ServisFirst Bancshares, Inc. (NYSE: SFBS)

ServisFirst Bancshares, Inc. (SFBS) is a bank holding company based in Birmingham, Alabama, with a strong presence in the southeastern United States. The company operates 30 full-service banking offices across seven states, primarily serving privately held businesses, professionals, and affluent consumers. SFBS focuses on providing competitive products, state-of-the-art technology, and quality service to its customers.

SFBS generates revenue through a diversified range of products and services, including commercial, consumer, and other loans, as well as deposit accounts. Its primary sources of funds are demand, time, savings, and other deposits, as well as the amortization and prepayment of loans and borrowings. The company's principal expenses include interest paid on savings and other deposits, interest paid on other borrowings, employee compensation, office expenses, and other overhead expenses.

The company operates through three primary segments: commercial banking, consumer banking, and treasury and cash management. The commercial banking segment provides a range of loan products, including commercial, industrial, and real estate loans, as well as lines of credit and other credit facilities. The company's commercial lending activity is directed primarily toward businesses and professional service firms with annual sales between $2 million and $250 million. The consumer banking segment offers a variety of consumer loan products, including home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. The treasury and cash management segment provides a range of services, including cash management, wire transfer, and night depository services. The company also offers correspondent banking services to over 370 community banks across the United States.

SFBS competes in a highly competitive market, with five of its largest competitors being Regions Financial Corporation, Wells Fargo & Company, PNC Financial Services Group, Inc., Truist Financial Corporation, and Synovus Financial Corp. The company differentiates itself through its reputation for greater personal service, consistency, flexibility, and the ability to make credit and other business decisions quickly.

In terms of market share, SFBS has a significant presence in its primary service areas, with a market share of 8.7% in the Birmingham-Hoover MSA, 16.2% in the Huntsville MSA, and 10.7% in the Montgomery MSA, among others. The company's combined total deposits in the counties where it operates account for 60.5% of the total deposits in Alabama, 16.1% in Florida, 11.6% in Georgia, 58.9% in North Carolina, 15.1% in South Carolina, 25.2% in Tennessee, and 2.8% in Virginia.

SFBS is subject to extensive state and federal banking laws and regulations, which 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. The consequences of noncompliance with these laws or regulations can include substantial monetary and nonmonetary sanctions.

The company's capital adequacy is subject to the guidelines established by the Federal Reserve and the FDIC. The implementation of Basel III for United States institutions began on January 1, 2015, and current capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets.

In addition to these regulatory requirements, SFBS is also subject to various other laws and regulations, including the Gramm-Leach-Bliley Act, the Bank Secrecy Act, the Money Laundering Control Act, and the USA Patriot Act. These laws and regulations impose requirements and limitations on specified financial transactions and account or other relationships, including obligations of a depository institution to verify customer identity, conduct customer due diligence, report on suspicious activity, and conduct enhanced due diligence on certain accounts. They also prohibit SFBS from engaging in transactions with certain designated restricted countries and persons.

The company is also subject to anti-terrorism and money laundering legislation, which requires it to maintain policies and procedures to comply with these restrictions. Failure to comply with these laws and regulations, or failure to maintain an adequate compliance program, could lead to monetary penalties and reputational damage to the company.