##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
 For the transition period from  to
 Commission file number 0-53149
 SERVISFIRST BANCSHARES, INC.
  Delaware(State or Other Jurisdiction of 
Incorporation or Organization)
    
    26-0734029(I.R.S. Employer
Identification No.)3300 Cahaba Road, Suite 300
Birmingham, Alabama(Address of Principal Executive Offices)
    
    35223(Zip Code)
 (205) 949-0302    NONE   Common Stock, par value $.001 per share
  o þ
  o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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DOCUMENTS INCORPORATED BY REFERENCE
  ii




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##### 



SERVISFIRST BANCSHARES, INC.
 TABLE OF CONTENTS
 FORM 10-K
 DECEMBER 31, 2008
 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    1PART I
    
    
    2ITEM 1. BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    23ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    31ITEM 2. PROPERTIES
    
    
    31ITEM 3. LEGAL PROCEEDINGS
    
    
    32ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    32PART II
    
    
    32ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    32ITEM 6. SELECTED FINANCIAL DATA
    
    
    36ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
    
    
    38ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    56ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    57ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
    
    
    89ITEM 9A. CONTROLS AND PROCEDURES
    
    
    89ITEM 9B. OTHER INFORMATION
    
    
    90PART III
    
    
    90ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    90ITEM 11. EXECUTIVE COMPENSATION
    
    
    91ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
    
    
    91ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    91ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    91PART IV
    
    
    91ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
    
    
    91SIGNATURES
    
    
    93EXHIBIT INDEX
    
    
    iEX-14EX-21EX-24EX-31.1EX-31.2EX-32.1EX-32.2
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    the effects of the current economic recession and the possible continued
deterioration of the United States economy, particularly deterioration of the economy
in Alabama and the communities in which we operate;
    
    the effects of continued deleveraging of United States citizens and businesses;
    
    the current financial and banking crisis resulting in the massive devaluation of the
assets and shareholders equity of many of the United States financial and banking
institutions, including many preeminent institutions such as Washington Mutual, Inc.,
Citigroup, Inc., Wachovia Corporation, Bank of America Corporation, American
International Group, Inc. (AIG), Lehman Brothers Holdings, Inc. and Bear Stearns
Companies, Inc.;
    
    the effects of continued compression of the residential housing industry, the
subprime mortgage crisis and rising unemployment;
    
    credit risks, including credit risks resulting from the devaluation of collateralized
debt obligations (CDOs) and/or structured investment vehicles to which we currently
have no direct exposure;
    
    the Emergency Economic Stabilization Act of 2008 including its Troubled Asset Relief
Program (TARP), American Recovery and Reinvestment Act of 2009, and other
governmental monetary and fiscal policies and legislative and regulatory changes;
    
    the effect of changes in interest rates on the level and composition of deposits,
loan demand and the values of loan collateral, securities and interest sensitive
assets and liabilities;
    
    the effects of terrorism and efforts to combat it;
    
    the effects of competition from other commercial banks, thrifts, mortgage banking
firms, consumer finance companies, credit unions, securities brokerage firms,
insurance companies, money market and other mutual funds and other financial
institutions operating in our market area and elsewhere, including institutions
operating regionally, nationally and internationally, together with competitors
offering banking products and services by mail, telephone and the Internet;
    
    the effect of any merger, acquisition or other transaction to which we or our
subsidiary may from time to time be a party, including our ability to successfully
integrate any business that we acquire; and
    
    the failure of our assumptions underlying the establishment of our loan loss reserves.
  1




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PART I
 
 ITEM 1. BUSINESS
 Overview
     Markets
 Service Areas
   2




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Local Economy of Service Areas
 Birmingham
 American City Business Journals Fortune th
    3




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Huntsville.
 Forbes Forbes Inc. 500 Companies
   Montgomery.
  4




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Dothan
     Deposit Growth in Our Markets
  5




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Competition
   Number
    
    
    
    
    
    Total
    
    
    
    
    
    Marketof
    
    Our Market
    
    Market
    
    
    
    
    
    ShareBranches
    
    Deposits
    
    Deposits
    
    Ranking
    
    PercentageMarket

    (Dollar amounts in millions)Alabama:Birmingham-Hoover MSA
    
    
    3
    
    
    $
    490.7
    
    
    $
    24,369.0
    
    
    
    10/50
    
    
    
    2.01
    %Huntsville MSA
    
    
    2
    
    
    
    231.7
    
    
    
    5,975.2
    
    
    
    7/24
    
    
    
    3.88
    %Montgomery MSA
    
    
    2
    
    
    
    125.1
    
    
    
    6,854.8
    
    
    
    11/20
    
    
    
    1.82
    %
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Business Strategy
 Management Philosophy
  Operating Strategy
  
    
    Quality Employees. We strive to hire highly trained and seasoned staff. Staff are
trained to answer questions about all of our products and services so that the first
employee the customer encounters can usually resolve most questions the customer may have.
    
    Experienced Senior Management. Our senior management has extensive experience in the
banking industry, as well as substantial business and banking contacts in the
Birmingham-Hoover, Huntsville, Montgomery and Dothan, Alabama MSAs.
    
    Relationship Banking. We focus on cross-selling financial products and services to our
customers. Our customer-contact employees are highly trained so that they recognize
customer needs and can meet those needs with a sophisticated array of products and services
offered by us. We view cross-selling as a means to leverage relationships and help provide
useful financial services to retain customers, attract new customers and remain
competitive.
    
    Community-Oriented Directors. Our board of directors for the holding company and the
Bank currently consists of residents of Birmingham, but we also have a non-voting advisory
board of directors in each of the Huntsville, Montgomery and Dothan markets. Each of these
directors represents a wide array of business experience and community involvement in the
service areas in which they reside. As residents of our primary service area, they are
sensitive and responsive to the needs of our proposed customers. In addition, these
directors bring substantial business and banking contacts to us.
    
    Highly Visible Offices. Our headquarters are highly visible in Birminghams south
Jefferson County, downtown Huntsville, downtown Montgomery and downtown Dothan. We believe
that a highly visible headquarters building gives us a powerful presence in the market.
    
    Individual Customer Focus. We focus on providing individual service and attention to
our target customers, which include privately-held businesses with $2 million to $250
million in sales, professionals, and affluent consumers. As our employees, officers and
directors become familiar with our customers on an individual basis, they are able to
respond to credit requests quickly.
    
    Market Segmentation and Advertising. We utilize traditional advertising media such as
local periodicals and local event sponsorships to increase awareness of us. The majority
of our marketing and advertising efforts, however, are focused on leveraging our
managements, directors, advisory directors, and stockholders existing relationship
network.
    
    Telephone and Internet Banking Services. We offer various banking services by telephone
through a 24-hour voice response unit and through Internet banking arrangements.
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Growth Strategy
  
    
    Capitalize on Community Orientation. We seek to capitalize on the extensive
relationships that our management, directors, advisory directors and stockholders have with
businesses and professionals in the Birmingham, Huntsville, Montgomery and Dothan markets.
We believe that these market sectors are not adequately served by the existing banks in
such areas.
    
    Emphasize Local Decision-Making. We emphasize local decision-making by experienced
bankers. We believe this helps us attract local businesses and service-minded customers.
    
    Offer Fee-Generating Products and Services. Our range of services, pricing strategies,
interest rates paid and charged, and hours of operation are structured to attract our
target customers and increase our market share. We strive to offer the businessperson,
professional, entrepreneur and consumer the best loan services available while pricing
these services competitively.
    
    Office Strategy. We have opened two offices in Jefferson County, one, our headquarters
in the Mountain Brook, Alabama area in 2005, and one in downtown Birmingham in 2006, one in
north Shelby County in the Greystone area in 2006, two offices in Huntsville in 2006, two
offices in Montgomery in 2007, and one office in Dothan in 2008.
 Lending Services
 Lending Policy
   Dollar
    
    
    Percentage ofamount
    
    
    portfolioLoan Type
    
    (In thousands)Commercial, financial and agricultural
    
    $
    325,968
    
    
    
    33.67
    %Real estate  construction
    
    
    235,162
    
    
    
    24.29
    %Real estate  mortgage:Owner occupied commercial
    
    
    147,197
    
    
    
    15.20
    %1-4 family
    
    
    137,019
    
    
    
    14.15
    %Other
    
    
    93,412
    
    
    
    9.65
    %Total real estate  mortgage
    
    
    377,628
    
    
    
    39.00
    %Consumer
    
    
    29,475
    
    
    
    3.04
    %Total loans
    
    $
    968,233
    
    
    
    100.00
    %
 Loan Approval and Review
  Commercial Loans
  8




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Real Estate Loans
  Commercial Real Estate.
  Construction and Development Loans.
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Residential Real Estate Loans
 Consumer Loans
   
    
    home equity loans  open and closed end;
    
    vehicle financing;
    
    loans secured by deposits; and
    
    secured and unsecured personal loans.
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Commitments and Contingencies
  Percentage ofDollar
    
    
    contractualamount
    
    
    obligationsLoan Type
    
    (In thousands)Commercial, financial and agricultural
    
    $
    201.5
    
    
    
    68.40
    %Real estate  construction
    
    
    38.2
    
    
    
    12.99
    %Real estate  mortgage
    
    
    41.7
    
    
    
    14.16
    %Consumer
    
    
    13.1
    
    
    
    4.45
    %Total loans
    
    $
    294.5
    
    
    
    100.00
    %
 Policy for Determining the Loan Loss Allowance
  
    
    the asset quality of individual loans;
    
    changes in the national and local economy and business conditions/development, including
underwriting standards, collections, charge-off and recovery practices;
    
    changes in the nature and volume of the loan portfolio;
    
    changes in the experience, ability and depth of our lending staff and management;
    
    changes in the trend of the volume and severity of past dues and classified loans; and
trends in the volume of non-accrual loans, troubled debt restructurings and other
modifications as has occurred in the residential mortgage markets and particularly for
residential construction and development loans;
    
    possible deterioration in collateral segments or other portfolio concentrations;
    
    historical loss experience (when available) used for pools of loans (i.e. collateral
types, borrowers, purposes, etc.);
    
    changes in the quality of our loan review system and the degree of oversight by our
board of directors;
    
    the effect of external factors such as competition and the legal and regulatory
requirement on the level of estimated credit losses in our current loan portfolio; and
    
    off-balance sheet credit risks.
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Investments
   GrossGross Unrealized
    
    
    Unrealized
    
    
    Estimated FairAmortized Cost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in Thousands)Securities available for sale:U.S. Treasury and government
sponsored agencies
    
    $
    5,093
    
    
    $
    42
    
    
    $
    (18
    )
    
    $
    5,117Mortgage-backed securities
    
    
    60,211
    
    
    
    2,338
    
    
    
    (5
    )
    
    
    62,544State and municipal securities
    
    
    29,879
    
    
    
    457
    
    
    
    (857
    )
    
    
    29,479Corporate debt
    
    
    5,971
    
    
    
    
    
    
    
    (772
    )
    
    
    5,199Total securities
    
    $
    101,154
    
    
    $
    2,837
    
    
    $
    (1,652
    )
    
    $
    102,339
  12




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Deposit Services
  Deposits
 Type of Deposit(Dollars in Thousands)Non-interest-bearing demand deposits
    
    $
    121,459Interest-bearing demand deposits
    
    
    147,113Money market accounts
    
    
    602,743Savings accounts
    
    
    777Time deposits
    
    
    25,920Time deposits, over $100,000
    
    
    139,307Total
    
    $
    1,037,319
  Less than$100,000 or more
    
    
    $100,000
    
    
    TotalMaturity
    
    (Dollars in Thousands)Three months or less
    
    $
    58,633
    
    
    $
    8,595
    
    
    $
    67,228Over three through six months
    
    
    27,746
    
    
    
    4,430
    
    
    
    32,176Over six months through one year
    
    
    29,853
    
    
    
    6,891
    
    
    
    36,744Over one year
    
    
    23,075
    
    
    
    6,004
    
    
    
    29,079Total
    
    $
    139,307
    
    
    $
    25,920
    
    
    $
    165,227
 Derivatives
    13




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Other Banking Services
 ®
 Asset, Liability and Risk Management
  Seasonality and Cycles
  Employees
  Supervision and Regulation
  Bank Holding Company Regulation
  cquisition of Banks
  
    
    acquiring direct or indirect ownership or control of any voting shares of any bank if,
after the acquisition, the bank holding company will, directly or indirectly, own or
control more than 5% of the banks voting shares;
    
    acquiring all or substantially all of the assets of any bank; or
    
    merging or consolidating with any other bank holding company.
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Change in Bank Control.
  Permitted Activities
  
    
    banking or managing or controlling banks; and
    
    any activity that the Federal Reserve determines to be so closely related to banking as
to be a proper incident to the business of banking.
  
    
    factoring accounts receivable;
    
    making, acquiring, brokering or servicing loans and usual related activities;
    
    leasing personal or real property;
    
    operating a non-bank depository institution, such as a savings association;
    
    trust company functions;
    
    financial and investment advisory activities;
    
    conducting discount securities brokerage activities;
    
    underwriting and dealing in government obligations and money market instruments;
    
    providing specified management consulting and counseling activities;
    
    performing selected data processing services and support services;
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
    
    acting as an agent or broker in selling credit life insurance and other types of
insurance in connection with credit transactions; and
    
    performing selected insurance underwriting activities.
   
    
    lending, trust and other banking activities;
    
    insuring, guaranteeing, or indemnifying against loss or harm, or providing and issuing
annuities, and acting as principal, agent, or broker for these purposes, in any state;
    
    providing financial, investment, or advisory services;
    
    issuing or selling instruments representing interests in pools of assets permissible for
a bank to hold directly;
    
    underwriting, dealing in or making a market in securities;
    
    other activities that the Federal Reserve may determine to be so closely related to
banking or managing or controlling banks as to be a proper incident to managing or
controlling banks;
    
    foreign activities permitted outside of the United States if the Federal Reserve has
determined them to be usual in connection with banking operations abroad;
    
    merchant banking through securities or insurance affiliates; and
    
    insurance company portfolio investments.
  Support of Subsidiary Institutions
  Bank Regulation and Supervision
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Branching
  de novo de novo de novo
 Prompt Corrective Action
    FDIC Insurance Assessments
  17




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Community Reinvestment Act
  Other Regulations
  Federal Laws Applicable to Credit Transactions
  
    
    Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers;
    
    Home Mortgage Disclosure Act of 1975, 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;
    
    Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or
other prohibited factors in extending credit;
    
    Fair Credit Reporting Act of 1978, governing the use and provisions of information to
credit reporting agencies;
    
    Fair Debt Collection Act, governing the manner in which consumer debts may be collected
by collection agencies;
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
    
    Service Members Civil Relief Act, which amended the Soldiers and Sailors Civil Relief
Act of 1940, governing the repayment terms of, and property rights underlying, secured
obligations of persons in military service; and
    
    Rules and regulations of the various federal agencies charged with the responsibility of
implementing these federal laws.
 Federal Laws Applicable to Deposit Transactions
  
    
    the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with administrative
subpoenas of financial records; and
    
    the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to
implement that act, which govern 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.
 Capital Adequacy
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To Be Well-CapitalizedFor Capital Adequacy
    
    Under Prompt CorrectiveActual
    
    Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in Thousands)As of December 31, 2008:Total Capital to Risk-Weighted Assets:Consolidated
    
    $
    111,424
    
    
    
    11.25
    %
    
    $
    79,247
    
    
    
    8.00
    %
    
    $
    99,058
    
    
    
    10.00
    %ServisFirst Bank
    
    
    110,242
    
    
    
    11.14
    %
    
    
    79,182
    
    
    
    8.00
    %
    
    
    98,977
    
    
    
    10.00
    %Tier 1 Capital to Risk Weighted Assets:Consolidated
    
    
    100,822
    
    
    
    10.18
    %
    
    
    39,623
    
    
    
    4.00
    %
    
    
    59,435
    
    
    
    6.00
    %ServisFirst Bank
    
    
    99,640
    
    
    
    10.07
    %
    
    
    39,591
    
    
    
    4.00
    %
    
    
    59,386
    
    
    
    6.00
    %Tier 1 Capital to Average Assets:Consolidated
    
    
    100,822
    
    
    
    9.01
    %
    
    
    44,746
    
    
    
    4.00
    %
    
    
    55,933
    
    
    
    5.00
    %ServisFirst Bank
    
    
    99,640
    
    
    
    8.91
    %
    
    
    44,746
    
    
    
    4.00
    %
    
    
    55,933
    
    
    
    5.00
    %
 Payment of Dividends
     Restrictions on Transactions with Affiliates
  
    
    a banks loans or extensions of credit to affiliates;
 20




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
    
    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; and
    
    a banks guarantee, acceptance, or letter of credit issued on behalf of an affiliate.
    Privacy
  Consumer Credit Reporting
   
    
    requirements for financial institutions to develop policies and procedures to identify
potential identity theft and, upon the request of a consumer, place a fraud alert in the
consumers credit file stating that the consumer may be the victim of identity theft or
other fraud;
    
    for entities that furnish information to consumer reporting agencies (which would
include the Bank), requirements to implement procedures and policies regarding the accuracy
and integrity of the furnished information and regarding the correction of previously
furnished information that is later determined to be inaccurate; and
    
    a requirement for mortgage lenders to disclose credit scores to consumers.
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Anti-Terrorism and Money Laundering Legislation
  Proposed Legislation and Regulatory Action
  Effect of Governmental Monetary Policies
  Sarbanes-Oxley Act of 2002
  Emergency Economic Stabilization Act of 2008 and Temporary Liquidity Guarantee Program
   22




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Available Information
 www.servisfirstbank.com http://www.sec.gov
 
 ITEM 1A. RISK FACTORS.
 An investment in our common stock involves risks. Before deciding to invest in our common
stock, you should carefully consider the risks described below, together with our consolidated
financial statements and the related notes and the other information included in this annual
report. The discussion below presents material risks associated with an investment in our common
stock. Our business, financial condition and results of speculation could be harmed by any of the
following risks or by other risks identified in this annual report. In such a case, the value of
our common stock could decline, and you may lose all or part of your investment. The risks
discussed below also include forward-looking statements, and our actual results may differ
substantially from those discussed in these forward-looking statements. See also, Cautionary Note
Regarding Forward-Looking Statements on Page 1.
 Risks Related to Our Industry
 There can be no assurance that the Emergency Economic Stabilization Act of 2008 and other recently
enacted government programs will help stabilize the U.S. financial system.
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Current market conditions have, and may continue to, adversely affect us, our customers and our
industry.
  Current market volatility and industry developments may adversely affect our business and financial
results.
   24




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Recent unfavorable developments in the residential mortgage and related markets and the economy may
adversely affect our business.
  Our profitability is vulnerable to interest rate fluctuations.
   We are subject to extensive regulation that could limit or restrict our activities and impose
financial requirements or limitations on the conduct of our business, which limitations or
restrictions could have a material adverse effect on our profitability.
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Changes in monetary policies may have a material adverse effect on our business.
  Risks Related To Our Business
 Our construction and land development loan portfolio is subject to unique risks that could
adversely affect earnings.
   If we fail to maintain effective internal controls over financial reporting or remediate any future
material weakness in our internal control over financial reporting, we may be unable to accurately
report our financial results or prevent fraud, which could have a material adverse effect on our
financial condition and results of operations.
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Our decisions regarding credit risk could be inaccurate and our allowance for loan losses may be
inadequate, which could materially and adversely affect our business, financial condition, results
of operations and future prospects.
  .
  Our business strategy includes the continuation of our growth plans, and our financial condition
and results of operations could be negatively affected if we fail to grow or fail to manage our
growth effectively.
  
    
    maintaining loan quality;
    
    maintaining adequate management personnel and information systems to oversee such
growth;
    
    maintaining adequate control and compliance functions; and
    
    securing capital and liquidity needed to support anticipated growth.
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Our continued pace of growth will require us to raise additional capital in the future to fund such
growth, and the unavailability of additional capital or on terms acceptable to us could adversely
affect our growth and/our financial condition and results of operations.
  Competition from financial institutions and other financial service providers may adversely affect
our profitability.
  de novo de novo
  Unpredictable economic conditions or a natural disaster in the State of Alabama, particularly the
Birmingham-Hoover, Huntsville, Montgomery and Dothan, Alabama MSAs, may have a material adverse
effect on our financial performance.
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We encounter technological change continually and have fewer resources than many of our competitors
to invest in technological improvements.
  Lower lending limits than many of our competitors may limit our ability to attract borrowers.
  We may not be able to successfully expand into new markets.
  Our recent results may not be indicative of our future results, and may not provide guidance to
assess the risk of an investment in our common stock.
  We are dependent on the services of our management team and board of directors, and the unexpected
loss of key officers or directors may adversely affect our operations.
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Our directors and executive officers own a significant portion of our common stock and can exert
influence over our business and corporate affairs
  We are subject to environmental liability risk associated with lending activities.
  Risks Related to Our Common Stock
 We have no current intentions to pay dividends on our common stock.
   There are limitations on your ability to transfer your common stock.
  Alabama and Delaware law limits the ability of others to acquire the Bank which may restrict your
ability to fully realize the value of your common stock.
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Our Certificate of Incorporation authorizes the issuance of preferred stock which could adversely
affect holders of our common stock and discourage a takeover of us by a third party.
  An investment in our common stock is not an insured deposit.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS .
  
 ITEM 2. PROPERTIES.
   StateMSA
    
    
    
    Zip
    
    Owned or
    
    DateOffice Address
    
    City
    
    Code
    
    Leased
    
    OpenedAlabama:Birmingham-Hoover MSA:3300 Cahaba Road, Suite 300
    
    Birmingham
    
    35223
    
    Leased
    
    
    03/02/2005324 Richard Arrington Junior Boulevard North
    
    Birmingham
    
    35203
    
    Leased
    
    
    12/19/20055403 Highway 280, Suite 401
    
    Birmingham
    
    35242
    
    Leased
    
    
    08/15/2006Total:
    
    
    
    3 Office(s)Huntsville MSA:401 Meridian Street, Suite 100
    
    Huntsville
    
    35801
    
    Leased
    
    
    11/21/2006475 Providence Main, Suite 401
    
    Huntsville
    
    35806
    
    Leased
    
    
    08/21/2006Total:
    
    
    
    2 Office(s)Montgomery MSA:1 Commerce Street, Suite 200
    
    Montgomery
    
    36104
    
    Leased
    
    
    06/04/20078117 Vaughn Road, Unit 20
    
    Montgomery
    
    36116
    
    Leased
    
    
    09/26/2007Total:
    
    
    
    2 Office(s)Dothan MSA:256 Honeysuckle Road
    
    Dothan
    
    36305
    
    Leased
    
    
    10/17/2008Brightleaf Court, Suite 12Total:
    
    
    
    1 OfficeTotal Offices in Alabama:
    
    
    
    8 Office(s)
 31




---



##### Table of Contents



ITEM 3. LEGAL PROCEEDINGS.
  ServisFirst Bank v. Max Federal Credit Union
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
  32




---



##### Table of Contents



Dividends
  Recent Sales of Unregistered Securities
 Trust Preferred Offering
   Dothan Offering
  Purchases of Equity Securities by the Registrant and Affiliated Purchasers
  33




---



##### Table of Contents



Equity Compensation Plan Information
  Number of securities to
    
    Weighted-average
    
    Number of securitiesbe issued upon exercise
    
    exercise price of
    
    remaining available forof outstanding options,
    
    outstanding options,
    
    future issuance underPlan Category
    
    warrants and rights
    
    warrants and rights
    
    equity compensation plansEquity compensation awards plans
approved by security holders
    
    
    801,000
    
    
    
    13.98
    
    
    
    284,000Equity compensation awards plans not
approved by security holders
    
    
    55,000
    
    
    
    17.27
    
    
    
    Total
    
    
    856,000
    
    
    
    14.19
    
    
    
    284,000
    Performance Graph
   34




---



##### Table of Contents



DateIndex:
    
    
    
    5/2/2005
    
    
    
    
    12/31/2005
    
    
    
    
    12/31/2006
    
    
    
    
    12/31/2007
    
    
    
    
    12/31/2008ServisFirst Bancshares, Inc.
    
    
    
    100.00
    
    
    
    
    100.00
    
    
    
    
    150.00
    
    
    
    
    200.00
    
    
    
    
    250.00NASDAQ Composite
    
    
    
    100.00
    
    
    
    
    114.35
    
    
    
    
    125.23
    
    
    
    
    137.52
    
    
    
    
    81.77NASDAQ Bank
    
    
    
    100.00
    
    
    
    
    105.91
    
    
    
    
    117.57
    
    
    
    
    91.62
    
    
    
    
    69.70
 35




---



##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA.
  As of and for the years ended December 31,As of and forthe period fromMay 2, 2005(date ofinception) toDecember 31,2008
    
    2007
    
    2006
    
    2005(Dollars in thousands except for share data)Selected Balance Sheet Data:Total assets
    
    $
    1,162,272
    
    
    $
    838,250
    
    
    $
    528,545
    
    
    $
    277,963Total loans
    
    
    968,233
    
    
    
    675,281
    
    
    
    440,489
    
    
    
    249,250Loans, net
    
    
    957,631
    
    
    
    667,549
    
    
    
    435,071
    
    
    
    246,140Securities available for sale
    
    
    102,339
    
    
    
    87,233
    
    
    
    28,119
    
    
    
    924Cash and due from banks
    
    
    22,844
    
    
    
    15,756
    
    
    
    15,706
    
    
    
    4,188Interest bearing balances with banks
    
    
    30,774
    
    
    
    34,068
    
    
    
    22
    
    
    
    Fed funds sold
    
    
    19,300
    
    
    
    16,598
    
    
    
    37,607
    
    
    
    20,725Mortgage loans held for sale
    
    
    3,320
    
    
    
    2,463
    
    
    
    2,902
    
    
    
    1,778Restricted equity securities
    
    
    2,659
    
    
    
    1,202
    
    
    
    805
    
    
    
    230Premises and equipment, net
    
    
    3,884
    
    
    
    4,176
    
    
    
    2,605
    
    
    
    1,400Deposits
    
    
    1,037,319
    
    
    
    762,683
    
    
    
    473,348
    
    
    
    244,048Other borrowings
    
    
    20,000
    
    
    
    73
    
    
    
    
    
    
    
    Trust preferred securities
    
    
    15,087
    
    
    
    
    
    
    
    
    
    
    
    Other liabilities
    
    
    3,082
    
    
    
    2,465
    
    
    
    2,353
    
    
    
    273Stockholders equity
    
    
    86,784
    
    
    
    72,247
    
    
    
    52,288
    
    
    
    33,469Selected Income Statement
Data:Interest income
    
    $
    55,450
    
    
    $
    51,417
    
    
    $
    30,610
    
    
    $
    6,580Interest expense
    
    
    20,474
    
    
    
    25,872
    
    
    
    13,335
    
    
    
    2,325Net interest income
    
    
    34,976
    
    
    
    25,545
    
    
    
    17,275
    
    
    
    4,255Provision for loan losses
    
    
    6,274
    
    
    
    3,541
    
    
    
    3,252
    
    
    
    3,521Net interest income after
provision for loan losses
    
    
    28,702
    
    
    
    22,004
    
    
    
    14,023
    
    
    
    734Non-interest income
    
    
    2,704
    
    
    
    1,441
    
    
    
    911
    
    
    
    101Non-interest expense
    
    
    20,576
    
    
    
    14,796
    
    
    
    8,674
    
    
    
    3,161Income (loss) before income taxes
    
    
    10,830
    
    
    
    8,649
    
    
    
    6,260
    
    
    
    (2,326
    )Income taxes expenses (benefit)
    
    
    3,825
    
    
    
    3,152
    
    
    
    2,189
    
    
    
    (840
    )Net income (loss)
    
    
    7,005
    
    
    
    5,497
    
    
    
    4,071
    
    
    
    (1,486
    )Common Per Share Data:Net income (loss), basic
    
    $
    1.37
    
    
    $
    1.19
    
    
    $
    1.06
    
    
    $
    (0.42
    )Net income (loss), diluted
    
    
    1.31
    
    
    
    1.16
    
    
    
    1.06
    
    
    
    (0.42
    )Book value
    
    
    16.15
    
    
    
    14.13
    
    
    
    11.71
    
    
    
    9.56Weighted average shares outstanding:Basic
    
    
    5,114,194
    
    
    
    4,631,047
    
    
    
    3,831,881
    
    
    
    3,500,000Diluted
    
    
    5,338,883
    
    
    
    4,721,864
    
    
    
    3,846,111
    
    
    
    3,500,000Actual shares outstanding
    
    
    5,374,022
    
    
    
    5,113,482
    
    
    
    4,463,607
    
    
    
    3,500,000
 36




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##### Table of Contents



As of and for the years ended December 31,As of and for theperiod from May2, 2005 (date ofinception) to2008
    
    2007
    
    2006
    
    December 31, 2005Selected Performance Ratios:Return on average assets
    
    
    0.71
    %
    
    
    0.78
    %
    
    
    1.02
    %
    
    
    (1.40
    )%Return on average stockholders equity
    
    
    9.28
    %
    
    
    9.40
    %
    
    
    9.96
    %
    
    
    (6.65
    )%Net interest margin(1)
    
    
    3.70
    %
    
    
    3.78
    %
    
    
    4.60
    %
    
    
    4.21
    %Efficiency ratio(2)
    
    
    54.61
    %
    
    
    54.83
    %
    
    
    50.67
    %
    
    
    72.56
    %Asset Quality Ratios:Net charge-offs to average loans
outstanding
    
    
    0.41
    %
    
    
    0.23
    %
    
    
    0.28
    %
    
    
    0.53
    %Non-performing loans to total loans
    
    
    1.02
    %
    
    
    0.66
    %
    
    
    0.00
    %
    
    
    0.28
    %Non-performing assets to total assets
    
    
    1.74
    %
    
    
    0.73
    %
    
    
    0.11
    %
    
    
    0.25
    %Allowance for loan losses to total
gross loans
    
    
    1.09
    %
    
    
    1.15
    %
    
    
    1.23
    %
    
    
    1.25
    %Allowance for loan losses to total
non-performing loans
    
    
    108.17
    %
    
    
    173.94
    %
    
    
    5,418.00
    %
    
    
    446.20
    %Liquidity Ratios:Net loans to total deposits
    
    
    92.32
    %
    
    
    87.53
    %
    
    
    91.91
    %
    
    
    100.86
    %Net average loans to average
earning assets
    
    
    85.84
    %
    
    
    77.19
    %
    
    
    89.34
    %
    
    
    76.35
    %Non-interest-bearing deposits
to total deposits
    
    
    11.71
    %
    
    
    11.15
    %
    
    
    15.05
    %
    
    
    20.40
    %Capital Adequacy Ratios:Stockholders equity to total
assets(3)
    
    
    7.38
    %
    
    
    8.50
    %
    
    
    9.89
    %
    
    
    12.04
    %Total risked-based capital(4)
    
    
    11.25
    %
    
    
    11.22
    %
    
    
    11.58
    %
    
    
    13.42
    %Tier I capital(5)
    
    
    10.18
    %
    
    
    10.12
    %
    
    
    10.49
    %
    
    
    12.28
    %Leverage ratio(6)
    
    
    9.01
    %
    
    
    8.40
    %
    
    
    10.32
    %
    
    
    14.32
    %Growth Ratios:Percentage change in net income
    
    
    27.43
    %
    
    
    35.00
    %
    
    
    373.93
    %
    
    
    n/aPercentage changed in diluted net
income per share
    
    
    12.93
    %
    
    
    13.21
    %
    
    
    352.38
    %
    
    
    n/aPercentage change in assets
    
    
    38.65
    %
    
    
    58.59
    %
    
    
    90.15
    %
    
    
    n/aPercentage change in net loans
    
    
    45.45
    %
    
    
    53.43
    %
    
    
    76.76
    %
    
    
    n/aPercentage change in deposits
    
    
    36.00
    %
    
    
    61.13
    %
    
    
    93.96
    %
    
    
    n/aPercentage change in equity
    
    
    20.12
    %
    
    
    38.18
    %
    
    
    56.23
    %
    
    
    n/a
 
 (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 and interest rate paid on
interest-bearing liabilities, divided by average earning assets.(2)
    
    Efficiency ratio is the result of non-interest expense divided by the sum of net interest
income and non-interest 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%. 37




---



##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 The following is a narrative discussion and analysis of significant changes in our results of
operations and financial condition. The purpose of this discussion is to focus on information
about our financial condition and results of operations that is not otherwise apparent from the
audited financial statements. Analysis of the results presented should be made with an
understanding of our relatively short history. This discussion should be read in conjunction with
the financial statements and selected financial data included elsewhere in this document.
 Forward-Looking Statements
  Overview
    38




---



##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses
  Impairment of Assets
  Investments Securities Impairment
  Results of Operations
 Net Income
  39




---



##### Table of Contents



Year EndedDecember 31,
    
    
    Change from the2008
    
    
    2007
    
    
    Prior Year(Dollars in Thousands)Interest income
    
    $
    55,450
    
    
    $
    51,417
    
    
    
    7.84
    %Interest expense
    
    
    20,474
    
    
    
    25,872
    
    
    
    (20.86
    )%Net interest income
    
    
    34,976
    
    
    
    25,545
    
    
    
    36.92
    %Provision for loan losses
    
    
    6,274
    
    
    
    3,541
    
    
    
    77.18
    %Net interest income after provision for loan losses
    
    
    28,702
    
    
    
    22,004
    
    
    
    30.44
    %Noninterest income
    
    
    2,704
    
    
    
    1,441
    
    
    
    87.65
    %Noninterest expense
    
    
    20,576
    
    
    
    14,796
    
    
    
    39.06
    %Net income before taxes
    
    
    10,830
    
    
    
    8,649
    
    
    
    25.21
    %Provisions for income taxes
    
    
    3,825
    
    
    
    3,152
    
    
    
    21.35
    %Net income
    
    $
    7,005
    
    
    $
    5,497
    
    
    
    27.43
    %
 Year EndedDecember 31,
    
    
    Change from the2007
    
    
    2006
    
    
    Prior Year(Dollars in Thousands)Interest income
    
    $
    51,417
    
    
    $
    30,610
    
    
    
    67.97
    %Interest expense
    
    
    25,872
    
    
    
    13,335
    
    
    
    94.02
    %Net interest income
    
    
    25,545
    
    
    
    17,275
    
    
    
    47.87
    %Provision for loan losses
    
    
    3,541
    
    
    
    3,252
    
    
    
    8.89
    %Net interest income after provision for loan losses
    
    
    22,004
    
    
    
    14,023
    
    
    
    56.91
    %Noninterest income
    
    
    1,441
    
    
    
    911
    
    
    
    58.18
    %Noninterest expense
    
    
    14,796
    
    
    
    8,674
    
    
    
    70.58
    %Net income before taxes
    
    
    8,649
    
    
    
    6,260
    
    
    
    38.14
    %Provisions for income taxes
    
    
    3,152
    
    
    
    2,189
    
    
    
    43.99
    %Net income
    
    $
    5,497
    
    
    $
    4,071
    
    
    
    35.03
    %
 Net Interest Income
    40




---



##### Table of Contents



Investments
    Net Interest Margin Analysis
   Average Consolidated Balance Sheets and Net Interest AnalysisOn a Fully Tax-Equivalent BasisFor the Years Ended December 312008
    
    
    2007
    
    
    2006Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(Dollars in Thousands)AssetsInterest-earning assets:Loans, net of unearned income(1)
    
    $
    829,426
    
    
    $
    49,997
    
    
    
    6.03
    %
    
    $
    532,280
    
    
    $
    43,839
    
    
    
    8.24
    %
    
    $
    338,472
    
    
    $
    28,280
    
    
    
    8.36
    %Investment securities:Taxable
    
    
    68,683
    
    
    
    3,840
    
    
    
    5.59
    %
    
    
    40,665
    
    
    
    2,235
    
    
    
    5.50
    %
    
    
    5,920
    
    
    
    323
    
    
    
    5.44
    %Tax-exempt(2)
    
    
    23,384
    
    
    
    1,318
    
    
    
    5.64
    %
    
    
    16,972
    
    
    
    962
    
    
    
    5.67
    %
    
    
    2,684
    
    
    
    155
    
    
    
    5.77
    %Total investment
securities(3)
    
    
    92,067
    
    
    
    5,158
    
    
    
    5.60
    %
    
    
    57,637
    
    
    
    3,197
    
    
    
    5.55
    %
    
    
    8,604
    
    
    
    478
    
    
    
    5.54
    %Federal funds sold
    
    
    29,474
    
    
    
    548
    
    
    
    1.86
    %
    
    
    87,592
    
    
    
    4,379
    
    
    
    5.00
    %
    
    
    29,130
    
    
    
    1,871
    
    
    
    6.42
    %Restricted equity
securities
    
    
    2,454
    
    
    
    90
    
    
    
    3.73
    %
    
    
    1,110
    
    
    
    45
    
    
    
    4.05
    %
    
    
    561
    
    
    
    28
    
    
    
    4.99Interest bearing
balances with
banks
    
    
    3,141
    
    
    
    58
    
    
    
    1.83
    %
    
    
    5,286
    
    
    
    250
    
    
    
    4.76
    %
    
    
    6
    
    
    
    
    
    
    
    Total interest-
earnings assets
    
    $
    956,562
    
    
    $
    55,851
    
    
    
    5.84
    %
    
    $
    683,997
    
    
    $
    51,710
    
    
    
    7.56
    %
    
    $
    376,773
    
    
    $
    30,657
    
    
    
    8.14
    %Non-interest earning
assets:
 41




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##### Table of Contents



Average Consolidated Balance Sheets and Net Interest AnalysisOn a Fully Tax-Equivalent BasisFor the Years Ended December 312008
    
    
    2007
    
    
    2006Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(Dollars in Thousands)Cash and due from banks
    
    
    18,247
    
    
    
    
    
    
    
    
    
    
    
    14,558
    
    
    
    
    
    
    
    
    
    
    
    19,994Net fixed assets and
equipment
    
    
    3,998
    
    
    
    
    
    
    
    
    
    
    
    3,312
    
    
    
    
    
    
    
    
    
    
    
    2,009Allowance for loan losses,
accrued interest and other
assets
    
    
    4,514
    
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    
    
    
    
    (1,250
    )Total assets
    
    $
    983,321
    
    
    
    
    
    
    
    
    
    
    $
    701,690
    
    
    
    
    
    
    
    
    
    
    $
    397,526Liabilities and stockholders
equityInterest-bearing liabilities:Interest bearing demand deposits
    
    $
    92,717
    
    
    $
    1,522
    
    
    
    1.64
    %
    
    $
    41,824
    
    
    $
    1,157
    
    
    
    2.77
    %
    
    $
    28,459
    
    
    $
    675
    
    
    
    2.37
    %Savings deposits
    
    
    455
    
    
    
    3
    
    
    
    0.64
    %
    
    
    205
    
    
    
    3
    
    
    
    1.54
    %
    
    
    126
    
    
    
    2
    
    
    
    1.47
    %Money market accounts
    
    
    558,313
    
    
    
    12,411
    
    
    
    2.22
    %
    
    
    458,925
    
    
    
    21,918
    
    
    
    4.76
    %
    
    
    244,618
    
    
    
    11,607
    
    
    
    4.73
    %Time deposits
    
    
    135,128
    
    
    
    5,439
    
    
    
    4.03
    %
    
    
    55,002
    
    
    
    2,793
    
    
    
    5.08
    %
    
    
    21,992
    
    
    
    1,044
    
    
    
    4.75
    %Fed funds purchased
    
    
    4,729
    
    
    
    119
    
    
    
    2.51
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    7
    
    
    
    5.69
    %Other borrowings
    
    
    20,838
    
    
    
    980
    
    
    
    4.71
    %
    
    
    
    
    
    
    1
    
    
    
    7.50
    %
    
    
    
    
    
    
    
    
    
    
    Total interest bearing liabilities
    
    $
    812,180
    
    
    $
    20,474
    
    
    
    2.52
    %
    
    $
    555,956
    
    
    $
    25,872
    
    
    
    4.65
    %
    
    $
    295,317
    
    
    $
    13,335
    
    
    
    4.52
    %Non-interest bearing liabilities:Non-interest bearing
demand deposits
    
    
    92,451
    
    
    
    
    
    
    
    
    
    
    
    84,051
    
    
    
    
    
    
    
    
    
    
    
    60,138Other liabilities
    
    
    3,203
    
    
    
    
    
    
    
    
    
    
    
    3,224
    
    
    
    
    
    
    
    
    
    
    
    1,181Stockholders equity
    
    
    75,034
    
    
    
    
    
    
    
    
    
    
    
    58,553
    
    
    
    
    
    
    
    
    
    
    
    40,878Unrealized gains(loss)
on securities and
derivative
    
    
    453
    
    
    
    
    
    
    
    
    
    
    
    (94
    )
    
    
    
    
    
    
    
    
    
    
    12Total liabilities and
stockholders equity
    
    $
    983,321
    
    
    
    
    
    
    
    
    
    
    $
    701,690
    
    
    
    
    
    
    
    
    
    
    $
    397,526Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.32
    %
    
    
    
    
    
    
    
    
    
    
    2.91
    %
    
    
    
    
    
    
    
    
    
    
    3.62
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.70
    %
    
    
    
    
    
    
    
    
    
    
    3.78
    %
    
    
    
    
    
    
    
    
    
    
    4.60
    %
 
 (1)
    
    Non-accrual loans are included in average loan balances in all periods. Loan fees of
$920,000, $1,423,000 and $1,041,000 are included in interest income in 2008, 2007 and 2006,
respectively.(2)
    
    Interest income and yields are presented on a fully taxable equivalent basis using a tax rate
of 34%.(3)
    
    Unrealized gains (losses) of $376,000, $233,000 and $(25,000) are excluded from the yield
calculation in 2008, 2007 and 2006, respectively. 42




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##### Table of Contents



Change in Interest Income and Expenses on aTax-Equivalent Basis2008 Compared to 2007
    
    
    2007 Compared to 2006Increase (Decrease) in
    
    
    Increase (Decrease) inInterest Income and Expense
    
    
    Interest Income and ExpenseDue to Changes in:
    
    
    Due to Changes in:Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    Total(Dollar amounts in Thousands)Interest-earning assets:Loans, net of unearned income
    
    $
    24,477
    
    
    $
    (18,319
    )
    
    $
    6,158
    
    
    $
    16,302
    
    
    $
    (743
    )
    
    $
    15,559Investment securities:Taxable
    
    
    1,541
    
    
    
    64
    
    
    
    1,605
    
    
    
    1,893
    
    
    
    19
    
    
    
    1,912Tax-exempt
    
    
    363
    
    
    
    (7
    )
    
    
    356
    
    
    
    825
    
    
    
    (18
    )
    
    
    807Restricted equity securities
    
    
    53
    
    
    
    (8
    )
    
    
    45
    
    
    
    8
    
    
    
    11
    
    
    
    19Interest bearing balances with
banks
    
    
    (101
    )
    
    
    (91
    )
    
    
    (192
    )
    
    
    248
    
    
    
    
    
    
    
    248Federal funds sold
    
    
    (2,906
    )
    
    
    (925
    )
    
    
    (3,831
    )
    
    
    3,755
    
    
    
    (1,247
    )
    
    
    2,508Total earning assets
    
    
    23,427
    
    
    
    (19,286
    )
    
    
    4,141
    
    
    
    23,031
    
    
    
    (1,978
    )
    
    
    21,053Interest-bearing liabilities:Interest bearing demand deposits
    
    
    1,408
    
    
    
    (1,043
    )
    
    
    365
    
    
    
    317
    
    
    
    165
    
    
    
    482Savings deposits
    
    
    4
    
    
    
    (4
    )
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Money market accounts
    
    
    4,747
    
    
    
    (14,254
    )
    
    
    (9,507
    )
    
    
    10,167
    
    
    
    142
    
    
    
    10,309Time deposits
    
    
    4,069
    
    
    
    (1,423
    )
    
    
    2,646
    
    
    
    1,564
    
    
    
    187
    
    
    
    1,751Federal funds purchased
    
    
    119
    
    
    
    
    
    
    
    119
    
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )Other borrowings
    
    
    979
    
    
    
    
    
    
    
    979
    
    
    
    1
    
    
    
    
    
    
    
    1Total interest-bearing
liabilities
    
    
    11,326
    
    
    
    (16,724
    )
    
    
    (5,398
    )
    
    
    12,043
    
    
    
    494
    
    
    
    12,537Increase in net interest income
    
    $
    12,101
    
    
    $
    (2,562
    )
    
    $
    9,539
    
    
    $
    10,988
    
    
    $
    (2,472
    )
    
    $
    8,516
      43




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##### Table of Contents



Provision for Loan Losses
    Noninterest Income
   44




---



##### Table of Contents



Noninterest Expense
  Income Tax Expense
  Financial Condition
 Assets
    Investment Portfolio
  45




---



##### Table of Contents



Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gain
    
    
    Loss
    
    
    Value(Dollars in Thousands)As of December 31, 2008Securities available for sale:U.S.
Treasury and government sponsored agencies
    
    $
    5,093
    
    
    $
    42
    
    
    $
    (18
    )
    
    $
    5,117Mortgage-backed securities
    
    
    60,211
    
    
    
    2,338
    
    
    
    (5
    )
    
    
    62,544State and municipal securities
    
    
    29,879
    
    
    
    457
    
    
    
    (857
    )
    
    
    29,479Corporate debt
    
    $
    5,971
    
    
    
    
    
    
    
    (772
    )
    
    
    5,199Total
    
    
    101,154
    
    
    $
    2,837
    
    
    $
    (1,652
    )
    
    $
    102,339As of December 31, 2007Securities available for sale:U.S. Treasury and government sponsored agencies
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    62,162
    
    
    
    471
    
    
    
    (30
    )
    
    
    62,603State and municipal securities
    
    
    24,271
    
    
    
    374
    
    
    
    (15
    )
    
    
    24,630Corporate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    86,433
    
    
    $
    845
    
    
    $
    (45
    )
    
    $
    87,233As of December 31, 2006Securities available for sale:U.S. Treasury and government sponsored agencies
    
    $
    2,000
    
    
    $
    
    
    
    $
    
    
    
    $
    2,000Mortgage-backed securities
    
    
    13,154
    
    
    
    71
    
    
    
    (42
    )
    
    
    13,183State and municipal securities
    
    
    12,969
    
    
    
    59
    
    
    
    (92
    )
    
    
    12,936Corporate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    28,123
    
    
    $
    130
    
    
    $
    (134
    )
    
    $
    28,119
  Maturity of Investment Securities  Amortized Cost
 More thanLess than
    
    
    One year to
    
    
    five years to
    
    
    More thanone year
    
    
    five years
    
    
    ten years
    
    
    ten years
    
    
    Total(Dollars in Thousands)U.S.
Treasury and government sponsored agencies
    
    $
    
    
    
    $
    1,055
    
    
    $
    3,107
    
    
    $
    931
    
    
    $
    5,093Mortgage-backed securities
    
    
    
    
    
    
    28,761
    
    
    
    26,711
    
    
    
    4,739
    
    
    
    60,211State and municipal securities
    
    
    
    
    
    
    2,020
    
    
    
    15,094
    
    
    
    12,765
    
    
    
    29,879Corporate debt
    
    
    
    
    
    
    
    
    
    
    4,032
    
    
    
    1,939
    
    
    
    5,971Total
    
    $
    
    
    
    $
    31,836
    
    
    $
    48,944
    
    
    $
    20,374
    
    
    $
    101,154Tax equivalent yield
    
    
    
    
    
    
    5.17
    %
    
    
    5.50
    %
    
    
    5.82
    %
    
    
    5.46
    %
   46




---



##### Table of Contents



Loan Portfolio
   December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in Thousands)Commercial, financial and
agricultural
    
    $
    325,968
    
    
    $
    219,684
    
    
    $
    187,817
    
    
    $
    95,356Real estate  construction
    
    
    235,162
    
    
    
    195,238
    
    
    
    128,029
    
    
    
    46,997Real estate  mortgage:Owner occupied commercial
    
    
    147,197
    
    
    
    89,014
    
    
    
    53,711
    
    
    
    1-4 family mortgage
    
    
    137,019
    
    
    
    64,325
    
    
    
    25,251
    
    
    
    20,666Other mortgage
    
    
    93,412
    
    
    
    83,663
    
    
    
    20,308
    
    
    
    76,153Total real estate  mortgage
    
    
    377,628
    
    
    
    237,002
    
    
    
    99,270
    
    
    
    96,819Consumer
    
    
    29,475
    
    
    
    23,357
    
    
    
    25,373
    
    
    
    10,078Total loans
    
    
    968,233
    
    
    
    675,281
    
    
    
    440,489
    
    
    
    249,250Less: allowance for loan losses
    
    
    (10,602
    )
    
    
    (7,732
    )
    
    
    (5,418
    )
    
    
    (3,110
    )Net loans
    
    $
    957,631
    
    
    $
    667,549
    
    
    $
    435,071
    
    
    $
    246,140
  December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005Commercial, financial and agricultural
    
    
    33.67
    %
    
    
    32.53
    %
    
    
    42.64
    %
    
    
    38.26
    %Real estate  construction
    
    
    24.29
    %
    
    
    28.91
    %
    
    
    29.07
    %
    
    
    18.86
    %Real estate  mortgage:Owner occupied commercial
    
    
    15.20
    %
    
    
    13.18
    %
    
    
    12.19
    %
    
    
    
    %1-4 family mortgage
    
    
    14.15
    %
    
    
    9.53
    %
    
    
    5.73
    %
    
    
    8.29
    %Other mortgage
    
    
    9.65
    %
    
    
    12.39
    %
    
    
    4.61
    %
    
    
    30.55
    %Total real estate  mortgage
    
    
    39.00
    %
    
    
    35.10
    %
    
    
    22.53
    %
    
    
    38.84
    %Consumer
    
    
    3.04
    %
    
    
    3.46
    %
    
    
    5.76
    %
    
    
    4.04
    %Total loans
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
  Due in 1
    
    
    Due in 1
    
    
    Due afteryear or less
    
    
    to 5 years
    
    
    5 Years
    
    
    TotalType of Loan(1)
    
    (Dollars in Thousands)Commercial, financial and agricultural
    
    $
    245,956
    
    
    $
    63,724
    
    
    $
    16,288
    
    
    $
    325,968Real estate  construction
    
    
    221,787
    
    
    
    12,352
    
    
    
    1,023
    
    
    
    235,162Real estate  mortgage
    
    
    176,016
    
    
    
    163,673
    
    
    
    37,939
    
    
    
    377,628Consumer
    
    
    23,238
    
    
    
    6,192
    
    
    
    45
    
    
    
    29,475Total
    
    $
    666,997
    
    
    $
    245,941
    
    
    $
    55,295
    
    
    $
    968,233Less: allowance for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (10,602
    )Net loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    957,631Interest rate sensitivity:Fixed interest rates
    
    $
    53,510
    
    
    $
    247,547
    
    
    $
    55,294
    
    
    $
    356,351Floating or adjustable rates
    
    
    390,932
    
    
    
    149,338
    
    
    
    71,612
    
    
    
    611,882Total
    
    $
    444,442
    
    
    $
    396,885
    
    
    $
    126,906
    
    
    $
    968,233
 
 (1)
    
    Includes non-accrual loans. 47




---



##### Table of Contents



Asset Quality
  Analysis of Changes in Allowance for Loan Losses
 For the Periodfrom May 2,2005 (date ofinception) toFor the Years Ended December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in Thousands)Allowance for loan losses:Beginning of year
    
    $
    7,732
    
    
    $
    5,418
    
    
    $
    3,110
    
    
    $
    Charge-offs:Commercial, financial and agricultural
    
    
    (545
    )
    
    
    (279
    )
    
    
    (707
    )
    
    
    (358
    )Real estate  construction
    
    
    (2,264
    )
    
    
    (953
    )
    
    
    (38
    )
    
    
    Real estate  mortgage:Owner occupied commercial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1-4 family mortgage
    
    
    (480
    )
    
    
    
    
    
    
    
    
    
    
    Other mortgages
    
    
    (459
    )
    
    
    
    
    
    
    
    
    
    
    Total real estate  mortgages
    
    
    (939
    )
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    (44
    )
    
    
    (8
    )
    
    
    (303
    )
    
    
    (53
    )Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (74
    )
    
    
    
    
    
    
    
    
    
    
    Total charge-offs
    
    
    (3,866
    )
    
    
    (1,240
    )
    
    
    (1,048
    )
    
    
    (411
    )Recoveries:Commercial, financial and agricultural
    
    
    264
    
    
    
    13Real estate  construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    198
    
    
    
    
    
    
    
    104
    
    
    
    Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total recoveries
    
    
    462
    
    
    
    13
    
    
    
    104
    
    
    
    Net charge-offs
    
    
    (3,404
    )
    
    
    (1,227
    )
    
    
    (944
    )
    
    
    (411
    )Provision for loan losses charged to expense
    
    
    6,274
    
    
    
    3,541
    
    
    
    3,252
    
    
    
    3,521Allowance for loan losses at end of period
    
    $
    10,602
    
    
    $
    7,732
    
    
    $
    5,418
    
    
    $
    3,110
 December 31,2008
    
    2007
    
    2006
    
    2005As a percentage of year-to-date average total loans:Net charge-offs
    
    
    0.41
    %
    
    
    0.23
    %
    
    
    0.28
    %
    
    
    0.53
    %Provisions for loan losses
    
    
    0.76
    %
    
    
    0.67
    %
    
    
    0.97
    %
    
    
    4.52
    %Allowance for loan losses as a percentage of:Year end loans
    
    
    1.09
    %
    
    
    1.15
    %
    
    
    1.23
    %
    
    
    1.25
    %Nonperforming assets
    
    
    52.68
    %
    
    
    126.88
    %
    
    
    n/a
    
    
    
    n/a
   48




---



##### Table of Contents



Allocation of Allowance for Loan Losses
 For the Period fromMay 2, 2005 (date ofinception) toFor the Years Ended December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentageof loans in
    
    
    
    
    
    
    of loans in
    
    
    
    
    
    
    of loans in
    
    
    
    
    
    
    of loans ineach
    
    
    
    
    
    
    each
    
    
    
    
    
    
    each
    
    
    
    
    
    
    eachcategory to
    
    
    
    
    
    
    category to
    
    
    
    
    
    
    category to
    
    
    
    
    
    
    category to(Dollars in Thousands)
    
    Amount
    
    
    total loans
    
    
    Amount
    
    
    total loans
    
    
    Amount
    
    
    total loans
    
    
    Amount
    
    
    total loansCommercial, financial and
agricultural
    
    $
    1,489
    
    
    
    33.67
    %
    
    $
    1,714
    
    
    
    32.53
    %
    
    $
    1,767
    
    
    
    42.64
    %
    
    $
    1,032
    
    
    
    38.26
    %Real estate  construction
    
    
    5,473
    
    
    
    24.29
    %
    
    
    3,487
    
    
    
    28.91
    %
    
    
    1,711
    
    
    
    29.07
    %
    
    
    395
    
    
    
    18.86
    %Real estate  mortgage
    
    
    40
    
    
    
    39.00
    %
    
    
    340
    
    
    
    35.10
    %
    
    
    1,162
    
    
    
    22.53
    %
    
    
    1,444
    
    
    
    38.84
    %Consumer
    
    
    5
    
    
    
    3.04
    %
    
    
    12
    
    
    
    3.46
    %
    
    
    114
    
    
    
    5.76
    %
    
    
    61
    
    
    
    4.04
    %Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    3,595
    
    
    
    
    
    
    
    2,179
    
    
    
    
    
    
    
    664
    
    
    
    
    
    
    
    178
    
    
    
    Total
    
    $
    10,602
    
    
    
    100.00
    %
    
    $
    7,732
    
    
    
    100.00
    %
    
    $
    5,418
    
    
    
    100.00
    %
    
    $
    3,110
    
    
    
    100.00
    %
  Nonperforming Assets
   Nonperforming assets
 For the Periodfrom May 2,2005 (date ofinception) toFor the Years Ended December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in Thousands)Non-accrual loans:Number
    
    
    27
    
    
    
    20
    
    
    
    1
    
    
    
    1Amount
    
    $
    7,713
    
    
    $
    4,284
    
    
    $
    1
    
    
    $
    297Accruing loans which are contractually past due 90 days
or more as to principal and interest payments:Number
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    1Amount
    
    $
    1,939
    
    
    $
    187
    
    
    $
    
    
    
    $
    400Loans defined as troubled debt restructurings:Number
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amount
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total nonperforming loans
    
    $
    9,652
    
    
    $
    4,471
    
    
    $
    1
    
    
    $
    697Other real estate owned
    
    $
    10,473
    
    
    $
    1,623
    
    
    $
    585
    
    
    $
    Total nonperforming assets
    
    $
    20,125
    
    
    $
    6,094
    
    
    $
    586
    
    
    $
    697Gross interest income lost on the above loans
    
    $
    450
    
    
    $
    177
    
    
    $
    
    
    
    $
    3Interest income included in net income on the above loans
    
    $
    232
    
    
    $
    
    
    
    $
    
    
    
    $
    
  49




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##### Table of Contents




    
    Close monitoring of the past due and overdraft reports on a weekly basis to identify
deterioration as early as possible and the placement of identified loans on the watchlist;
    
    Extensive monthly credit review for all watchlist/classified loans including
formulation of aggressive workout or action plans. When a workout is not achievable, move
immediately to collection/foreclosure mode to obtain control of the underlying collateral
as rapidly as possible to minimize the deterioration/loss of its value;
    
    Requiring updated financial information, global inventory aging and interest carry
analysis for existing builders to help identify potential future loan payment problems;
and
    
    New construction is generally limited to established builders/developers that are
turning inventory and we have little desire to increase our fundings of developed lots and
land.
 Deposits
  50




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##### Table of Contents



Average DepositsAverage for Years Ended December 31,2008
    
    2007

    
    2006Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageAverage
    
    
    Rate
    
    
    Average
    
    
    Rate
    
    
    Average
    
    
    RateBalance
    
    
    Paid
    
    
    Balance
    
    
    Paid
    
    
    Balance
    
    
    PaidTypes of Deposits:
    
    (Dollars in Thousands)Non-interest-bearing demand deposits
    
    $
    92,451
    
    
    
    
    
    
    $
    84,051
    
    
    
    
    
    
    $
    60,138
    
    
    
    Interest-bearing demand deposits
    
    
    92,717
    
    
    
    1.64
    %
    
    
    41,824
    
    
    
    2.77
    %
    
    
    28,459
    
    
    
    2.37
    %Money market accounts
    
    
    558,313
    
    
    
    2.22
    %
    
    
    458,925
    
    
    
    4.76
    %
    
    
    244,618
    
    
    
    4.73
    %Savings accounts
    
    
    455
    
    
    
    0.64
    %
    
    
    205
    
    
    
    1.54
    %
    
    
    126
    
    
    
    1.47
    %Time deposits
    
    
    19,144
    
    
    
    3.99
    %
    
    
    9,058
    
    
    
    4.92
    %
    
    
    3,596
    
    
    
    4.74
    %Time deposits, $100,000 and over
    
    
    115,984
    
    
    
    4.04
    %
    
    
    45,944
    
    
    
    5.11
    %
    
    
    18,396
    
    
    
    4.75
    %Purchased time deposits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total deposits
    
    $
    879,064
    
    
    
    
    
    
    $
    640,007
    
    
    
    
    
    
    $
    355,333
  $100,000 or more
    
    
    Less than $100,000
    
    
    TotalMaturity
    
    (Dollars in Thousands)Three months or less
    
    $
    58,633
    
    
    $
    8,595
    
    
    $
    67,228Over three through six months
    
    
    27,746
    
    
    
    4,430
    
    
    
    32,176Over six months through one
year
    
    
    29,853
    
    
    
    6,891
    
    
    
    36,744Over one year
    
    
    23,075
    
    
    
    6,004
    
    
    
    29,079Total
    
    $
    139,307
    
    
    $
    25,920
    
    
    $
    165,227
    Stockholders Equity
     51




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##### Table of Contents



Borrowed Funds
  Off-balance sheet arrangements
    2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Commitments to extend credit
    
    $
    294,502
    
    
    $
    291,937
    
    
    $
    141,380Credit card arrangements
    
    
    11,323
    
    
    
    5,849
    
    
    
    2,441Standby letters of credit
and financial guarantees
    
    
    32,655
    
    
    
    21,010
    
    
    
    32,924Total
    
    $
    338,480
    
    
    $
    318,796
    
    
    $
    176,745
   Derivatives
   52




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##### Table of Contents



Liability and Asset Management
   Liquidity and Capital Adequacy
 Liquidity
    53




---



##### Table of Contents



Payments due by PeriodLess Than
    
    
    1-3
    
    
    More than 3 to 5
    
    
    More thanTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsContractual Obligations (1):
    
    (Dollars in Millions)Deposits without a stated maturity
    
    $
    872
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    872Certificates of deposit(2)
    
    
    165
    
    
    
    136
    
    
    
    21
    
    
    
    8
    
    
    
    Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    16
    
    
    
    1
    
    
    
    3
    
    
    
    3
    
    
    
    9Purchase obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Federal Home Loan Bank borrowings
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    Trust preferred securities
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Other long term liabilitiesTotal
    
    $
    1,088
    
    
    $
    137
    
    
    $
    24
    
    
    $
    31
    
    
    $
    896
 
 (1)
    
    Excludes interest.(2)
    
    Certificates of deposit give customers rights to early withdrawal. Early withdrawals
may be subject to penalties. The penalty amount depends on the remaining time to maturity
at the time of early withdrawal. Capital Adequacy
   Actual atWell-Capitalized
    
    December 31, 2008Total risk-based capital
    
    
    10.00
    %
    
    
    11.25
    %Tier 1 capital
    
    
    6.00
    %
    
    
    10.18
    %Leverage ratio
    
    
    5.00
    %
    
    
    9.01
    %
  Impact of Inflation
  54




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##### Table of Contents



Recent Accounting Pronouncements
   Effective Date of FASB Statement
No. 157
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133
 Business Combinations Business Combinations.
 55




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##### Table of Contents



Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
     Rate Sensitivity Gap Analysis0-3
    
    
    4-12
    
    
    1-5
    
    
    OverMonths
    
    
    Months
    
    
    Years
    
    
    5 years
    
    
    TotalInterest earning assets:
    
    (Dollars in Thousands)Loans
    
    $
    630,036
    
    
    $
    60,253
    
    
    $
    239,106
    
    
    $
    38,838
    
    
    $
    968,233Securities
    
    
    4,075
    
    
    
    12,464
    
    
    
    40,576
    
    
    
    45,224
    
    
    
    102,339Federal funds sold
    
    
    19,300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,300Interest bearing balances with banks
    
    
    30,774
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,774Total interest-earning assets
    
    $
    684,185
    
    
    $
    72,717
    
    
    $
    279,682
    
    
    $
    84,062
    
    
    $
    1,120,646Interest bearing liabilities:Deposits:Interest checking
    
    $
    147,099
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    147,099Money market and savings
    
    
    750,593
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750,593Time deposits
    
    
    67,228
    
    
    
    68,824
    
    
    
    29,169
    
    
    
    
    
    
    
    165,221Other borrowings
    
    
    
    
    
    
    
    
    
    
    35,000
    
    
    
    
    
    
    
    35,000Total interest-bearing liabilities
    
    $
    964,920
    
    
    $
    68,824
    
    
    $
    64,169
    
    
    $
    
    
    
    $
    1,097,913Interest sensitivity gap
    
    $
    (280,735
    )
    
    $
    3,893
    
    
    $
    215,513
    
    
    $
    82,876
    
    
    $
    22,773Cumulative sensitivity gap
    
    $
    (280,735
    )
    
    $
    (276,142
    )
    
    $
    (61,325
    )
    
    $
    22,733Percent of
cumulative sensitivity gap to total interest-earning assets
    
    
    (25.1
    )%
    
    
    (24.6
    )%
    
    
    (5.5
    )%
    
    
    2.0
    %
 56




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##### Table of Contents



Economic Value of Equity Under Rate ShockAt December 31, 2008-200bps
    
    -100bps
    
    0bps
    
    +100bps
    
    +200bpsRate Change
    
    (Dollars in Thousands)Economic value of equity
    
    $
    75,618
    
    
    $
    88,209
    
    
    $
    86,784
    
    
    $
    83,391
    
    
    $
    79,476Actual dollar change
    
    $
    (11,116
    )
    
    $
    1,425
    
    
    
    
    
    
    $
    (3,393
    )
    
    $
    7,308Percent change
    
    
    (12.87
    )%
    
    
    1.64
    %
    
    
    
    
    
    
    (3.91
    )%
    
    
    ( 8.42
    )%
   
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  PageReport of Independent Registered Public Accounting Firm
    
    
    58Consolidated Balance Sheets at December 31, 2008 and 2007
    
    
    59Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006
    
    
    60Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2008,
2007 and 2006
    
    
    61Consolidated Statements of Stockholders Equity for Years Ended December 31, 2008, 2007
and 2006
    
    
    62Consolidated Statements of Cash Flows for the Years December 31, 2008, 2007 and 2006
    
    
    63Notes to Consolidated Financial Statements
    
    
    64
 57




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors
ServisFirst Bancshares, Inc.
Birmingham, Alabama
 ServisFirst Bancshares, Inc.
     
 58




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 
 CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2008 AND 2007
 (In thousands, except share and per share amounts)
 2008
    
    
    2007ASSETSCash and due from banks
    
    $
    22,844
    
    
    $
    15,756Interest bearing balances due from depository institutions
    
    
    30,774
    
    
    
    34,068Federal funds sold
    
    
    19,300
    
    
    
    16,598Cash and cash equivalents
    
    
    72,918
    
    
    
    66,422Securities available for sale
    
    
    102,339
    
    
    
    87,233Restricted equity securities
    
    
    2,659
    
    
    
    1,202Mortgage loans held for sale
    
    
    3,320
    
    
    
    2,463Loans
    
    
    968,233
    
    
    
    675,281Less allowance for loan losses
    
    
    (10,602
    )
    
    
    (7,732
    )Loans, net
    
    
    957,631
    
    
    
    667,549Premises and equipment, net
    
    
    3,884
    
    
    
    4,176Accrued interest and dividends receivable
    
    
    4,026
    
    
    
    3,949Deferred tax assets
    
    
    3,585
    
    
    
    2,432Other real estate owned
    
    
    10,473
    
    
    
    1,623Other assets
    
    
    1,437
    
    
    
    1,201Total assets
    
    $
    1,162,272
    
    
    $
    838,250LIABILTIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Noninterest-bearing
    
    $
    121,459
    
    
    $
    85,018Interest bearing
    
    
    915,860
    
    
    
    677,665Total deposits
    
    
    1,037,319
    
    
    
    762,683Other borrowings
    
    
    20,000
    
    
    
    73Trust preferred securities
    
    
    15,087
    
    
    
    Accrued interest payable
    
    
    1,280
    
    
    
    782Other liabilities
    
    
    1,803
    
    
    
    2,465Total liabilities
    
    
    1,075,489
    
    
    
    766,003Shareholders equity:Common stock, par value $.001 per share; 15,000,000 shares authorized;
5,374,022 and 5,113,482 shares issued and outstanding
    
    
    5
    
    
    
    5Preferred stock, par value $.001 per share; 1,000,000 shares authorized;
no shares outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    70,729
    
    
    
    63,159Retained earnings
    
    
    15,087
    
    
    
    8,082Accumulated other comprehensive income
    
    
    962
    
    
    
    1,001Total shareholders equity
    
    
    86,783
    
    
    
    72,247Total liabilities and shareholders equity
    
    $
    1,162,272
    
    
    $
    838,250
 See Notes to Consolidated Financial Statements.
 59




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
 YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 (In thousands, except share and per share amounts)
 2008
    
    
    2007
    
    
    2006Interest income:Interest and fees on loans
    
    $
    49,997
    
    
    $
    43,839
    
    
    $
    28,280Taxable securities
    
    
    3,840
    
    
    
    2,235
    
    
    
    323Nontaxable securities
    
    
    917
    
    
    
    669
    
    
    
    108Federal funds sold
    
    
    548
    
    
    
    4,379
    
    
    
    1,871Other interest and dividends
    
    
    148
    
    
    
    295
    
    
    
    28Total interest income
    
    
    55,450
    
    
    
    51,417
    
    
    
    30,610Interest expense:Deposits
    
    
    19,375
    
    
    
    25,871
    
    
    
    13,328Borrowed funds
    
    
    1,099
    
    
    
    1
    
    
    
    7Total interest expense
    
    
    20,474
    
    
    
    25,872
    
    
    
    13,335Net interest income
    
    
    34,976
    
    
    
    25,545
    
    
    
    17,275Provision for loan losses
    
    
    6,274
    
    
    
    3,541
    
    
    
    3,252Net interest income after
provision for loan losses
    
    
    28,702
    
    
    
    22,004
    
    
    
    14,023Noninterest income:Service charges on deposit accounts
    
    
    1,270
    
    
    
    584
    
    
    
    376Other operating income
    
    
    1,434
    
    
    
    857
    
    
    
    535Total noninterest income
    
    
    2,704
    
    
    
    1,441
    
    
    
    911Noninterest expenses:Salaries and employee benefits
    
    
    10,552
    
    
    
    9,308
    
    
    
    5,238Equipment and occupancy expense
    
    
    2,157
    
    
    
    1,566
    
    
    
    826Professional services
    
    
    986
    
    
    
    528
    
    
    
    492Other operating expenses
    
    
    6,881
    
    
    
    3,394
    
    
    
    2,118Total noninterest expenses
    
    
    20,576
    
    
    
    14,796
    
    
    
    8,674Income before income taxes
    
    
    10,830
    
    
    
    8,649
    
    
    
    6,260Provision for income taxes
    
    
    3,825
    
    
    
    3,152
    
    
    
    2,189Net income
    
    $
    7,005
    
    
    $
    5,497
    
    
    $
    4,071Basic earnings per share
    
    $
    1.37
    
    
    $
    1.19
    
    
    $
    1.06Diluted earnings per share
    
    $
    1.31
    
    
    $
    1.16
    
    
    $
    1.06
 See Notes to Consolidated Financial Statements.
 60




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 (In thousands)
 2008
    
    
    2007
    
    
    2006Net income
    
    $
    7,005
    
    
    $
    5,497
    
    
    $
    4,071Other comprehensive income (loss), net of tax:Unrealized holding gains arising during period from securities
available for sale, net tax of $131, $273, and $6 for 2008,
2007 and 2006, respectively
    
    
    254
    
    
    
    531
    
    
    
    12Unrealized holding gains arising during period from derivative,
net of
tax of $23, $125 and $14 for 2008, 2007 and 2006, respectively
    
    
    67
    
    
    
    445
    
    
    
    28Reclassification adjustment for net gains realized on derivatives
in net income, net of tax of $184
    
    
    (360
    )
    
    
    
    
    
    
    Other comprehensive income (loss)
    
    
    (39
    )
    
    
    976
    
    
    
    40Comprehensive income
    
    $
    6,966
    
    
    $
    6,473
    
    
    $
    4,111
 See Notes to Consolidated Financial Statements.
 61




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY
 YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 (In thousands, except share amounts)
 Accumulated Other
    
    
    TotalAdditional
    
    
    Retained Earnings
    
    
    Comprehensive
    
    
    ShareholdersCommon Stock
    
    
    Paid-In Capital
    
    
    (Deficient)
    
    
    Income (Loss)
    
    
    EquityBalance, December 31, 2005
    
    $
    17,500
    
    
    $
    17,470
    
    
    $
    (1,486
    )
    
    $
    (15
    )
    
    $
    33,469Sale of 963,607 shares
    
    
    4,818
    
    
    
    9,593
    
    
    
    
    
    
    
    
    
    
    
    14,411Other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    40Stock based compensation expense
    
    
    
    
    
    
    297
    
    
    
    
    
    
    
    
    
    
    
    297Net income
    
    
    
    
    
    
    
    
    
    
    4,071
    
    
    
    
    
    
    
    4,071Balance, December 31, 2006
    
    
    22,318
    
    
    
    27,360
    
    
    
    2,585
    
    
    
    25
    
    
    
    52,288Change in par value
    
    
    (22,314
    )
    
    
    22,314
    
    
    
    
    
    
    
    
    
    
    
    Sale of 649,875 shares
    
    
    1
    
    
    
    12,945
    
    
    
    
    
    
    
    
    
    
    
    12,946Other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    976
    
    
    
    976Stock based compensation expense
    
    
    
    
    
    
    540
    
    
    
    
    
    
    
    
    
    
    
    540Net income
    
    
    
    
    
    
    
    
    
    
    5,497
    
    
    
    
    
    
    
    5,497Balance, December 31, 2007
    
    
    5
    
    
    
    63,159
    
    
    
    8,082
    
    
    
    1,001
    
    
    
    72,247Sale of 260,540 shares
    
    
    
    
    
    
    6,474
    
    
    
    
    
    
    
    
    
    
    
    6,474Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39
    )
    
    
    (39
    )Stock based compensation expense
    
    
    
    
    
    
    671
    
    
    
    
    
    
    
    
    
    
    
    671Relative fair value of warrants issued in
connection with subordinated
debentures
    
    
    
    
    
    
    425
    
    
    
    
    
    
    
    
    
    
    
    425Net income
    
    
    
    
    
    
    
    
    
    
    7,005
    
    
    
    
    
    
    
    7,005Balance, December 31, 2008
    
    $
    5
    
    
    $
    70,729
    
    
    $
    15,087
    
    
    $
    962
    
    
    $
    86,783
 See Notes to Consolidated Financial Statements.
 62




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
 (In thousands)
 2008
    
    
    2007
    
    
    2006OPERATING
ACTIVITIESNet income
    
    $
    7,005
    
    
    $
    5,497
    
    
    $
    4,071Adjustments to reconcile net income to net cash provided by
operating activities:Deferred tax benefit
    
    
    (1,237
    )
    
    
    (1,036
    )
    
    
    (837
    )Provision for loan losses
    
    
    6,274
    
    
    
    3,541
    
    
    
    3,252Depreciation and amortization
    
    
    926
    
    
    
    615
    
    
    
    396Write-down
of other real estate owned
    
    
    1,289
    
    
    
    
    
    
    
    Write-down of investment in limited partnership
    
    
    
    
    
    
    
    
    
    
    541Net accretion of investments
    
    
    (320
    )
    
    
    (447
    )
    
    
    (29
    )Amortized gain on derivative
    
    
    544
    
    
    
    
    
    
    
    Increase in accrued interest and dividends receivable
    
    
    (77
    )
    
    
    (1,047
    )
    
    
    (1,693
    )Stock compensation expense
    
    
    671
    
    
    
    540
    
    
    
    297Increase in accrued interest payable
    
    
    498
    
    
    
    226
    
    
    
    383Proceeds from mortgage loans held for sale
    
    
    79,751
    
    
    
    50,232
    
    
    
    45,531Originations of mortgage loans held for sale
    
    
    (81,025
    )
    
    
    (49,793
    )
    
    
    (46,655
    )Loss on sale
of other real estate owned
    
    
    180
    
    
    
    
    
    
    
    Net change in other assets, liabilities, and other operating
activities
    
    
    (2,281
    )
    
    
    1,879
    
    
    
    1,958Net cash provided by operating activities
    
    
    12,198
    
    
    
    10,207
    
    
    
    7,215INVESTMENT ACTIVITIESPurchase of securities available for sale
    
    
    (23,825
    )
    
    
    (94,679
    )
    
    
    (28,123
    )Proceeds from maturities, calls and paydowns of securities
available for sale
    
    
    9,434
    
    
    
    36,816
    
    
    
    975Increase in loans
    
    
    (308,944
    )
    
    
    (239,160
    )
    
    
    (192,767
    )Purchase of premises and equipment
    
    
    (817
    )
    
    
    (2,186
    )
    
    
    (1,601
    )Purchase of restricted equity securities
    
    
    (1,457
    )
    
    
    (397
    )
    
    
    (574
    )Purchase of interest rate floor
    
    
    
    
    
    
    
    
    
    
    (230
    )Proceeds from sale of interest rate floor
    
    
    1,000
    
    
    
    
    
    
    
    Proceeds from tenant reimbursement
    
    
    183
    
    
    
    
    
    
    
    Proceeds from sale of other real estate owned and repossessions
    
    
    4,111
    
    
    
    261
    
    
    
    Additions to
other real estate owned
    
    
    (1,424
    )
    
    
    (129
    )
    
    
    (184
    )Net cash used in investing activities
    
    
    (321,739
    )
    
    
    (299,474
    )
    
    
    (222,504
    )FINANCING ACTIVITIESNet increase in non-interest bearing deposits
    
    
    36,441
    
    
    
    13,794
    
    
    
    21,480Net increase in interest-bearing deposits
    
    
    238,195
    
    
    
    275,541
    
    
    
    207,820Proceeds from other borrowings
    
    
    20,317
    
    
    
    73
    
    
    
    Repayments and maturities of borrowings
    
    
    (390
    )
    
    
    
    
    
    
    Proceeds from sale of stock, net
    
    
    6,474
    
    
    
    12,946
    
    
    
    14,411Net proceeds from issuance of trust preferred securities
    
    
    15,000
    
    
    
    
    
    
    
    Net cash provided by investing activities
    
    
    316,037
    
    
    
    302,354
    
    
    
    243,711Net increase in cash and cash equivalents
    
    
    6,496
    
    
    
    13,087
    
    
    
    28,422Cash and cash equivalents at beginning of year
    
    
    66,422
    
    
    
    53,335
    
    
    
    24,913Cash and cash equivalents at end of year
    
    $
    72,918
    
    
    $
    66,422
    
    
    $
    53,335SUPPLEMENTAL DISCLOSURECash paid for:Interest
    
    $
    19,976
    
    
    $
    25,646
    
    
    $
    12,953Income taxes
    
    
    4,169
    
    
    
    4,371
    
    
    
    1,605NONCASH TRANSACTIONSTransfers of loans from held for sale to held for investment
    
    $
    417
    
    
    $
    
    
    
    $
    Other real estate acquired in settlement of loans
    
    
    13,650
    
    
    
    3,141
    
    
    
    585Finance sale
of other real estate owned
    
    
    555
    
    
    
    1,049
    
    
    
    
 See Notes to Consolidated Financial Statements.
 63




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations
  Basis of Presentation and Accounting Estimates
  Cash, Due From Banks, Interest Bearing Balances Due from Financial Institutions
   Investment Securities
   64




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. Summary of Significant Accounting Policies  (Continued)
 Investments in Restricted Equity Securities Carried at Cost
  Loans
  Mortgage Loans Held for Sale
  Allowance for Loan Losses
  Foreclosed Real Estate
  Premises and Equipment
  65




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. Summary of Significant Accounting Policies  (Continued)
 Derivatives and Hedging Activities
 Accounting for Derivative Instruments and Hedging
Activities
     66




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. Summary of Significant Accounting Policies  (Continued)
 Income Taxes
  Stock-Based Compensation
 Share-based
 Earnings Per Common Share
  Loan Commitments and Related Financial Instruments
  Fair Value of Financial Instruments
  Comprehensive Income
  Advertising
  Recent Accounting Standards
  67




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. Summary of Significant Accounting Policies  (Continued)
 Recent Accounting Standards  (continued)
    Effective Date of FASB
Statement No. 157
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 68




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. Summary of Significant Accounting Policies  (Continued)
  NOTE 2. INVESTMENT SECURITIES
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gain
    
    
    Loss
    
    
    Market Value(In Thousands)Securities Available for SaleDecember 31, 2008:U.S.
Treasury and government sponsored agencies
    
    $
    5,093
    
    
    $
    42
    
    
    $
    (18
    )
    
    $
    5,117Mortgage-backed securities
    
    
    60,211
    
    
    
    2,338
    
    
    
    (5
    )
    
    
    62,544State and municipal securities
    
    
    29,879
    
    
    
    457
    
    
    
    (857
    )
    
    
    29,479Corporate debt
    
    
    5,971
    
    
    
    
    
    
    
    (772
    )
    
    
    5,199Total
    
    $
    101,154
    
    
    $
    2,837
    
    
    $
    (1,652
    )
    
    $
    102,339Securities Available for SaleDecember 31, 2007:U.S. Treasury and government sponsored agencies
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    62,162
    
    
    
    471
    
    
    
    (30
    )
    
    
    62,603State and municipal securities
    
    
    24,271
    
    
    
    374
    
    
    
    (15
    )
    
    
    24,630Corporate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    86,433
    
    
    $
    845
    
    
    $
    (45
    )
    
    $
    87,233
  AmortizedCost
    
    
    Market Value(In Thousands)Due within one year
    
    $
    
    
    
    $
    Due from one to five years
    
    
    3,076
    
    
    
    3,119Due from five to ten years
    
    
    22,233
    
    
    
    21,798Due after ten years
    
    
    15,634
    
    
    
    14,878Mortgage-backed securities
    
    
    60,211
    
    
    
    62,544$
    101,154
    
    
    $
    102,339
 69




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 2. INVESTMENT SECURITIES  (Continued)
  Less Than Twelve Months
    
    
    Twelve Months or MoreGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    
    UnrealizedLosses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value(In Thousands)
    
    
    (In Thousands)December 31, 2008:U.S.
Treasury and government sponsored agencies
    
    $
    (18
    )
    
    $
    3,089
    
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    (5
    )
    
    
    1,868
    
    
    
    
    
    
    
    State and municipal securities
    
    
    (857
    )
    
    
    14,814
    
    
    
    
    
    
    
    Corporate debt
    
    
    (772
    )
    
    
    5,199
    
    
    
    
    
    
    
    $
    (1,652
    )
    
    $
    24,970
    
    
    $
    
    
    
    $
    December 31, 2007:U.S. Treasury and government sponsored agencies
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    (22
    )
    
    
    6,440
    
    
    
    (8
    )
    
    
    726State and municipal securities
    
    
    (13
    )
    
    
    3,309
    
    
    
    (2
    )
    
    
    773Corporate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (35
    )
    
    $
    9,749
    
    
    $
    (10
    )
    
    $
    1,499
      70




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3. LOANS
  December 31,2008
    
    
    2007(In Thousands)Commercial, financial and agricultural
    
    $
    325,968
    
    
    $
    219,640Real estate-construction
    
    
    235,162
    
    
    
    195,538Real estate-mortgage
    
    
    377,628
    
    
    
    237,002Consumer
    
    
    29,475
    
    
    
    23,401968,233
    
    
    
    675,281Allowance for loan losses
    
    
    (10,602
    )
    
    
    (7,732
    )Loans, net
    
    $
    957,631
    
    
    $
    667,549
  Years
Ended December 31,2008
    
    
    2007
    
    
    2006(In Thousands)Balance, beginning of year
    
    $
    7,732
    
    
    $
    5,418
    
    
    $
    3,110Loans charged off
    
    
    (3,866
    )
    
    
    (1,240
    )
    
    
    (1,048
    )Recoveries
    
    
    462
    
    
    
    13
    
    
    
    104Provision for loan losses
    
    
    6,274
    
    
    
    3,541
    
    
    
    3,252Balance, end of year
    
    $
    10,602
    
    
    $
    7,732
    
    
    $
    5,418
  Years
Ended December 31,2008
    
    2007
    
    2006(In Thousands)Total impaired loans
    
    $
    15,880
    
    
    $
    11,612
    
    
    $
    1Impaired loans with allowance allocated
    
    
    6,254
    
    
    
    6,185
    
    
    
    1Impaired loans without valuation allowance
    
    
    9,626
    
    
    
    5,427
    
    
    
    Amount of allowance allocated
    
    
    1,125
    
    
    
    1,370
    
    
    
    Average balance during the year
    
    
    13,450
    
    
    
    7,070
    
    
    
    Interest income not recognized during impairment
    
    
    450
    
    
    
    177
    
    
    
    Interest income recognized for impaired loans
    
    
    644
    
    
    
    
    
    
    
    
  December 31,2008
    
    2007(In Thousands)Nonaccrual loans
    
    $
    7,713
    
    
    $
    4,284Past due 90 days and still accruing
    
    
    1,939
    
    
    
    187
 71




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3. LOANS  (Continued)
  December 31,2008
    
    
    2007(In Thousands)Balance, beginning of year
    
    $
    12,078
    
    
    $
    14,514Advances
    
    
    22,579
    
    
    
    35,552Repayments
    
    
    (18,723
    )
    
    
    (37,988
    )Balance, end of year
    
    $
    15,934
    
    
    $
    12,078
 NOTE 4. PREMISES AND EQUIPMENT
  December 31,2008
    
    
    2007(In Thousands)Furniture and equipment
    
    $
    3,511
    
    
    $
    2,849Leasehold improvements
    
    
    2,422
    
    
    
    2,4505,933
    
    
    
    5,299Accumulated depreciation
    
    
    (2,049
    )
    
    
    (1,123
    )$
    3,884
    
    
    $
    4,176
   (In Thousands)2009
    
    $
    1,4252010
    
    
    1,4762011
    
    
    1,5042012
    
    
    1,5282013
    
    
    1,548Thereafter
    
    
    8,276$
    15,757
  72




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
5. DEPOSITS
  December 31,2008
    
    
    2007(In Thousands)Noninterest-bearing demand
    
    $
    121,459
    
    
    $
    85,018Interest bearing checking
    
    
    749,856
    
    
    
    605,788Savings
    
    
    777
    
    
    
    319Time
    
    
    25,920
    
    
    
    11,667Time, $100,000 and over
    
    
    139,307
    
    
    
    59,891$
    1,037,319
    
    
    $
    762,683
  (In Thousands)2009
    
    $
    136,1482010
    
    
    16,5202011
    
    
    4,7472012
    
    
    5,9002013
    
    
    1,912$
    165,227
  73




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
6. FEDERAL FUNDS PURCHASED
  NOTE
7. OTHER BORROWINGS
  2008
    
    
    2007Weighted
    
    
    
    
    
    
    WeightedAmount
    
    
    Average Rate
    
    
    Amount
    
    
    Average RateFHLB AdvancesFixed rate, due 2012 and 2013
    
    $
    20,000
    
    
    
    3.13
    %
    
    $
    
    
    
    
    
    %Borrowing from correspondent bank under line of credit
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    7.50
    %Total other borrowings
    
    $
    20,000
    
    
    
    3.13
    %
    
    $
    73
    
    
    
    7.50
    %
    NOTE
8. SUBORDINATED DEBENTURES
    74




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
8. SUBORDINATED DEBENTURES  (Continued)
   NOTE 9. DERIVATIVES
    75




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
10. EMPLOYEE AND DIRECTOR BENEFITS
  Stock Option Plan
    2008
    
    2007
    
    2006Expected volatility
    
    21.16 %
    
    20.00 %
    
    20.00 %Expected dividends
    
    0.50 %
    
    0.50 %
    
    0.50 %Expected term (in years)
    
    7 years
    
    7 years
    
    7 yearsRisk-free rate
    
    2.93 %
    
    4.15 %
    
    4.86 %
  76




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 10. EMPLOYEE AND DIRECTOR BENEFITS  (Continued)
 Stock Option Plan (Continued)
  WeightedAverageWeighted
    
    
    Remaining
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Term (years)
    
    
    ValueYear Ended December 31, 2008:Outstanding at beginning of year
    
    
    712,500
    
    
    $
    13.12
    
    
    
    8.4
    
    
    $
    4,905Granted
    
    
    98,500
    
    
    
    24.31
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (15,000
    )
    
    
    13.50
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    796,000
    
    
    
    14.50
    
    
    
    7.7
    
    
    $
    8,363Exercisable at end of year
    
    
    68,598
    
    
    $
    12.08
    
    
    
    7.0
    
    
    $
    886Year Ended December 31, 2007Outstanding at beginning of year
    
    
    517,000
    
    
    $
    11.35
    
    
    
    9.0
    
    
    $
    1,894Granted
    
    
    201,500
    
    
    
    17.56
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    6,000
    
    
    
    10.00
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    712,500
    
    
    
    13.12
    
    
    
    8.4
    
    
    $
    4,905Exercisable at end of year
    
    
    20,000
    
    
    $
    10.00
    
    
    
    7.3
    
    
    $
    200Year Ended December 31, 2006Outstanding at beginning of year
    
    
    229,000
    
    
    $
    10.00
    
    
    
    9.3
    
    
    $
    Granted
    
    
    304,000
    
    
    
    12.30
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (16,000
    )
    
    
    10.06
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    517,000
    
    
    
    11.35
    
    
    
    9.0
    
    
    $
    1,894Exercisable at end of year
    
    
    10,000
    
    
    $
    10.00
    
    
    
    8.3
    
    
    $
    50
  WeightedAverageWeighted
    
    
    Remaining
    
    
    AggregateRange of
    
    
    
    
    
    
    Average
    
    
    Contractual
    
    
    Intrinsic ValueExercise Price
    
    
    Shares
    
    
    Exercise Price
    
    
    Term (years)
    
    
    (In Thousands)$
    10.00
    
    
    
    40,000
    
    
    $
    10.00
    
    
    
    6.4
    
    
    $
    60015.00
    
    
    
    28,598
    
    
    
    15.00
    
    
    
    8.0
    
    
    
    28668,598
    
    
    
    
    
    
    
    7.0
    
    
    $
    886
  77




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
10. EMPLOYEE AND DIRECTOR BENEFITS  (Continued)
 Stock Warrants
    WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contractual
    
    
    AggregateShares
    
    
    Exercise Price
    
    
    Term (years)
    
    
    Intrinsic Value(In Thousands)Year Ended December 31, 2008:Outstanding at beginning of year
    
    
    60,000
    
    
    $
    10.00
    
    
    
    7.3
    
    
    $
    600Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    60,000
    
    
    $
    10.00
    
    
    
    6.3
    
    
    $
    900Exercisable at end of year
    
    
    60,000
    
    
    $
    10.00
    
    
    
    6.3
    
    
    $
    900Year Ended December 31, 2007:Outstanding at beginning of year
    
    
    60,000
    
    
    $
    10.00
    
    
    
    8.3
    
    
    $
    Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    60,000
    
    
    $
    10.00
    
    
    
    7.3
    
    
    $
    600Exercisable at end of year
    
    
    40,000
    
    
    $
    10.00
    
    
    
    7.3
    
    
    $
    400Year ended December 31, 2006:Outstanding at beginning of year
    
    
    60,000
    
    
    $
    10.00
    
    
    
    9.3
    
    
    $
    Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    60,000
    
    
    $
    10.00
    
    
    
    8.3
    
    
    
    Exercisable at end of year
    
    
    20,000
    
    
    $
    10.00
    
    
    
    8.3
    
    
    $
    100
  78




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
11. COMMON STOCK
     NOTE
12. REGULATORY MATTERS
     79




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
12. REGULATORY MATTERS  (Continued)
  To Be Well Capitalized UnderPrompt Corrective ActionActual
    
    For Capital Adequacy Purposes
    
    ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2008:Total Capital to Risk Weighted Assets:Consolidated
    
    $
    111,424
    
    
    
    11.25
    %
    
    $
    79,247
    
    
    
    8.00
    %
    
    $
    99,058
    
    
    
    10.00
    %ServisFirst Bank
    
    
    110,242
    
    
    
    11.14
    %
    
    
    79,182
    
    
    
    8.00
    %
    
    
    98,977
    
    
    
    10.00
    %Tier I Capital to Risk Weighted Assets:Consolidated
    
    
    100,822
    
    
    
    10.18
    %
    
    
    39,623
    
    
    
    4.00
    %
    
    
    59,435
    
    
    
    6.00
    %ServisFirst Bank
    
    
    99,640
    
    
    
    10.07
    %
    
    
    39,591
    
    
    
    4.00
    %
    
    
    59,386
    
    
    
    6.00
    %Tier I Capital to Average Assets:Consolidated
    
    
    100,822
    
    
    
    9.01
    %
    
    
    44,746
    
    
    
    4.00
    %
    
    
    55,933
    
    
    
    5.00
    %ServisFirst Bank
    
    
    99,640
    
    
    
    8.91
    %
    
    
    44,746
    
    
    
    4.00
    %
    
    
    55,933
    
    
    
    5.00
    %As of December 31, 2007:Total Capital to Risk Weighted Assets:Consolidated
    
    
    78,978
    
    
    
    11.22
    %
    
    
    56,306
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AServisFirst Bank
    
    
    79,035
    
    
    
    11.22
    %
    
    
    56,306
    
    
    
    8.00
    %
    
    
    70,382
    
    
    
    10.00
    %Tier I Capital to Risk Weighted Assets:Consolidated
    
    
    71,246
    
    
    
    10.12
    %
    
    
    28,152
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AServisFirst Bank
    
    
    71,303
    
    
    
    10.12
    %
    
    
    28,152
    
    
    
    4.00
    %
    
    
    42,229
    
    
    
    6.00
    %Tier I Capital to Average Assets:Consolidated
    
    
    71,246
    
    
    
    8.40
    %
    
    
    28,152
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AServisFirst Bank
    
    
    71,246
    
    
    
    8.40
    %
    
    
    28,152
    
    
    
    4.00
    %
    
    
    35,082
    
    
    
    5.00
    %
 80




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
13. OTHER OPERATING INCOME AND EXPENSES
  Years Ended December 31,2008
    
    
    2007
    
    
    2006(In Thousands)Other operating incomeMortgage fee income
    
    $
    995
    
    
    $
    654
    
    
    $
    470Merchant Services income
    
    
    477
    
    
    
    195
    
    
    
    63Loss on sale of other real estate owned
    
    
    (180
    )
    
    
    
    
    
    
    Other
    
    
    142
    
    
    
    8
    
    
    
    2$
    1,434
    
    
    $
    857
    
    
    $
    535Other operating expensesPostage
    
    $
    105
    
    
    $
    129
    
    
    $
    71Telephone
    
    
    206
    
    
    
    130
    
    
    
    81Data Processing
    
    
    1,341
    
    
    
    718
    
    
    
    442FDIC insurance
    
    
    568
    
    
    
    203
    
    
    
    36Expense to carry other real estate owned
    
    
    1,619
    
    
    
    13
    
    
    
    19Recording fees
    
    
    288
    
    
    
    202
    
    
    
    172Supplies
    
    
    274
    
    
    
    205
    
    
    
    176Customer and public relations
    
    
    409
    
    
    
    335
    
    
    
    199Marketing
    
    
    318
    
    
    
    272
    
    
    
    347Sales and use tax
    
    
    243
    
    
    
    190
    
    
    
    111Donations and contributions
    
    
    205
    
    
    
    147
    
    
    
    77Directors fees
    
    
    198
    
    
    
    96
    
    
    
    45Other
    
    
    1,107
    
    
    
    754
    
    
    
    342$
    6,881
    
    
    $
    3,394
    
    
    $
    2,118
 NOTE
14. INCOME TAXES
  Years Ended December 31,2008
    
    
    2007
    
    
    2006(In Thousands)Current
    
    $
    5,062
    
    
    $
    4,188
    
    
    $
    3,026Deferred
    
    
    (1,237
    )
    
    
    (1,036
    )
    
    
    (837
    )Income tax expense
    
    $
    3,825
    
    
    $
    3,152
    
    
    $
    2,189
 81




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
14. INCOME TAXES  (Continued)
  Year Ended December 31, 2008% of Pre-taxAmount
    
    
    Earnings(In Thousands)Income tax at statutory federal rate
    
    $
    3,683
    
    
    
    34.00
    %Effect on rate of:State income tax, net of federal tax effect
    
    
    191
    
    
    
    1.76
    %Tax-exempt income, net of expenses
    
    
    (278
    )
    
    
    -2.57
    %Incentive stock option expense
    
    
    177
    
    
    
    1.64
    %Other
    
    
    52
    
    
    
    0.48
    %Effective income tax and rate
    
    $
    3,825
    
    
    
    35.31
    %
 Year Ended December 31, 2007% of Pre-taxAmount
    
    
    Earnings(In Thousands)Income tax at statutory federal rate
    
    $
    2,941
    
    
    
    34.00
    %Effect on rate of:State income tax, net of federal tax effect
    
    
    165
    
    
    
    1.91
    %Tax-exempt income, net of expenses
    
    
    (102
    )
    
    
    -1.18
    %Incentive stock option expense
    
    
    163
    
    
    
    1.88
    %Other
    
    
    (15
    )
    
    
    -0.18
    %Effective income tax and rate
    
    $
    3,152
    
    
    
    36.43
    %
 Year Ended December 31, 2006% of Pre-taxAmount
    
    
    Earnings(In Thousands)Income tax at statutory federal rate
    
    $
    2,129
    
    
    
    34.00
    %Effect on rate of:State income tax, net of federal tax effect
    
    
    154
    
    
    
    2.70
    %Tax-exempt income, net of expenses
    
    
    (175
    )
    
    
    -8.26
    %Incentive stock option expense
    
    
    86
    
    
    
    1.50
    %Other
    
    
    (5
    )
    
    
    -1.13
    %Effective income tax and rate
    
    $
    2,189
    
    
    
    28.81
    %
 82




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
14. INCOME TAXES  (Continued)
  December 31,2008
    
    
    2007(In Thousands)Other real estate
    
    $
    309
    
    
    $
    Start-up costs
    
    
    154
    
    
    
    168Net unrealized (gains) losses on securities available
for sale and cash flow hedge
    
    
    (496
    )
    
    
    (412
    )Depreciation
    
    
    (195
    )
    
    
    (107
    )Deferred loan fees
    
    
    131
    
    
    
    299Allowance for loan losses
    
    
    3,649
    
    
    
    2,422Nonqualified equity awards
    
    
    116
    
    
    
    41Other
    
    
    (83
    )
    
    
    21Net deferred income tax assets
    
    $
    3,585
    
    
    $
    2,432
  NOTE
15. COMMITMENTS AND CONTINGENCIES
 Loan Commitments
  December 31,2008
    
    
    2007(In Thousands)Commitments to extend credit
    
    $
    294,502
    
    
    $
    291,937Credit card arrangements
    
    
    11,323
    
    
    
    5,849Standby letters of credit
    
    
    32,655
    
    
    
    21,010$
    338,480
    
    
    $
    318,796
  83




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
16. CONCENTRATIONS OF CREDIT
   NOTE
17. EARNINGS PER SHARE
  Years Ended December 31,2008
    
    
    2007
    
    
    2006(In Thousands, except
share and per share amounts)Earnings per ShareWeighted average common shares outstanding
    
    
    5,114,194
    
    
    
    4,617,422
    
    
    
    3,831,881Net income
    
    $
    7,005
    
    
    $
    5,497
    
    
    $
    4,071Basic earnings per share
    
    $
    1.37
    
    
    $
    1.19
    
    
    $
    1.06Weighted average common shares outstanding
    
    
    5,114,194
    
    
    
    4,617,422
    
    
    
    3,831,881Dilutive effects of assumed conversions and
exercise of stock options and warrants
    
    
    224,689
    
    
    
    104,442
    
    
    
    14,230Weighted average common and dilutive potential
common shares outstanding
    
    
    5,338,883
    
    
    
    4,721,864
    
    
    
    3,846,111Net income
    
    $
    7,005
    
    
    $
    5,497
    
    
    $
    4,071Diluted earnings per share
    
    $
    1.31
    
    
    $
    1.16
    
    
    $
    1.06
 NOTE
18 RELATED PARTY TRANSACTIONS
 Loans
  NOTE
19. FAIR VALUE MEASUREMENT
 Fair value Measurements
  84




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SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     (In Thousands)Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor identical
    
    
    Observable
    
    
    UnobservableAssets (Level 1)
    
    
    Inputs (Level 2)
    
    
    Inputs (Level 3)
    
    
    TotalAssets measured on a recurring basis:Available for sale securities
    
    $
    
    
    
    $
    102,339
    
    
    $
    
    
    
    $
    102,339Assets measured on a nonrecurring basis:Impaired loans
    
    
    
    
    
    
    
    
    
    
    15,880
    
    
    
    15,880
 
 (1)
    
    The Company chose not to elect the fair value option as prescribed by SFAS No.
159 for its financial assets and financial liabilities that had not been previously
carried at fair value.  NOTE
20. FAIR VALUE OF FINANCIAL INSTRUMENTS
 Disclosures about Fair Values of Financial
Instruments,
  Cash and cash equivalents:
 Investment securities:
 85




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Restricted equity securities:
 Loans:
 Derivatives:
 Accrued interest and dividends receivable:
 Deposits:
 Other borrowings:
 Trust preferred securities:
 Accrued interest payable:
 Loan
commitments:
 86




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  December 31,2008
    
    
    2007Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(In Thousands)Financial Assets:Cash and short-term investments
    
    $
    72,918
    
    
    $
    72,918
    
    
    $
    66,422
    
    
    $
    66,422Investment securities
    
    
    102,339
    
    
    
    102,339
    
    
    
    87,233
    
    
    
    87,233Restricted equity securities
    
    
    2,659
    
    
    
    2,659
    
    
    
    1,202
    
    
    
    1,202Mortgage loans held for sale
    
    
    3,320
    
    
    
    3,320
    
    
    
    2,463
    
    
    
    2,463Loans, net
    
    
    957,631
    
    
    
    979,656
    
    
    
    667,549
    
    
    
    669,300Accrued interest and dividends receivable
    
    
    4,026
    
    
    
    4,026
    
    
    
    3,949
    
    
    
    3,949Derivative
    
    
    823
    
    
    
    823
    
    
    
    796
    
    
    
    796$
    1,143,716
    
    
    $
    1,165,741
    
    
    $
    829,614
    
    
    $
    831,365Financial Liabilities
    
    $
    1,037,319
    
    
    $
    1,038,502
    
    
    $
    762,683
    
    
    $
    763,368Deposits
    
    
    20,000
    
    
    
    20,270
    
    
    
    
    
    
    
    Borrowings
    
    
    15,087
    
    
    
    12,544
    
    
    
    
    
    
    
    Trust preferred securities
    
    
    1,280
    
    
    
    1,280
    
    
    
    782
    
    
    
    782Accrued interest payable
    
    
    823
    
    
    
    823
    
    
    
    796
    
    
    
    796Derivative
    
    $
    1,074,509
    
    
    $
    1,073,419
    
    
    $
    764,261
    
    
    $
    764,946
 NOTE
21. BUSINESS COMBINATION
  NOTE
22. PARENT COMPANY FINANCIAL INFORMATION
 BALANCE SHEETS
 December 312008
    
    
    2007AssetsCash and due from banks
    
    $
    561
    
    
    $
    1Investment in subsidiary
    
    
    100,602
    
    
    
    72,304Other assets
    
    
    812
    
    
    
    32Total assets
    
    
    101,975
    
    
    
    72,337LiabilitiesOther borrowings
    
    
    15,087
    
    
    
    73Other liabilities
    
    
    105
    
    
    
    1715,192
    
    
    
    90Stockholders equityCommon stock
    
    
    5
    
    
    
    5Paid in capital
    
    
    70,729
    
    
    
    63,159Retained earnings
    
    
    15,087
    
    
    
    8,082Accumulated other comprehensive income
    
    
    962
    
    
    
    1,001Total stockholders equity
    
    
    86,783
    
    
    
    72,247Total liabilities and stockholders equity
    
    $
    101,975
    
    
    $
    72,337
 87




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##### Table of Contents



SERVISFIRST BANCSHARES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
22. PARENT COMPANY FINANCIAL INFORMATION (Continued)
 STATEMENTS OF INCOME
 2008
    
    
    2007IncomeDividends
received from subsidiary
    
    $
    850
    
    
    $
    Other income
    
    
    330
    
    
    
    Total income
    
    
    880
    
    
    
    ExpenseInterest on other borrowing
    
    
    12
    
    
    
    1Other operating expenses
    
    
    867
    
    
    
    88Total expense
    
    
    879
    
    
    
    89Income
before income taxes and equity in undistributed earnings of subsidiary
    
    
    1
    
    
    
    (89
    )Income tax benefit
    
    
    (313
    )
    
    
    (33
    )Income before equity in undistributed earnings of subsidiary
    
    
    314
    
    
    
    (56
    )Equity in undistributed earnings of subsidiary
    
    
    6,691
    
    
    
    590Net income
    
    $
    7,005
    
    
    $
    534
 STATEMENTS OF CASH FLOWS
 2008
    
    
    2007Operating activitiesNet income
    
    $
    7,005
    
    
    
    534Other
    
    
    (180
    )
    
    
    (16
    )Equity in undistributed earnings of subsidiary
    
    
    (6,691
    )
    
    
    (590
    )Net cash
provided by (used in) operating activities
    
    
    134
    
    
    
    (72
    )Investing activitiesInvestment in subsidiary
    
    
    (20,975
    )
    
    
    Net cash
used in investing activities
    
    
    (20,975
    )
    
    
    Financing activitiesProceeds from other borrowings
    
    
    317
    
    
    
    73Repayment of borrowings
    
    
    (390
    )
    
    
    Proceeds from issuance of trust preferred securities
    
    
    15,000
    
    
    
    Proceeds from issuance of common stock
    
    
    6,474
    
    
    
    Net cash provided by financing activities
    
    
    21,401
    
    
    
    73Increase in
cash and cash equivalents
    
    $
    560
    
    
    $
    1Cash and cash equivalents at beginning of year
    
    
    1
    
    
    
    Cash and cash equivalents at end of year
    
    $
    561
    
    
    $
    1
 88




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##### Table of Contents



SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
  2008 Quarter Ended(Dollars in Thousands, except per share data)March 31
    
    June 30
    
    September 30
    
    December 31Interest Income
    
    $
    13,835
    
    
    $
    13,341
    
    
    $
    13,881
    
    
    $
    14,393Interest Expense
    
    
    5,748
    
    
    
    4,647
    
    
    
    5,004
    
    
    
    5,075Net Interest Income
    
    
    8,087
    
    
    
    8,694
    
    
    
    8,877
    
    
    
    9,318Provision for Loan Loss
    
    
    1,383
    
    
    
    2,137
    
    
    
    1,381
    
    
    
    1,373Net Income
    
    
    1,570
    
    
    
    1,750
    
    
    
    1,724
    
    
    
    1,961Income Per Share, basic
    
    
    0.31
    
    
    
    0.34
    
    
    
    0.34
    
    
    
    0.38Income Per Share, diluted
    
    
    0.30
    
    
    
    0.33
    
    
    
    0.32
    
    
    
    0.36
 2007 Quarter Ended(Dollars in Thousands, except per share data)March 31
    
    June 30
    
    September 30
    
    December 31Interest Income
    
    $
    10,882
    
    
    $
    12,194
    
    
    $
    13,816
    
    
    $
    14,525Interest Expense
    
    
    5,225
    
    
    
    6,133
    
    
    
    7,099
    
    
    
    7,415Net Interest Income
    
    
    5,657
    
    
    
    6,061
    
    
    
    6,717
    
    
    
    7,110Provision for Loan Loss
    
    
    643
    
    
    
    816
    
    
    
    1,041
    
    
    
    1,041Net Income
    
    
    1,509
    
    
    
    1,294
    
    
    
    1,264
    
    
    
    1,430Income Per Share, basic
    
    
    0.32
    
    
    
    0.28
    
    
    
    0.27
    
    
    
    0.32Income Per Share, diluted
    
    
    0.32
    
    
    
    0.28
    
    
    
    0.26
    
    
    
    0.30
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
  Managements Report On Internal Control Over Financial Reporting
   Changes in Internal Control Over Financial Reporting
  89




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##### Table of Contents



ITEM 9B. OTHER INFORMATION.
 None.
 
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  Code of Ethics
  Executive Officers of the Registrant
  William Foshee
 Clarence C. Pouncey, III
 Andrew N. Kattos
 G. Carlton Barker
 Ronald A. DeVane 
 90




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION.
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
  
 PART IV
 
 ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
  PageReport of
Independent Registered Public Accounting Firm
    
    
    58Consolidated Balance Sheets at December 31, 2008 and 2007
    
    
    59Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006
    
    
    60Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2008,
2007 and 2006
    
    
    61Consolidated Statements of Stockholders Equity for Years Ended December 31, 2008, 2007
and 2006
    
    
    62Consolidated Statements of Cash Flows for the Years December 31, 2008, 2007 and 2006
    
    
    63Notes to Consolidated Financial Statements
    
    
    64
  EXHIBIT NO.
    
    NAME OF EXHIBIT2.1
    
    Plan of Reorganization and Agreement of Merger dated August 29, 2007(1)3.1
    
    Certificate of Incorporation(1)3.2
    
    Certificate of Amendment to Certificate of Incorporation(1)3.3
    
    Bylaws(1)
 91




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##### Table of Contents



EXHIBIT NO.
    
    NAME OF EXHIBIT4.1
    
    Common stock certificate(1)4.2
    
    Certain provisions from the Certificate of Incorporation(1)4.3
    
    Revised Common Stock Certificate(2)4.4
    
    Amended and Restated Trust Agreement of ServisFirst Capital Trust I dated
September 2, 2008(3)4.5
    
    Indenture dated September 2, 2008(3)4.6
    
    Guarantee Agreement dated September 2, 2008(3)4.7
    
    Form of Common Stock Purchase Warrant dated September 2, 2008(3)10.1
    
    2005 Amended and Restated Stock Incentive Plan(1)*10.2
    
    Change in Control Agreement with William M. Foshee dated May 20, 2005(1)*10.3
    
    Change in Control Agreement with Clarence C. Pouncey III dated June 6, 2006(1)*10.4
    
    Employment Agreement of Andrew N. Kattos dated April 27, 2006(1)*10.5
    
    Employment Agreement of G. Carlton Barker February 1, 2007(1)*11
    
    Statement Regarding Computation of Earnings Per Share is included herein at
Note 16 to the Financial Statements in Item 8.14
    
    Code of Ethics for Principal Financial Officers21
    
    List of Subsidiaries24
    
    Power of Attorney31.1
    
    Section 302 Certification of Chief Executive Officer31.2
    
    Section 302 Certification of Chief Financial Officer32.1
    
    Section 906 Certification of Chief Executive Officer32.2
    
    Section 906 Certification of Chief Financial Officer
 
 (1)
    
    Previously filed as an exhibit to ServisFirst Bancshares, Inc.s Registration Statement on
Form 10, as filed with the Securities and Exchange Commission on March 28, 2008, and incorporated
herein by reference.(2)
    
    Previously filed as an exhibit to ServisFirst Bancshares, Inc.s Form 8-K, as filed with the
Securities and Exchange Commission on September 15, 2008, and incorporated herein by reference.(3)
    
    Previously filed as an exhibit to ServisFirst Bancshares, Inc.s Form 8-K, as filed with the
Securities and Exchange Commission on September 3, 2008, and incorporated herein by reference.*
    
    Management contract or compensatory plan arrangements. 92




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##### Table of Contents



SIGNATURES
  SERVISFIRST BANCSHARES, INC.By:
    /s/ Thomas A. Broughton, IIIThomas A. Broughton, IIIPresident and Chief Executive Officer   Signature
    
    Title
    
    Date/s/ Thomas A. Broughton, III

Thomas A. Broughton, III
    
    President, Chief Executive
Officer and Director(Principal
Executive Officer)
    
    March 10, 2009/s/ William M. Foshee

William M. Foshee
    
    Executive Vice President
and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
    
    March 10, 2009*

Stanley M. Brock
    
    Chairman of the Board
    
    March 10, 2009*

Michael D. Fuller
    
    Director
    
    March 10, 2009*

James J. Filler
    
    Director
    
    March 10, 2009*

Joseph R. Cashio
    
    Director
    
    March 10, 2009*

Hatton C. V. Smith
    
    Director
    
    March 10, 2009
 
 *
    
    The undersigned, acting pursuant to a Power of Attorney, have signed this Annual Report on
Form 10-K for and on behalf of the persons indicated above as such persons true and lawful
attorney-in-fact and in their names, places and stated, in the capacities indicated above ad on the
date indicated below. /s/ William M. Foshee

William M. FosheeAttorney-in-Fact
 93




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##### Table of Contents



EXHIBIT INDEX
 EXHIBIT NO.
    
    NAME OF EXHIBIT2.1
    
    Plan of Reorganization and Agreement of Merger dated August 29, 2007(1)3.1
    
    Certificate of Incorporation(1)3.2
    
    Certificate of Amendment to Certificate of Incorporation(1)3.3
    
    Bylaws(1)4.1
    
    Common stock certificate(1)4.2
    
    Certain provisions from the Certificate of Incorporation(1)4.3
    
    Revised Common Stock Certificate(2)4.4
    
    Amended and Restated Trust Agreement of ServisFirst Capital Trust I dated
September 2, 2008(3)4.5
    
    Indenture dated September 2, 2008(3)4.6
    
    Guarantee Agreement dated September 2, 2008(3)4.7
    
    Form of Common Stock Purchase Warrant dated September 2, 2008(3)10.1
    
    2005 Amended and Restated Stock Incentive Plan(1)*10.2
    
    Change in Control Agreement with William M. Foshee dated May 20, 2005(1)*10.3
    
    Change in Control Agreement with Clarence C. Pouncey III dated June 6, 2006(1)*10.4
    
    Employment Agreement of Andrew N. Kattos dated April 27, 2006(1)*10.5
    
    Employment Agreement of G. Carlton Barker February 1, 2007(1)*11
    
    Statement Regarding Computation of Earnings Per Share is included herein at
Note 16 to the Financial Statements in Item 8.14
    
    Code of Ethics for Principal Financial Officers21
    
    List of Subsidiaries24
    
    Power of Attorney31.1
    
    Section 302 Certification of Chief Executive Officer31.2
    
    Section 302 Certification of Chief Financial Officer
 i




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##### Table of Contents



EXHIBIT NO.
    
    NAME OF EXHIBIT32.1
    
    Section 906 Certification of Chief Executive Officer32.2
    
    Section 906 Certification of Chief Financial Officer
 
 (1)
    
    Previously filed as an exhibit to ServisFirst Bancshares, Inc.s Registration Statement on
Form 10, as filed with the Securities and Exchange Commission on March 28, 2008, and incorporated
herein by reference.(2)
    
    Previously filed as an exhibit to ServisFirst Bancshares, Inc.s Form 8-K, as filed with the
Securities and Exchange Commission on September 15, 2008, and incorporated herein by reference.(3)
    
    Previously filed as an exhibit to ServisFirst Bancshares, Inc.s Form 8-K, as filed with the
Securities and Exchange Commission on September 3, 2008, and incorporated herein by reference.*
    
    Management contract or compensatory plan arrangements.