. Fuller J. Richard Cashio AUDIT Stanley M. Brock Michael D. Fuller J. Richard Cashio COMPENSATION James J. Filler Joseph R. Cashio Hatton C.V. Smith 3 OFFICES AND LOCATIONS CORPORATE OFFICES 850 SHADES CREEK PARKWAY SUITE 200 BIRMINGHAM, ALABAMA 35209 205.949.0302 MAIN OFFICE BANKING CENTER 850 SHADES CREEK PARKWAY SUITE 100 BIRMINGHAM, ALABAMA 35209 205.949.0345 DOWNTOWN BANKING CENTER 324 RICHARD ARRINGTON JR. BOULEVARD N. BIRMINGHAM, ALABAMA 35203 205.949.2200 GREYSTONE BANKING CENTER 5403 HIGHWAY 280 SUITE 401 BIRMINGHAM, ALABAMA 35242 205.949.0870 DOTHAN CORPORATE OFFICE & BANKING CENTER 4801 WEST MAIN STREET DOTHAN, AL 36305 334.340.4300 HUNTSVILLE CORPORATE OFFICE & DOWNTOWN BANKING CENTER 401 MERIDIAN STREET SUITE 100 HUNTSVILLE, ALABAMA 35801 256.722.7800 RESEARCH PARK BANKING CENTER 1267-A ENTERPRISE WAY HUNTSVILLE, ALABAMA 35806 256.722.7880 MONTGOMERY CORPORATE OFFICE ONE COMMERCE STREET SUITE 200 MONTGOMERY, ALABAMA 36104 334.223.5800 MONTGOMERY DOWNTOWN BANKING CENTER ONE COMMERCE STREET SUITE 100 MONTGOMERY, ALABAMA 36104 334.223.5800 MONTGOMERY EAST BANKING CENTER 8117 VAUGHN ROAD UNIT 20 MONTGOMERY, ALABAMA 36116 334.223.5600 4 ANNUAL MEETING STOCKHOLDER INFORMATION The Annual Meeting of Stockholders of ServisFirst Bancshares, Inc. will be held at Dothan Country Club, 200 South Cherokee Avenue, Dothan, AL 36301 on Tuesday, May 4th, 2010 at 5:30 p.m., Central Daylight Time. FORM 10-K Form 10-K is ServisFirst Bancshares, Inc.’s annual report filed with the Securities and Exchange Commission. A copy of ServisFirst Bancshares, Inc.’s 10-K is included as part of this Annual Report, and additional copies may be obtained free of charge by writing to us at 850 Shades Creek Parkway, Suite 200, Birmingham, Alabama 35209, Attn.: Investor Relations. TRANSFER AGENT Registrar and Transfer Company 10 Commerce Drive Cranford, NJ 07016 AVAILABLE INFORMATION Our corporate website is www.servisfirstbank.com. We have direct links on this website to our Code of Ethics and the charters for our Audit, Compensation and Nominations and Corporate Governance Committees by clicking on the “Investor Relations” tab. We also have direct links to our filings with the Securities and Exchange Commission (SEC), including, but not limited to, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to these reports. You may also obtain a copy of any such report free of charge from us by requesting such copy in writing to 850 Shades Creek Parkway, Suite 200, Birmingham, Alabama 35209 Attn.: Investor Relations. This Annual Report and accompanying exhibits and all other reports and filings that we file with the SEC will be available for the public to view and copy (at prescribed rates) at the SEC’s Public Reference Room at 100 F Street, Washington, D.C. 20549. You may also obtain copies of such information at the prescribed rates from the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains such reports, proxy and information statements, and other information as we file electronically with the SEC by clicking on http://www.sec.gov. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Mauldin & Jenkins, LLC 2000 Southbridge Parkway Birmingham, Alabama 35209 (205) 445-2880 LEGAL COUNSEL Haskell Slaughter Young & Rediker, LLC 1400 Park Place Tower 2001 Park Place North Birmingham, Alabama 35203 (205) 251-1000 5 ServisFirst Bancshares, Inc. 850 Shades Creek Parkway Suite 200 Birmingham, AL 35209 Toll Free: 866.317.0810 www.servisfirstbank.com Our Name – is Our Mission (Back To Top) 

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