Annual report pursuant to Section 13 and 15(d)

REGULATORY MATTERS

v3.3.1.900
REGULATORY MATTERS
 12 Months Ended
Dec. 31, 2015
Banking and Thrift [Abstract]  
REGULATORY MATTERS
NOTE 16.
REGULATORY MATTERS
 
The Bank is subject to dividend restrictions set forth in the Alabama Banking Code and by the Alabama State Banking Department. Under such restrictions, the Bank may not, without the prior approval of the Alabama State Banking Department, declare dividends in excess of the sum of the current year’s earnings plus the retained earnings from the prior two years. Based on these restrictions, the Bank would be limited to paying $141.8 million in dividends as of December 31, 2015.
 
The Bank is subject to various regulatory capital requirements administered by the state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank and the financial statements. Under regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective guidelines are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
 
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of common equity Tier 1 capital, total risk-based capital and Tier 1 capital to risk-weighted assets (as defined in the regulations), and Tier 1 capital to adjusted total assets (as defined). Management believes, as of December 31, 2015, that the Bank meets all capital adequacy requirements to which it is subject.
 
In July 2013, the Federal Reserve announced its approval of a final rule to implement the regulatory capital reforms developed by the Basel Committee on Banking Supervision (“Basel III”), among other changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The new 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 new rules a covered banking organization will also be required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer will be required to consist solely of common equity Tier 1, and the buffer will apply to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer will be phased in incrementally over time, beginning January 1, 2016 and becoming fully effective on January 1, 2019, and will ultimately consist of an additional amount of Tier 1 common equity equal to 2.5% of risk-weighted assets.
 
As of December 31, 2015, the most recent notification from the Federal Deposit Insurance Corporation categorized ServisFirst Bank as well capitalized under the regulatory framework for prompt corrective action. To remain categorized as well capitalized, the Bank will have to maintain minimum CET1, total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as disclosed in the table below. Management believes that it is well capitalized under the prompt corrective action provisions as of December 31, 2015.
 
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table:
 
 
 
 
 
 
 
To Be Well Capitalized Under
 
 
 
 
 
For Capital Adequacy
 
Prompt Corrective
 
 
 
Actual
 
Purposes
 
Action Provisions
 
 
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
 
As of December 31, 2015:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CET I Capital to Risk Weighted Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
431,642
 
 
9.72
%
$
199,836
 
 
4.50
%
 
N/A
 
 
N/A
 
ServisFirst Bank
 
 
439,279
 
 
9.89
%
 
199,806
 
 
4.50
%
$
288,608
 
 
6.50
%
Tier I Capital to Risk Weighted Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
432,019
 
 
9.73
%
 
266,448
 
 
6.00
%
 
N/A
 
 
N/A
 
ServisFirst Bank
 
 
439,656
 
 
9.90
%
 
266,407
 
 
6.00
%
 
355,210
 
 
8.00
%
Total Capital to Risk Weighted Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
530,688
 
 
11.95
%
 
355,264
 
 
8.00
%
 
N/A
 
 
N/A
 
ServisFirst Bank
 
 
483,575
 
 
10.89
%
 
355,210
 
 
8.00
%
 
444,012
 
 
10.00
%
Tier I Capital to Average Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
432,019
 
 
8.55
%
 
202,043
 
 
4.00
%
 
N/A
 
 
N/A
 
ServisFirst Bank
 
 
439,656
 
 
8.71
%
 
202,023
 
 
4.00
%
 
252,529
 
 
5.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier I Capital to Risk Weighted Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
402,471
 
 
11.75
%
$
136,972
 
 
4.00
%
 
N/A
 
 
N/A
 
ServisFirst Bank
 
 
362,119
 
 
10.58
%
 
136,970
 
 
4.00
%
$
205,454
 
 
6.00
%
Total Capital to Risk Weighted Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
458,073
 
 
13.38
%
 
273,943
 
 
8.00
%
 
N/A
 
 
N/A
 
ServisFirst Bank
 
 
397,748
 
 
11.62
%
 
273,939
 
 
8.00
%
 
342,424
 
 
10.00
%
Tier I Capital to Average Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
402,471
 
 
9.91
%
 
162,377
 
 
4.00
%
 
N/A
 
 
N/A
 
ServisFirst Bank
 
 
362,119
 
 
8.92
%
 
162,375
 
 
4.00
%
 
202,969
 
 
5.00
%