##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _______to_______
 Commission file number 000-53149
 SERVISFIRST BANCSHARES, INC.
  Delaware(State or Other Jurisdiction of 
Incorporation or Organization)
    
    26-0734029(I.R.S. Employer
Identification No.)
 (205) 949-0302  (Registrants Telephone Number, Including Area Code)
 þ 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
  Class
    
    Outstanding as of August 1, 2008Common stock, $.001 par value
    
    5,113,482




---



##### 



TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosure about Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    30PART II. OTHER INFORMATION
    
    
    31Item 1 Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    31Item 4. Submission of Matters to a Vote of Security Holders
    
    
    31Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32EX-31.01 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICEREX-31.02 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICEREX-32.01 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICEREX-32.02 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
  2




---



##### Table of Contents



PART 1. FINANCIAL INFORMATION
 
 ITEM 1.  FINANCIAL STATEMENTS
 SERVISFIRST BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)
 June 30,
    
    
    December 31,Assets
    
    2008
    
    
    2007(Unaudited)Cash and due from banks
    
    $
    26,994
    
    
    $
    15,756Interest bearing balances due from depository institutions
    
    
    55
    
    
    
    34,068Federal funds sold
    
    
    72
    
    
    
    16,598Cash and cash equivalents
    
    
    27,121
    
    
    
    66,422Securities available for sale
    
    
    91,773
    
    
    
    87,233Restricted equity securities
    
    
    2,658
    
    
    
    1,202Mortgage loans held for sale
    
    
    3,869
    
    
    
    2,463Loans
    
    
    836,520
    
    
    
    675,281Less allowance for loan losses
    
    
    (9,438
    )
    
    
    (7,732
    )Loans, net
    
    
    827,082
    
    
    
    667,549Premises and equipment, net
    
    
    3,965
    
    
    
    4,176Accrued interest and dividends receivable
    
    
    3,979
    
    
    
    3,949Deferred tax assets
    
    
    3,566
    
    
    
    2,432Other real estate owned
    
    
    8,202
    
    
    
    1,623Other assets
    
    
    895
    
    
    
    1,201Total assets
    
    $
    973,110
    
    
    $
    838,250Liabilities and Stockholders EquityLiabilities:Deposits:Noninterest-bearing
    
    $
    97,066
    
    
    $
    85,018Interest-bearing
    
    
    750,359
    
    
    
    677,665Total deposits
    
    
    847,425
    
    
    
    762,683Federal funds purchased
    
    
    26,302
    
    
    
    Other borrowings
    
    
    20,320
    
    
    
    73Accrued interest payable
    
    
    1,336
    
    
    
    782Other liabilities
    
    
    2,857
    
    
    
    2,465Total liabilities
    
    
    898,240
    
    
    
    766,003Stockholders equity:Common stock, par value $.001 per share; 15,000,000 shares authorized;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
    
    
    63,479
    
    
    
    63,159Retained earnings
    
    
    11,402
    
    
    
    8,082Accumulated other comprehensive income (loss)
    
    
    (16
    )
    
    
    1,001Total stockholders equity
    
    
    74,870
    
    
    
    72,247Total liabilities and stockholders equity
    
    $
    973,110
    
    
    $
    838,250
 See Notes to Unaudited Consolidated Financial Statements.
 3




---



##### Table of Contents



SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income:Interest and fees on loans
    
    $
    11,938
    
    
    $
    10,435
    
    
    $
    24,312
    
    
    $
    19,904Taxable securities
    
    
    975
    
    
    
    394
    
    
    
    1,881
    
    
    
    650Nontaxable securities
    
    
    229
    
    
    
    159
    
    
    
    444
    
    
    
    292Federal funds sold
    
    
    164
    
    
    
    1,140
    
    
    
    437
    
    
    
    2,093Other interest and dividends
    
    
    35
    
    
    
    2
    
    
    
    102
    
    
    
    16Total interest income
    
    
    13,341
    
    
    
    12,130
    
    
    
    27,176
    
    
    
    22,955Interest expense:Deposits
    
    
    4,457
    
    
    
    6,133
    
    
    
    10,179
    
    
    
    11,359Borrowed funds
    
    
    190
    
    
    
    
    
    
    
    216
    
    
    
    Total interest expense
    
    
    4,647
    
    
    
    6,133
    
    
    
    10,395
    
    
    
    11,359Net interest income
    
    
    8,694
    
    
    
    5,997
    
    
    
    16,781
    
    
    
    11,596Provision for loan losses
    
    
    2,137
    
    
    
    816
    
    
    
    3,519
    
    
    
    1,460Net interest income after
provision for loan losses
    
    
    6,557
    
    
    
    5,181
    
    
    
    13,262
    
    
    
    10,136Noninterest income:Service charges on deposit accounts
    
    
    290
    
    
    
    104
    
    
    
    546
    
    
    
    217Other operating income
    
    
    405
    
    
    
    198
    
    
    
    692
    
    
    
    348Total noninterest income
    
    
    695
    
    
    
    302
    
    
    
    1,238
    
    
    
    565Noninterest expense:Salaries and employee benefits
    
    
    2,400
    
    
    
    2,116
    
    
    
    5,227
    
    
    
    3,982Equipment and occupancy
    
    
    522
    
    
    
    375
    
    
    
    1,053
    
    
    
    710Professional services
    
    
    259
    
    
    
    129
    
    
    
    575
    
    
    
    230Other operating expense
    
    
    1,349
    
    
    
    783
    
    
    
    2,505
    
    
    
    1,385Total noninterest expense
    
    
    4,530
    
    
    
    3,403
    
    
    
    9,360
    
    
    
    6,307Income before income taxes
    
    
    2,722
    
    
    
    2,080
    
    
    
    5,140
    
    
    
    4,394Provision for income taxes
    
    
    972
    
    
    
    783
    
    
    
    1,820
    
    
    
    1,590Net income
    
    $
    1,750
    
    
    $
    1,297
    
    
    $
    3,320
    
    
    $
    2,804Basic earnings per share
    
    $
    0.34
    
    
    $
    0.29
    
    
    $
    0.65
    
    
    $
    0.63Diluted earnings per share
    
    $
    0.33
    
    
    $
    0.29
    
    
    $
    0.63
    
    
    $
    0.62
 See Notes to Unaudited Consolidated Financial Statements.
 4




---



##### Table of Contents



SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In Thousands)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    1,750
    
    
    $
    1,297
    
    
    $
    3,320
    
    
    $
    2,804Other comprehensive income (loss), net of tax:Unrealized holding gains (losses) arising during the
period from securities available for sale, net of tax
(benefit) of $(818) and $(466) for the three and six
months ended June 30, 2008, respectively, and $388
and $369 for the three months ended June 30, 2008,
respectively
    
    
    (1,592
    )
    
    
    753
    
    
    
    (905
    )
    
    
    716Unrealized gains(losses) arising during the period
from derivative, net of tax (benefit) of $35 for the
six months ended June 30, 2008, and
$18 and $26 for the three and six months ended
June 30, 2007, respectively
    
    
    
    
    
    
    24
    
    
    
    68
    
    
    
    42Reclassification adjustment for net gains realized on
derivatives in net income, net of tax of $46 and
$92 for the three and six months ended June 30,
2008, respectively
    
    
    (90
    )
    
    
    
    
    
    
    (180
    )
    
    
    Other comprehensive income (loss)
    
    
    (1,682
    )
    
    
    777
    
    
    
    (1,017
    )
    
    
    758Comprehensive income
    
    $
    68
    
    
    
    2,074
    
    
    
    2,303
    
    
    
    3,562
 See Notes to Unaudited Consolidated Financial Statements.
 5




---



##### Table of Contents



SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
(In Thousands)
 AccumulatedAdditional
    
    
    
    
    
    Other
    
    TotalCommon
    
    Paid-in
    
    Retained
    
    Comprehensive
    
    StockholdersStock
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    EquityBalance December 31, 2007
    
    $5
    
    $
    63,159
    
    
    $
    8,082
    
    
    $
    1,001
    
    
    $
    72,247Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    (1,017
    )
    
    
    (1,017
    )Stock based compensation
expense
    
    
    
    
    320
    
    
    
    
    
    
    
    
    
    
    
    320Net income
    
    
    
    
    
    
    
    
    3,320
    
    
    
    
    
    
    
    3,320Balance June 30, 2008
    
    $5
    
    
    $   63,479
    
    
    
    $  11,402
    
    
    
    $   (16
    )
    
    
    $  74,870
 See Notes to Unaudited Consolidated Financial Statements.
 6




---



##### Table of Contents



SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(Unaudited)
 (In Thousands)
 2008
    
    
    2007OPERATING ACTIVITIESNet income
    
    $
    3,320
    
    
    $
    2,804Adjustments to reconcile net income to net cash
provided by operating activities:Deferred tax benefit
    
    
    (623
    )
    
    
    (1,415
    )Provision for loan losses
    
    
    3,519
    
    
    
    1,460Depreciation and amortization
    
    
    450
    
    
    
    275Net amortization (accretion) of investments
    
    
    (174
    )
    
    
    (58
    )Amortized gain on derivative
    
    
    272
    
    
    
    Increase in accrued interest and dividends receivable
    
    
    (30
    )
    
    
    (362
    )Stock compensation expense
    
    
    320
    
    
    
    257Increase in accrued interest payable
    
    
    554
    
    
    
    149Proceeds from sale of mortgages held for sale
    
    
    (45,669
    )
    
    
    (22,452
    )Originations of mortgages held for sale
    
    
    44,263
    
    
    
    22,195(Gain) loss on sale of other real estate
    
    
    97
    
    
    
    (15
    )Net change in other operating activities
    
    
    (335
    )
    
    
    (180
    )Net cash provided by operating activities
    
    
    5,965
    
    
    
    2,656INVESTING ACTIVITIESPurchases of securities available for sale
    
    
    (10,956
    )
    
    
    (26,829
    )Proceeds from maturities/calls, pay downs of
securities available for sale
    
    
    5,220
    
    
    
    3,663Increase in loans
    
    
    (170,097
    )
    
    
    (86,990
    )Purchase of premises and equipment
    
    
    (239
    )
    
    
    (1,027
    )Purchase of restricted equity securities
    
    
    (1,457
    )
    
    
    (396
    )Proceeds from sale of other real estate
    
    
    972
    
    
    
    276Net cash used in investing activities
    
    
    (176,557
    )
    
    
    (111,303
    )FINANCING ACTIVITIESNet increase in non-interest bearing deposits
    
    
    12,048
    
    
    
    19,398Net increase in interest bearing deposits
    
    
    72,694
    
    
    
    152,153Net increase in federal funds purchased
    
    
    26,302
    
    
    
    Proceeds from other borrowings
    
    
    20,247
    
    
    
    Net cash provided by financing activities
    
    
    131,291
    
    
    
    171,551Net increase (decrease) in cash and cash equivalents
    
    
    (39,301
    )
    
    
    62,904Cash and cash equivalents at beginning of period
    
    
    66,422
    
    
    
    53,335Cash and cash equivalents at end of period
    
    $
    27,121
    
    
    $
    116,239
 See Notes to Unaudited Consolidated Financial Statements.
 7




---



##### Table of Contents



SERVISFIRST BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)
 NOTE 1 GENERAL
   NOTE 2 CASH AND CASH FLOWS
  Six Months EndedJune 30,2008
    
    
    2007(In Thousands)Interest paid
    
    $
    9,836
    
    
    $
    11,211Income taxes paid
    
    $
    2,560
    
    
    $
    2,585Transfers of loans to other real estate
    
    $
    6,857
    
    
    $
    
 8




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3 EARNINGS PER COMMON SHARE
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In Thousands, Except Share and Per Share Amounts)Weighted average common shares
outstanding
    
    
    5,113,482
    
    
    
    4,463,606
    
    
    
    5,113,482
    
    
    
    4,463,606Net income
    
    $
    1,750
    
    
    $
    1,297
    
    
    $
    3,320
    
    
    $
    2,804Basic earnings per common share
    
    $
    0.34
    
    
    $
    0.29
    
    
    $
    0.65
    
    
    $
    0.63Weighted average common shares
outstanding
    
    
    5,113,482
    
    
    
    4,463,606
    
    
    
    5,113,482
    
    
    
    4,463,606Dilutive effects of assumed
conversions and exercises of
stock options and warrants
    
    
    176,611
    
    
    
    37,744
    
    
    
    174,435
    
    
    
    25,842Weighted average common and
dilutive potential common shares
outstanding
    
    
    5,290,093
    
    
    
    4,501,351
    
    
    
    5,287,917
    
    
    
    4,489,449Net income
    
    $
    1,750
    
    
    $
    1,297
    
    
    $
    3,320
    
    
    $
    2,804Diluted earnings per common share
    
    $
    0.33
    
    
    $
    0.29
    
    
    $
    0.63
    
    
    $
    0.62
 NOTE 4 EMPLOYEE AND DIRECTOR BENEFITS
 Stock Options
   9




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    June 30,2008
    
    
    2007Expected volatility
    
    
    20.00
    %
    
    
    20.00
    %Expected dividends
    
    
    .50
    %
    
    
    .50
    %Expected term in years
    
    7 years
    
    7 yearsRisk-free rate
    
    
    2.93
    %
    
    
    4.56
    %
  WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateShares
    
    
    Price
    
    
    Term (years)
    
    
    Intrinsic Value(In
Thousands)Outstanding January 1, 2008
    
    
    712,500
    
    
    $
    13.12
    
    
    
    8.43
    
    
    $
    4,905Granted
    
    
    13,500
    
    
    
    20.00
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2008
    
    
    726,000
    
    
    $
    13.24
    
    
    
    7.99
    
    
    
    4,905Exercisable at June 30, 2008
    
    
    42,000
    
    
    $
    10.24
    
    
    
    6.98
    
    
    $
    410
  Stock Warrants
  10




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year EndedDecember 31,2005Expected volatility
    
    
    20.00
    %Expected dividends
    
    
    0.00
    %Expected term (in years)
    
    3 yearsRisk-free rate
    
    
    3.69
    %
  NOTE 5 ADOPTION OF NEW ACCOUNTING INTERPRETATIONS
 The Fair Value Option for Financial Assets and Financial Liabilities  Including an
Amendment of FASB Statement No. 115
 Fair Value Measurements, Effective
Date FASB Statement No. 157.
 11




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 6 RECENT ACCOUNTING PRONOUNCEMENTS
  Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB No. 133.
 NOTE 7 FAIR VALUE MEASUREMENT
 Fair value Measurements
 Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement
date for assets or liabilities. The fair value hierarchy gives the highest priority to Level
1 inputs.Level 2: Observable prices that are based on inputs not quoted on active markets, but
corroborated by market data.Level 3: Unobservable inputs are used when little or no market data is available. The fair
value hierarchy gives the lowest priority to Level 3 inputs.
  12




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Fair Value Measurement at June 30, 2008Quoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total(Dollar amounts in thousands)Assets Measured on a Recurring Basis:Available-for-sale securities (1)
    
    $
    
    
    
    $
    91,773
    
    
    
    
    
    
    $
    91,773Assets measured on a Nonrecurring Basis:Impaired loans
    
    
    
    
    
    
    
    
    
    
    10,125
    
    
    $
    10,125
 
 (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.
Therefore, certain financial assets and financial liabilities not carried at fair value, such as
the Companys investment in the Federal Home Loan Bank are still reported at their carrying values.  13




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Forward Looking Statements
  Business
    14




---



##### Table of Contents



Overview
   Significant Accounting Policies
  15




---



##### Table of Contents



Financial Condition
 Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gain
    
    
    Loss
    
    
    Value(In Thousands)As of June 30, 2008:Securities available for sale:Mortgage backed securities
    
    $
    59,650
    
    
    $
    140
    
    
    $
    (444
    )
    
    $
    59,346State and municipal securities
    
    
    26,727
    
    
    
    280
    
    
    
    (132
    )
    
    
    26,875Corporate bonds
    
    
    5,964
    
    
    
    
    
    
    
    (412
    )
    
    
    5,552Total
    
    $
    92,341
    
    
    $
    420
    
    
    $
    (988
    )
    
    $
    91,773As of December 31, 2007:Securities available for sale:Mortgage backed securities
    
    $
    62,162
    
    
    $
    471
    
    
    $
    (30
    )
    
    $
    62,603State and municipal securities
    
    
    24,271
    
    
    
    374
    
    
    
    (15
    )
    
    
    24,630Total
    
    $
    86,433
    
    
    $
    845
    
    
    $
    (45
    )
    
    $
    87,233
   Less than
    
    
    One year
    
    
    Five yearsone
    
    
    to five
    
    
    to ten
    
    
    More thanyear
    
    
    years
    
    
    years
    
    
    ten years
    
    
    Total(In Thousands)As of June 30, 2008Mortgage backed securities
    
    $
    
    
    
    $
    28,301
    
    
    $
    26,754
    
    
    $
    4,595
    
    
    $
    59,650State and municipal
securities
    
    
    
    
    
    
    1,564
    
    
    
    13,282
    
    
    
    11,881
    
    
    
    26,727Corporate bonds
    
    
    
    
    
    
    
    
    
    
    4,034
    
    
    
    1,930
    
    
    
    5,964Total
    
    $
    
    
    
    $
    29,865
    
    
    $
    44,070
    
    
    $
    18,406
    
    
    $
    92,341
  16




---



##### Table of Contents



Loans
  June 30,
    
    
    December 31,2008
    
    
    2007(In Thousands)Commercial, financial and agricultural
    
    $
    260,763
    
    
    $
    219,684Real estate  construction
    
    
    223,377
    
    
    
    195,238Real estate  mortgage:Owner occupied
    
    
    128,466
    
    
    
    89,0141-4 family
    
    
    99,630
    
    
    
    64,325Other
    
    
    93,890
    
    
    
    83,663Total real estate mortgage
    
    
    321,986
    
    
    
    237,002Consumer
    
    
    30,394
    
    
    
    23,357Total loans
    
    
    836,520
    
    
    
    675,281Less allowance for loan losses
    
    
    (9,438
    )
    
    
    (7,732
    )Net loans
    
    $
    827,082
    
    
    $
    667,549
 Asset Quality
   17




---



##### Table of Contents



Three Months
    
    
    Six MonthsEnded June 30
    
    
    Ended June 302008
    
    
    2007
    
    
    2008
    
    
    2007(In Thousands)Allowance for loan losses at beginning of period
    
    $
    8,852
    
    
    $
    6,038
    
    
    $
    7,732
    
    
    $
    5,418Charge-offsCommercial, financial and agricultural
    
    
    
    
    
    
    (23
    )
    
    
    (1
    )
    
    
    (43
    )Real estate  construction
    
    
    (1,469
    )
    
    
    
    
    
    
    (1,748
    )
    
    
    Real estate  mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Owner occupied
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1-4 family
    
    
    (77
    )
    
    
    
    
    
    
    (77
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total real estate mortgage
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    Consumer
    
    
    (5
    )
    
    
    (6
    )
    
    
    (6
    )
    
    
    (10
    )Total charge-offs
    
    
    (1,551
    )
    
    
    (29
    )
    
    
    (1,832
    )
    
    
    (53
    )RecoveriesCommercial, financial and industrial
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    Real estate  construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Real estate  mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Owner occupied
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1-4 family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total real estate mortgage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total recoveries
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    Net charge-offs
    
    
    (1,551
    )
    
    
    (29
    )
    
    
    (1,813
    )
    
    
    (53
    )Provision for loan losses charged to expense
    
    
    2,137
    
    
    
    816
    
    
    
    3,519
    
    
    
    1,460Allowance for loan losses at end of period
    
    $
    9,438
    
    
    $
    6,825
    
    
    $
    9,438
    
    
    $
    6,825As a percentage of year to date average loans:Annualized charge-offs
    
    
    0.79
    %
    
    
    0.02
    %
    
    
    0.48
    %
    
    
    0.02
    %Annualized provision for loan losses
    
    
    1.08
    %
    
    
    0.66
    %
    
    
    0.94
    %
    
    
    0.62
    %
 18




---



##### Table of Contents



June 30,
    
    
    December 31,2008
    
    
    2007
    
    
    2007Percentage of
    
    
    
    
    
    
    Percentage of
    
    
    
    
    
    
    Percentage ofloans in each
    
    
    
    
    
    
    loans in each
    
    
    
    
    
    
    loans in eachcategory of
    
    
    
    
    
    
    category of
    
    
    
    
    
    
    category ofAmount
    
    
    total loans
    
    
    Amount
    
    
    total loans
    
    
    Amount
    
    
    total loans(Dollars in Thousands)Commercial, financial
and agricultural
    
    $
    970
    
    
    
    31.17
    %
    
    $
    1,391
    
    
    
    35.84
    %
    
    $
    1,714
    
    
    
    32.53
    %Real estate  construction
    
    
    4,428
    
    
    
    26.70
    %
    
    
    4,434
    
    
    
    35.00
    %
    
    
    3,487
    
    
    
    28.91
    %Real estate  mortgage
    
    
    1,139
    
    
    
    38.49
    %
    
    
    191
    
    
    
    26.27
    %
    
    
    340
    
    
    
    35.10
    %Consumer
    
    
    33
    
    
    
    3.64
    %
    
    
    199
    
    
    
    2.89
    %
    
    
    12
    
    
    
    3.46
    %Other
    
    
    2,868
    
    
    
    
    
    
    
    610
    
    
    
    
    
    
    
    2,179
    
    
    
    Total
    
    $
    9,438
    
    
    
    100.00
    %
    
    $
    6,825
    
    
    
    100.00
    %
    
    $
    7,732
    
    
    
    100.00
    %
 Non-performing Assets
    19




---



##### Table of Contents



June 30,
    
    
    December 31,
    
    
    June 30,2008
    
    
    2007
    
    
    2007(Dollars in Thousands)Non-accrual loans
    
    $
    3,218
    
    
    
    4,284
    
    
    
    2,484Loans 90 days or more past
due and still accruing
    
    
    1,775
    
    
    
    187
    
    
    
    6All other real estate owned
    
    
    8,202
    
    
    
    1,623
    
    
    
    371Total non-performing assets
    
    $
    13,195
    
    
    
    6,094
    
    
    
    2,861
    Deposits
   Other Borrowings
   20




---



##### Table of Contents



Liquidity
      Payments due by Period(In Thousands)Less than
    
    
    1-3
    
    
    4-5
    
    
    More thanContractual Obligations (1)
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsDeposits without a stated maturity
    
    $
    702,834
    
    
    
    702,834
    
    
    
    
    
    
    
    
    
    
    
    Certificates of deposit (2)
    
    $
    144,591
    
    
    
    132,620
    
    
    
    8,883
    
    
    
    3,088
    
    
    
    FHLB borrowings
    
    $
    20,000
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    Federal funds purchased
    
    $
    26,302
    
    
    
    26,302
    
    
    
    
    
    
    
    
    
    
    
    Other borrowings
    
    $
    320
    
    
    
    320
    
    
    
    
    
    
    
    
    
    
    
    Operating lease commitments
    
    $
    5,971
    
    
    
    915
    
    
    
    1,509
    
    
    
    1,085
    
    
    
    2,462Total
    
    $
    900,018
    
    
    
    862,991
    
    
    
    10,392
    
    
    
    24,173
    
    
    
    2,462
 21




---



##### Table of Contents



(1)
    
    Excludes interest(2)
    
    Certificates of deposit give customers the right 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
   To Be WellCapitalizedUnder PromptFor Capital
    
    CorrectiveAdequacy
    
    ActionActual
    
    Purposes
    
    ProvisionsServisFirst
    
    ServisFirstBancshares
    
    BankJune 30, 2008Total Capital to Risk Weighted Assets
    
    
    10.00
    %
    
    
    10.03
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 Capital to Risk Weighted Assets
    
    
    8.88
    %
    
    
    8.91
    %
    
    
    4.00
    %
    
    
    6.00
    %Tier 1 Capital to Average Assets
    
    
    7.92
    %
    
    
    7.94
    %
    
    
    4.00
    %
    
    
    5.00
    %December 31, 2007Total Capital to Risk Weighted Assets
    
    
    11.22
    %
    
    
    11.22
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 Capital to Risk Weighted Assets
    
    
    10.12
    %
    
    
    10.12
    %
    
    
    4.00
    %
    
    
    6.00
    %Tier 1 Capital to Average Assets
    
    
    8.40
    %
    
    
    8.40
    %
    
    
    4.00
    %
    
    
    5.00
    %June 30, 2007Total Capital to Risk Weighted Assets
    
    
    N/A
    
    
    
    10.91
    %
    
    
    8.00
    %
    
    
    10.00
    %Tier 1 Capital to Risk Weighted Assets
    
    
    N/A
    
    
    
    9.72
    %
    
    
    4.00
    %
    
    
    6.00
    %Tier 1 Capital to Average Assets
    
    
    N/A
    
    
    
    8.55
    %
    
    
    4.00
    %
    
    
    5.00
    %
 Off-balance sheet arrangements
  22




---



##### Table of Contents



(In Thousands)Commitments to extend credit beyond current fundings
    
    $
    285,394Credit card arrangements
    
    
    8,270Standby letters of credit and financial guarantees
    
    
    26,026Total
    
    $
    319,690
   Derivatives
  Net Income
  23




---



##### Table of Contents



Net Interest Income
     24




---



##### Table of Contents



Average Consolidated Balance Sheet and Net Interest      Analysis on a Fully Tax Equivalent BasisThree Months Ended June 30,2008
    
    
    2007Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollar Amounts In Thousands)Assets:Interest-earning assets:Loans, net of
unearned income(1)
    
    $
    791,383
    
    
    
    11,896
    
    
    
    6.03
    %
    
    
    494,836
    
    
    
    10,409
    
    
    
    8.44
    %Mortgage loans held for
sale
    
    
    2,871
    
    
    
    42
    
    
    
    5.87
    %
    
    
    1,758
    
    
    
    26
    
    
    
    5.93
    %Investment securities:Taxable
    
    
    68,930
    
    
    
    975
    
    
    
    5.66
    %
    
    
    28,583
    
    
    
    394
    
    
    
    5.51
    %Tax-exempt(2)(3)
    
    
    23,342
    
    
    
    329
    
    
    
    5.64
    %
    
    
    16,198
    
    
    
    229
    
    
    
    5.65
    %Total investment
securities(3)
    
    
    92,272
    
    
    
    1,304
    
    
    
    5.65
    %
    
    
    44,781
    
    
    
    623
    
    
    
    5.56
    %Federal funds sold
    
    
    30,353
    
    
    
    164
    
    
    
    2.16
    %
    
    
    87,855
    
    
    
    1,140
    
    
    
    5.19
    %Restricted equity
securities
    
    
    2,659
    
    
    
    34
    
    
    
    5.28
    %
    
    
    1,201
    
    
    
    2
    
    
    
    0.67
    %Interest bearing balances
with banks
    
    
    37
    
    
    
    1
    
    
    
    5.42
    %
    
    
    35
    
    
    
    
    
    
    
    Total interest-earning
assets
    
    
    919,575
    
    
    
    13,441
    
    
    
    5.86
    %
    
    
    630,466
    
    
    
    12,200
    
    
    
    7.76
    %Non-interest earning
assetsCash and due from banks
    
    
    17,167
    
    
    
    
    
    
    
    
    
    
    
    13,527Net fixed assets
    
    
    3,972
    
    
    
    
    
    
    
    
    
    
    
    3,085Allowance for loan
losses,
accrued interest and
other assets
    
    
    5,105
    
    
    
    
    
    
    
    
    
    
    
    (562
    )Total assets
    
    $
    945,819
    
    
    
    
    
    
    
    
    
    
    
    646,516Liabilities and
stockholders
equity:Interest-bearing
liabilities:Interest bearing demand
deposits
    
    $
    95,781
    
    
    
    367
    
    
    
    1.54
    %
    
    
    36,186
    
    
    
    263
    
    
    
    2.92
    %Savings deposits
    
    
    431
    
    
    
    1
    
    
    
    0.52
    %
    
    
    243
    
    
    
    1
    
    
    
    1.65
    %Money market accounts
    
    
    524,806
    
    
    
    2,655
    
    
    
    2.03
    %
    
    
    418,868
    
    
    
    5,219
    
    
    
    5.00
    %Time deposits
    
    
    135,300
    
    
    
    1,434
    
    
    
    4.25
    %
    
    
    50,799
    
    
    
    650
    
    
    
    5.13
    %Federal funds purchased
    
    
    5,041
    
    
    
    30
    
    
    
    2.39
    %
    
    
    
    
    
    
    
    
    
    
    Other borrowed funds
    
    
    20,250
    
    
    
    160
    
    
    
    3.17
    %
    
    
    
    
    
    
    
    
    
    
    Total interest-bearing
liabilities
    
    
    781,609
    
    
    
    4,647
    
    
    
    2.38
    %
    
    
    506,096
    
    
    
    6,133
    
    
    
    4.86
    %Non-interest liabilitiesNon-interest bearing
demand deposits
    
    
    86,019
    
    
    
    
    
    
    
    
    
    
    
    82,910Other liabilities
    
    
    2,611
    
    
    
    
    
    
    
    
    
    
    
    2,803Stockholders equity
    
    
    75,580
    
    
    
    
    
    
    
    
    
    
    
    54,707Total liabilities and
stockholders equity
    
    $
    945,819
    
    
    
    
    
    
    
    
    
    
    
    646,516Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.48
    %
    
    
    
    
    
    
    
    
    
    
    2.90
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.84
    %
    
    
    
    
    
    
    
    
    
    
    3.82
    %
 
 (1)
    
    Non-accrual loans are included in average loan balances in all years. Loan fees of
$319,000 and $353,000 are included in interest income in 2008 and 2007, 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 $1,753,000 and ($263,000) are excluded from the yield
calculation in 2008 and 2007, respectively. 25




---



##### Table of Contents



Average Consolidated Balance Sheet and Net Interest  Analysis on a Fully Tax Equivalent BasisSix Months Ended June 30,2008
    
    
    2007Average
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollar Amounts In Thousands)Assets:Interest-earning assets:Loans, net of
unearned income(1)
    
    $
    753,739
    
    
    
    24,238
    
    
    
    6.45
    %
    
    
    472,658
    
    
    
    19,845
    
    
    
    8.42
    %Mortgage loans held for
sale
    
    
    2,636
    
    
    
    74
    
    
    
    5.66
    %
    
    
    1,484
    
    
    
    59
    
    
    
    8.01
    %Investment securities:Taxable
    
    
    67,021
    
    
    
    1,881
    
    
    
    5.61
    %
    
    
    23,679
    
    
    
    650
    
    
    
    5.49
    %Tax-exempt (2)(3)
    
    
    22,607
    
    
    
    639
    
    
    
    5.64
    %
    
    
    14,802
    
    
    
    420
    
    
    
    5.68
    %Total investment
securities (3)
    
    
    89,628
    
    
    
    2,520
    
    
    
    5.62
    %
    
    
    38,481
    
    
    
    1,070
    
    
    
    5.51
    %Federal funds sold
    
    
    34,274
    
    
    
    437
    
    
    
    2.55
    %
    
    
    81,200
    
    
    
    2,093
    
    
    
    5.15
    %Restricted equity
securities
    
    
    2,013
    
    
    
    49
    
    
    
    4.93
    %
    
    
    1,018
    
    
    
    15
    
    
    
    3.00
    %Interest bearing balances
with banks
    
    
    2,395
    
    
    
    53
    
    
    
    4.41
    %
    
    
    33
    
    
    
    1
    
    
    
    2.92
    %Total interest-earning
assets
    
    
    884,685
    
    
    
    27,371
    
    
    
    6.20
    %
    
    
    594,874
    
    
    
    23,083
    
    
    
    7.78
    %Non-interest earning
assetsCash and due from banks
    
    
    16,448
    
    
    
    
    
    
    
    
    
    
    
    13,049Net fixed assets
    
    
    4,076
    
    
    
    
    
    
    
    
    
    
    
    2,888Allowance for loan losses,
accrued interest and
other assets
    
    
    3,555
    
    
    
    
    
    
    
    
    
    
    
    (490
    )Total assets
    
    $
    908,764
    
    
    
    
    
    
    
    
    
    
    
    610,321Liabilities and
stockholders
equity:Interest-bearing
liabilities:Interest bearing demand
deposits
    
    $
    81,633
    
    
    
    714
    
    
    
    1.76
    %
    
    
    40,059
    
    
    
    520
    
    
    
    2.62
    %Savings deposits
    
    
    404
    
    
    
    1
    
    
    
    0.74
    %
    
    
    200
    
    
    
    2
    
    
    
    1.53
    %Money market accounts
    
    
    535,651
    
    
    
    6,872
    
    
    
    2.57
    %
    
    
    387,482
    
    
    
    9,591
    
    
    
    4.96
    %Time deposits
    
    
    117,565
    
    
    
    2,592
    
    
    
    4.42
    %
    
    
    48,653
    
    
    
    1246
    
    
    
    5.14
    %Federal funds purchased
    
    
    2,521
    
    
    
    30
    
    
    
    2.39
    %
    
    
    0
    
    
    
    0
    
    
    
    0.00
    %Other borrowings
    
    
    11,319
    
    
    
    186
    
    
    
    3.30
    %
    
    
    0
    
    
    
    0
    
    
    
    0.00
    %Total interest-bearing
liabilities
    
    
    749,093
    
    
    
    10,395
    
    
    
    2.78
    %
    
    
    476,394
    
    
    
    11,359
    
    
    
    4.78
    %Non-interest liabilitiesNon-interest bearing
demand deposits
    
    
    81,939
    
    
    
    
    
    
    
    
    
    
    
    77,192Other liabilities
    
    
    3,129
    
    
    
    
    
    
    
    
    
    
    
    2,690Stockholders equity
    
    
    74,603
    
    
    
    
    
    
    
    
    
    
    
    54,045Total liabilities and
stockholders equity
    
    $
    908,764
    
    
    
    
    
    
    
    
    
    
    
    610,321Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.42
    %
    
    
    
    
    
    
    
    
    
    
    3.00
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.77
    %
    
    
    
    
    
    
    
    
    
    
    3.94
    %
 
 (1)
    
    Non-accrual loans are included in average loan balances in all years. Loan fees of
$617,000 and $683,000 are included in interest income in 2008 and 2007, respectively.(2)
    
    Interest income and yields are presented on a fully taxable equivalent basis using a
tax rate of 34%.(4)
    
    Unrealized gains (losses) of $1,594,000 and ($211,000) are excluded from the yield
calculation in 2008 and 2007, respectively. 26




---



##### Table of Contents



Provision for Loan Losses
   27




---



##### Table of Contents



Noninterest Income
   Noninterest Expense
   28




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
     29




---



##### Table of Contents



Economic Value of Equity Under Rate Shock  At June 30, 2008
 -200bps
    
    
    -100bps
    
    
    0bps
    
    
    +100bps
    
    
    +200bps(Dollars in Thousands)Economic value of equity
    
    $
    74,279
    
    
    
    74,593
    
    
    
    74,870
    
    
    
    78,277
    
    
    
    81,586Actual dollar change
    
    $
    (277
    )
    
    
    (591
    )
    
    
    0
    
    
    
    3,407
    
    
    
    6,716Percent change
    
    
    (0.37
    )%
    
    
    (0.79
    )%
    
    
    0.00
    %
    
    
    4.55
    %
    
    
    8.97
    %
   
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 CEO and CFO Certification
 Evaluation of Disclosure Controls and Procedures
  30




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  31




---



##### Table of Contents



ITEM 6.
    
    EXHIBITS
      32




---



##### Table of Contents



SIGNATURES
  SERVISFIRST BANCSHARES, INC.Date: August 5, 2008
    By
    /s/ Thomas A. Broughton, IIIThomas A. Broughton, IIIPresident and Chief Executive OfficerDate: August 5, 2008
    By
    /s/ William M. FosheeWilliam M. FosheeChief Financial Officer 33