sfbs20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

☐ 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 001-36452

SERVISFIRST BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

26-0734029

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

2500 Woodcrest Place, Birmingham, Alabama	35209
(Address of Principal Executive Offices)	(Zip Code)

(205) 949-0302

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common stock, par value $.001 per share	SFBS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Class	Outstanding as of April 29, 2024
Common stock, $.001 par value	54,509,296

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3
Item 1.	Consolidated Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4.	Controls and Procedures	37

PART II. OTHER INFORMATION		38
Item 1	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38

PART 1. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

	March 31, 2024			December 31, 2023
	(Unaudited)			(1)
ASSETS
Cash and due from banks	$	78,708		$	123,430
Interest-bearing balances due from depository institutions		1,201,566			1,907,083
Federal funds sold		170,625			100,575
Cash and cash equivalents		1,450,899			2,131,088
Available-for-sale debt securities, at fair value		1,073,929			900,183
Held-to-maturity debt securities (fair value of $785,270 and $907,191, respectively)		867,696			982,664
Restricted equity securities		11,300			10,226
Mortgage loans held for sale		7,592			5,074
Loans		11,880,696			11,658,829
Less allowance for credit losses		(155,892	)		(153,317	)
Loans, net		11,724,804			11,505,512
Premises and equipment, net		59,302			59,324
Accrued interest and dividends receivable		61,407			59,181
Deferred tax asset, net		60,292			62,918
Other real estate owned and repossessed assets		490			995
Bank owned life insurance contracts		294,786			292,759
Goodwill		13,615			13,615
Other assets		95,518			106,129
Total assets	$	15,721,630		$	16,129,668
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing demand	$	2,627,639		$	2,643,101
Interest-bearing		10,123,809			10,630,410
Total deposits		12,751,448			13,273,511
Federal funds purchased		1,345,328			1,256,724
Other borrowings		64,737			64,735
Accrued interest and dividends payable		26,822			27,545
Other liabilities		57,259			66,748
Total liabilities		14,245,594			14,689,263
Stockholders' equity:
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at March 31, 2024 and December 31, 2023		-			-
Common stock, par value $0.001 per share; 200,000,000 shares authorized: 54,507,778 shares issued and outstanding at March 31, 2024; and 54,461,580 shares issued and outstanding at December 31, 2023		54			54
Additional paid-in capital		233,560			232,605
Retained earnings		1,288,514			1,254,841
Accumulated other comprehensive loss		(46,592	)		(47,595	)
Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		1,475,536			1,439,905
Noncontrolling interest		500			500
Total stockholders' equity		1,476,036			1,440,405
Total liabilities and stockholders' equity	$	15,721,630		$	16,129,668

(1) Derived from audited financial statements.

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
(Unaudited)
	Three Months Ended March 31,
	2024		2023
Interest income:
Interest and fees on loans	$	186,978	$	163,732
Taxable securities		15,979		10,895
Nontaxable securities		9		21
Federal funds sold		541		614
Other interest and dividends		23,203		6,060
Total interest income		226,710		181,322
Interest expense:
Deposits		104,066		55,713
Borrowed funds		20,149		17,308
Total interest expense		124,215		73,021
Net interest income		102,495		108,301
Provision for credit losses		4,368		4,197
Net interest income after provision for credit losses		98,127		104,104
Noninterest income:
Service charges on deposit accounts		2,150		1,934
Mortgage banking		678		442
Credit card income		2,155		1,689
Bank-owned life insurance income		3,231		1,621
Other operating income		599		635
Total noninterest income		8,813		6,321
Noninterest expense:
Salaries and employee benefits		22,986		19,066
Equipment and occupancy		3,557		3,435
Third party processing and other services		7,166		7,284
Professional services		1,464		1,654
FDIC and other regulatory assessments		3,905		1,517
Other real estate owned		30		6
Other operating expense		7,195		6,702
Total noninterest expense		46,303		39,664
Income before income taxes		60,637		70,761
Provision for income taxes		10,611		12,790
Net income		50,026		57,971
Dividends on preferred stock		-		-
Net income available to common stockholders	$	50,026	$	57,971
Basic earnings per common share	$	0.92	$	1.07
Diluted earnings per common share	$	0.92	$	1.06

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
	Three Months Ended March 31,
	2024			2023
Net income	$	50,026		$	57,971
Other comprehensive income (loss), net of tax
Unrealized net holding gains (losses) arising during period from securities available-for-sale, net of $2,373 and $(221) for the three months ended March 31, 2024 and 2023, respectively		1,138			(667	)
Amortization of net unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax of $(37) and $(46) for the three months ended March 31, 2024 and 2023, respectively		(135	)		(129	)
Other comprehensive income (loss), net of tax		1,003			(796	)
Comprehensive income	$	51,029		$	57,175

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
(Unaudited)
	Three Months Ended March 31,
													Accumulated
							Additional						Other					Total
	Common		Preferred		Common		Paid-in			Retained			Comprehensive			Noncontrolling		Stockholders'
	Shares		Stock		Stock		Capital			Earnings			Income (Loss)			Interest		Equity
Balance, January 1, 2023		54,326,527	$	-	$	54	$	229,693		$	1,109,902		$	(42,253	)	$	500	$	1,297,896
Common dividends declared, $0.28 per share		-		-		-		-			(15,233	)		-			-		(15,233	)
Dividends on nonvested restricted stock recognized as compensation expense		-		-		-		-			41			-			-		41
Issue restricted shares pursuant to stock incentives, net of forfeitures		20,713		-		-		-			-			-			-		-
Issue shares of common stock upon exercise of stock options		50,785		-		-		846			-			-			-		846
24,215 shares of common stock withheld in net settlement upon exercise of stock options		-		-		-		(1,716	)		-			-			-		(1,716	)
Stock-based compensation expense		-		-		-		808			-			-			-		808
Other comprehensive loss, net of tax		-		-		-		-			-			(796	)		-		(796	)
Net income		-		-		-		-			57,971			-			-		57,971
Balance, March 31, 2023		54,398,025	$	-	$	54	$	229,631		$	1,152,681		$	(43,049	)	$	500	$	1,339,817

Balance, January 1, 2024		54,461,580	$	-	$	54	$	232,605		$	1,254,841		$	(47,595	)	$	500	$	1,440,405
Common dividends declared, $0.30 per share		-		-		-		-			(16,353	)		-			-		(16,353	)
Issue restricted shares pursuant to stock incentives, net of forfeitures		39,912		-		-		-			-			-			-		-
Issue shares of common stock upon exercise of stock options		6,286		-		-		130			-			-			-		130
2,014 shares of common stock withheld in net settlement upon exercise of stock options		-		-		-		(133	)		-			-			-		(133	)
Stock-based compensation expense		-		-		-		958			-			-			-		958
Other comprehensive income, net of tax		-		-		-		-			-			1,003			-		1,003
Net income		-		-		-		-			50,026			-			-		50,026
Balance, March 31, 2024		54,507,778	$	-	$	54	$	233,560		$	1,288,514		$	(46,592	)	$	500	$	1,476,036

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
	Three Months Ended March 31,
	2024			2023
OPERATING ACTIVITIES
Net income	$	50,026		$	57,971
Adjustments to reconcile net income to net cash provided by operations
Deferred benefit tax		2,626			49
Provision for credit losses		4,368			4,197
Depreciation		1,099			1,071
Accretion on acquired loans		49			49
Amortization of investments in tax credit partnerships		2,837			3,345
Net (accretion) amortization of debt securities available-for-sale		(197	)		128
Increase in accrued interest and dividends receivable		(2,226	)		(2,078	)
Stock-based compensation expense		958			808
(Decrease) Increase in accrued interest and dividends payable		(723	)		1,926
Proceeds from sale of mortgage loans held for sale		37,635			16,320
Originations of mortgage loans held for sale		(39,475	)		(15,922	)
Gain on sale of mortgage loans held for sale		(678	)		(442	)
Net gain on sale of other real estate owned and repossessed assets		(95	)		-
Increase in cash surrender value of life insurance contracts		(3,231	)		(1,621	)
Net change in other assets, liabilities, and other operating activities		500			(10,652	)
Net cash provided by operating activities		53,473			55,149
INVESTMENT ACTIVITIES
Purchases of debt securities available-for-sale		(198,269	)		-
Proceeds from maturities, calls and paydowns of debt securities available-for-sale		24,724			18,853
Purchases of debt securities held-to-maturity		(9,936	)		-
Proceeds from maturities, calls and paydowns of debt securities held-to-maturity		124,904			11,960
Purchases of restricted equity securities		(1,074	)		(12,750	)
Proceeds from sale of restricted equity securities		-			13,177
Investment in tax credit partnerships and SBIC		(25	)		(538	)
(Increase) decrease in loans		(223,799	)		56,588
Purchases of premises and equipment		(1,077	)		(1,314	)
Proceeds from sale of other real estate owned and repossessed assets		690			-
Net cash (used in) provided by investing activities		(283,862	)		85,976
FINANCING ACTIVITIES
Net decrease in non-interest-bearing deposits		(15,462	)		(422,611	)
Net (decrease) increase in interest-bearing deposits		(506,601	)		491,123
Net increase (decrease) in federal funds purchased		88,604			(138,638	)
FHLB advances		-			300,000
Repayment of FHLB advances		-			(300,000	)
Proceeds from exercise of stock options		130			846
Taxes paid in net settlement of tax obligation upon exercise of stock options		(133	)		(1,716	)
Dividends paid on common stock		(16,338	)		(15,211	)
Net cash used in financing activities		(449,800	)		(86,207	)
Net (decrease) increase in cash and cash equivalents		(680,189	)		54,918
Cash and cash equivalents at beginning of period		2,131,088			816,053
Cash and cash equivalents at end of period	$	1,450,899		$	870,971
SUPPLEMENTAL DISCLOSURE
Cash paid for:
Interest	$	124,938		$	71,095
Income taxes		6,977			1,920
NONCASH TRANSACTIONS
Other real estate acquired in settlement of loans	$	90		$	1,046
Dividends on nonvested restricted stock reclassified as compensation expense		-			41
Dividends declared		16,353			15,233

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

NOTE 1 - GENERAL

The accompanying consolidated financial statements in this report have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, including Regulation S-X and the instructions for Form 10-Q, and have not been audited. These consolidated financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the consolidated financial position and the consolidated results of operations for the interim periods have been made. All such adjustments are of a normal nature. The consolidated results of operations are not necessarily indicative of the consolidated results of operations that ServisFirst Bancshares, Inc. (the “Company”) may achieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Form 10-K for the year ended December 31, 2023.

NOTE 2 - CASH AND CASH EQUIVALENTS

Cash on hand, cash items in process of collection, amounts due from banks, and federal funds sold are included in cash and cash equivalents.

NOTE 3 - EARNINGS PER COMMON SHARE

Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options. The difference in earnings per share under the two-class method was not significant for the three month periods ended March 31, 2024 and 2023.

	Three Months Ended March 31,
	2024		2023
	(In Thousands, Except Shares and Per Share Data)
Earnings per common share
Weighted average common shares outstanding		54,491,019		54,360,253
Net income available to common stockholders	$	50,026	$	57,971
Basic earnings per common share	$	0.92	$	1.07

Weighted average common shares outstanding		54,491,019		54,360,253
Dilutive effects of assumed conversions and exercise of stock options and warrants		104,365		174,229
Weighted average common and dilutive potential common shares outstanding		54,595,384		54,542,899
Net income available to common stockholders	$	50,026	$	57,971
Diluted earnings per common share	$	0.92	$	1.06

NOTE 4 - SECURITIES

The amortized cost and fair value of available-for-sale and held-to-maturity securities at March 31, 2024 and December 31, 2023 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Market
	Cost		Gain		Loss			Value
March 31, 2024	(In Thousands)
Debt Securities Available-for-Sale
U.S. Treasury Securities	$	494,156	$	10	$	(197	)	$	493,969
Mortgage-backed securities		281,343		249		(26,677	)		254,915
State and municipal securities		11,142		1		(1,186	)		9,958
Corporate debt		352,684		60		(37,657	)		315,086
Total	$	1,139,325	$	320	$	(65,716	)	$	1,073,929
Debt Securities Held-to-Maturity
U.S. Treasury Securities	$	393,932	$	-	$	(25,065	)	$	368,868
Mortgage-backed securities		465,695		5		(56,634	)		409,066
State and municipal securities		8,069		-		(733	)		7,336
Total	$	867,696	$	5	$	(82,431	)	$	785,270

December 31, 2023
Debt Securities Available-for-Sale
U.S. Treasury Securities	$	340,556	$	251	$	-		$	340,807
Mortgage-backed securities		241,458		6		(25,979	)		215,485
State and municipal securities		11,400		1		(1,178	)		10,223
Corporate debt		375,676		-		(42,009	)		333,667
Total	$	969,090	$	258	$	(69,166	)	$	900,183
Debt Securities Held-to-Maturity
U.S. Treasury Securities	$	508,985	$	-	$	(24,718	)	$	484,267
Mortgage-backed securities		465,615		3		(50,025	)		415,593
State and municipal securities		8,063		-		(732	)		7,331
Total	$	982,664	$	3	$	(75,475	)	$	907,191

The amortized cost and fair value of debt securities as of March 31, 2024 and December 31, 2023 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities since the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories along with the other categories of debt securities.

	March 31, 2024				December 31, 2023
	Amortized Cost		Market Value		Amortized Cost		Market Value
	(In Thousands)
Debt securities available-for-sale
Due within one year	$	430,857	$	430,760	$	350,400	$	350,396
Due from one to five years		132,967		129,779		70,016		67,334
Due from five to ten years		291,157		256,407		304,216		264,893
Due after ten years		3,000		2,068		3,000		2,076
Mortgage-backed securities		281,343		254,915		241,458		215,485
	$	1,139,325	$	1,073,929	$	969,090	$	900,183

Debt securities held-to-maturity
Due within one year	$	144,940	$	144,283	$	260,047	$	257,835
Due from one to five years		253,772		229,043		203,481		185,741
Due from five to ten years		3,289		2,878		53,521		48,022
Mortgage-backed securities		465,695		409,066		465,615		415,593
	$	867,696	$	785,270	$	982,664	$	907,191

All mortgage-backed securities are with government-sponsored enterprises (GSEs) such as Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Bank, and Federal Home Loan Mortgage Corporation.

Restricted equity securities are comprised entirely of restricted investment in Federal Home Loan Bank stock for membership requirements.

The carrying value of investment securities pledged to secure public funds on deposit and for other purposes as required by law was $1.48 billion and $1.49 billion as of March 31, 2024 and December 31, 2023, respectively.

The following table identifies, as of March 31, 2024 and December 31, 2023, the Company’s investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months.

	Less Than Twelve Months					Twelve Months or More					Total
	Gross					Gross					Gross
	Unrealized					Unrealized					Unrealized
	Losses			Fair Value		Losses			Fair Value		Losses			Fair Value
	(In Thousands)
March 31, 2024
Debt Securities available-for-sale
U.S. Treasury Securities	$	(197	)	$	479,762	$	-		$	-	$	(197	)	$	479,762
Government Agency Securities		-			-		-			-		-			-
Mortgage-backed securities		(2	)		161		(26,674	)		205,195		(26,677	)		205,356
State and municipal securities		-			-		(1,186	)		9,512		(1,186	)		9,512
Corporate debt		(2,392	)		11,108		(35,265	)		294,003		(37,657	)		305,111
Total	$	(2,591	)	$	491,031	$	(63,125	)	$	508,710	$	(65,716	)	$	999,741
Debt Securities held-to-maturity
U.S. Treasury Securities	$	-		$	-	$	(25,065	)	$	368,868	$	(25,065	)	$	368,868
Mortgage-backed securities		(162	)		9,895		(56,471	)		393,887		(56,634	)		405,323
State and municipal securities		-			-		(733	)		7,086		(733	)		7,086
Total	$	(162	)	$	9,895	$	(82,269	)	$	771,382	$	(82,431	)	$	779,735
December 31, 2023
Debt Securities available-for-sale
Mortgage-backed securities	$	(6	)	$	704	$	(25,973	)	$	214,393	$	(25,979	)	$	215,097
State and municipal securities		-			-		(1,178	)		9,777		(1,178	)		9,777
Corporate debt		(794	)		15,141		(41,214	)		311,666		(42,009	)		326,807
Total	$	(801	)	$	15,845	$	(68,365	)	$	535,836	$	(69,166	)	$	551,681
Debt Securities held-to-maturity
U.S. Treasury Securities	$	-		$	-	$	(24,718	)	$	484,267	$	(24,718	)	$	484,267
Mortgage-backed securities		(1	)		430		(50,024	)		411,585		(50,025	)		412,015
State and municipal securities		-			-		(732	)		7,081		(732	)		7,081
Total	$	(1	)	$	430	$	(75,474	)	$	902,933	$	(75,475	)	$	903,363

At March 31, 2024 and 2023, no allowance for credit losses (“ACL”) has been recognized on available-for-sale debt securities in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired. This is based on the Company’s analysis of the risk characteristics, including credit ratings, and other qualitative factors related to available-for-sale debt securities. The issuers of these debt securities continue to make timely principal and interest payments under the contractual terms of the securities. The Company does not intend to sell these debt securities and it is more likely than not that the Company will not be required to sell the debt securities before recovery of their amortized cost, which may be at maturity. The unrealized losses are due to increases in market interest rates over the yields available at the time the debt securities were purchased. Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to U.S. Treasury and residential mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. With regard to securities issued by States and political subdivisions and other held-to-maturity securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, and (iv) internal forecasts. Historical loss rates associated with securities having similar grades as those in our portfolio have generally not been significant. Furthermore, as of March 31, 2024 and 2023, there were no past due principal or interest payments associated with these securities. Based upon (i) the issuer’s strong bond ratings and (ii) a zero historical loss rate, no allowance for credit losses has been recorded for held-to-maturity State and Municipal Securities as such amount is not material at March 31, 2024 and 2023. All debt securities in an unrealized loss position as of March 31, 2024 continue to perform as scheduled and the Company does not believe there is a possible credit loss or that an allowance for credit loss on these debt securities is necessary.

NOTE 5 – LOANS

The loan portfolio is classified based on the underlying collateral utilized to secure each loan for financial reporting purposes. This classification is consistent with the Quarterly Report of Condition and Income filed by ServisFirst Bank with the Federal Deposit Insurance Corporation (FDIC).

Commercial, financial and agricultural - Includes loans to business enterprises issued for commercial, industrial, agricultural production and/or other professional purposes. These loans are generally secured by equipment, inventory, and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.

Real estate – construction – Includes loans secured by real estate to finance land development or the construction of industrial, commercial or residential buildings. Repayment is dependent upon the completion and eventual sale, refinance or operation of the related real estate project.

Owner-occupied commercial real estate mortgage – Includes loans secured by nonfarm nonresidential properties for which the primary source of repayment is the cash flow from the ongoing operations conducted by the party that owns the property.

1-4 family real estate mortgage – Includes loans secured by residential properties, including home equity lines of credit. Repayment is primarily dependent on the personal cash flow of the borrower.

Other real estate mortgage – Includes loans secured by nonowner-occupied properties, including office buildings, industrial buildings, warehouses, retail buildings, multifamily residential properties and farmland. Repayment is primarily dependent on income generated from the underlying collateral.

Consumer – Includes loans to individuals not secured by real estate. Repayment is dependent upon the personal cash flow of the borrower.

The following table details the Company’s loans at March 31, 2024 and December 31, 2023:

	March 31,			December 31,
	2024			2023
	(Dollars In Thousands)
Commercial, financial and agricultural	$	2,834,102		$	2,823,986
Real estate - construction		1,546,716			1,519,619
Real estate - mortgage:
Owner-occupied commercial		2,377,042			2,257,163
1-4 family mortgage		1,284,888			1,249,938
Other mortgage		3,777,758			3,744,346
Subtotal: Real estate - mortgage		7,439,688			7,251,447
Consumer		60,190			63,777
Total Loans		11,880,696			11,658,829
Less: Allowance for credit losses		(155,892	)		(153,317	)
Net Loans	$	11,724,804		$	11,505,512


Commercial, financial and agricultural		23.85	%		24.22	%
Real estate - construction		13.02	%		13.03	%
Real estate - mortgage:
Owner-occupied commercial		20.01	%		19.36	%
1-4 family mortgage		10.81	%		10.72	%
Other mortgage		31.80	%		32.12	%
Subtotal: Real estate - mortgage		62.62	%		62.20	%
Consumer		0.51	%		0.55	%
Total Loans		100.00	%		100.00	%

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the credit loss portfolio segments and classes. These categories are utilized to develop the associated allowance for credit losses using historical losses adjusted for current economic conditions defined as follows:

●

Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or obligors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral.

●

Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

●

Substandard – loans that exhibit well-defined weakness or weaknesses that presently jeopardize debt repayment. These loans are characterized by the distinct possibility that the institution will sustain some loss if the weaknesses are not corrected.

●

Doubtful – loans that have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

The table below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of March 31, 2024:

March 31, 2024	2024		2023		2022		2021		2020		Prior		Revolving		Revolving lines of credit converted to term loans		Total
	(In Thousands)
Commercial, financial and agricultural
Pass	$	107,544	$	316,897	$	437,779	$	344,676	$	149,733	$	234,363	$	1,141,682	$	430	$	2,733,104
Special Mention		737		403		1,769		4,277		4,692		6,419		26,880		2		45,179
Substandard - accruing		501		1,364		-		385		427		27,406		5,176		-		35,259
Substandard -Non-accrual		-		3,575		226		2,385		206		11,786		2,382		-		20,560
Total Commercial, financial and agricultural	$	108,782	$	322,239	$	439,774	$	351,723	$	155,058	$	279,974	$	1,176,120	$	432	$	2,834,102
Current-period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	1,106	$	736	$	-	$	1,842

Real estate - construction
Pass	$	48,543	$	254,568	$	847,543	$	252,588	$	50,092	$	20,705	$	68,975	$	-	$	1,543,014
Special Mention		-		590		-		-		-		-		-		-		590
Substandard - accruing		-		-		1,997		-		-		973		-		-		2,970
Substandard -Non-accrual		-		-		34		-		-		-		-		108		142
Total Real estate - construction	$	48,543	$	255,158	$	849,574	$	252,588	$	50,092	$	21,678	$	68,975	$	108	$	1,546,716

Owner-occupied commercial
Pass	$	80,143	$	171,911	$	517,845	$	528,261	$	290,718	$	669,803	$	58,928	$	834	$	2,318,443
Special Mention		-		5,359		8,785		792		8,279		15,957		-		-		39,172
Substandard - accruing		-		1,333		-		6,847		-		2,506		-		-		10,686
Substandard -Non-accrual		-		-		-		-		-		8,741		-		-		8,741
Total Owner-occupied commercial	$	80,143	$	178,603	$	526,630	$	535,900	$	298,997	$	697,007	$	58,928	$	834	$	2,377,042

1-4 family mortgage
Pass	$	61,318	$	155,581	$	369,024	$	220,533	$	77,073	$	97,362	$	289,012	$	-	$	1,269,903
Special Mention		-		709		428		2,269		764		4,862		905		-		9,937
Substandard - accruing		-		-		-		-		-		424		117		-		541
Substandard -Non-accrual		-		156		433		1,000		643		1,475		800		-		4,507
Total 1-4 family mortgage	$	61,318	$	156,446	$	369,885	$	223,802	$	78,480	$	104,123	$	290,834	$	-	$	1,284,888
Current-period gross write-offs	$	-	$	-	$	-	$	62	$	-	$	-	$	5	$	-	$	67

Other mortgage
Pass	$	82,631	$	156,951	$	1,129,986	$	1,090,507	$	429,593	$	774,646	$	91,073	$	247	$	3,755,634
Special Mention		-		-		5,034		-		-		751		-		-		5,785
Substandard - accruing		-		-		4,958		660		-		10,215		-		-		15,833
Substandard -Non-accrual		-		-		-		-		-		506		-		-		506
Total Other mortgage	$	82,631	$	156,951	$	1,139,978	$	1,091,167	$	429,593	$	786,118	$	91,073	$	247	$	3,777,758

Consumer
Pass	$	1,102	$	21,705	$	3,467	$	4,377	$	1,662	$	3,849	$	24,028	$	-	$	60,190
Special Mention		-		-		-		-		-		-		-		-		-
Substandard - accruing		-		-		-		-		-		-		-		-		-
Total Consumer	$	1,102	$	21,705	$	3,467	$	4,377	$	1,662	$	3,849	$	24,028	$	-	$	60,190
Current-period gross write-offs	$	-	$	8	$	-	$	-	$	-	$	-	$	90	$	-	$	98

Total Loans
Pass	$	381,281	$	1,077,613	$	3,305,644	$	2,440,942	$	998,871	$	1,800,728	$	1,673,698	$	1,511	$	11,680,288
Special Mention		737		7,061		16,016		7,338		13,735		27,989		27,785		2		100,663
Substandard - accruing		501		2,697		6,955		7,892		427		41,524		5,293		-		65,289
Substandard -Non-accrual		-		3,731		693		3,385		849		22,508		3,182		108		34,456
Total Loans	$	382,519	$	1,091,102	$	3,329,308	$	2,459,557	$	1,013,882	$	1,892,749	$	1,709,958	$	1,621	$	11,880,696
Current-period gross write-offs	$	-	$	8	$	-	$	62	$	-	$	1,106	$	831	$	-	$	2,007

Loans by credit quality indicator, loan type and based on year of origination as of December 31, 2023 were as follows:

December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Revolving lines of credit converted to term loans		Total
	(In Thousands)
Commercial, financial and agricultural
Pass	$	341,335	$	455,281	$	354,034	$	162,543	$	100,032	$	151,527	$	1,161,324	$	491	$	2,726,567
Special Mention		4,275		1,982		5,105		5,765		1,320		3,549		21,769		7		43,772
Substandard - accruing		1,410		-		2,830		368		9,501		27,962		4,360		-		46,431
Substandard -Non-accrual		-		2		767		206		-		3,336		2,905		-		7,216
Total Commercial, financial and agricultural	$	347,020	$	457,265	$	362,736	$	168,882	$	110,853	$	186,374	$	1,190,358	$	498	$	2,823,986
Current-period gross write-offs	$	1,213	$	4,690	$	2,531	$	779	$	4	$	2,014	$	1,998	$	-	$	13,229

Real estate - construction
Pass	$	216,745	$	874,903	$	283,012	$	49,668	$	4,866	$	16,558	$	72,156	$	-	$	1,517,908
Special Mention		589		-		-		-		-		-		-		-		589
Substandard - accruing		-		33		-		-		-		978		-		-		1,011
Substandard -Non-accrual		-		-		-		-		-		-		-		111		111
Total Real estate - construction	$	217,334	$	874,936	$	283,012	$	49,668	$	4,866	$	17,536	$	72,156	$	111	$	1,519,619
Current-period gross write-offs	$	-	$	-	$	19	$	-	$	-	$	-	$	-	$	89	$	108

Owner-occupied commercial
Pass	$	148,915	$	478,364	$	517,667	$	300,978	$	181,864	$	512,752	$	64,170	$	844	$	2,205,554
Special Mention		5,369		1,411		7,705		8,317		8,530		7,539		-		-		38,871
Substandard - accruing		1,358		-		-		-		-		4,292		-		-		5,650
Substandard -Non-accrual		-		-		-		-		2,329		4,759		-		-		7,088
Total Owner-occupied commercial	$	155,642	$	479,775	$	525,372	$	309,295	$	192,723	$	529,342	$	64,170	$	844	$	2,257,163
Current-period gross write-offs	$	-	$	-	$	-	$	-	$	117	$	-	$	-	$	-	$	117

1-4 family mortgage
Pass	$	166,927	$	376,964	$	228,183	$	75,104	$	40,697	$	61,046	$	286,066	$	-	$	1,234,987
Special Mention		574		721		2,504		1,009		3,865		439		727		-		9,839
Substandard - accruing		-		-		-		-		-		425		261		-		686
Substandard -Non-accrual		155		380		741		572		877		901		800		-		4,426
Total 1-4 family mortgage	$	167,656	$	378,065	$	231,428	$	76,685	$	45,439	$	62,811	$	287,854	$	-	$	1,249,938
Current-period gross write-offs	$	-	$	40	$	-	$	-	$	-	$	14	$	-	$	-	$	54

Other mortgage
Pass	$	162,418	$	1,119,609	$	1,106,055	$	448,781	$	249,059	$	540,325	$	100,516	$	247	$	3,727,010
Special Mention		-		-		-		-		-		-		850		-		850
Substandard - accruing		-		4,975		-		-		-		11,005		-		-		15,980
Substandard -Non-accrual		-		-		-		-		130		376		-		-		506
Total Other mortgage	$	162,418	$	1,124,584	$	1,106,055	$	448,781	$	249,189	$	551,706	$	101,366	$	247	$	3,744,346
Current-period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer
Pass	$	22,227	$	3,890	$	4,542	$	1,794	$	1,295	$	2,687	$	27,342	$	-	$	63,777
Special Mention		-		-		-		-		-		-		-		-		-
Substandard - accruing		-		-		-		-		-		-		-		-		-
Substandard -Non-accrual		-		-		-		-		-		-		-		-		-
Total Consumer	$	22,227	$	3,890	$	4,542	$	1,794	$	1,295	$	2,687	$	27,342	$	-	$	63,777
Current-period gross write-offs	$	-	$	-	$	-	$	-	$	4	$	49	$	1,020	$	-	$	1,073

Total Loans
Pass	$	1,058,567	$	3,309,011	$	2,493,493	$	1,038,868	$	577,813	$	1,284,895	$	1,711,574	$	1,582	$	11,475,803
Special Mention		10,807		4,114		15,314		15,091		13,715		11,527		23,346		7		93,921
Substandard - accruing		2,768		5,008		2,830		368		9,501		44,662		4,621		-		69,758
Substandard -Non-accrual		155		382		1,508		778		3,336		9,372		3,705		111		19,347
Total Loans	$	1,072,297	$	3,318,515	$	2,513,145	$	1,055,105	$	604,365	$	1,350,456	$	1,743,246	$	1,700	$	11,658,829
Current-period gross write-offs	$	1,213	$	4,730	$	2,550	$	779	$	125	$	2,077	$	3,018	$	89	$	14,581

Loans by performance status as of March 31, 2024 and December 31, 2023 were as follows:

March 31, 2024	Performing		Nonperforming		Total
	(In Thousands)
Commercial, financial and agricultural	$	2,813,190	$	20,912	$	2,834,102
Real estate - construction		1,546,574		142		1,546,716
Real estate - mortgage:
Owner-occupied commercial		2,368,301		8,741		2,377,042
1-4 family mortgage		1,280,381		4,507		1,284,888
Other mortgage		3,777,252		506		3,777,758
Total real estate - mortgage		7,425,934		13,754		7,439,688
Consumer		60,161		29		60,190
Total	$	11,845,859	$	34,837	$	11,880,696

December 31, 2023	Performing		Nonperforming		Total
	(In Thousands)
Commercial, financial and agricultural	$	2,816,599	$	7,387	$	2,823,986
Real estate - construction		1,519,508		111		1,519,619
Real estate - mortgage:
Owner-occupied commercial		2,250,074		7,089		2,257,163
1-4 family mortgage		1,243,603		6,335		1,249,938
Other mortgage		3,743,840		506		3,744,346
Total real estate - mortgage		7,237,517		13,930		7,251,447
Consumer		63,672		105		63,777
Total	$	11,637,296	$	21,533	$	11,658,829

Loans by past due status as of March 31, 2024 and December 31, 2023 were as follows:

March 31, 2024	Past Due Status (Accruing Loans)
							Total Past		Total						Nonaccrual
	30-59 Days		60-89 Days		90+ Days		Due		Nonaccrual		Current		Total Loans		With No ACL
	(In Thousands)
Commercial, financial and agricultural	$	9,962	$	444	$	351	$	10,757	$	20,561	$	2,802,784	$	2,834,102	$	4,479
Real estate - construction		-		-		-		-		142		1,546,574		1,546,716		142
Real estate - mortgage:
Owner-occupied commercial		1,241		103		-		1,344		8,741		2,366,957		2,377,042		6,939
1-4 family mortgage		3,623		951		-		4,574		4,507		1,275,807		1,284,888		1,199
Other mortgage		-		-		-		-		506		3,777,252		3,777,758		506
Total real estate - mortgage		4,864		1,054		-		5,918		13,754		7,420,016		7,439,688		8,644
Consumer		115		74		29		218		-		59,972		60,190		-
Total	$	14,941	$	1,572	$	380	$	16,893	$	34,457	$	11,829,346	$	11,880,696	$	13,265

December 31, 2023	Past Due Status (Accruing Loans)
							Total Past		Total						Nonaccrual
	30-59 Days		60-89 Days		90+ Days		Due		Nonaccrual		Current		Total Loans		With No ACL
	(In Thousands)
Commercial, financial and agricultural	$	3,418	$	3,718	$	170	$	7,306	$	7,217	$	2,809,463		2,823,986	$	5,028
Real estate - construction		-		34		-		34		111		1,519,474		1,519,619		-
Real estate - mortgage:
Owner-occupied commercial		-		-		-		-		7,089		2,250,074		2,257,163		7,089
1-4 family mortgage		540		4,920		1,909		7,369		4,426		1,238,143		1,249,938		1,224
Other mortgage		676		10,703		-		11,379		506		3,732,461		3,744,346		506
Total real estate - mortgage		1,216		15,623		1,909		18,748		12,021		7,220,678		7,251,447		8,819
Consumer		58		31		105		194		-		63,583		63,777		-
Total	$	4,692	$	19,406	$	2,184	$	26,282	$	19,349	$	11,613,198		11,658,829	$	13,847

Under the current expected credit losses (“CECL”) methodology, the ACL is measured on a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses.

The Company uses the discounted cash flow (“DCF”) method to estimate ACL for all loan pools except for commercial revolving lines of credit and credit cards. For all loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment rate as a loss driver. The Company also utilizes and forecasts GDP growth as a second loss driver for its agricultural and consumer loan pools. Consistent forecasts of the loss drivers are used across the loan segments. At March 31, 2024 and December 31, 2023, the Company utilized a reasonable and supportable forecast period of twelve months followed by a six-month straight-line reversion to long term averages. The Company leveraged economic projections from reputable and independent sources to inform its loss driver forecasts. The Company expects national unemployment to rise and national GDP growth rate to decline compared to the December 31, 2023 forecast.

The Company uses a loss-rate method to estimate expected credit losses for its commercial revolving lines of credit and credit card pools. The commercial revolving lines of credit pool incorporates a probability of default (“PD”) and loss given default (“LGD”) modeling approach. This approach involves estimating the pool average life and then using historical correlations of default and loss experience over time to calculate the lifetime PD and LGD. These two inputs are then applied to the outstanding pool balance. The credit card pool incorporates a remaining life modeling approach, which utilizes an attrition-based method to estimate the remaining life of the pool. A quarterly average loss rate is then calculated using the Company’s historical loss data. The model reduces the pool balance quarterly on a straight-line basis over the estimated life of the pool. The quarterly loss rate is multiplied by the outstanding balance at each period-end resulting in an estimated loss for each quarter. The sum of estimated loss for all quarters is the total calculated reserve for the pool. Management has also applied the loss-rate method to commercial and industrial (“C&I”) lines of credit and to credit cards due to their generally short-term nature. An expected loss ratio is applied based on internal and peer historical losses.

Each loan pool is adjusted for qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. The Company considers factors that are relevant within the qualitative framework, which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.

Inherent risks in the loan portfolio will differ based on type of loan. Specific risk characteristics by loan portfolio segment are listed below:

Commercial and industrial loans include risks associated with borrower’s cash flow, debt service coverage and management’s expertise. These loans are subject to the risk that the Company may have difficulty converting collateral to a liquid asset if necessary, as well as risks associated with degree of specialization, mobility and general collectability in a default situation. These commercial loans may be subject to many different types of risks, including fraud, bankruptcy, economic downturn, deteriorated or non-existent collateral, and changes in interest rates.

Real estate construction loans include risks associated with the borrower’s credit-worthiness, contractor’s qualifications, borrower and contractor performance, and the overall risk and complexity of the proposed project. Construction lending is also subject to risks associated with sub-market dynamics, including population, employment trends and household income. During times of economic stress, this type of loan has typically had a greater degree of risk than other loan types.

Real estate mortgage loans consist of loans secured by commercial and residential real estate. Commercial real estate lending is dependent upon successful management, marketing and expense supervision necessary to maintain the property. Repayment of these loans may be adversely affected by conditions in the real estate market or the general economy. Also, commercial real estate loans typically involve relatively large loan balances to a single borrower. Residential real estate lending risks are generally less significant than those of other loans. Real estate lending risks include fluctuations in the value of real estate, bankruptcies, economic downturns and customer financial problems.

Consumer loans carry a moderate degree of risk compared to other loans. They are generally more risky than traditional residential real estate loans but less risky than commercial loans. Risk of default is usually determined by the well-being of the local economies. During times of economic stress, there is usually some level of job loss both nationally and locally, which directly affects the ability of the consumer to repay debt.

The following table presents changes in the ACL, segregated by loan type, for the three months ended March 31, 2024 and March 31, 2023.

	Commercial,
	financial and			Real estate -			Real estate -
	agricultural			construction			mortgage			Consumer			Total
	(In Thousands)
	Three Months Ended March 31, 2024
Allowance for credit losses:
Balance at December 31, 2023	$	52,121		$	44,658		$	55,126		$	1,412		$	153,317
Charge-offs		(1,842	)		-			(67	)		(98	)		(2,007	)
Recoveries		199			-			6			9			214
Provision		544			1,031			2,575			218			4,368
Balance at March 31, 2024	$	51,022		$	45,689		$	57,640		$	1,541		$	155,892

	Three Months Ended March 31, 2023
Allowance for credit losses:
Balance at December 31, 2022	$	42,830		$	42,889		$	58,652		$	1,926		$	146,297
Charge-offs		(1,257	)		-			(26	)		(390	)		(1,673	)
Recoveries		128			3			1			11			143
Provision		1,193			(2,409	)		4,530			883			4,197
Balance at March 31, 2023	$	42,894		$	40,483		$	63,157		$	2,430		$	148,964

We maintain an ACL on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The ACL is computed using a methodology similar to that used to determine the ACL for loans, modified to take into account the probability of a drawdown on the commitment. The ACL on unfunded loan commitments is classified as a liability account on the Consolidated Balance Sheets within other liabilities, while the corresponding provision for these credit losses is recorded as a component of other expense. The ACL on unfunded commitments was $742,000 at March 31, 2024 and $575,000 at December 31, 2023. The provision expense for unfunded commitments for the three months ended March 31, 2024 and 2023 was $167,000 and zero, respectively.

Loans that no longer share similar risk characteristics with collectively evaluated pools are estimated on an individual basis. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent gross loans held for investment by collateral type as follows:

			Accounts								ACL
March 31, 2024	Real Estate		Receivable		Equipment		Other		Total		Allocation
	(In Thousands)
Commercial, financial and agricultural	$	18,467	$	3,834	$	3,673	$	29,841	$	55,815	$	15,495
Real estate - construction		2,142		-		-		972		3,114		-
Real estate - mortgage:
Owner-occupied commercial		19,476		-		-		-		19,476		241
1-4 family mortgage		15,542		-		-		-		15,542		1,580
Other mortgage		5,808		-		-		-		5,808		568
Total real estate - mortgage		40,826		-		-		-		40,826		2,389
Consumer		-		-		-		-		-		-
Total	$	61,435	$	3,834	$	3,673	$	30,813	$	99,755	$	17,884

			Accounts								ACL
December 31, 2023	Real Estate		Receivable		Equipment		Other		Total		Allocation
	(In Thousands)
Commercial, financial and agricultural	$	20,266	$	7,240	$	2,126	$	24,016	$	53,648	$	16,189
Real estate - construction		145		-		-		978		1,123		1
Real estate - mortgage:
Owner-occupied commercial		12,038		-		-		698		12,736		475
1-4 family mortgage		15,694		-		-		-		15,694		1,058
Other mortgage		5,062		-		-		800		5,862		603
Total real estate - mortgage		32,794		-		-		1,498		34,292		2,136
Consumer		-		-		-		-		-		-
Total	$	53,205	$	7,240	$	2,126	$	26,492	$	89,063	$	18,326

The table below details the amortized cost basis at the end of the reporting period for loans made to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31, 2024
			Payment Deferral
	Term		and Term				Percentage of
	Extensions		Extensions		Total		Total Loans
	(In Thousands)

Commercial, financial and agricultural	$	5,568	$	-	$	5,568		0.05	%
Real estate - construction		973		-		973		0.01	%
Owner-occupied commercial		1,501		-		1,501		0.01	%
1-4 family mortgage		424		-		424		-	%
Other mortgage		9,913		-		9,913		0.08	%
Total	$	18,379	$	-	$	18,379		0.15	%

	Three Months Ended March 31, 2023
			Payment Deferral
	Term		and Term				Percentage of
	Extensions		Extensions		Total		Total Loans
	(In Thousands)

Commercial, financial and agricultural	$	28,335	$	-	$	28,335		0.24	%
Owner-occupied commercial		23		701		724		0.01	%
1-4 family mortgage		214		-		214		-	%
Other mortgage		11,254		359		11,613		0.10	%
Total	$	39,827	$	1,060	$	40,886		0.35	%

The following table summarizes the financial impacts of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31, 2024
			Total Payment
	Term Extensions		Deferral
	(In months)		(In Thousands)
Commercial, financial and agricultural		1 to 6	$	-
Real estate - construction		12		-
Owner-occupied commercial		12		-
1-4 family mortgage		12		-
Other mortgage		11		-

	Three Months Ended March 31, 2023
			Total Payment
	Term Extensions		Deferral
	(In months)		(In Thousands)
Commercial, financial and agricultural		3 to 12	$	-
Real estate - construction		6		-
Owner-occupied commercial		3 to 18		49
1-4 family mortgage		3		-
Other mortgage		3 to 36		59

No loans modified on or after March 31, 2023, were past due greater than 30 days or on non-accrual as of March 31, 2024.

As of March 31, 2024, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the first quarter of 2024 that subsequently defaulted. For purposes of this disclosure, default is defined as 90 days past due and still accruing or placement on nonaccrual status.

NOTE 6 – LEASES

The Company leases space under non-cancelable operating leases for several of its banking offices and certain office equipment. The leases have remaining terms up to 15 years. At March 31, 2024, the Company had lease right-of-use assets and lease liabilities totaling $25.3 million and $26.3 million, respectively, compared to $26.5 million and $27.4 million, respectively at December 31, 2023, which are reflected in other assets and other liabilities, respectively, in the Company’s Consolidated Balance Sheets.

Maturities of operating lease liabilities are as follows:

	March 31, 2024
	(In Thousands)
2024 (remaining)	$	3,872
2025		4,933
2026		4,106
2027		3,537
2028		2,684
thereafter		11,901
Total lease payments		31,033
Less: imputed interest		(4,689	)
Present value of operating lease liabilities	$	26,344

As of March 31, 2024, the weighted average remaining term of operating leases was 8.2 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.68%.

Operating cash flows related to leases were $1.4 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively.

Lease costs during the three months ended March 31, 2024 and 2023 were as follows (in thousands):

	Three Months Ended March 31,
	2024			2023
Operating lease cost	$	1,393		$	1,230
Variable lease cost		216			191
Sublease income		(5	)		(8	)
Net lease cost	$	1,604		$	1,413

NOTE 7 - EMPLOYEE AND DIRECTOR BENEFITS

Stock Incentive Plan

At March 31, 2024, the Company had a stock incentive plan as described below. The compensation cost that has been charged to earnings for the plan was approximately $958,000 and $808,000 for the three months ended March 31, 2024 and 2023, respectively.

The Company’s 2009 Amended and Restated Stock Incentive Plan authorizes the grant of up to 5,550,000 shares and allows for the issuance of Stock Appreciation Rights, Restricted Stock, Stock Options, Non-stock Share Equivalents, Performance Shares or Performance Units. The plan allows for the grant of incentive stock options and non-qualified stock options, and option awards are granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant. The maximum term of the options granted under the plan is ten years.

The Company estimates the fair value of each stock option award using a Black-Scholes-Merton valuation model. Expected volatilities are based on the Company’s trading price history. The expected term for options granted is based on the short-cut method and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

There were no grants of stock options during first quarters of 2024 and 2023.

The following table summarizes stock option activity during the three months ended March 31, 2024 and 2023:

						Weighted
				Weighted		Average
				Average		Remaining
				Exercise		Contractual		Aggregate
	Shares			Price		Term (years)		Intrinsic Value
								(In Thousands)
Three Months Ended March 31, 2024:
Outstanding January 1, 2024		165,800		$	24.35		2.9	$	7,211
Exercised		(8,300	)		15.74		0.9		420
Outstanding March 31, 2024		157,500		$	24.80		2.7	$	6,744

Exercisable March 31, 2024		140,000		$	22.63		2.1	$	6,122

Three Months Ended March 31, 2023:
Outstanding January 1, 2023		280,000		$	19.43		3.0	$	14,088
Exercised		(75,000	)		10.80		0.9		3,288
Outstanding March 31, 2023		205,000		$	22.59		3.4	$	7,428

Exercisable March 31, 2023		152,000		$	17.28		2.2	$	5,859

As of March 31, 2024, there was $35,000 of total unrecognized compensation cost related to non-vested stock options. The cost is expected to be recognized on the straight-line method over the next six months.

Restricted Stock and Performance Shares

The Company periodically grants restricted stock awards that vest upon time-based service conditions. Dividend payments are made during the vesting period. The value of restricted stock is determined to be the current value of the Company’s stock, and this total value will be recognized as compensation expense over the vesting period. As of March 31, 2024, there was $5.3 million of total unrecognized compensation cost related to non-vested time-based restricted stock. The cost is expected to be recognized evenly over the remaining 1.8 years of the restricted stock’s vesting period.

The Company periodically grants performance shares that give plan participants the opportunity to earn between 0% and 150% of the number of performance shares granted based on achieving certain performance metrics. The number of performance shares earned is determined by reference to the Company’s total shareholder return relative to a peer group of other publicly traded banks and bank holding companies during the performance period. The performance period is generally three years beginning on January 1^st of the year of the grant. The fair value of performance shares is determined using a Monte Carlo simulation model on the grant date. As of March 31, 2024, there was $1.2 million of total unrecognized compensation cost related to non-vested performance shares. As of March 31, 2024, non-vested performance shares had a weighted average remaining time to vest of 2.1 years.

	Restricted Stock					Performance Shares
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Three Months Ended March 31, 2024:
Non-vested at January 1, 2024		158,298		$	58.08		31,944		$	58.25
Granted		21,835			67.12		8,894			67.90
Additional performance share attainment		-			-		6,216			68.18
Vested		(25,107	)		48.19		(18,653	)		37.05
Forfeited		(576	)		71.43		-			-
Non-vested at March 31, 2024		154,450		$	60.92		28,401		$	77.37

Three Months Ended March 31, 2023:
Non-vested at January 1, 2023		141,580		$	56.39		23,852		$	54.16
Granted		27,258			69.83		8,091			70.29
Vested		(17,521	)		48.32		-			-
Forfeited		(6,545	)		69.90		-			-
Non-vested at March 31, 2023		144,772		$	59.29		31,943		$	58.25

NOTE 8 - DERIVATIVES

The Company periodically enters into derivative contracts to manage exposures to movements in interest rates. The Company purchased an interest rate cap in May of 2020 to limit exposures to increases in interest rates. The interest rate cap was not designated as a hedging instrument but rather as a stand-alone derivative. The interest rate cap had an original term of 3 three years, a notional amount of $300 million and was tied to the one-month LIBOR rate with a strike rate of 0.50%. The fair value of the interest rate cap was carried on the Consolidated Balance Sheets in other assets and the change in fair value was recognized in noninterest income each quarter. The interest rate cap had a fair value of $1.2 million and remaining term of one month at March 31, 2023, and expired on May 4, 2023.

The Company has entered into forward loan sale commitments with secondary market investors to deliver loans on a “best efforts delivery” basis, which do not meet the definition of a derivative instrument. When a rate is committed to a borrower, it is based on the best price that day and locked with the investor for the customer for a 30-day period. In the event the loan is not delivered to the investor, the Company has no risk or exposure with the investor. The interest rate lock commitments related to loans that are originated for later sale are classified as derivatives. The fair values of the Company’s agreements with investors and rate lock commitments to customers as of March 31, 2024 and December 31, 2023 were not material.

NOTE 9 – RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-02, Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. These amendments allow entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU responds to stakeholder feedback that the proportional amortization method provides investors and other allocators of capital with a better understanding of the returns from investments that are made primarily for the purpose of receiving income tax credits and other income tax benefits.

The amendments in this update permit reporting entities to elect to account for certain tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax benefits in the income statement as a component of income tax expense (benefit). To qualify for the proportional amortization method, all of the following conditions must be met: (i) It is probable that the income tax credits allocated to the tax equity investor will be available; (ii) The tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project; (iii) Substantially all of the projected benefits are from income tax credits and other income tax benefits. Projected benefits included income tax credits, other income tax benefits, and other non-income tax -related benefits. The projected benefits are determined on a discounted basis, using a discount rate that is consistent with the cash flow assumptions used by the tax equity investor in making its decision to invest in the project; (iv) The tax equity investor's projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive; and (v) The tax equity investor is a limited liability investor in the limited liability entity for both legal and tax purposes, and the tax equity investor's liability is limited to its capital investment. An accounting policy election is allowed to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments. The amendments in this update require specific disclosures that must be applied to all investments that generate income tax credits and other income tax benefits from a tax credit program for which the entity has elected to apply the proportional amortization method. The amendments require that a reporting entity disclose certain information in annual and interim reporting periods that enable investors to understand the following information about its investments that generate income tax credits and other income tax benefits from a tax credit program including: (i) The nature of its tax equity investments; and (ii) The effect of its tax equity investments and related income tax credits and other income tax benefits on its financial position and results of operations.

This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company has determined that its equity investments in New Markets Tax Credits and Historic Tax Credits qualify for the proportional amortization method and has made the election to apply the proportional amortization method for these types of tax credits. The Company adopted the standard as of January 1, 2024 using the modified retrospective method of adoption, and the adoption of this guidance did not have a material impact on the consolidated financial statements.

NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced income tax disclosures primarily related to the rate reconciliation and income taxes paid information to provide more transparency by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation table and (ii) income taxes paid, net of refunds, to be disaggregated by jurisdiction based on an established threshold. The amendments in this standard will be effective for the Company on January 1, 2025. The Company is currently evaluating the impact the amendments will have the consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures. This amendment is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other decision makers for additional, more detailed information about a reportable segment’s expenses. The amendment applies to all public entities that are required to report segment information in accordance with Topic 280. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024. Early adoption is permitted. The amendments are to be applied retrospectively to all periods presented and segment expense categories should be based on the categories identified at adoption. The Company does not currently expect adoption of the amendment to have a material impact on its consolidated financial statements.

NOTE 11 - FAIR VALUE MEASUREMENT

Measurement of fair value under U.S. GAAP establishes a hierarchy that prioritizes observable and unobservable inputs used to measure fair value, as of the measurement date, into three broad levels, which are described below:

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.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and also considers counterparty credit risk in its assessment of fair value.

Debt Securities. Where quoted prices are available in an active market, securities are classified within Level 1 of the hierarchy. Level 1 securities include highly liquid government securities such as U.S. Treasuries and exchange-traded equity securities. For securities traded in secondary markets for which quoted market prices are not available, the Company generally relies on pricing services provided by independent vendors. Such independent pricing services are to advise the Company on the carrying value of the securities available for sale portfolio. As part of the Company’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, the Company investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. The Company has also reviewed and confirmed its determinations in discussions with the pricing service regarding their methods of price discovery. Securities measured with these techniques are classified within Level 2 of the hierarchy and often involve using quoted market prices for similar securities, pricing models or discounted cash flow calculations using inputs observable in the market where available. Examples include U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, and certain corporate, asset-backed and other securities. In cases where Level 1 or Level 2 inputs are not available, as in the case of certain corporate securities, these securities are classified in Level 3 of the hierarchy.

Derivative instruments. The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate curves, adjusted for counterparty credit risk. These measurements are classified as level 2 within the valuation hierarchy.

Loans Individually Evaluated. Loans individually evaluated are measured and reported at fair value when full payment under the loan terms is not probable. Loans individually evaluated are carried at the present value of expected future cash flows using the loan’s existing rate in a discounted cash flow calculation, or the fair value of the collateral if the loan is collateral-dependent. Expected cash flows are based on internal inputs reflecting expected default rates on contractual cash flows. This method of estimating fair value does not incorporate the exit-price concept of fair value described in ASC 820-10 and would generally result in a higher value than the exit-price approach. For loans measured using the estimated fair value of collateral less costs to sell, fair value is generally determined based on appraisals performed by certified and licensed appraisers using inputs such as absorption rates, capitalization rates and market comparables, adjusted for estimated costs to sell. Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as changes in absorption rates or market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets. These measurements are classified as Level 3 within the valuation hierarchy. Loans individually evaluated are subject to nonrecurring fair value adjustment upon initial recognition or subsequent individually evaluation. A portion of the ACL is allocated to loans individually evaluated if the value of such loans is deemed to be less than the unpaid balance. The range of fair value adjustments and weighted average adjustment as of March 31, 2024 was 0% to 68% and 24%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2023 was 0% to 66% and 25% respectively. Loans individually evaluated are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly based on the same factors identified above. The amount recognized to write-down individually evaluated loans that are measured at fair value on a nonrecurring basis was $1.1 million during the three months ended March 31, 2024, and $2.3 million during the three months ended March 31, 2023.

Other Real Estate Owned. Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure are held for sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the ACL subsequent to foreclosure. Values are derived from appraisals of underlying collateral and discounted cash flow analysis. Appraisals are performed by certified and licensed appraisers. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the new cost basis. In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as changes in absorption rates and market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition, which could result in adjustment to lower the property value estimates indicated in the appraisals. The range of fair value adjustments and weighted average adjustment as of March 31, 2024 was 25% to 100% and 49.7%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2023 was 25% to 100% and 38.3%, respectively. These measurements are classified as Level 3 within the valuation hierarchy. Net losses on the sale and write-downs of OREO of $95,000 during the three months ended March 31, 2024, compared to no losses during the three months ended March 31, 2023. These charges were for write-downs in the value of OREO subsequent to foreclosure and losses on the disposal of OREO. OREO is classified within Level 3 of the hierarchy.

There were four residential real estate loans with an aggregate balance of $450,000 foreclosed and classified as OREO as of March 31, 2024 and compared to three residential real estate loan foreclosures for $360,000 as of December 31, 2023.

Three residential real estate loans for $547,000 were in the process of foreclosure as of March 31, 2024. There were three residential real estate loans for $292,000 that were in the process of being foreclosed as of December 31, 2023.

The following table presents the Company’s financial assets carried at fair value on a recurring basis as of March 31, 2024 and December 31, 2023. There were no liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023.

	Fair Value Measurements at March 31, 2024 Using
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable Inputs		Unobservable
	Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total
Assets Measured on a Recurring Basis:	(In Thousands)
Available for sale debt securities:
U.S. Treasury securities	$	493,969	$	-	$	-	$	493,969
Mortgage-backed securities		-		254,915		-		254,915
State and municipal securities		-		9,958		-		9,958
Corporate debt		-		315,086		-		315,086
Total available-for-sale debt securities		493,969		579,959		-		1,073,929
Total assets at fair value	$	493,969	$	579,959	$	-	$	1,073,929

	Fair Value Measurements at December 31, 2023 Using
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable Inputs		Unobservable
	Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total
Assets Measured on a Recurring Basis:	(In Thousands)
Available for sale debt securities:
U.S. Treasury securities	$	340,807	$	-	$	-	$	340,807
Mortgage-backed securities		-		215,485		-		215,485
State and municipal securities		-		10,223		-		10,223
Corporate debt		-		326,808		6,860		333,668
Total available-for-sale debt securities		340,807		552,516		6,860		900,183
Total assets at fair value	$	340,807	$	552,516	$	6,860	$	900,183

The following table presents the Company’s financial assets carried at fair value on a nonrecurring basis as of March 31, 2024 and December 31, 2023. There were no liabilities measured at fair value on a nonrecurring basis as of March 31, 2024 and December 31, 2023.

	Fair Value Measurements at March 31, 2024 Using
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total
Assets Measured on a Nonrecurring Basis:	(In Thousands)
Loans individually evaluated	$	-	$	-	$	81,871	$	81,871
Other real estate owned and repossessed assets		-		-		490		490
Total assets at fair value	$	-	$	-	$	82,361	$	82,361

	Fair Value Measurements at December 31, 2023 Using
	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total
Assets Measured on a Nonrecurring Basis:	(In Thousands)
Loans individually evaluated	$	-	$	-	$	70,735	$	70,735
Other real estate owned		-		-		995		995
Total assets at fair value	$	-	$	-	$	71,730	$	71,730

There were no liabilities measured at fair value on a non-recurring basis as of March 31, 2024 and December 31, 2023.

In the case of the debt securities portfolio, the Company monitors the portfolio to ascertain when transfers between levels have been affected. For the three months ended March 31, 2024, there were two transfers out of Level 3 into Level 2.

The table below includes a roll forward of the balance sheet amounts for the period ended March 31, 2024 and March 31, 2023 (including the change in fair value) for financial instruments classified by the Company within Level 3 of the valuation hierarchy measured at fair value on a recurring basis including changes in fair value due in part to observable factors that are part of the valuation methodology:

	For the period ended March 31,
	2024			2023
	Available-for-sale Securities			Available-for-sale Securities
	(In Thousands)
Fair value, beginning of period	$	6,860		$	10,860
Transfers into Level 3		-			-
Total realized gains included in income		-			-
Changes in unrealized gains/losses included in other comprehensive income for assets and liabilities still held at period-end		(1,329	)		160
Purchases		-			-
Transfers out of Level 3		(5,531	)		(4,160	)
Fair value, end of period	$	-		$	6,860

The fair value of a financial instrument is the current amount that would be exchanged in a sale between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Current U.S. GAAP excludes certain financial instruments and all nonfinancial instruments from its fair value disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or non-recurring basis as of March 31, 2024 and December 31, 2023 were as follows:

	March 31, 2024				December 31, 2023
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In Thousands)
Financial Assets:
Level 1 Inputs:
Cash and cash equivalents	$	1,280,274	$	1,280,274	$	2,030,513	$	2,030,513
Held to maturity U.S. Treasury securities		393,932		368,868		508,985		484,267

Level 2 Inputs:
Federal funds sold		170,625		170,625		100,575		100,575
Held to maturity debt securities		473,514		416,152		473,429		422,674
Mortgage loans held for sale		7,592		7,592		5,071		5,071
Restricted equity securities		11,300		11,300		10,226		10,226

Level 3 Inputs:
Held to maturity debt securities		250		250		250		250
Loans, net		11,642,933		11,195,399		11,505,512		11,032,819

Financial Liabilities:
Level 2 Inputs:
Deposits	$	12,751,448	$	12,743,505	$	13,273,511	$	13,266,640
Federal funds purchased		1,345,328		1,345,328		1,256,724		1,256,724
Other borrowings		64,737		58,337		64,735		58,083

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is designed to provide a better understanding of various factors relating to the results of operations and financial condition of ServisFirst Bancshares, Inc. (the “Company”) and its wholly owned subsidiary, ServisFirst Bank (the “Bank”). This discussion is intended to supplement and highlight information contained in the accompanying unaudited consolidated balance sheets as of March 31, 2024 and December 31, 2023 and consolidated statements of income for the three months ended March 31, 2024 and March 31, 2023.

Forward-Looking Statements

Statements in this document that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 27A of the Securities Act of 1933. The words “believe,” “expect,” “anticipate,” “project,” “plan,” “intend,” “will,” “could,” “would,” “might” and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. The Company cautions that such forward-looking statements, wherever they occur in this quarterly report or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Such forward looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, including, but not limited to: general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes as a result of our reclassification as a large financial institution by the FDIC; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, Federal Reserve policies in connection with continued inflationary pressures and the ability of the U.S. Congress to increase the U.S. statutory debt limit as needed; computer hacking or cyber-attacks resulting in unauthorized access to confidential or proprietary information; substantial, unexpected or prolonged changes in the level or cost of liquidity; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and nonbank financial institutions. The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. The Company assumes no obligation to update or revise any forward-looking statements that are made from time to time.

Business

We are a bank holding company under the Bank Holding Company Act of 1956 and are headquartered in Birmingham, Alabama. Our wholly-owned subsidiary, ServisFirst Bank, an Alabama banking corporation, provides commercial banking services through full-service banking offices located in Alabama, Florida, Georgia, North and South Carolina, Tennessee, and Virginia. We also operate loan production offices in Florida and Tennessee. Through the Bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions

Our principal business is to accept deposits from the public and to make loans and other investments. Our principal sources of funds for loans and investments are demand, time, savings, and other deposits. Our principal sources of income are interest and fees collected on loans, interest and dividends collected on other investments and service charges. Our principal expenses are interest paid on savings and other deposits, interest paid on our other borrowings, employee compensation, office expenses and other overhead expenses.

First quarter highlights

●

Diluted earnings per common share of $0.92 for the first quarter of 2024.

●

Loans grew by 8% annualized for the first quarter of 2024.

●

Net interest margin increased to 2.66% for the first quarter of 2024 from 2.57% for the fourth quarter of 2023.

●

Credit quality continues to be strong with non-performing assets to total assets of 0.22%.

●

Deposits grew 10% year-over-year.

●

Book value per share of $27.08, up 10% from the first quarter of 2023.

Overview

As of March 31, 2024, we had consolidated total assets of $15.72 billion, a decrease of $408.0 million, or 2.5%, from $16.13 billion at December 31, 2023. Total loans were $11.88 billion, an increase of $221.9 million, or 1.9%, from $11.66 billion at December 31, 2023. Total deposits were $12.75 billion, a decrease of $522.1 million, or 3.9%, from $13.27 billion at December 31, 2023.

Net income and net income available to common stockholders of $50.0 million for the quarter ended March 31, 2024, compared to net income and net income available to common stockholders of $58.0 million for the first quarter of 2023. Basic and diluted earnings per common share were both $0.92 for the three months ended March 31, 2024, compared to $1.07 and $1.06, respectively, in the corresponding period in 2023. Changes in income and expenses are more fully explained in “Results of Operations” below.

Performance Ratios

The following table presents selected ratios of our results of operations for the three months ended March 31, 2024, and 2023.

	Three Months Ended March 31,
	2024			2023
Return on average assets		1.26	%		1.63	%
Return on average stockholders' equity		13.82	%		17.83	%
Dividend payout ratio		32.74	%		26.34	%
Net interest margin (1)		2.66	%		3.15	%
Efficiency ratio (2)		43.30	%		34.60	%
Average stockholders' equity to average total assets		9.12	%		9.16	%

(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 noninterest expense divided by the sum of net interest income and noninterest income.

Financial Condition

Cash and Cash Equivalents

At March 31, 2024, we had $170.6 million in federal funds sold, compared to $100.6 million at December 31, 2023. We also maintain balances at the Federal Reserve Bank of Atlanta, which earn interest. At March 31, 2024, we had $1.19 billion in balances at the Federal Reserve, compared to $1.89 billion at December 31, 2023. We strategically reduced some of our higher-rate non-core deposit liability balances during the first quarter, resulting in lower balances at the Federal Reserve Bank of Atlanta.

Investment Securities

Debt securities available-for-sale totaled $1.07 billion at March 31, 2024 and $900.2 million at December 31, 2023. Investment securities held to maturity totaled $867.7 million at March 31, 2024 and $982.7 million at December 31, 2023. We had paydowns of $21.1 million on mortgage-backed securities, and maturities of $138.8 million on U.S. government agencies, mortgage-backed securities, municipal bonds, and corporate securities during the three months ended March 31, 2024. We purchased $59.7 million in mortgage-backed securities, and $148.5 million in U.S. Treasury securities during the first three months of 2024. For a tabular presentation of debt securities available for sale and held to maturity at March 31, 2024 and December 31, 2023, see “Note 4 – Securities” in our Notes to Consolidated Financial Statements.

The objective of our investment policy is to invest funds not otherwise needed to meet our loan demand to earn the maximum return, yet still maintain sufficient liquidity to meet fluctuations in our loan demand and deposit structure. In doing so, we seek to balance the market and credit risks against the potential investment return, make investments compatible with the pledge requirements of any deposits of public funds, maintain compliance with regulatory investment requirements, and assist certain public entities with their financial needs. The investment committee has full authority over the investment portfolio and makes decisions on purchases and sales of securities. The entire portfolio, along with all investment transactions occurring since the previous board of directors meeting, is reviewed by the board at each monthly meeting. The investment policy allows portfolio holdings to include short-term securities purchased to provide us with needed liquidity and longer-term securities purchased to generate level income for us over periods of interest rate fluctuations.

All investment securities in an unrealized loss position as of March 31, 2024 continue to perform as scheduled. We have evaluated the securities and have determined that the decline in fair value, relative to its amortized cost, is not due to credit-related factors. In addition, we have the ability to hold these securities within the portfolio until maturity or until the value recovers, and we believe that it is not likely that we will be required to sell these securities prior to recovery. We continue to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

The Company does not invest in collateralized debt obligations (“CDOs”). As of March 31, 2024, we had $315.1 million of bank holding company subordinated notes. If rated, all such bonds were rated BBB or better by Kroll Bond Rating Agency at the time of our initial investment. All other corporate bonds had a Standard and Poor’s or Moody’s rating of A-1 or better when purchased. The total investment portfolio has a combined average credit rating of AA as of March 31, 2024.

The carrying value of investment securities pledged to secure public funds on deposit and for other purposes as required by law was $1.48 billion and $1.49 billion as of March 31, 2024 and December 31, 2023, respectively.

Loans

We had total loans of $11.88 billion, an increase of $221.9 million, or 1.9%, from $11.66 billion at December 31, 2023. Owner occupied commercial real estate loans increased $119.9 million during the quarter, making up over half of total loan growth. Our loan pipeline has expanded and indicates that loan demand is improving in our market areas.

Asset Quality

The Company assesses the adequacy of its ACL at the end of each calendar quarter. The level of ACL is based on the Company’s evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio and other relevant factors. The ACL is increased by a provision for credit losses, which is charged to expense, and reduced by charge-offs, net of recoveries. We believe the ACL is adequate to absorb all expected future losses to be recognized over the contractual life of the loans in the portfolio.

Loans with similar risk characteristics are evaluated in pools and, depending on the nature of each identified pool, the Company utilizes a discounted cash flow (“DCF”), probability of default / loss given default (“PD/LGD”) or remaining life method. The historical loss experience estimate by pool is then adjusted by forecast factors that are quantitatively related to the Company’s historical credit loss experience, such as national unemployment rates and gross domestic product. Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter by the Company and are dependent on the current economic environment among other factors. See “Note 1 – General” in the Notes to Consolidated Financial Statements included in Item 1. Consolidated Financial Statements elsewhere in this report.

The expected credit losses for each loan pool are then adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. The Company considers factors that are relevant within the qualitative framework, which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.

Expected credit losses for loans that no longer share similar risk characteristics with the collectively evaluated pools are excluded from the collective evaluation and estimated on an individual basis. Individual evaluations are performed for nonaccrual loans, loans rated substandard, and certain modified loans. Specific allocations of the ACL for credit losses are estimated on one of several methods, including the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected cash flows.

	As of and for the Three Months Ended
	March 31,
	2024			2023
	(Dollars in thousands)
Total loans outstanding, net of unearned income	$	11,880,696		$	11,629,802
Average loans outstanding, net of unearned income	$	11,740,996		$	11,651,417
Allowance for credit losses at beginning of period		153,317			146,297
Charge-offs:
Commercial, financial and agricultural loans		1,842			1,257
Real estate - construction		-			-
Real estate - mortgage		67			26
Consumer loans		98			390
Total charge-offs		2,007			1,673
Recoveries:
Commercial, financial and agricultural loans		199			128
Real estate - construction		-			3
Real estate - mortgage		6			1
Consumer loans		9			11
Total recoveries		214			143
Net charge-offs		1,793			1,530
Provision for credit losses		4,368			4,197
Allowance for credit losses at period end	$	155,892		$	148,965
Allowance for credit losses to period end loans		1.31	%		1.28	%
Net charge-offs to average loans		0.06	%		0.05	%

			Percentage
			of loans in
			each
			category to
March 31, 2024	Amount		total loans
	(In Thousands)
Commercial, financial and agricultural	$	51,022		23.85	%
Real estate - construction		45,689		13.02	%
Real estate - mortgage		57,640		62.62	%
Consumer		1,541		0.51	%
Total	$	155,892		100.00	%

			Percentage
			of loans in
			each
			category to
December 31, 2023	Amount		total loans
	(In Thousands)
Commercial, financial and agricultural	$	52,121		24.22	%
Real estate - construction		44,658		13.03	%
Real estate - mortgage		55,126		62.21	%
Consumer		1,412		0.55	%
Total	$	153,317		100.01	%

Nonperforming Assets

Total nonperforming loans at March 31, 2024, which include nonaccrual loans and loans 90 or more days past due and still accruing, increased $13.3 million, or 61.8%, to $34.8 million from $21.5 million at December 31, 2023. Of this total, nonaccrual loans of $34.5 million at March 31, 2024 represented a net increase of $15.1 million from nonaccrual loans at December 31, 2023. The increase in non-performing assets to total assets can be attributed to a single relationship that moved to non-accrual status during the first quarter of 2024. This relationship has been closely monitored and is well-collateralized. Excluding credit card accounts, there were no loans 90 or more days past due and still accruing at March 31, 2024, compared to nine loans totaling $1.9 million at December 31, 2023. Loans made to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2024 and 2023 were $18.4 million and $40.9 million, respectively.

OREO and repossessed assets at March 31, 2024 were $490,000, a decrease of $505,000, or 50.8%, from $995,000 at December 31, 2023. The following table summarizes OREO and repossessed asset activity for the three months ended March 31, 2024 and 2023:

	Three months ended March 31,
	2024		2023
	(In thousands)
Balance at beginning of period	$	995	$	1,208
Transfers from loans and capitalized expenses		90		830
Proceeds from sales		(690)		(44	)
Write-downs / net gain (loss) on sales		95		(5	)
Balance at end of period	$	490	$	1,989

The following table summarizes our nonperforming assets at March 31, 2024 and December 31, 2023:

	March 31, 2024					December 31, 2023
				Number of					Number of
	Balance			Loans		Balance			Loans
	(Dollar Amounts In Thousands)
Nonaccrual loans:
Commercial, financial and agricultural	$	20,561			40	$	7,217			35
Real estate - construction		142			2		111			1
Real estate - mortgage:
Owner-occupied commercial		8,741			18		7,089			14
1-4 family mortgage		4,507			40		4,426			41
Other mortgage		506			2		506			2
Total real estate - mortgage		13,754			60		12,021			57
Consumer		-			-		-			-
Total Nonaccrual loans:	$	34,457			102	$	19,349			93

90+ days past due and accruing:
Commercial, financial and agricultural	$	351			15	$	170			8
Real estate - construction		-			-		-			-
Real estate - mortgage:
Owner-occupied commercial		-			-		-			-
1-4 family mortgage		-			-		1,909			9
Other mortgage		-			-		-			-
Total real estate - mortgage		-			-		1,909			9
Consumer		29			11		105			16
Total 90+ days past due and accruing:	$	380			26	$	2,184			33

Total Nonperforming Loans:	$	34,837			128	$	21,533			126

Plus: Other real estate owned and repossessions		490			6		995			7
Total Nonperforming Assets	$	35,327			134	$	22,528			133

Ratios:
Nonperforming loans to total loans		0.29	%				0.18	%
Nonperforming assets to total loans plus other real estate owned and repossessions		0.30	%				0.19	%
Nonperforming assets plus restructured accruing loans to total loans plus other real estate owned and repossessions		0.30	%				0.19	%

The balance of nonperforming assets can fluctuate due to changes in economic conditions. We have established a policy to discontinue accruing interest on a loan (i.e., place the loan on nonaccrual status) after it has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent unless management believes that the collection of interest is expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. Interest income on nonaccrual loans is recognized only as received. If we believe that a loan will not be collected in full, we will increase the ACL to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal.

Deposits

We rely on increasing our deposit base to fund loan and other asset growth. Each of our markets is highly competitive. We compete for local deposits by offering attractive products with competitive rates. We expect to have a higher average cost of funds for local deposits than competitor banks due to our lack of an extensive branch network. Our management’s strategy is to offset the higher cost of funding with a lower level of operating expense and firm pricing discipline for loan products. We have promoted electronic banking services by providing them without charge and by offering in-bank customer training. Our total deposits decreased by $522.1 million to $12.75 billion at March 31, 2024 compared to $13.27 billion at December 31, 2023. The decline in our deposits over the last quarter can be partly attributed to our strategic decision to move away from high-cost and non-core deposits. We anticipate long-term sustainable growth in deposits through continued development of market share in our less mature markets and through organic growth in our mature markets.

For amounts and rates of our deposits by category, see the table “Average Consolidated Balance Sheets and Net Interest Analysis on a Fully Taxable-equivalent Basis” under the subheading “Net Interest Income” below.

The following table summarizes balances of our deposits and the percentage of each type to the total at March 31, 2024 and December 31, 2023.

	March 31, 2024				December 31, 2023
Non-interest-bearing demand	$	2,627,639	20.61	%	$	2,643,101	19.91	%
Interest-bearing demand		2,064,648	16.19	%		2,698,430	20.33	%
Money market		6,790,561	53.25	%		6,669,033	50.24	%
Savings		106,703	0.84	%		107,227	0.81	%
Time deposits, $250,000 and under		317,374	2.49	%		424,730	3.20	%
Time deposits, over $250,000		844,523	6.62	%		730,990	5.51	%
	$	12,751,448	100.00	%	$	13,273,511	100.00	%

At March 31, 2024 and December 31, 2023, we estimate that we had approximately $8.42 billion and $8.76 billion, respectively, in uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit. Included in the total uninsured deposits we estimate that we had approximately $592.7 million and $607.3 million, respectively, in uninsured time deposits. These uninsured deposits represent the portion of deposit accounts that exceed FDIC insurance limits. Included in our uninsured deposits as of March 31, 2024 and December 31, 2023, we estimate that we had approximately $1.97 billion and $2.2 billion, respectively, in public funds. While public fund balances that exceed FDIC limits are uninsured deposits, these deposits are collateralized by securities. The uninsured deposit data for 2024 and 2023 reflect the deposit insurance impact of “combined ownership segregation” of escrow and other accounts at an aggregate level but do not reflect an evaluation of all of the account styling distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations.

Borrowings

Our borrowings consist of federal funds purchased and subordinated notes payable. We had $1.35 billion and $1.26 billion at March 31, 2024 and December 31, 2023, respectively, in federal funds purchased from correspondent banks that are clients of our correspondent banking unit. The average rate paid on these borrowings was 5.50% for the quarter ended March 31, 2024. Other borrowings consist of the following:

●

$30.0 million on the Company’s 4.5% Subordinated Notes due November 8, 2027, which were issued in a private placement in November 2017 and pay interest semi-annually. The Notes may be prepaid by the Company; and

●

$34.75 million of the Company’s 4% Subordinated Notes due October 21, 2030, which were issued in a private placement in October 2020 and pay interest semi-annually. The Notes may not be prepaid by the Company prior to October 21, 2025.

Liquidity

Liquidity is defined as our ability to generate sufficient cash to fund current loan demand, deposit withdrawals, and other cash demands and disbursement needs, and otherwise to operate on an ongoing basis.

The retention of existing deposits and attraction of new deposit sources through new and existing customers is critical to our liquidity position. If our liquidity was to decline due to a run-off in deposits, we have procedures that provide for certain actions under varying liquidity conditions. These actions include borrowing from existing correspondent banks, selling or participating loans, and curtailing loan commitments and funding. At March 31, 2024, our liquid assets, represented by cash and due from banks, federal funds sold and unpledged available-for-sale securities, totaled $1.91 billion. The Bank had loans pledged to both the FHLB and the Federal Reserve Bank of Atlanta, which provided approximately $2.76 billion and $2.15 billion, respectively, in available funding. The Bank’s policy limits on brokered deposits would allow for up to $3.93 billion in available funding for brokered deposits. Additionally, the Bank had approximately $888.0 million in available unused federal funds lines of credit with regional banks, subject to certain restrictions and collateral requirements, to meet short term funding needs.

Our management meets on a quarterly basis to review sources and uses of funding to determine the appropriate strategy to ensure an appropriate level of liquidity. At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments and deposit withdrawals. Our regular sources of funding are from the growth of our deposit base, repayment of principal and interest on loans, the sale of loans and the renewal of time deposits. In addition, we have issued debt as described above under “Borrowings” and have various other sources of liquidity as discussed herein. We believe these sources of funding are adequate to meet both our immediate (within the next 12 months) and our longer term anticipated funding needs. However, we may need additional funding if we are able to maintain our current growth rate into the future.

We are subject to general FDIC guidelines that require a minimum level of liquidity. Management believes our liquidity ratios meet or exceed these guidelines.

The following table illustrates, during the periods presented, the mix of our funding sources and the assets in which those funds are invested as a percentage of our average total assets for the period indicated. Average assets totaled $15.96 billion and $14.40 billion for the quarters ended March 31, 2024 and 2023, respectively.

	For the Three Months Ended March 31,
	2024			2023
Sources of Funds:
Deposits:
Non-interest-bearing		15.9	%		21.4	%
Interest-bearing		64.8			58.3
Federal funds purchased		8.9			9.6
Long term debt and other borrowings		0.4			0.8
Other liabilities		0.6			0.5
Equity capital		9.4			9.4
Total sources		100.0	%		100.0	%

Uses of Funds:
Loans		73.7	%		81.0	%
Securities		12.6			12.0
Interest-bearing balances with banks		10.6			3.5
Federal funds sold		0.2			0.4
Other assets		2.9			3.1
Total uses		100.0	%		100.0	%

Capital Adequacy

Total stockholders’ equity attributable to us at March 31, 2024 was $1.48 billion, or 9.4% of total assets. At December 31, 2023, total stockholders’ equity attributable to us was $1.44 billion, or 8.9% of total assets.

As of March 31, 2024, our most recent notification from the FDIC categorized us as well-capitalized under the regulatory framework for prompt corrective action. To remain categorized as well-capitalized, the Bank must maintain minimum common equity Tier 1, Tier 1 risk-based, total risk-based, and Tier 1 leverage ratios as disclosed in the table below, and not be subject to any written agreement, order, or directive from the FDIC requiring us to maintain a specific capital level for any capital measure. Our management believes that we are well-capitalized under the prompt corrective action provisions as of March 31, 2024.

The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015, subject to a phase-in period for certain aspects of the new rules. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the Basel III rules a covered banking organization is required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of common equity Tier 1 capital, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer became fully effective on January 1, 2019. As of January 1, 2019, an additional amount of common equity Tier 1 capital equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in capital conservation buffer.

The following table sets forth (i) the capital ratios required by Basel III and prompt corrective action and (ii) our actual ratios, as of March 31, 2024, December 31, 2023 and March 31, 2023:

	Actual					For Basel III Capital Adequacy Purposes*					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2024:
CET 1 Capital to Risk Weighted Assets:
Consolidated	$	1,508,513		11.07	%	$	613,067		4.50	%		N/A		N/A
ServisFirst Bank		1,566,428		11.50	%		613,026		4.50	%	$	885,481		6.50	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		1,509,013		11.08	%		817,422		6.00	%		N/A		N/A
ServisFirst Bank		1,566,928		11.50	%		817,368		6.00	%		1,089,823		8.00	%
Total Capital to Risk Weighted Assets:
Consolidated		1,718,384		12.61	%		1,089,896		8.00	%		N/A		N/A
ServisFirst Bank		1,723,562		12.65	%		1,089,823		8.00	%		1,362,279		10.00	%
Tier 1 Capital to Average Assets:
Consolidated		1,509,013		9.44	%		639,651		4.00	%		N/A		N/A
ServisFirst Bank		1,566,928		9.80	%		639,621		4.00	%		799,527		5.00	%

As of December 31, 2023:
CET 1 Capital to Risk Weighted Assets:
Consolidated	$	1,473,885		10.91	%	$	607,690		4.50	%		N/A		N/A
ServisFirst Bank		1,535,757		11.37	%		607,665		4.50	%	$	877,738		6.50	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		1,474,385		10.92	%		810,253		6.00	%		N/A		N/A
ServisFirst Bank		1,536,257		11.38	%		810,220		6.00	%		1,080,293		8.00	%
Total Capital to Risk Weighted Assets:
Consolidated		1,681,028		12.45	%		1,080,338		8.00	%		N/A		N/A
ServisFirst Bank		1,690,149		12.52	%		1,080,293		8.00	%		1,350,366		10.00	%
Tier 1 Capital to Average Assets:
Consolidated		1,474,385		9.12	%		646,710		4.00	%		N/A		N/A
ServisFirst Bank		1,536,257		9.50	%		646,675		4.00	%		808,343		5.00	%

As of March 31, 2023:
CET 1 Capital to Risk Weighted Assets:
Consolidated	$	1,368,751		10.01	%	$	615,176		4.50	%		N/A		N/A
ServisFirst Bank		1,428,371		10.45	%		615,120		4.50	%	$	888,506		6.50	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		1,369,251		10.02	%		820,235		6.00	%		N/A		N/A
ServisFirst Bank		1,428,871		10.45	%		820,160		6.00	%		1,093,546		8.00	%
Total Capital to Risk Weighted Assets:
Consolidated		1,578,208		11.54	%		1,093,647		8.00	%		N/A		N/A
ServisFirst Bank		1,578,411		11.55	%		1,093,546		8.00	%		1,366,933		10.00	%
Tier 1 Capital to Average Assets:
Consolidated		1,369,251		9.49	%		576,964		4.00	%		N/A		N/A
ServisFirst Bank		1,428,871		9.91	%		576,969		4.00	%		721,211		5.00	%

* this column reflects the minimum capital ratios under Basel III and does not include the 2.5% capital conservation buffer

We are a legal entity separate and distinct from the Bank. Our principal source of cash flow, including cash flow to pay dividends to our stockholders, is dividends the Bank pays to us as the Bank’s sole shareholder. Statutory and regulatory limitations apply to the Bank’s payment of dividends to us as well as to our payment of dividends to our stockholders. The requirement that a bank holding company must serve as a source of strength to its subsidiary banks also results in the position of the Federal Reserve that a bank holding company should not maintain a level of cash dividends to its stockholders that places undue pressure on the capital of its bank subsidiaries or that can be funded only through additional borrowings or other arrangements that may undermine the bank holding company’s ability to serve as such a source of strength. Our ability to pay dividends is also subject to the provisions of Delaware corporate law.

The Alabama Banking Department also regulates the Bank’s dividend payments. Under Alabama law, a state-chartered bank may not pay a dividend in excess of 90% of its net earnings until the Bank’s surplus is equal to at least 20% of its capital (our Bank’s surplus currently exceeds 20% of its capital). Moreover, our Bank is also required by Alabama law to obtain the prior approval of the Superintendent of Banks (“Superintendent”) for its payment of dividends if the total of all dividends declared by the Bank in any calendar year will exceed the total of (i) the Bank’s net earnings (as defined by statute) for that year, plus (ii) its retained net earnings for the preceding two years, less any required transfers to surplus. In addition, no dividends, withdrawals or transfers may be made from the Bank’s surplus without the prior written approval of the Superintendent.

The Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. If, in the opinion of the federal banking regulators, the Bank were engaged in or about to engage in an unsafe or unsound practice, the federal banking regulators could require, after notice and a hearing, that the Bank stop or refrain from engaging in the questioned practice.

Off-Balance Sheet Arrangements

In the normal course of business, we are a party to financial credit arrangements with off-balance sheet risk to meet the financing needs of our customers. These financial credit arrangements include commitments to extend credit beyond current fundings, credit card arrangements, standby letters of credit and financial guarantees. Those credit arrangements involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement we have in those particular financial credit arrangements. All such credit arrangements bear interest at variable rates and we have no such credit arrangements that bear interest at fixed rates.

Our exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, credit card arrangements and standby letters of credit is represented by the contractual or notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments.

As part of our mortgage operations, we originate and sell certain loans to investors in the secondary market. We continue to experience a manageable level of investor repurchase demands. For loans sold, we have an obligation to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loans sold were in violation of representations and warranties made by the Bank at the time of the sale. Representations and warranties typically include those made regarding loans that had missing or insufficient file documentation or loans obtained through fraud by borrowers or other third parties such as appraisers.

Financial instruments whose contract amounts represent credit risk at March 31, 2024 are as follows:

	March 31, 2024
	(In Thousands)
Commitments to extend credit	$	3,512,011
Credit card arrangements		406,749
Standby letters of credit		122,415
	$	4,041,175

Commitments to extend credit beyond current funded amounts are agreements to lend to a customer as long as there is no violation of any condition established in the applicable loan agreement. Such commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by us upon extension of credit is based on our management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. All letters of credit are due within one year or less of the original commitment date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Federal funds lines of credit are uncommitted lines issued to downstream correspondent banks for the purpose of providing liquidity to them. The lines are unsecured, and we have no obligation to sell federal funds to the correspondent, nor does the correspondent have any obligation to request or accept purchases of federal funds from us.

Results of Operations

Summary of Net Income

Net income and net income available to common stockholders of $50.0 million for the quarter ended March 31, 2024, compared to net income and net income available to common stockholders of $58.0 million for the first quarter of 2023. The decrease in net income was primarily attributable to a $5.8 million decrease in net interest income during the three months ended March 31, 2024 to $102.5 million, compared to $108.3 million during the same period in 2023. The decrease in net interest income was primarily attributable to growth in average deposits, which increased by $1.48 billion. Total non-interest income increased by $2.5 million to $8.8 million during the three months ended March 31, 2024 compared to $6.3 million during the same period in 2023. Total non-interest expenses increased by $6.6 million to $46.3 million during the three months ended March 31, 2024 compared to $39.7 million during the same period in 2023.

Basic and diluted earnings per common share were both $0.92 for the three months ended March 31, 2024, compared to $1.07 and $1.06, respectively, in the corresponding period in 2023. Return on average assets for the three months ended March 31, 2024 was 1.26% compared to 1.63% for the corresponding period in 2023, and return on average common stockholders’ equity for the three months ended March 31, 2024 was 13.82% compared to 17.83% for the corresponding period in 2023.

Net Interest Income

Net interest income is the difference between the income earned on interest-earning assets and interest paid on interest-bearing liabilities used to support such assets. The major factors that affect net interest income are changes in volumes, the yield on interest-earning assets and the cost of interest-bearing liabilities. Our management’s ability to respond to changes in interest rates by effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the momentum of our primary source of earnings.

Taxable-equivalent net interest income decreased $5.9 million, or 5.4%, to $102.5 million for the three months ended March 31, 2024 compared to $108.4 million for the corresponding period in 2023. This decrease was primarily attributable to a $1.48 billion increase in average deposits, or 12.3%, year-over-year. The taxable-equivalent yield on interest-earning assets increased from 5.27% to 5.88% year-over-year. Loan yields were 6.40% during the first quarter of 2024 compared to 6.32% during the fourth quarter of 2023 and 5.70% during the first quarter of 2023. Investment yields were 3.16% during the first quarter of 2024 compared to 3.08% during the fourth quarter of 2023 and 2.54% during the first quarter of 2023. Average interest-bearing deposit rates were 4.04% during the first quarter of 2024, compared to 4.06% during the fourth quarter of 2023 and 2.68% during the first quarter of 2023. Average federal funds purchased rates were 5.50% during first quarter of 2024, compared to 5.49% during the fourth quarter of 2023 and 4.67% during the first quarter of 2023. The net interest margin in the first quarter of 2024 was 2.66% compared to 2.57% in the fourth quarter of 2023 and 3.15% in the first quarter of 2023.

The Federal Reserve Bank increased their targeted federal funds rate from 4.75 – 5.00% at March 31, 2023 to its current range as of March 31, 2024 of 5.25 – 5.50%. Our cost of funding has increased as a result of deposit pricing pressures resulting from these rate increases.

The following table shows, for the three months ended March 31, 2024 and March 31, 2023, the average balances of each principal category of our assets, liabilities and stockholders’ equity, and an analysis of net interest revenue. The accompanying table reflects changes in our net interest margin as a result of changes in the volume and rate of our interest-earning assets and interest-bearing liabilities for the same periods. Changes as a result of mix or the number of days in the periods have been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. Both tables are presented on a taxable-equivalent basis where applicable:

Average Consolidated Balance Sheets and Net Interest Analysis
On a Fully Taxable-Equivalent Basis
For the Three Months Ended March 31,
(In thousands, except Average Yields and Rates)
	2024								2023
				Interest		Average						Interest		Average
	Average			Earned /		Yield /			Average			Earned /		Yield /
	Balance			Paid		Rate			Balance			Paid		Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2):
Taxable	$	11,723,391		$	186,739		6.41	%	$	11,632,439		$	163,576		5.70	%
Tax-exempt (3)		17,605			219		5.00			18,978			157		3.36
Total loans, net of unearned income		11,740,996			186,958		6.40			11,651,417			163,733		5.70
Mortgage loans held for sale		4,770			66		5.57			1,522			24		6.40
Debt securities:													-		-
Taxable		2,013,295			15,922		3.16			1,724,523			10,939		2.54
Tax-exempt (3)		1,296			11		3.40			3,781			23		2.43
Total debt securities (4)		2,014,591			15,933		3.16			1,728,304			10,962		2.54
Federal funds sold		37,298			541		5.83			50,526			614		4.93
Restricted equity securities		10,417			196		7.57			9,919			188		7.69
Interest-bearing balances with banks		1,687,977			23,007		5.48			510,021			5,873		4.67
Total interest-earning assets	$	15,496,049		$	226,701		5.88	%	$	13,951,709		$	181,394		5.27	%
Non-interest-earning assets:
Cash and due from banks		98,813								106,448
Net fixed assets and equipment		60,126								60,617
Allowance for credit losses, accrued interest and other assets		302,592								279,775
Total assets	$	15,957,580							$	14,398,549

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	2,339,548		$	15,662		2.69	%	$	1,675,355		$	5,151		1.25	%
Savings deposits		106,924			468		1.76			134,671			312		0.94
Money market accounts		6,761,495			75,273		4.48			5,756,642			44,978		3.17
Time deposits		1,164,204			12,663		4.37			850,639			5,272		2.51
Total interest-bearing deposits		10,372,171			104,066		4.04			8,417,307			55,713		2.68
Federal funds purchased		1,422,828			19,462		5.50			1,389,217			16,003		4.67
Other borrowings		64,736			685		4.26			114,726			1,305		4.61
Total interest-bearing liabilities	$	11,859,735		$	124,213		4.21	%	$	9,921,250		$	73,021		2.98	%
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits		2,550,841								3,086,774
Other liabilities		91,066								72,121
Stockholders' equity		1,503,240								1,358,587
Accumulated other comprehensive loss		(47,302	)							(40,183	)
Total liabilities and stockholders' equity	$	15,957,580							$	14,398,549
Net interest income				$	102,488							$	108,373
Net interest spread							1.67	%							2.29	%
Net interest margin							2.66	%							3.15	%

(1)	Non-accrual loans are included in average loan balances in all periods. Loan fees of $3,655 and $3,263 are included in interest income in the first quarter of 2024 and 2023, respectively. Loan fees include accretion of PPP loan fees.
(2)	Amortization of acquired loan premiums of $49 and $38 is included in interest income in 2024 and 2023, respectively.
(3)	Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%.
(4)	Unrealized losses of $(68,162) and $(57,738) are excluded from the yield calculation in the first quarter of 2024 and 2023, respectively.

	For the Three Months Ended March 31,
	2024 Compared to 2023 Increase (Decrease) in Interest Income and Expense Due to Changes in:
	Volume			Rate			Total
	(In Thousands)
Interest-earning assets:
Loans, net of unearned income
Taxable	$	1,381		$	21,782		$	23,163
Tax-exempt		(12	)		74			62
Total loans, net of unearned income		1,369			21,856			23,225
Mortgages held for sale		45			(3	)		42
Debt securities:
Taxable		2,066			2,917			4,983
Tax-exempt		(19	)		7			(12	)
Total debt securities		2,047			2,924			4,971
Federal funds sold		(177	)		104			(73	)
Restricted equity securities		9			(3	)		6
Interest-bearing balances with banks		15,934			1,200			17,134
Total interest-earning assets		19,227			26,078			45,305

Interest-bearing liabilities:
Interest-bearing demand deposits		2,678			7,833			10,511
Savings		(75	)		231			156
Money market accounts		9,000			21,295			30,295
Time deposits		2,457			4,934			7,391
Total interest-bearing deposits		14,060			34,293			48,353
Federal funds purchased		414			3,045			3,459
Other borrowed funds		(526	)		(94	)		(620	)
Total interest-bearing liabilities		13,948			37,244			51,192
Increase in net interest income	$	5,279		$	(11,166	)	$	(5,887	)

Our growth in loans continues to drive favorable volume component change. The rate component was unfavorable as average rates paid on interest-bearing liabilities increased 123 basis points while loan yields increased only 70 basis points. An increase in average equity contributed to a favorable volume component, but was partially offset by a decrease in average non-interest-bearing deposits.

Provision for Credit Losses

The provision for credit losses was $4.4 million for the three months ended March 31, 2024, an increase of $171,000 from $4.2 million for the three months ended March 31, 2023. The ACL for at March 31, 2024, December 31, 2023, and March 31, 2023, totaled $155.9 million, $153.3 million, and $149.0 million, or 1.31%, 1.32%, and 1.28% of loans, net of unearned income, respectively. Annualized net credit charge-offs to quarter-to-date average loans were 0.06% for the first quarter of 2024, a basis point increase compared to 0.05% for the first quarter of 2023. Nonperforming loans increased to $34.8 million, or 0.29% of total loans, at March 31, 2024 from $21.5 million, or 0.18%, of total loans at December 31, 2023, and increased compared to $17.8 million, or 0.15% of total loans, at March 31, 2023.

Noninterest Income

Noninterest income totaled $8.8 million for the three months ended March 31, 2024, an increase of $2.5 million compared to the corresponding period in 2023. Service charges on deposit accounts increased $216,000, or 11.2%, to $2.2 million for the three months ended March 31, 2024, compared to $1.9 million in the corresponding period in 2023. Mortgage banking revenue increased $236,000, or 53.4%, to $678,000 for the three months ended March 31, 2024, compared to $442,000 in the corresponding period in 2023. Net credit card revenue increased $466,000, or 27.6%, to $2.2 million during the three months ended March 31, 2024, compared to $1.7 million during the three months ended March 31, 2023. Bank-owned life insurance (“BOLI”) income increased $1.6 million, or 99.3%, to $3.2 million for the first quarter of 2024 from $1.6 million in the first quarter of 2023. During the first quarter of 2024, we recognized $1.2 million of income attributed to a death benefit related to a former employee in our BOLI program. Other income for the three months ended March 31, 2024, decreased $36,000, or 5.7%, to $599,000 when compared to the corresponding period in 2023. Merchant service revenue increased $53,000, or 11.7%, to $508,000 for the first quarter of 2024 from $455,000 in the first quarter of 2023.

Changes in our non-interest income, including percentage changes, are detailed in the following table:

	Three Months Ended March 31,
	2024		2023		$ change			% change
	(Dollars In Thousands)
Noninterest income:
Service charges on deposit accounts	$	2,150	$	1,934	$	216			11.2	%
Mortgage banking		678		442		236			53.4	%
Credit cards		2,155		1,689		466			27.6	%
Securities gains		-		-		NM			NM
Increase in cash surrender value life insurance		3,231		1,621		1,610			99.3	%
Other operating income		599		635		(36	)		(5.7	)%
Total noninterest income	$	8,813	$	6,321	$	2,492			39.4	%

Noninterest Expense

Noninterest expense totaled $46.3 million for the three months ended March 31, 2024, an increase of $6.6 million, or 16.7%, compared to $39.7 million for the same period in 2023. Salary and benefit expense increased $3.9 million, or 20.6%, to $23.0 million for the three months ended March 31, 2024, from $19.1 million for the same period in 2023. The number of FTE employees increased by 32, or 5.6%, to 605 at March 31, 2024 compared to 573 at March 31, 2023, and increased by 14, or 2.4%, from the end of the fourth quarter of 2023. The increase in salary and benefit expense from the first quarter of 2023 was largely due to the normalization of incentives and increased salary expenses due to an increase in FTE employees. Incentives increased approximately $2.8 million, and salaries increased approximately $1.0 million from the first quarter of 2023. Equipment and occupancy expense increased $122,000, or 3.6%, to $3.6 million for the first quarter of 2024 from $3.4 million in the first quarter of 2023. Third party processing and other services expense decreased $118,000, or 1.6%, to $7.2 million for the first quarter of 2024 from $7.3 million in the first quarter of 2023. Professional services expense decreased $190,000, or 11.5%, to $1.5 million for the first quarter of 2024 from $1.7 million in the first quarter of 2023. FDIC and other regulatory assessments increased $2.4 million, or 157.4%, to $3.9 million for the first quarter of 2024 from $1.5 million in the first quarter of 2023. In the fourth quarter of 2023, the FDIC implemented a special assessment to recapitalize the Deposit Insurance Fund resulting in an expense of $7.2 million during the fourth quarter of 2023. The FDIC recapitalization estimate will be periodically adjusted as the FDIC sells assets, satisfies liabilities, and incurs expenses, which resulted in an additional expense of $1.8 million during the first quarter of 2024. Other operating expenses increased $493,000, or 7.4%, to $7.2 million for the first quarter of 2024 from $6.7 million in the first quarter of 2023.

Changes in our non-interest expenses, including percentage changes, are detailed in the following table:

	Three Months Ended March 31,
	2024		2023		$ change			% change
	(Dollars In Thousands)

Noninterest expense:
Salaries and employee benefits	$	22,986	$	19,066	$	3,920			20.6	%
Equipment and occupancy		3,557		3,435		122			3.6	%
Third party processing and other services		7,166		7,284		(118	)		(1.6	)%
Professional services		1,464		1,654		(190	)		(11.5	)%
FDIC and other regulatory assessments		3,905		1,517		2,388			157.4	%
Other real estate owned		30		6		24			400.0	%
Other operating expense		7,195		6,702		493			7.4	%
Total noninterest expense	$	46,303	$	39,664	$	6,639			16.7	%

Income Tax Expense

Income tax expense decreased $2.2 million, or 17.0%, to $10.6 million in the first quarter of 2024, compared to $12.8 million in the first quarter of 2023. Our effective tax rate was 17.5% for the first quarter of 2024 compared to 18.1% for the first quarter of 2023. We recognized an aggregate of $2.2 million in credits during the first quarter of 2024 related to investments in tax credit partnerships, compared to $2.7 million during the first quarter of 2023. We recognized a reduction in provision for income taxes resulting from excess tax benefits from the exercise and vesting of stock options and restricted stock during the first quarters of 2024 and 2023 of $204,000 and $1.1 million, respectively. Our primary permanent differences are related to tax-exempt income on securities, state income tax benefit on real estate investment trust dividends, various qualifying tax credits and change in cash surrender value of bank-owned life insurance.

We own real estate investment trusts for the purpose of holding and managing participations in residential mortgages and commercial real estate loans originated by the Bank. The trusts are wholly-owned subsidiaries of a trust holding company, which in turn is an indirect wholly-owned subsidiary of the Bank. The trusts earn interest income on the loans they hold and incur operating expenses related to their activities. They pay their net earnings, in the form of dividends, to the Bank, which receives a deduction for state income taxes.

Critical Accounting Estimates

The accounting and financial policies of the Company conform to U.S. GAAP and to general practices within the banking industry. To prepare consolidated financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The ACL, valuation of impaired loans and foreclosed real estate, deferred taxes, and fair value of financial instruments are particularly subject to change. Information concerning our accounting policies with respect to these items is available in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Like all financial institutions, we are subject to market risk from changes in interest rates. Interest rate risk is inherent in the balance sheet due to the mismatch between the maturities of rate-sensitive assets and rate-sensitive liabilities. If rates are rising, and the level of rate-sensitive liabilities exceeds the level of rate-sensitive assets, the net interest margin will be negatively impacted. Conversely, if rates are falling, and the level of rate-sensitive liabilities is greater than the level of rate-sensitive assets, the impact on the net interest margin will be favorable. Managing interest rate risk is further complicated by the fact that all rates do not change at the same pace; in other words, short-term rates may be rising while longer-term rates remain stable. In addition, different types of rate-sensitive assets and rate-sensitive liabilities react differently to changes in rates.

To manage interest rate risk, we must take a position on the expected future trend of interest rates. Rates may rise, fall or remain the same. Our asset-liability committee (“ALCO”) develops its view of future rate trends and strives to manage rate risk within a targeted range by monitoring economic indicators, examining the views of economists and other experts, and understanding the current risks that our balance sheet is exposed to. Our annual budget reflects the anticipated rate environment for the next 12 months.

The ALCO employs modeling techniques such as net interest income simulations and economic value of equity simulations to determine what amount of the Bank’s net interest income is at risk given different movements in market interest rates. Simulations assume gradual and instantaneous (shocks) movements in market interest rates of up and down 100, 200, 300 and 400 basis points, when practicable. A set of Benchmark and optional scenarios are ran and results are compared to base model results to measure sensitivity to movements in market interest rates. The ALCO establishes limits for the amount of negative change in net interest margin in the first year, second year and two-year cumulative time horizon. Current policy limits for the 100 and 200 basis point shock and ramp scenarios in the first and second year range from -4% to -17%. The ALCO conducts a quarterly analysis of the rate sensitivity position, reviews established limits, and reports its results to our board of directors. As of March 31, 2024, there have been no significant changes to our sensitivity to changes in interest rates since December 31, 2023. We could experience an increase in the cost of funding our balance sheet. In response to increased inflationary pressures the Federal Reserve increased their targeted federal funds rate from 0 – 0.25% to 4.75 – 5.00% since March of 2022. Such rate increases could lead to us further increasing rates on our deposits and short-term borrowings. We could also experience increased pricing competition for our existing loans or future borrower prospects, which could decrease rates earned on our earning assets.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

We conducted an evaluation (the “Evaluation”) of the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our management, including our CEO and CFO, as of March 31, 2024. Based upon the Evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective as of March 31, 2024.

There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time we may be a party to various legal proceedings arising in the ordinary course of business. Management does not believe the Company or the Bank is currently a party to any material legal proceedings except as disclosed in Item 3, “Legal Proceedings”, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and there has been no material change in any matter described therein.

ITEM 1A. RISK FACTORS

Our business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond our control. We have identified a number of these risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes in the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a)	Exhibit:
	3.1	Restated Certificate of Incorporation as amended (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q, filed on August 3, 2023).
	3.2	Certificate of Elimination of the Senior-Non Cumulative Perpetual Preferred Stock, Series A (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K/A, filed on June 28, 2016).
	3.3	Bylaws (Restated for SEC filing purposes only) (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 4, 2014).
	4.1	Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 10, filed on March 28, 2008).
	4.2	Revised Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on September 15, 2008, Commission File No. 0-53149).
	31.01	Certification of principal executive officer pursuant to Rule 13a-14(a).
	31.02	Certification of principal financial officer pursuant to Rule 13a-14(a).
	32.01	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350.
	32.02	Certification of principal financial officer pursuant to 18 U.S.C. Section 1350.
	101.INS	Inline XBRL Instance Document
	101.SCH	Inline XBRL Taxonomy Extension Schema Document
	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		SERVISFIRST BANCSHARES, INC.


Date: May 8, 2024	By	/s/ Thomas A. Broughton III
		Thomas A. Broughton III
		President and Chief Executive Officer

Date: May 8, 2024	By	/s/ Kirk P. Pressley
		Kirk P. Pressley
		Chief Financial Officer