UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

(Mark ~~one~~)one)

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

☐
	~~FOR THE QUARTERLY PERIOD ENDED~~ ~~SEPTEMBER 30, 2020~~

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE 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

~~(I.R.S. Employer~~

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

~~2500 Woodcrest Place~~~~, Birmingham, Alabama 35209~~

~~(Address of Principal Executive Offices) (Zip Code)~~

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)~~Symbol(s)	Name of ~~each~~ exchange on which registered
Common stock, par value $.001 per share	SFBS	~~The~~ NASDAQ Global Select Market

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 (Check one):

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 ~~October 23, 2020~~April 26, 2021
Common stock, $.001 par value		~~53,915,245~~54,152,882

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

	March 31, 2021			December 31, 2020
	(Unaudited)				(1)
ASSETS
Cash and due from banks	$	70,107		$	93,655
Interest-bearing balances due from depository institutions		2,738,046			2,115,985
Federal funds sold		1,577			1,771
Cash and cash equivalents		2,809,730			2,211,411
Available for sale debt securities, at fair value		961,879			886,688
Held to maturity debt securities (fair value of $250 at March 31, 2021 and December 31, 2020)		250			250
Mortgage loans held for sale		15,834			14,425
Loans		8,504,980			8,465,688
Less allowance for credit losses		(94,906	)		(87,942	)
Loans, net		8,410,074			8,377,746
Premises and equipment, net		56,472			54,969
Accrued interest and dividends receivable		36,348			36,841
Deferred tax assets, net		32,126			31,072
Other real estate owned and repossessed assets		2,067			6,497
Bank owned life insurance contracts		278,045			276,387
Goodwill and other identifiable intangible assets		13,841			13,908
Other assets		30,708			22,460
Total assets	$	12,647,374		$	11,932,654
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing	$	3,044,611		$	2,788,772
Interest-bearing		7,532,999			7,186,952
Total deposits		10,577,610			9,975,724
Federal funds purchased		911,558			851,545
Other borrowings		64,691			64,748
Accrued interest payable		12,865			12,321
Other liabilities		50,165			35,464
Total liabilities		11,616,889			10,939,802
Stockholders' equity:
Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at March 31, 2021 and December 31 2020		0			0
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 54,137,650 shares issued and outstanding at March 31, 2021, and 53,943,751 shares issued and outstanding at December 31 2020		54			54
Additional paid-in capital		224,302			223,856
Retained earnings		788,875			748,224
Accumulated other comprehensive income		16,754			20,218
Total stockholders' equity attributable to ServisFirst Bancshares, Inc.		1,029,985			992,352
Noncontrolling interest		500			500
Total stockholders' equity		1,030,485			992,852
Total liabilities and stockholders' equity	$	12,647,374		$	11,932,654

September 30, 2020

December 31, 2019

(Unaudited)
(1 )
ASSETS

Cash and due from banks
$ 70,472 $ 78,618
Interest-bearing balances due from depository institutions
1,551,597 451,509
Federal funds sold
1,302 100,473
Cash and cash equivalents
1,623,371 630,600
Available for sale debt securities, at fair value
913,049 759,399
Held to maturity debt securities (fair value of $250 at September 30, 2020 and December 31, 2019)
250 250
Mortgage loans held for sale
21,472 6,312
Loans
8,508,554 7,261,451
Less allowance for loan losses
(92,440 ) (76,584 )
Loans, net
8,416,114 7,184,867
Premises and equipment, net
55,273 56,496
Accrued interest and dividends receivable
36,607 26,262
Deferred tax assets
26,764 25,566
Other real estate owned and repossessed assets
6,976 8,178
Bank owned life insurance contracts
254,045 209,395
Goodwill and other identifiable intangible assets
13,976 14,179
Other assets
26,977 26,149
Total assets
$ 11,394,874 $ 8,947,653
LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits:

Noninterest-bearing
$ 2,762,814 $ 1,749,879
Interest-bearing
6,910,969 5,780,554
Total deposits
9,673,783 7,530,433
Federal funds purchased
669,350 470,749
Other borrowings
64,719 64,703
Accrued interest payable
11,915 11,934
Other liabilities
25,518 27,152
Total liabilities
10,445,285 8,104,971
Stockholders' equity:

Preferred stock, par value $0.001 per share; 1,000,000 authorized and undesignated at September 30, 2020 and December 31, 2019
0 0
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 53,915,245 shares issued and outstanding at September 30, 2020, and 53,623,740 shares issued and outstanding at December 31, 2019
54 54
Additional paid-in capital
223,280 219,766
Retained earnings
706,924 616,611
Accumulated other comprehensive income
18,831 5,749
Total stockholders' equity attributable to ServisFirst Bancshares, Inc.
949,089 842,180
Noncontrolling interest
500 502
Total stockholders' equity
949,589 842,682
Total liabilities and stockholders' equity
$ 11,394,874 $ 8,947,653

(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,
	2021		2020
Interest income:
Interest and fees on loans	$	93,803	$	89,385
Taxable securities		5,807		5,154
Nontaxable securities		107		233
Federal funds sold		3		277
Other interest and dividends		676		1,718
Total interest income		100,396		96,767
Interest expense:
Deposits		6,881		16,745
Borrowed funds		1,150		2,382
Total interest expense		8,031		19,127
Net interest income		92,365		77,640
Provision for credit losses		7,451		13,584
Net interest income after provision for credit losses		84,914		64,056
Noninterest income:
Service charges on deposit accounts		1,908		1,916
Mortgage banking		2,747		1,071
Credit card income		1,192		1,765
Increase in cash surrender value life insurance		1,658		1,453
Other operating income		958		469
Total noninterest income		8,463		6,674
Noninterest expense:
Salaries and employee benefits		15,543		15,658
Equipment and occupancy		2,654		2,400
Third party processing and other services		3,416		3,457
Professional services		923		948
FDIC and other regulatory assessments		1,582		1,332
Other real estate owned		157		601
Other operating expense		4,639		3,524
Total noninterest expense		28,914		27,920
Income before income taxes		64,463		42,810
Provision for income taxes		13,008		8,032
Net income		51,455		34,778
Dividends on preferred stock		0		0
Net income available to common stockholders	$	51,455	$	34,778
Basic earnings per common share	$	0.95	$	0.65
Diluted earnings per common share	$	0.95	$	0.64

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Interest income:

Interest and fees on loans
$ 89,564 $ 90,767 $ 268,332 $ 264,901
Taxable securities
5,858 4,367 16,104 12,306
Nontaxable securities
166 316 610 1,155
Federal funds sold
16 1,768 327 4,985
Other interest and dividends
506 3,912 2,584 9,269
Total interest income
96,110 101,130 287,957 292,616
Interest expense:

Deposits
9,876 24,787 37,377 71,172
Borrowed funds
1,152 3,338 4,624 9,576
Total interest expense
11,028 28,125 42,001 80,748
Net interest income
85,082 73,005 245,956 211,868
Provision for loan losses
12,284 6,985 36,151 16,754
Net interest income after provision for loan losses
72,798 66,020 209,805 195,114
Noninterest income:

Service charges on deposit accounts
1,818 1,735 5,557 5,223
Mortgage banking
2,519 1,333 5,697 2,995
Credit card income
1,840 1,868 5,003 5,185
Securities gains
0 34 0 28
Increase in cash surrender value life insurance
1,733 787 4,650 2,327
Other operating income
262 453 972 1,172
Total noninterest income
8,172 6,210 21,879 16,930
Noninterest expenses:

Salaries and employee benefits
14,994 15,499 46,444 44,103
Equipment and occupancy expense
2,556 2,387 7,390 6,933
Third party processing and other services
3,281 2,923 10,360 8,058
Professional services
955 887 2,994 3,072
FDIC and other regulatory assessments (credits)
1,061 (296 ) 2,988 1,804
OREO expense
119 78 2,023 312
Other operating expenses
3,607 3,683 11,110 12,227
Total noninterest expenses
26,573 25,161 83,309 76,509
Income before income taxes
54,397 47,069 148,375 135,535
Provision for income taxes
11,035 9,506 29,787 27,329
Net income
43,362 37,563 118,588 108,206
Preferred stock dividends
0 0 31 31
Net income available to common stockholders
$ 43,362 $ 37,563 $ 118,557 $ 108,175

Basic earnings per common share
$ 0.80 $ 0.70 $ 2.20 $ 2.02
Diluted earnings per common share
$ 0.80 $ 0.69 $ 2.19 $ 2.00

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENT 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, 2020		53,623,740	$	0	$	54	$	219,766		$	616,611		$	5,749		$	502	$	842,682
Common dividends declared, $0.175 per share		-		0		0		0			(9,423	)		0			0		(9,423	)
Dividends on nonvested restricted stock recognized as compensation expense		-		0		0		0			14			0			0		14
Issue restricted shares pursuant to stock incentives		15,300		0		0		0			0			0			0		0
Issue shares of common stock upon exercise of stock options		204,969		0		0		2,261			0			0			0		2,261
11,031 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(403	)		0			0			0		(403	)
Stock-based compensation expense		-		0		0		277			0			0			0		277
Other comprehensive income, net of tax		-		0		0		0			0			11,699			0		11,699
Net income		-		0		0		0			34,778			0			0		34,778
Balance, March 31, 2020		53,844,009	$	0	$	54	$	221,901		$	641,980		$	17,448		$	502	$	881,885

Balance, January 1, 2021		53,943,751		0		54		223,856			748,224			20,218			500		992,852
Common dividends declared, $0.20 per share		-		0		0		0			(10,829	)		0			0		(10,829	)
Dividends on nonvested restricted stock recognized as compensation expense		-		0		0		0			25			0			0		25
Issue restricted shares pursuant to stock incentives, net of forfeitures		42,642		0		0		0			0			0			0		0
Issue shares of common stock upon exercise of stock options		151,257		0		0		1,865			0			0			0		1,865
36,243 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(1,710	)		0			0			0		(1,710	)
Stock-based compensation expense		-		0		0		291			0			0			0		291
Other comprehensive loss, net of tax		-		0		0		0			0			(3,464	)		0		(3,464	)
Net income		-		0		0		0			51,455			0			0		51,455
Balance, March 31, 2021		54,137,650	$	0	$	54	$	224,302		$	788,875		$	16,754		$	500	$	1,030,485

Three Months Ended September 30,

Common Shares Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling interest Total Stockholders' Equity
Balance, July 1, 2019
53,526,882 $ 0 $ 54 $ 218,658 $ 555,425 $ 4,318 $ 502 $ 778,957
Common dividends declared, $0.15 per share
- 0 0 0 (8,020 ) 0 0 (8,020 )
Issue restricted shares pursuant to stock incentives, net of forfeitures
10,500 0 0 0 0 0 0 0
Issue shares of common stock upon exercise of stock options
41,731 0 0 571 0 0 0 571
9,069 shares of common stock withheld in net settlement upon exercise of stock options
- 0 0 (289 ) 0 0 0 (289 )
Stock-based compensation expense
- 0 0 294 0 0 0 294
Other comprehensive income, net of tax
- 0 0 0 0 1,461 0 1,461
Net income
- 0 0 0 37,563 0 0 37,563
Balance, September 30, 2019
53,579,113 $ 0 $ 54 $ 219,234 $ 584,968 $ 5,779 $ 502 $ 810,537

Balance, July 1, 2020
53,874,276 $ 0 $ 54 $ 222,437 $ 672,984 $ 18,611 $ 502 $ 914,588
Common dividends declared, $0.175 per share
- 0 0 0 (9,422 ) 0 0 (9,422 )
Issue restricted shares pursuant to stock incentives, net of forfeitures
3,500 0 0 0 0 0 0 0
Issue shares of common stock upon exercise of stock options
37,469 0 0 728 0 0 0 728
5,831 shares of common stock withheld in net settlement upon exercise of stock options
- 0 0 (225 ) 0 0 0 (225 )
Stock-based compensation expense
- 0 0 340 0 0 0 340
Other comprehensive loss, net of tax
- 0 0 0 0 220 0 220
Net income
- 0 0 0 43,362 0 (2 ) 43,360
Balance, September 30, 2020
53,915,245 $ 0 $ 54 $ 223,280 $ 706,924 $ 18,831 $ 500 $ 949,589

Nine Months Ended September 30,

Common Shares Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling interest Total Stockholders' Equity
Balance, January 1, 2019
53,375,195 $ 0 $ 53 $ 218,521 $ 500,868 $ (4,741 ) $ 502 $ 715,203
Common dividends paid, $0.30 per share
- 0 0 0 (16,038 ) 0 0 (16,038 )
Common dividends declared, $0.15 per share
- 0 0 0 (8,037 ) 0 0 (8,037 )
Preferred dividends paid
- 0 0 0 (31 ) 0 0 (31 )
Issue restricted shares pursuant to stock incentives, net of forfeitures
18,874 0 0 0 0 0 0 0
Issue shares of common stock upon exercise of stock options
185,044 0 1 1,674 0 0 0 1,675
54,256 shares of common stock withheld in net settlement upon exercise of stock options
- 0 0 (1,742 ) 0 0 0 (1,742 )
Stock-based compensation expense
- 0 0 781 0 0 0 781
Other comprehensive income, net of tax
- 0 0 0 0 10,520 0 10,520
Net income
- 0 0 0 108,206 0 0 108,206
Balance, September 30, 2019
53,579,113 $ 0 $ 54 $ 219,234 $ 584,968 $ 5,779 $ 502 $ 810,537

Balance, January 1, 2020
53,623,740 $ 0 $ 54 $ 219,766 $ 616,611 $ 5,749 $ 502 $ 842,682
Common dividends paid, $0.35 per share
- 0 0 0 (18,822 ) 0 0 (18,822 )
Common dividends declared, $0.175 per share
- 0 0 0 (9,422 ) 0 0 (9,422 )
Preferred dividends paid
- 0 0 0 (31 ) 0 0 (31 )
Issue restricted shares pursuant to stock incentives, net of forfeitures
29,067 0 0 0 0 0 0 0
Issue shares of common stock upon exercise of stock options
262,438 0 0 3,172 0 0 0 3,172
16,862 shares of common stock withheld in net settlement upon exercise of stock options
- 0 0 (627 ) 0 0 0 (627 )
Stock-based compensation expense
- 0 0 969 0 0 0 969
Other comprehensive loss, net of tax
- 0 0 0 0 13,082 0 13,082
Net income
- 0 0 0 118,588 0 (2 ) 118,586
Balance, September 30, 2020
53,915,245 $ 0 $ 54 $ 223,280 $ 706,924 $ 18,831 $ 500 $ 949,589

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
	Three Months Ended March 31,
	2021			2020
OPERATING ACTIVITIES
Net income	$	51,455		$	34,778
Adjustments to reconcile net income to net cash provided by
Deferred tax benefit		(137	)		(1,267	)
Provision for credit losses		7,451			13,584
Depreciation		1,015			921
Amortization of core deposit intangible		67			68
Net amortization of debt securities available for sale		1,701			966
Increase in accrued interest and dividends receivable		493			948
Stock-based compensation expense		291			277
Increase in accrued interest payable		544			465
Proceeds from sale of mortgage loans held for sale		90,227			36,308
Originations of mortgage loans held for sale		(88,889	)		(35,672	)
Gain on sale of mortgage loans held for sale		(2,747	)		(1,071	)
Net loss (gain) on sale of other real estate owned and repossessed assets		334			(24	)
Write down of other real estate owned and repossessed assets		147			587
Operating losses of tax credit partnerships		4			3
Increase in cash surrender value of life insurance contracts		(1,658	)		(1,453	)
Net change in other assets, liabilities, and other operating activities		6,462			2,814
Net cash provided by operating activities		66,760			52,232
INVESTMENT ACTIVITIES
Purchase of debt securities available for sale		(149,719	)		(80,149	)
Proceeds from maturities, calls and paydowns of debt securities
available for sale		72,194			26,778
Investment in tax credit partnership and SBIC		(56	)		(111	)
Increase in loans		(40,193	)		(312,426	)
Purchase of premises and equipment		(2,518	)		(417	)
Proceeds from sale of other real estate owned and repossessed assets		584			454
Net cash used in investing activities		(119,708	)		(365,871	)
FINANCING ACTIVITIES
Net increase in non-interest-bearing deposits		255,839			175,747
Net increase in interest-bearing deposits		346,047			126,475
Net increase in federal funds purchased		60,013			72,874
Proceeds from exercise of stock options		1,865			2,261
Taxes paid in net settlement of tax obligation upon exercise of stock options		(1,710	)		(403	)
Dividends paid on common stock		(10,787	)		(9,384	)
Net cash provided by financing activities		651,267			367,570
Net increase in cash and cash equivalents		598,319			53,931
Cash and cash equivalents at beginning of period		2,211,411			630,600
Cash and cash equivalents at end of period	$	2,809,730		$	684,531
SUPPLEMENTAL DISCLOSURE
Cash paid for:
Interest	$	7,487		$	18,662
Income taxes		4,294			400
NONCASH TRANSACTIONS
Other real estate acquired in settlement of loans	$	364		$	287
Internally financed sale of other real estate owned		3,779			0
Dividends declared		10,829			9,423

Nine Months Ended September 30,

2020

2019

OPERATING ACTIVITIES

Net income
$ 118,588 $ 108,206
Adjustments to reconcile net income to net cash provided by

Deferred tax (benefit) expense
(4,675 ) 2,851
Provision for loan losses
36,151 16,754
Depreciation
2,788 2,774
Accretion on acquired loans
(100 ) (91 )
Amortization of core deposit intangible
203 203
Net amortization of debt securities available for sale
3,834 2,040
Increase in accrued interest and dividends receivable
(10,345 ) (1,353 )
Stock-based compensation expense
969 781
(Decrease) increase in accrued interest payable
(19 ) 1,095
Proceeds from sale of mortgage loans held for sale
194,558 90,188
Originations of mortgage loans held for sale
(204,021 ) (95,764 )
Gain on sale of mortgage loans held for sale
(5,697 ) (2,995 )
Net gain on sale of debt securities available for sale
0 (28 )
Net gain on sale of other real estate owned and repossessed assets
(8 ) (6 )
Write down of other real estate owned and repossessed assets
1,836 288
Operating loss (income) of tax credit partnerships
4 (16 )
Increase in cash surrender value of life insurance contracts
(4,650 ) (2,327 )
Net change in other assets, liabilities, and other operating activities
(11,916 ) (19,766 )
Net cash provided by operating activities
117,500 102,834
INVESTMENT ACTIVITIES

Purchase of debt securities available for sale
(288,453 ) (186,240 )
Proceeds from maturities, calls and paydowns of debt securities available for sale
148,206 100,687
Purchase of debt securities held to maturity
0 (250 )
Investment in tax credit partnership and SBIC
(636 ) 0
Increase in loans
(1,269,704 ) (505,224 )
Purchase of premises and equipment
(1,565 ) (1,522 )
Purchase of bank owned life insurance contracts
(40,000 ) (20,000 )
Proceeds from sale of other real estate owned and repossessed assets
1,780 727
Net cash used in investing activities
(1,450,372 ) (611,822 )
FINANCING ACTIVITIES

Net increase in non-interest-bearing deposits
1,012,935 121,331
Net increase in interest-bearing deposits
1,130,415 687,119
Net increase in federal funds purchased
198,601 81,506
Proceeds from exercise of stock options
3,172 1,675
Taxes paid in net settlement of tax obligation upon exercise of stock options
(627 ) (1,742 )
Dividends paid on common stock
(18,822 ) (16,038 )
Dividends paid on preferred stock
(31 ) (31 )
Net cash provided by financing activities
2,325,643 873,820
Net increase in cash and cash equivalents
992,771 364,832
Cash and cash equivalents at beginning of period
630,600 681,895
Cash and cash equivalents at end of period
$ 1,623,371 $ 1,046,727
SUPPLEMENTAL DISCLOSURE

Cash paid for:

Interest
$ 42,020 $ 76,653
Income taxes
38,593 34,464
Income tax refund
(47 ) (86 )
NONCASH TRANSACTIONS

Other real estate acquired in settlement of loans
$ 2,406 $ 1,177
Dividends declared
9,422 8,037

See Notes to Consolidated Financial Statements.

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 ~~recurring~~ nature. The consolidated results of operations are not necessarily indicative of the consolidated results of operations which ServisFirst Bancshares, Inc. (the “Company”) ~~and its consolidated subsidiaries, including ServisFirst Bank (the “Bank”),~~ 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, ~~2019.~~2020.

The ~~Company was prepared to fully adopt Accounting Standards Update (“ASU”)~~ ~~2016~~-~~13,~~~~Financial Instruments – Credit Losses (Topic~~ ~~326~~) ~~as of~~ ~~January 1, 2020~~ ~~prior to the COVID-~~19 ~~outbreak and subsequent passage of the~~ Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was passed on March 27, 2020 ~~which~~and provided financial institutions with the option to delay adoption of ASU 2016-~~13.~~13 ~~The~~,Financial Instruments-Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments (“CECL”). As described below under Recently Adopted Accounting Pronouncements, the Company ~~has~~ decided to delay its adoption of ASU 2016-13, as provided by the CARES Act, until the earlier of the date on which the national emergency concerning COVID-19 terminates or December 31, 2020, with an effective retrospective implementation date of January 1, 2020.

~~The allowance for loan losses as of~~Prior to ~~September 30,~~January 1, 2020, ~~is determined under the Company’s incurred loss model. Qualitative adjustments~~except quarterly periods in 2020 which were ~~made to the amount of the allowance to take into effect management’s estimates of the COVID-~~19not ~~pandemic’s impact on the local and regional markets in which the Company operates. Further discussion of~~restated, the allowance for ~~loan~~credit losses ~~is included in Note~~ 5 ~~– Loans.~~was calculated using an incurred losses methodology.

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

Basic earnings per common share are computed by dividing net income ~~available to common stockholders~~ 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 amortized cost and fair value of available-for-sale and held-to-maturity securities at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 are summarized as follows:

			Gross		Gross					Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Allowance For Credit Losses		Fair Value
	Amortized		Unrealized		Unrealized			Market
	Cost		Gain		Loss			Value
September 30, 2020	(In Thousands)
Securities Available for Sale
U.S. Treasury securities	$	18,990	$	436	$	0		$	19,426
Government agencies		15,222		299		0			15,521
March 31, 2021										(In Thousands)
Available for sale debt securities
U.S. Treasury Securities										$	13,995	$	301	$	0		$	-	$	14,296
Government Agency Securities											12,020		170		0			-		12,190
Mortgage-backed securities		500,251		17,879		(68	)		518,062		558,985		13,352		(2,795	)		-		569,542
State and municipal securities		36,922		486		0			37,408		33,408		303		(189	)		-		33,522
Corporate debt		317,887		5,638		(893	)		322,632		322,320		10,288		(279	)		-		332,329
Total	$	889,272	$	24,738	$	(961	)	$	913,049	$	940,728	$	24,414	$	(3,263	)	$	-	$	961,879
Securities Held to Maturity
Held to maturity debt securities
State and municipal securities		250		0		0			250	$	250	$	0	$	0		$	-	$	250
Total	$	250	$	0	$	0		$	250	$	250	$	0	$	0		$	-	$	250

December 31, 2019
Securities Available for Sale
U.S. Treasury securities	$	48,923	$	291	$	(4	)	$	49,210
Government agencies		18,245		143		(2	)		18,386
December 31, 2020
Available for sale debt securities
U.S. Treasury Securities										$	13,993	$	364	$	0		$	-	$	14,357
Government Agency Securities											15,228		230		0			-		15,458
Mortgage-backed securities		470,513		4,859		(1,318	)		474,054		477,407		17,720		(18	)		-		495,109
State and municipal securities		56,951		335		(14	)		57,272		37,671		444		0			-		38,115
Corporate debt		157,549		3,098		(170	)		160,477		316,857		7,296		(504	)		-		323,649
Total	$	752,181	$	8,726	$	(1,508	)	$	759,399	$	861,156	$	26,054	$	(522	)	$	-	$	886,688
Securities Held to Maturity
Held to maturity debt securities
State and municipal securities		250		0		0			250	$	250	$	0	$	0		$	-	$	250
Total	$	250	$	0	$	0		$	250	$	250	$	0	$	0		$	-	$	250

The amortized cost and fair value of debt securities as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 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. Corporate debt is primarily comprised of subordinated notes payable issued by financial institutions. Most of these corporate securities have a contractual maturity of ten years but may be called at the end of their fifth year.

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.

The carrying value of ~~debt~~investment securities pledged to secure public funds on deposit and for other purposes as required by law was $468.7 million and $477.6 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020, ~~was $431.0 million and $389.9 million,~~ respectively.

The following table identifies, as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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.

At ~~September 30, 2020,~~March 31, 2021, ~~none~~no ~~of the Company’s 641~~allowance for credit losses has been recognized on available for sale debt securities ~~had been~~ 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. Furthermore, the Company does 12not orintend to sell these debt securities and it is more ~~months.~~

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.

The ~~following table details~~loan portfolio is classified based on the ~~Company’s loans at~~ ~~September 30, 2020~~ underlying collateral utilized to secure each loan for financial reporting purposes. This classification is consistent with the Quarterly Report of Condition and ~~December 31, 2019:~~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.

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.

In light of the U.S. and global economic crisis brought about by the COVID-19 pandemic, the Company has prioritized assisting its clients through this troubled time. The ~~CARES~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provides for Paycheck Protection ~~Plan~~Program (“PPP”) loans to be made by banks to employers with less than 500 employees if they continue to employ their existing workers. As of ~~September 30, 2020,~~March 31, 2021, the Company has funded approximately ~~4,900~~7,100 loans for a total amount of ~~$1.05~~$1.47 billion for clients under the PPP since April 2020, and management expects to continue to participate in any extensions of the PPP by the Treasury Department. At ~~September 30,~~March 31, 2021 and December 31, 2020, unaccreted deferred loan origination fees, net of costs, related to PPP loans totaled ~~$25.3 million.~~$20.4 million and $17.8 million, respectively. PPP loan origination fees recorded ~~as an adjustment~~ to ~~loan yield~~interest income for the three ~~and~~ ~~nine~~months ended ~~September 30,~~March 31, 2021 and 2020 were $9.1 million and $0, respectively. PPP loans outstanding totaled $967.7 million and $900.5 million at March 31, 2021 and December 31, 2020, ~~were $4.0 million and $6.6 million,~~ respectively. ~~These~~ PPP loans are included within the Commercial, financial and agricultural loan category in the table ~~above.~~below. No allowance for credit losses has been recorded for PPP loans as they are fully guaranteed by the SBA (“Small Business Administration”).

The following table details the Company’s loans at March 31, 2021 and December 31, 2020:

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 ~~loan~~credit loss portfolio segments and classes. These categories are utilized to develop the associated allowance for ~~loan~~credit losses using historical losses adjusted for current economic conditions defined as follows:

~~Loans~~The table below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of ~~September 30, 2020~~ ~~and~~ ~~December~~March 31, ~~2019~~ 2021:~~were as follows:~~

			Special																				Revolving
September 30, 2020	Pass		Mention		Substandard		Doubtful		Total

March 31, 2021											2021		2020		2019		2018		2017		Prior		Loans		Total
	(In Thousands)										(In Thousands)
Commercial, financial and agricultural	$	3,374,467	$	17,955	$	73,767	$	0	$	3,466,189
Pass											$	451,136	$	942,305	$	305,491	$	202,837	$	153,959	$	196,657	$	993,613	$	3,245,998
Special Mention												557		1,430		227		9		1,386		384		10,814		14,807
Substandard												0		559		10,570		567		3,741		2,570		44,281		62,288
Doubtful												0		0		0		0		0		0		0		0
Total Commercial, financial and agricultural											$	451,693	$	944,294	$	316,288	$	203,413	$	159,086	$	199,611	$	1,048,708	$	3,323,093
Real estate - construction		527,231		3,100		588		0		530,919
Real estate - mortgage:
Pass											$	40,168	$	250,260	$	238,486	$	54,129	$	15,879	$	19,009	$	48,426	$	666,357
Special Mention												0		0		0		0		0		0		0		0
Substandard												0		0		0		0		0		235		0		235
Doubtful												0		0		0		0		0		0		0		0
Total Real estate - construction											$	40,168	$	250,260	$	238,486	$	54,129	$	15,879	$	19,244	$	48,426	$	666,592
Owner-occupied commercial		1,708,113		14,280		2,829		0		1,725,222
Pass											$	51,008	$	364,982	$	263,789	$	207,599	$	199,276	$	551,086	$	55,790	$	1,693,530
Special Mention												0		0		0		0		289		1,941		200		2,430
Substandard												0		0		0		0		780		1,716		239		2,735
Doubtful												0		0		0		0		0		0		0		0
Total Owner-occupied commercial											$	51,008	$	364,982	$	263,789	$	207,599	$	200,345	$	554,743	$	56,229	$	1,698,695
1-4 family mortgage		666,463		2,065		3,313		0		671,841
Pass											$	34,862	$	170,574	$	99,727	$	65,064	$	50,130	$	61,073	$	199,658	$	681,088
Special Mention												0		680		433		129		104		481		1,111		2,938
Substandard												0		150		367		0		233		217		847		1,814
Doubtful												0		0		0		0		0		0		0		0
Total 1-4 family mortgage											$	34,862	$	171,404	$	100,527	$	65,193	$	50,467	$	61,771	$	201,616	$	685,840
Other mortgage		2,031,328		12,006		13,215		0		2,056,549
Total real estate mortgage		4,405,904		28,351		19,357		0		4,453,612
Pass											$	90,376	$	458,320	$	442,499	$	216,211	$	333,266	$	431,485	$	71,610	$	2,043,767
Special Mention												0		0		0		0		2,775		8,989		0		11,764
Substandard												0		0		0		4,567		8,462		0		0		13,029
Doubtful												0		0		0		0		0		0		0		0
Total Other mortgage											$	90,376	$	458,320	$	442,499	$	220,778	$	344,503	$	440,474	$	71,610	$	2,068,560
Consumer		57,785		49		0		0		57,834
Total	$	8,365,387	$	49,455	$	93,712	$	0	$	8,508,554
Pass											$	3,588	$	16,111	$	3,990	$	1,332	$	1,311	$	4,373	$	31,451	$	62,156
Special Mention												0		0		0		13		0		31		0		44
Substandard												0		0		0		0		0		0		0		0
Doubtful												0		0		0		0		0		0		0		0
Total Consumer											$	3,588	$	16,111	$	3,990	$	1,345	$	1,311	$	4,404	$	31,451	$	62,200
Total Loans
Pass											$	671,138	$	2,202,552	$	1,353,982	$	747,172	$	753,821	$	1,263,683	$	1,400,548	$	8,392,896
Special Mention												557		2,110		660		151		4,554		11,826		12,125		31,983
Substandard												0		709		10,937		5,134		13,216		4,738		45,367		80,101
Doubtful												0		0		0		0		0		0		0		0
Total Loans											$	671,695	$	2,205,371	$	1,365,579	$	752,457	$	771,591	$	1,280,247	$	1,458,040	$	8,504,980

Loans by credit quality indicator, loan type and based on year of origination as of December 31, 2020 were as follows:

Loans by performance status as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows:

September 30, 2020	Performing		Nonperforming		Total

March 31, 2021							Performing		Nonperforming		Total
	(In Thousands)						(In Thousands)
Commercial, financial and agricultural	$	3,447,490	$	18,699	$	3,466,189	$	3,313,167	$	9,926	$	3,323,093
Real estate - construction		530,332		587		530,919		666,358		234		666,592
Real estate - mortgage:
Owner-occupied commercial		1,723,384		1,838		1,725,222		1,696,686		2,009		1,698,695
1-4 family mortgage		671,227		614		671,841		684,917		923		685,840
Other mortgage		2,051,722		4,827		2,056,549		2,063,799		4,761		2,068,560
Total real estate mortgage		4,446,333		7,279		4,453,612
Total real estate - mortgage								4,445,402		7,693		4,453,095
Consumer		57,826		8		57,834		62,161		39		62,200
Total	$	8,481,981	$	26,573	$	8,508,554	$	8,487,088	$	17,892	$	8,504,980

December 31, 2019	Performing		Nonperforming		Total

December 31, 2020							Performing		Nonperforming		Total
	(In Thousands)						(In Thousands)
Commercial, financial and agricultural	$	2,681,280	$	14,930	$	2,696,210	$	3,284,180	$	11,720	$	3,295,900
Real estate - construction		519,803		1,589		521,392		593,380		234		593,614
Real estate - mortgage:
Owner-occupied commercial		1,576,652		10,826		1,587,478		1,692,169		1,259		1,693,428
1-4 family mortgage		641,875		2,313		644,188		710,817		875		711,692
Other mortgage		1,740,963		6,431		1,747,394		2,101,379		4,805		2,106,184
Total real estate mortgage		3,959,490		19,570		3,979,060
Total real estate - mortgage								4,504,365		6,939		4,511,304
Consumer		64,766		23		64,789		64,809		61		64,870
Total	$	7,225,339	$	36,112	$	7,261,451	$	8,446,734	$	18,954	$	8,465,688

Loans by past due status as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows:

September 30, 2020	Past Due Status (Accruing Loans)
							Total Past
March 31, 2021															Past Due Status (Accruing Loans)
	30-59 Days		60-89 Days		90+ Days		Due		Non-Accrual		Current		Total Loans								Total Past		Total						Nonaccrual
															30-59 Days		60-89 Days		90+ Days		Due		Nonaccrual		Current		Total Loans		With No ACL
	(In Thousands)														(In Thousands)
Commercial, financial and agricultural	$	721	$	3,102	$	63	$	3,886	$	18,636	$	3,443,667	$	3,466,189	$	119	$	0	$	4	$	123	$	9,922	$	3,313,048	$	3,323,093	$	6,946
Real estate - construction		0		0		0		0		587		530,332		530,919		0		0		0		0		234		666,358		666,592		0
Real estate - mortgage:
Owner-occupied commercial		0		0		0		0		1,838		1,723,384		1,725,222		0		0		0		0		2,009		1,696,686		1,698,695		1,229
1-4 family mortgage		211		320		0		531		614		670,696		671,841		782		178		0		960		923		683,957		685,840		327
Other mortgage		0		0		4,827		4,827		0		2,051,722		2,056,549		15		0		4,761		4,776		0		2,063,784		2,068,560		0
Total real estate - mortgage		211		320		4,827		5,358		2,452		4,445,802		4,453,612		797		178		4,761		5,736		2,932		4,444,427		4,453,095		1,556
Consumer		36		6		8		50		0		57,784		57,834		89		10		39		138		0		62,062		62,200		0
Total	$	968	$	3,428	$	4,898	$	9,294	$	21,675	$	8,477,585	$	8,508,554	$	1,005	$	188	$	4,804	$	5,997	$	13,088	$	8,485,895	$	8,504,980	$	8,502

December 31, 2019	Past Due Status (Accruing Loans)
							Total Past
December 31, 2020															Past Due Status (Accruing Loans)
	30-59 Days		60-89 Days		90+ Days		Due		Non-Accrual		Current		Total Loans								Total Past		Total						Nonaccrual
															30-59 Days		60-89 Days		90+ Days		Due		Nonaccrual		Current		Total Loans		With No ACL
	(In Thousands)														(In Thousands)
Commercial, financial and agricultural	$	3,135	$	344	$	201	$	3,680	$	14,729	$	2,677,801	$	2,696,210	$	92	$	1,738	$	11	$	1,841	$	11,709	$	3,282,350	$	3,295,900	$	5,101
Real estate - construction		830		0		0		830		1,589		518,973		521,392		0		0		0		0		234		593,380		593,614		0
Real estate - mortgage:
Owner-occupied commercial		917		7,242		0		8,159		10,826		1,568,493		1,587,478		0		995		0		995		1,259		1,691,174		1,693,428		467
1-4 family mortgage		1,638		567		873		3,078		1,440		639,670		644,188		61		1,073		104		1,238		771		709,683		711,692		512
Other mortgage		0		0		4,924		4,924		1,507		1,740,963		1,747,394		18		0		4,805		4,823		0		2,101,361		2,106,184		0
Total real estate - mortgage		2,555		7,809		5,797		16,161		13,773		3,949,126		3,979,060		79		2,068		4,909		7,056		2,030		4,502,218		4,511,304		979
Consumer		35		25		23		83		0		64,706		64,789		64		13		61		138		0		64,732		64,870		0
Total	$	6,555	$	8,178	$	6,021	$	20,754	$	30,091	$	7,210,606	$	7,261,451	$	235	$	3,819	$	4,981	$	9,035	$	13,973	$	8,442,680	$	8,465,688	$	6,080

~~The allowance~~As described in Note 9 - Recently Adopted Accounting Pronouncements, the Company adopted ASU 2016-13 on January 1, 2020, which introduced the CECL methodology for ~~loan~~estimating all expected losses ~~(“ALLL”) is maintained at~~over the life of a ~~level which, in management’s judgment, is adequate to absorb credit losses inherent in~~financial asset. Under the loan portfolio. The amount of the allowance is based on management’s evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, economic conditions and other risks inherent in the portfolio. Allowances for impaired loans are generally determined based on collateral values or the present value of the estimated cash flows. The allowance is increased by a provision for loan losses, which is charged to expense, and reduced by charge-offs, net of recoveries. In addition, various regulatory agencies, as an integral part of their examination process, periodically reviewCECL methodology, the allowance for ~~losses on loans. Such agencies~~ ~~may~~ ~~require the Company to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination.~~

~~The methodology utilized for the calculation of the allowance for loan~~credit losses is ~~divided into~~measured on a collective basis for pools of loans with similar risk characteristics. For loans that do ~~four~~not ~~distinct categories. Those categories include allowances for non-impaired loans (ASC~~ ~~450~~~~), impaired loans (ASC~~ ~~310~~~~), external qualitative factors, and internal qualitative factors. A description of each category of~~share similar risk characteristics with the ~~allowance for loan loss methodology is listed below.~~

~~Non-Impaired Loans.~~ ~~Non-impaired loans~~collectively evaluated pools, evaluations are ~~grouped into homogeneous loan pools by loan type: commercial and industrial, construction and development, commercial real estate,~~ ~~second~~ lien home equity lines of credit, and all other loans. Each loan pool is stratified by internal risk rating and multiplied by a loss allocation percentage derived from the loan pool historical loss rate. The historical loss rate is basedperformed on an ~~age weighted~~ 5 ~~year history~~individual basis. For all loan segments collectively evaluated, losses are predicted over a period of net charge-offs experienced by pool, with the most recent net charge-off experience given a greater weighting. This results in the expected loss rate per year, adjusted by a qualitative adjustment factortime determined to be reasonable and ~~a years-to-impairment factor, for each pool of loans to derive the total amount of allowance for non-impaired loans.~~

~~Impaired Loans.~~ ~~Loans are considered impaired, when based on current information~~supportable, and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. The collection of all amounts due according to contractual terms means that both the contractual interest and principal payments of a loan will be collected as scheduled in the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the rate implicit in the original loan agreement, at the loan’s observable market price or the fair value of the underlying collateral. The fair value of collateral, reduced by costs to sell on a discounted basis, is used if a loan is collateral-dependent. Fair value estimates for specifically impaired collateral-dependent loans are derived from appraised values based on the current market value or “as is” value of the property, normally from recently received and reviewed appraisals. Appraisals are obtained from certified and licensed appraisers and are based on certain assumptions, which ~~may~~ ~~include construction or development status and the highest and best use of the property.~~These appraisals are reviewed by our credit administration department, and values are adjusted downward to reflect anticipated disposition costs. Once this estimated net realizable value has been determined, the value used in the impairment assessment is updated for each impaired loan. As subsequent events dictate and estimated net realizable values decline, required reserves ~~may~~ ~~be established or further adjustments recorded.~~

~~External Qualitative Factors~~. The determination of the portion of the allowance for loan losses relating to external qualitative factors is based on consideration of the following factors: gross domestic product growth rate, changes in prime rate, delinquency trends, peer delinquency trends, year over year loan growth and state unemployment rate trends. Data for the ~~three~~ most recent periods is utilized in the calculation for each external qualitative component. The factors have a consistent weighted methodology to calculate the amount of allowance due to external qualitative factors. An additional qualitative factor was incorporated beginning in the ~~second~~ ~~quarter of~~ ~~2020~~ ~~due to COVID-~~19 ~~and its effect on overall macroeconomic conditions. This specific qualitative factor totaled $14.9 million at~~ ~~June 30, 2020.~~ ~~This COVID-~~19 ~~qualitative factor totaled~~ ~~$11.3~~ ~~million at~~ ~~September 30, 2020,~~ ~~a decrease of~~ ~~$3.6~~ ~~million from~~ ~~June 30, 2020,~~ ~~primarily due to improvement in the national unemployment rate~~ 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 ~~third~~not ~~quarter of~~ ~~2020.~~inherently considered in the quantitative analyses.

~~Internal Qualitative Factors~~. The ~~determination~~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 ~~portion~~loss drivers are used across the loan segments. At March 31, 2021 and December 31, 2020, 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 remain above pre-pandemic levels over the ~~allowance~~forecast period with an improved national GDP growth rate as the economy comes back on-line over the next year.

The Company uses a loss-rate method to estimate expected credit losses for ~~loan losses relating to internal qualitative factors is based on~~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 ~~consideration~~pool average life and then using historical correlations of ~~criteria which includes the following: number of extensions~~default and deferrals, single pay and interest only loans, current financial information, credit concentrations and risk grade accuracy. A self-assessment for each of the criteria is made with a consistent weighted methodology usedloss experience over time to calculate the ~~amount~~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 ~~allowance required~~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 applied the loss-rate method to 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 ~~qualitative factors.~~and peer historical losses.

~~During~~Each loan pool is adjusted for qualitative factors not inherently considered in the ~~third~~ ~~quarter of~~ ~~2019,~~quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. The Company ~~recorded a $7.4 million payment resulting from~~considers factors that are relevant within the ~~termination of a Loan Guarantee Program (“LGP”) operated by~~qualitative framework which include the State of Alabama. The payment was recorded as an increase to the allowance for loan losses specifically related to loans formerly enrolled in this program, in accordance with the Company’s established ALLL review and evaluation criteria.

~~The following table presents an analysis of the allowance for loan losses by portfolio segment and~~following: lending policy, changes in ~~the allowance for~~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 ~~losses for the~~ ~~three~~review system and ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~and~~ ~~September 30, 2019.~~ ~~The total allowance for loan losses is disaggregated into those amounts associated with loans individually evaluated and those associated with loans collectively evaluated.~~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 industrialloans 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 constructionloans 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 mortgageloans 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 downturn 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 allowance for credit losses, and allowance for loan losses, segregated by loan type, for the three months ended March 31, 2021 and March 31, 2020.

The following table details of the ~~Company’s impaired~~allowance for loan losses and recorded investment in loans by impairment evaluation method as of ~~September 30,~~March 31, 2020, ~~and~~as determined in accordance with ASC ~~December 31, 2019,~~ ~~respectively. Loans which have been fully charged off do~~ ~~not~~310 ~~appear in~~prior to the ~~tables.~~adoption of ASU 2016-13:

We maintain an allowance for credit losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within other liabilities, while the corresponding provision for these credit losses is recorded as a component of other expense. The allowance for credit losses on unfunded commitments was $2.8 million at March 31, 2021 and $2.2 million at December 31, 2020. The provision expense for unfunded commitments for the three months ended March 31, 2021 and March 31, 2020 was $600,000 and $0, respectively. Prior to January 1, 2020, except quarterly periods in 2020 which were not restated, the allowance for losses on unfunded loan commitments was calculated using an incurred losses methodology.

On March 22, 2020, the Interagency Statement was issued by banking regulators that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a TDR as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak declared by the President of the United States under the National Emergencies Act terminates. The Interagency Statement was subsequently revised in April 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act 2021, which extended the period established by Section 4013 of the CARES Act to the earlier of January 1, 2022 or the date that is 60 days after the date on which the national COVID-19 emergency terminates. In accordance with such guidance, the Bank is offering short-term modifications made in response to COVID-19 to borrowers who are current and otherwise not past due. These include short-term (180 days or less) modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. As of ~~September 30, 2020,~~March 31, 2021, there ~~are 42~~were 29 loans outstanding totaling ~~$28.2~~$6.2 million that have payment deferrals in connection with the COVID-19 relief provided by the CARES Act. OfAll of these ~~42 payment~~remaining deferrals ~~9 were principal only deferrals totaling $5.1 million, 4 were interest only deferrals totaling $3.2 million and 29~~ were principal and interest ~~deferrals totaling $19.9 million.~~deferrals. The CARES Act precluded all of the ServisFirst COVID-19 loan modifications from being classified as a TDR as of ~~September 30, 2020.~~March 31, 2021.

Troubled Debt Restructurings (“TDR”) at ~~September 30, 2020,~~March 31, 2021, December 31, ~~2019~~2020 and ~~September 30, 2019~~March 31, 2020 totaled ~~$2.7~~$3.5 million, ~~$3.3~~$1.5 million and ~~$11.2~~$2.4 million, respectively. The portion of those TDRs accruing interest at ~~September 30, 2020,~~March 31, 2021, December 31, ~~2019~~2020 and ~~September 30, 2019~~March 31, 2020 totaled ~~$1.8 million, $625,000~~$794,000, $818,000 and ~~$3.5 million,~~$975,000, respectively. AtThe following tables present loans modified in a TDR during the periods ended ~~September 30,~~March 31, 2021 and March 31, 2020 ~~the Company had a related allowance for loan losses of $534,000 allocated to these TDRs, compared to $929,000 at~~ ~~December 31, 2019~~ ~~and $1.8 million at~~ ~~September 30, 2019.~~ ~~TDR activity~~ by portfolio segment ~~for~~and the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~and~~ ~~September 30, 2019~~ ~~is presented in the table below.~~financial impact of those modifications. The tables include modifications made to new TDRs, as well as renewals of existing TDRs.

	Three Months Ended September 30, 2020					Nine Months Ended September 30, 2020					Three Months Ended March 31, 2021
		Pre-		Post-			Pre-		Post-				Pre-		Post-
		Modification		Modification			Modification		Modification				Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding				Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded		Number of		Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment		Contracts		Investment		Investment
	(In Thousands)										(In Thousands)
Troubled Debt Restructurings
Commercial, financial and agricultural	1	$	214	$	214	2	$	564	$	564		2	$	1,155	$	1,155
Real estate - construction	1		357		357	1		357		357		0		0		0
Real estate - mortgage:
Owner-occupied commercial	1		611		611	1		611		611		1		991		991
1-4 family mortgage	-		-		-	-		-		-		0		0		0
Other mortgage	-		-		-	-		-		-		0		0		0
Total real estate mortgage	1		611		611	1		611		611		1		991		991
Consumer	-		-		-	-		-		-		0		0		0
	3	$	1,182	$	1,182	4	$	1,532	$	1,532		3	$	2,146	$	2,146

	Three Months Ended September 30, 2019					Nine Months Ended September 30, 2019					Three Months Ended March 31, 2020
		Pre-		Post-			Pre-		Post-				Pre-		Post-
		Modification		Modification			Modification		Modification				Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding				Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded		Number of		Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment		Contracts		Investment		Investment
	(In Thousands)										(In Thousands)
Troubled Debt Restructurings
Commercial, financial and agricultural	-	$	-	$	-	1	$	2,742	$	2,742		1	$	350	$	350
Real estate - construction	-		-		-	-		-		-		0		0		0
Real estate - mortgage:
Owner-occupied commercial	-		-		-	-		-		-		0		0		0
1-4 family mortgage	-		-		-	-		-		-		0		0		0
Other mortgage	-		-		-	-		-		-		0		0		0
Total real estate mortgage	-		-		-	-		-		-		0		0		0
Consumer	-		-		-	-		-		-		0		0		0
	-	$	-	$	-	1	$	2,742	$	2,742		1	$	350	$	350

There were 0 loans which were modified in the previous twelve months (i.e., the twelve months prior to default) that defaulted during the three ~~and~~ ~~nine~~months ended ~~September 30,~~March 31, 2021 and March 31, 2020.~~There were 0 loans which were modified in the previous~~ ~~twelve~~ ~~months that defaulted during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2019.~~ ~~There were~~ ~~two~~ ~~commercial loans totaling $325,000 which were modified in the previous~~ ~~twelve~~ ~~months which defaulted during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019.~~ For purposes of this disclosure, default is defined as 90 days past due and still accruing or placement on nonaccrual status.

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 ~~8.4~~10 years. At ~~September 30, 2020,~~March 31, 2021, the Company had lease right-of-use assets and lease liabilities totaling ~~$10.3~~$18.5 million and ~~$11.1~~$18.8 million, respectively, compared to ~~$12.3~~$10.5 million and ~~$12.4~~$10.6 million, respectively at December 31, ~~2019~~2020 which are reflected in other assets and other liabilities, respectively, in the Company’s Consolidated Balance Sheet.

Maturities of operating lease liabilities as of ~~September 30, 2020~~March 31, 2021 are as follows:

	September 30, 2020			March 31, 2021
	(In Thousands)			(In Thousands)
2020 (remaining)	$	839
2021		2,744
2021 (remaining)				$	3,055
2022		2,679			3,423
2023		2,205			3,061
2024		1,232			2,189
2025					2,157
thereafter		2,624			6,974
Total lease payments		12,323			20,859
Less: imputed interest		(1,219	)		(2,078	)
Present value of operating lease liabilities	$	11,104		$	18,782

As of ~~September 30, 2020,~~March 31, 2021, the weighted average remaining term of operating leases ~~is 5.0~~was 7.06 years and the weighted average discount rate used in the measurement of operating lease liabilities was ~~3.20%~~3.21%.

Operating cash flows related to leases were ~~$855,000~~$747,000 and ~~$2.6 million,~~$852,000 for the three ~~and~~ ~~nine~~months ended ~~September 30, 2020,~~March 31, 2021 ~~respectively, compared to $888,000 and $2.5 million for the~~ ~~three~~and ~~nine~~2020, ~~months ended~~ ~~September 30, 2019,~~ respectively.

Lease costs during the three ~~and~~ ~~nine~~months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019~~ 2020were as follows (in thousands):

	Three Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2021			2020
Operating lease cost	$	876		$	809		$	899		$	873
Short-term lease cost		13			8			0			16
Variable lease cost		77			49			81			44
Sublease income		(25	)		(23	)		(19	)		(16	)
Net lease cost	$	941		$	843		$	961		$	917

~~The~~At March 31, 2021, the Company ~~has a stock-based compensation plan~~had stock incentive plans as described below. The compensation cost that has been charged to earnings for the ~~plan~~plans was ~~$340,000~~approximately $291,000 and ~~$969,000~~$276,000 for the three ~~and~~ ~~nine~~months ended ~~September 30, 2020~~March 31, 2021 and ~~$294,000 and $781,000 for the~~ ~~three~~2020, ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019.~~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~~Both plans allow 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~~plans is ten years.

The Company estimates the fair value of each stock option award using a Black-Scholes-Merton valuation model ~~that uses~~which incorporates the assumptions noted in the following table. Expected ~~volatility is~~volatilities are based on ~~historical volatilities~~an index of ~~the Company’s common stock.~~southeastern United States publicly traded banks. 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.~~U. S. Treasury yield curve in effect at the time of grant.

~~There were 0 grants of stock options during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020.~~ The weighted average grant-date fair value of options granted during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2021 was ~~$12.60.~~$12.73. There were 0 grants of stock options during the three months ended March 31, 2020.

The following table summarizes stock option activity during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019:~~2020:

As of ~~September 30, 2020,~~March 31, 2021, there was ~~$815,000~~$604,000 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 ~~0.9~~2.0 years.

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 ~~September 30, 2020,~~March 31, 2021, there was ~~$1.8~~$3.2 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 ~~2.9~~2.7 years of the restricted stock’s vesting period.

The ~~following table summarizes restricted stock activity~~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 ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~and~~ ~~2019,~~ ~~respectively:~~performance period. The performance period is generally three years starting on the grant date. The fair value of the performance shares is determined using a Monte Carlo simulation model on the grant date.

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 is not designated as a hedging instrument but rather as a stand-alone derivative. The interest rate cap has an original term of 3 years, a notional amount of $300 million and is tied to the one-month LIBOR rate with a strike rate of 0.50%. The fair value of the interest rate cap is carried on the balance sheet in other assets and the change in fair value is recognized in noninterest income each quarter. At ~~September 30, 2020~~March 31, 2021 the interest rate cap had a fair value of ~~$200,000~~$414,000 and remaining term of ~~2.6~~2.1 years. If LIBOR is deemed unrepresentative at any time, the reference rate for the cap would be governed by the fallback protocol where LIBOR will be adjusted to the Secured Overnight Financing Rate (“SOFR”) plus the five-year median spread.

The Company has entered into agreements with secondary market investors to deliver loans on a “best efforts delivery” basis. 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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were not material.

In ~~July 2018,~~ ~~the Financial Accounting Standards Board (“FASB”) issued ASU~~ ~~2018~~-~~13,~~~~Fair Value Measurement (Topic~~ ~~820~~~~): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.~~ ~~This ASU eliminated, added and modified certain disclosure requirements for fair value measurements. Among the changes, entities are~~ no ~~longer required to disclose the amount of and reasons for transfers between Level~~ 1 ~~and Level~~ 2 ~~of the fair value hierarchy however, entities are required to disclose the range and weighted average used to develop significant unobservable inputs for Level~~ 3 ~~fair value measurements. ASU~~ ~~No.~~~~2018~~-13 ~~was effective for the Company beginning~~ ~~January 1, 2020.~~ ~~As ASU~~ ~~2018~~-13 ~~only revised disclosure requirements, it had~~ no ~~material impact on the Company’s Consolidated Financial Statements.~~

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is essentially the final rule on use of the so-called CECL model, or current expected credit losses. Among other things, ~~the amendments in this ASU require~~ASC 326 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable ~~forecasts.~~forecasts that affect the collectability of the reported amount. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

The ~~CARES~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020, gave financial institutions the option to delay adoption of ~~ASU~~ ~~2016~~-~~13.~~CECL. The Company ~~decided~~elected to delay its adoption of the update until the earlier of the date the national emergency concerning COVID-19 terminates or December 31, 2020, with an effective retrospective adoption date of January 1, 2020.

~~The Company’s CECL implementation team includes leadership from Accounting, Credit Administration and Risk Management. This group works closely with a~~Amounts reported for periods beginning on or after ~~third~~January 1, 2020 -~~party software solution vendor providing expertise~~are presented under ASC 326, except quarterly periods in CECL modeling techniques to develop expected credit loss estimation models. Loans with similar risk characteristics have been evaluated in pools and, depending on the nature of each identified pool, the Company utilized 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.

~~CECL parallel comparisons~~2020, which were ~~performed at~~ ~~September 30, 2020~~ not~~and the Company estimates the allowance for loan losses~~ restated under CECL will be within 5 percent of the allowance for loan losses under the incurred loss methodology. The Company forecasted an immediate reversion to longer term average historical loss experience for the reasonable and ~~supportable forecast due to the current level of uncertainty and unprecedented effect of COVID-~~19 ~~as well as the corresponding response from the federal government through the CARES Act. Qualitative factors were adjusted for a higher level of risk associated~~all prior period information is presented in accordance with previously applicable GAAP. Based on prevailing economic conditions ~~with a mitigating adjustment for the regulatory environment.~~

~~Credit losses for loans that~~and forecasts as of nolonger share similar risk characteristics were estimated on an individual basis. Individual evaluations were performed for nonaccrual loans, loans rated substandard, and modified loans classified as troubled debt restructurings. Specific allowances were estimated based 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.~~

The estimation methodology for credit losses on lending-related commitments were similar to the process for estimating credit losses for loans, with the addition of a probability of draw estimate that will be applied to each commitment amount.

~~Based upon the nature and characteristics of our securities portfolios at~~ ~~September 30,~~January 1, 2020, the ~~macroeconomic conditions and forecasts at that date, and other management judgments,~~Company recognized a cumulative net increase to retained earnings of $1.1 million, net of tax, attributable to a decrease in the ~~Company does~~ ~~not~~ ~~currently expect to record any~~ allowance for credit losses ~~on available~~of $2.0 million, an increase in the allowance for ~~sale securities.~~off balance sheet credit exposures of $0.5 million, and a decrease in deferred tax assets of $0.4 million. This was the result of implementing a more quantitative methodology. The commercial, financial, and agricultural loan category decreased $8.2 million due to the portfolio primarily consisting of loans with generally short contractual maturities. This was partially offset by an increase of $6.2 million in the real estate – construction loan category due to the application of peer loss rates within the discounted cash flow pool reserve methodology. Peer historical loss rates were utilized to better align with loss expectations given the Company’s low historical loss experience in this category.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The update provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The guidance is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be effective for a limited time, starting March 12, 2020 through December 31, 2022. The Company has identified a replacement reference rate established by the American Financial Exchange. This rate is based on an active market of daily fund trading among participant banks. The Company will apply the guidance provided by this ASU in transitioning to the new reference rate.

In August 2020,FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Topic470) and Derivatives and Hedging – Contracts in ~~Entity’s~~Entity’s Own Equity (Topic815): Accounting for Convertible Instruments and Contracts in an ~~Entity’s~~Entity’s Own Equity. The update is intended to simplify accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The update removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The update also simplifies the diluted earnings per share calculation in certain areas. The update is effective for the Company for its fiscal year beginning after December 15, 2021,including interim periods within those years. Early adoption will be permitted. The Company does not currently have any convertible debt instruments outstanding so does not believe that the update will have an impact on its financial statements.

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:

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.~~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 source 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. The Company ~~bought~~ ~~two~~periodically buys corporate debt securities in a private placement ~~transaction, for which~~transactions. Level 2 inputs are not ~~available.~~available for these securities. The Company uses average observable prices of similar corporate securities owned by the Company to value ~~the~~ ~~two~~such securities and are classified in Level 3 of the hierarchy. The ~~range of values and~~ weighted average value as of ~~September 30, 2020~~March 31, 2021 was ~~87.6222 to 116.1915 and 104.0924, respectively, observed for the Company’s other similar corporate securities. The range of values and weighted average value as of~~ ~~December 31, 2019~~ 3%~~was 98.7836 to 112.2305 and 102.2648, respectively,~~ observed for the Company’s other similar corporate securities.

Derivative ~~instruments~~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.

~~Impaired~~ Loans Individually Evaluated. ~~. Impaired loans~~Loans individually evaluated are measured and reported at fair value when full payment under the loan terms is not probable. ~~Impaired loans~~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, ~~which typically ranges between 8%-10%,~~ 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. ~~Impaired loans~~Loans individually evaluated are subject to nonrecurring fair value adjustment upon initial recognition or subsequent ~~impairment.~~individually evaluation. A portion of the allowance for ~~loan~~credit losses is allocated to ~~impaired~~ 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 ~~adjustments~~adjustment as of ~~September 30, 2020~~March 31, 2021 was 0% to ~~50%~~64% and ~~17.1%~~25.6%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, ~~2019~~2020 was 0% to ~~30%~~56% and ~~5.6%,~~22.3% respectively. ~~Impaired loans~~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 ~~as an impairment charge related~~ to ~~impaired~~write-down individually evaluated loans that are measured at fair value on a nonrecurring basis was ~~$11.2 million and $20.0~~$2.0 million during the three ~~and~~ ~~nine~~months ended ~~September 30, 2020,~~March 31, 2021, ~~respectively,~~ and ~~$7.7 million and $16.1~~$5.0 million during the three ~~and~~ ~~nine~~months ended ~~September 30, 2019,~~ March 31, 2020.~~respectively.~~

Other Real Estate Owned ~~and repossessed assets~~. Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure ~~and repossessed assets~~ 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 ~~or repossession~~ are charged to the allowance for ~~loan~~credit losses subsequent to ~~foreclosure or repossession.~~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 ~~September 30, 2020~~March 31, 2021 was 5% to ~~46%~~25% and ~~10.7%~~15.9%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, ~~2019~~2020 was 5% to ~~10%~~27% and ~~8.0%~~12.5%, respectively. These measurements are classified as Level 3 within the valuation hierarchy. A loss on the sale and write-downs of OREO of $432,000 and ~~repossessed assets of $86,000 and $2.5 million~~$563,000 was recognized ~~for~~during the three ~~and~~ ~~nine~~months ended ~~September 30, 2020,~~March 31, 2021 ~~respectively, and $58,000 and $282,000 for the~~ ~~three~~and ~~nine~~2020, ~~months ended~~ ~~September 30, 2019,~~ respectively. These charges were for write-downs in the value of OREO subsequent to foreclosure and losses on the disposal of OREO. OREO ~~and repossessed assets are~~is classified within Level 3 of the hierarchy.

There ~~were~~ nowas one residential real estate ~~loans~~loan with a balance of $150,000 foreclosed and classified as OREO as of ~~September 30, 2020,~~March 31, 2021, compared to one residential real estate loan foreclosure for ~~$103,000~~$209,000 as of December 31, ~~2019.~~2020.

One residential real estate loan for $928,000 was in the process of being foreclosed as of March 31, 2021. There were 0 residential real estate loans in process of foreclosure as of December 31, 2020.

The following table presents the Company’s financial assets ~~and financial liabilities~~ carried at fair value on a recurring basis as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020. There were 0 liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020.

	Fair Value Measurements at September 30, 2020 Using								Fair Value Measurements at March 31, 2021 Using
	Quoted Prices in								Quoted Prices in
	Active Markets		Significant Other		Significant				Active Markets		Significant Other		Significant
	for Identical		Observable Inputs		Unobservable				for Identical		Observable Inputs		Unobservable
	Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total		Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total
Assets Measured on a Recurring Basis:	(In Thousands)								(In Thousands)
Available-for-sale debt securities:
Available for sale debt securities:
U.S. Treasury securities	$	0	$	19,426	$	0	$	19,426	$	0	$	14,296	$	0	$	14,296
Government agency securities		0		15,521		0		15,521		0		12,190		0		12,190
Mortgage-backed securities		0		518,062		0		518,062		0		569,542		0		569,542
State and municipal securities		0		37,408		0		37,408		0		33,522		0		33,522
Corporate debt		0		316,051		6,581		322,632		0		322,028		10,301		332,329
Total available-for-sale debt securities		0		906,468		6,581		913,049		0		951,578		10,301		961,879
Interest rate cap derivative		0		200		0		200		0		414		0		414
Total assets at fair value	$	0	$	906,668	$	6,581	$	913,249	$	0	$	951,992	$	10,301	$	962,293

	Fair Value Measurements at December 31, 2019 Using								Fair Value Measurements at December 31, 2020 Using
	Quoted Prices in								Quoted Prices in
	Active Markets		Significant Other		Significant				Active Markets		Significant Other		Significant
	for Identical		Observable Inputs		Unobservable				for Identical		Observable Inputs		Unobservable
	Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total		Assets (Level 1)		(Level 2)		Inputs (Level 3)		Total
Assets Measured on a Recurring Basis:	(In Thousands)								(In Thousands)
Available-for-sale debt securities:
Available for sale debt securities:
U.S. Treasury securities	$	0	$	49,210	$	0	$	49,210	$	0	$	14,357	$	0	$	14,357
Government agency securities		0		18,386		0		18,386		0		15,458		0		15,458
Mortgage-backed securities		0		474,054		0		474,054		0		495,109		0		495,109
State and municipal securities		0		57,272		0		57,272		0		38,115		0		38,115
Corporate debt		0		153,881		6,596		160,477		0		323,649		0		323,649
Total available-for-sale debt securities										0		886,688		0		886,688
Interest rate cap derivative										0		139		0		139
Total assets at fair value	$	0	$	752,803	$	6,596	$	759,399	$	0	$	886,827	$	0	$	886,827

During the three months ended March 31, 2021, two securities with a fair value of $6.2 million were transferred to level 3 in the hierarchy and one security with a fair value of $4.1 million was purchased.

The following table presents the Company’s financial assets ~~and financial liabilities~~ carried at fair value on a nonrecurring basis as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020. There were no liabilities measured at fair value on a non-recurring basis as of March 31, 2021 and December 31, 2020.

									Fair Value Measurements at March 31, 2021 Using
									Quoted Prices in
									Active Markets		Significant Other		Significant
	Fair Value Measurements at September 30, 2020								for Identical		Observable		Unobservable
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total
Assets Measured on a Nonrecurring Basis:	(In Thousands)								(In Thousands)
Impaired loans	$	0	$	0	$	84,163	$	84,163
Loans individually evaluated									$	0	$	0	$	70,929	$	70,929
Other real estate owned and repossessed assets		0		0		6,976		6,976		0		0		2,067		2,067
Total assets at fair value	$	0	$	0	$	91,139	$	91,139	$	0	$	0	$	72,996	$	72,996

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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows:

ITEM 2. ~~MANAGEMENT’S~~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~~wholly owned subsidiary, ServisFirst ~~Bank.~~Bank (the “Bank”). This discussion is intended to supplement and highlight information contained in the accompanying unaudited consolidated ~~financial statements~~balance sheets as of March 31, 2021 and December 31, 2020 and consolidated statements of income for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~September 30, 2019.~~March 31, 2020.

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: the global health and economic crisis precipitated by the COVID-19 outbreak; 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 in our loan portfolio and deposit base; economic crisis and associated credit issues in industries most impacted by the COVID-19 outbreak, including but not limited to, the restaurant, hospitality and retail sectors;possible changes in laws and regulations and governmental monetary and fiscal policies; 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 non-banks. 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 ~~our Quarterly Reports on Form 10-Q for fiscal year 2020~~ 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 contained herein.~~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.

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 2123 full-service banking offices located in Alabama, Tampa Bay, Florida, the panhandle of Florida, the greater Atlanta, Georgia metropolitan area, Charleston, South Carolina, and Nashville, Tennessee. We also operate a loan production office in Columbus, Georgia. Through the ~~Bank,~~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.

As of ~~September 30, 2020,~~March 31, 2021, we had consolidated total assets of ~~$11.39~~$12.65 billion, up ~~$2.45 billion,~~$714.7 million, or ~~27%~~6.0%, ~~when compared to consolidated~~from total assets of ~~$8.95~~$11.93 billion at December 31, ~~2019.~~2020. Total loans were ~~$8.51~~$8.50 billion at ~~September 30, 2020,~~March 31, 2021, up ~~$1.25 billion,~~$39.3 million, or ~~17%~~0.5%, from ~~$7.26~~$8.47 billion at December 31, ~~2019.~~2020. Total deposits were ~~$9.67~~$10.58 billion at ~~September 30, 2020,~~March 31, 2021, up ~~$2.14 billion,~~$601.9 million, or ~~29%~~6.0%, from ~~$7.53~~$9.98 billion at December 31, ~~2019.~~2020.

Net income available to common stockholders for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$43.4~~$51.5 million, ~~an increase of $5.8~~up $16.7 million, or ~~15.4%~~48.0%, from ~~$37.6~~$34.8 million for the ~~corresponding period in 2019.~~three months ended March 31, 2020. Basic and diluted earnings per common share were ~~$0.80~~$0.95 for the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~basic~~$0.65 and ~~diluted earnings per common share of $0.70 and $0.69,~~$0.64, respectively, for the corresponding period in ~~2019.~~

~~Net~~2020. An increase in net interest income ~~available to common stockholders for the nine months ended September 30, 2020 was $118.6 million, an increase~~ of ~~$10.4 million, or 9.6%, from $108.2~~$14.7 million for the ~~corresponding period~~comparative periods contributed to the increase in ~~2019. Basic~~net income. Partially offsetting the increase in net interest income were increases in salary expenses, other operating expenses, and ~~diluted earnings per common share were $2.20~~provision for income taxes. Changes in income and ~~$2.19, respectively, for the nine months ended September 30, 2020, compared to $2.02 and $2.00, respectively, for the corresponding period~~expenses are more fully explained in ~~2019.~~“Results of Operations” below.

The accounting and financial policies of the Company conform to U.S. ~~generally accepted accounting principles~~GAAP and to general practices within the banking industry. To prepare consolidated financial statements in conformity with U.S. ~~GAAP,~~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 allowance for ~~loan~~credit losses, valuation of 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, ~~2019.~~2020.

At ~~September 30, 2020,~~March 31, 2021, we had ~~$1.3~~$1.6 million in federal funds sold, compared to ~~$100.5~~$1.8 million at December 31, ~~2019.~~2020. We also maintain balances at the Federal Reserve Bank of Atlanta, which earn interest. At ~~September 30, 2020,~~March 31, 2021, we had ~~$1.40 billion~~$67.4 million in balances at the Federal Reserve, compared to $61.9 million at December 31, ~~2019. The~~2020. Our increase in ~~balances kept at~~federal funds sold were the ~~Federal Reserve~~result of an increase in ~~2020 result from federal stimulus~~ funds sold on ~~deposit with us by our customers stemming from~~ the ~~COVID-19 pandemic.~~American Financial Exchange during the first quarter of 2021.

Debt securities available for sale totaled ~~$913.0~~$961.9 million at ~~September 30, 2020~~March 31, 2021 and ~~$759.4~~$886.7 million at December 31, ~~2019.~~2020. Investment securities held to maturity totaled $250,000 at ~~September 30, 2020~~March 31, 2021 and at December 31, ~~2019.~~2020, respectively. We had ~~paydowns~~pay downs of ~~$87.2~~$53.7 million on mortgage-backed securities and ~~government agencies,~~calls and maturities of ~~$48.1~~$1.8 million and $2.5 million on municipal ~~bonds, corporate~~ securities and ~~treasury securities, and calls~~certificates of ~~$8.1 million on U.S. government agencies and municipal securities~~deposit, respectively during the ~~nine~~first three months ~~ended September 30, 2020.~~of 2021. We ~~purchased $120.0~~had two bonds with an aggregate book balance of $7.5 million into be called during the first three months of 2021. We bought $136.7 million of mortgage-backed securities and ~~$168.5~~$13.0 million inof corporate ~~securities~~bonds during the first ~~nine~~three months of 2020. For a tabular presentation of debt securities available for sale and held to maturity at September 30, 2020 and December 31, 2019, see “Note 4 – Securities” in our Notes to Consolidated Financial Statements.2021.

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~~longer-term securities purchased to generate level income for us over periods of interest rate fluctuations.

Each quarter, management assesses whether there have been events or economic circumstances indicating that a security on which there is an unrealized loss is other-than-temporarily impaired. Management considers several factors, including the amount and duration of the impairment; the intent and ability of the Company to hold the security for a period sufficient for a recovery in value; and known recent events specific to the issuer or its industry. In analyzing an issuer’s financial condition, management considers whether the securities are issued by agencies of the federal government, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports, among other things. As we currently do not have the intent to sell these securities and it is not more likely than not that we will be required to sell these securities before recovery of their amortized cost basis, which may be at maturity, and impairment positions at September 30, 2020 are interest-rate driven, no declines are deemed to be other than temporary. We will continue to evaluate our investment securities for possible other-than-temporary impairment, which could result in non-cash charges to earnings in one or more future periods. All securities held are traded in liquid markets.

The Company does not invest in collateralized debt obligations (“CDOs”). ~~At September 30, 2020, we had $316.1~~We have $320.9 million of bank holding company subordinated notes. If rated, all ~~of these notes~~such bonds were rated BBB or better by Kroll Bond Rating Agency at the time of our investment in them. 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 ~~at September 30, 2020~~as of March 31, 2021 has a combined average credit rating of AA.

The carrying value of investment securities pledged to secure public funds on deposit and for other purposes as required by law was ~~$432.7~~$468.7 million and ~~$389.9~~$477.6 million as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

AsSection 1102 of ~~September 30,~~the CARES Act created the Paycheck Protection Program (“PPP”), a program administered by the SBA to provide loans to small businesses for payroll and other basic expenses during the COVID-19 pandemic. The Company has participated in the PPP as a lender. These loans are eligible to be forgiven if certain conditions are satisfied and are fully guaranteed by the SBA. Additionally, loan payments will also be deferred for the first six months of the loan term. The PPP commenced on April 3, 2020 ~~there~~and was available to qualified borrowers through August 8, 2020. No collateral or personal guarantees are 42required. Neither the government nor lenders are permitted to charge the recipients any fees.

On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act (“CAA”). The CAA, among other things, extends the life of the PPP, effectively creating a second round of PPP loans ~~outstanding totaling $28.2 million that have payment deferrals~~for eligible businesses. The Company is participating in ~~connection with~~ the ~~COVID-19~~CAA’s second round of PPP lending. Additionally, section 541 of the CAA extends the relief provided by the CARES Act. Of these 42 payment deferrals, 9 were principal only deferrals totaling $5.1 million, 4 were interest only deferrals totaling $3.2 million and 29 were principal and interest deferrals totaling $19.9 million. The amount of accrued interest relatedAct for financial institutions to ~~payment deferrals totaled $6.0 million at September 30, 2020. These deferrals were not considered~~suspend the GAAP accounting treatment for troubled debt ~~restructurings based~~restructuring to January 1, 2022. As of March 31, 2021, the Company had originated over 7,100 loans with balances in excess of $1.47 billion to new and existing customers through the PPP. To the extent the PPP loans are forgiven, this represents outside funds to our borrowers; and, especially with respect to vulnerable industries, we believe these capital injections are going to be instrumental in assisting our borrowers in navigating through the pandemic. This capital injection, along with the level of capital each borrower had just prior to COVID-19 impacting them, are critical factors in determining the staying power of our borrowers. Upon receipt of interim financial results from our borrowers, we will use that information to update our understanding of the underlying strengths or weaknesses in each individual relationship and take actions, as appropriate. As of March 31, 2021, we have received payment from the SBA on ~~guidance within the CARES Act issued in March 2020.~~just over 2,350 of our loans totaling $505.1 million.

We had total loans of ~~$8.51~~$8.50 billion at ~~September 30, 2020, an increase of $1.25 billion,~~March 31, 2021, up $39.3 million, or ~~17%~~0.5%, compared to ~~$7.26~~$8.47 billion at December 31, ~~2019. We originated approximately 4,900 PPP loans totaling $1.05 billion as of September 30,~~ 2020. ~~Over 4,100 of these loans have a balance of less than $350,000. The~~At March 31, 2021, the percentage of our total loans in each of our ~~regions were~~markets was as follows:

The Company ~~determined to delay~~assesses the adequacy of its adoption of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” until the earlier of the date on which the national emergency concerning COVID-19 terminates or December 31, 2020, as outlined in the CARES Act, with an effective retrospective implementation date of January 1, 2020. Accordingly, the Company will continue to use the incurred loss methodology to calculate the allowance for ~~loan losses until the earlier of either event.~~

~~The allowance for loan losses, sometimes referred to as the “ALLL,” is established and maintained at levels management deems adequate to absorb anticipated~~ credit losses ~~from identified~~at the end of each calendar quarter. The level of allowance is based on the Company’s evaluation of historical default and ~~otherwise~~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, ~~portfolio as~~the estimated value of ~~the balance sheet date. In assessing the adequacy of the ALLL, management considers its evaluation~~any underlying collateral, composition of the loan portfolio ~~past due loan experience, collateral values, current economic conditions~~ and other ~~factors considered necessary~~relevant factors. The allowance is increased by a provision for credit losses, which is charged to ~~maintain the ALLL at an~~expense, and reduced by charge-offs, net of recoveries. The allowance for credit losses is believed adequate ~~level. If the ALLL is considered inadequate~~ to absorb all expected future ~~loan~~ losses ~~on existing loans for any reason, including but not limited~~ to ~~increases in~~be recognized over the ~~size~~contractual life of the loan portfolio, increases in charge-offs or changes in the risk characteristics of the loan portfolio, then the provision for loan losses is increased. Our management believes that the allowance was adequate at September 30, 2020.

Our management reviews the adequacy of the ALLL on a quarterly basis. The ALLL calculation is segregated into various segments that include classified loans, loans with specific allocations and pass rated loans. A pass rated loan is generally characterized by a very low to average risk of default and in which management perceives there is a minimal risk of loss. Loans are rated using a nine-point risk grade scale with loan officers having the primary responsibility for assigning risk grades and for the timely reporting of changes in the risk grades. Based on these processes, and the assigned risk grades, the criticized and classified loans in the ~~portfolio~~portfolio.

Loans with similar risk characteristics are ~~segregated into~~evaluated in pools and, depending on the ~~following regulatory classifications: Special Mention, Substandard, Doubtful~~nature of each identified pool, the Company utilizes a discounted cash flow (“DCF”), probability of default / loss given default (“PD/LGD”) or ~~Loss, with some general allocation~~remaining life method. 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 ~~reserve based on these grades.~~the loss drivers are used across the loan segments. At ~~September 30, 2020, total loans rated Special Mention, Substandard,~~March 31, 2021 and ~~Doubtful were $143.2 million, or 1.7% of total loans, compared to $123.7 million, or 1.7% of total loans, at~~ December 31, ~~2019. Reserve percentages assigned~~2020, the Company utilized a reasonable and supportable forecast period of twelve months followed by a six-month straight-line reversion to ~~non-impaired loans are based on historical charge-off experience adjusted for other risk factors. To evaluate~~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 remain above pre-pandemic levels over the ~~overall adequacy of~~forecast period with an improved national GDP growth rate as the ~~ALLL to absorb losses inherent in our loan portfolio, our management considers~~economy comes back on-line over the next year.

The historical loss experience ~~based on volume~~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 ~~types~~gross domestic product. Losses are predicted over a period of ~~loans, trends in classifications, volume~~time determined to be reasonable and ~~trends in delinquencies~~supportable, and ~~nonaccruals, economic conditions, including~~at the ~~economic distress caused~~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 ~~COVID-19 pandemic~~Company and are dependent on the current economic environment among other ~~pertinent information. Based on future evaluations, additional provisions for loan losses may be necessary to maintain the allowance for loan losses at an appropriate level.~~

factors. See Note 5 – Loans are considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the original terms of the loan agreement. The collection of all amounts due according to contractual terms means that both the contractual interest and principal payments of a loan will be collected as scheduled in the ~~loan agreement. Impaired loans are reviewed specifically and separately under FASB ASC 310-30-35, Subsequent Measurement of Impaired Loans,~~notes to ~~determine the appropriate reserve allocation. Impaired loans are measured based on the present value of expected future cash flows discounted at the interest rate implicit~~consolidated financial statements included in the original loan agreement, or, as a practical expedient, at the loan’s observable market price, or the fair value of the underlying collateral. The fair value of collateral, reduced by costs to sell on a discounted basis, is used if a loan is collateral-dependent.Item 1. Consolidated Financial Statements elsewhere in this report.

The ~~following table presents a summary~~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 modified loans classified as troubled debt restructurings. Specific allocations of the allowance 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.

Prior to the adoption of ASU 2016-13, Financial Instruments-Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments, the allowance for loan losses represented management’s best estimate of inherent losses that had been incurred within the existing portfolio of loans. The allowance for ~~the three~~losses on loans included allowance allocations calculated in accordance with FASB Accounting Standards Codification (“ASC”) Topic 310, “Receivables” and ~~nine months ended September 30, 2020 and 2019:~~allowance allocations calculated in accordance with ASC Topic 450, “Contingencies.”

The following table presents the allocation of the allowance for loan losses for each respective loan category with the corresponding percentage of loans in each category to total loans at September 30, 2020 and December 31, 2019:

Total nonperforming loans, which include nonaccrual loans and loans 90 or more days past due and still accruing, decreased to ~~$26.6~~$17.9 million at ~~September 30, 2020,~~March 31, 2021 compared to ~~$36.1~~$19.0 million at December 31, ~~2019.~~2020. Of this total, nonaccrual loans of ~~$21.7~~$13.1 million at ~~September 30, 2020~~March 31, 2021 represented a net decrease of ~~$8.4~~$0.9 million from nonaccrual loans at December 31, ~~2019.~~2020. Excluding credit card accounts, there was one loan 90 or more days past due and still accruing totaling $4.8 million at ~~September 30, 2020,~~March 31, 2021, compared to ~~three loans~~one loan totaling ~~$5.0~~$4.9 million at December 31, ~~2019.~~2020. Troubled Debt Restructurings (“TDR”) at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were ~~$2.7~~$3.5 million and ~~$3.3~~$2.4 million, respectively. There were three loans newly classified as TDR totaling $2.1 million and no renewals of existing TDRs for the three months ended March 31, 2021. There was one loan newly classified as a TDR totaling $350,000 and no renewals of existing TDRs for the three months ended March 31, 2020.

OREO and repossessed assets decreased to ~~$7.0~~$2.1 million at ~~September 30, 2020,~~March 31, 2021, from ~~$8.2~~$6.5 million at December 31, ~~2019.~~2020. The following table summarizes OREO and repossessed asset activity for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:

	Nine Months Ended September 30,						Three months ended March 31,
	2020			2019			2021			2020
	(In thousands)						(In thousands)
Balance at beginning of period	$	8,178		$	5,169		$	6,497		$	8,178
Transfers from loans and capitalized expenses		2,406			1,177			414			287
Proceeds from sales		(1,780	)		(727	)		(584	)		(454	)
Internally financed sales		-			-			(3,779	)		-
Write-downs / net gain (loss) on sales		(1,828	)		(282	)		(482	)		(563	)
Balance at end of period	$	6,976		$	5,337		$	2,066		$	7,448

The following table summarizes our nonperforming assets and TDRs at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:

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 allowance for ~~loan~~credit losses to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal.

~~Impaired Loans~~In keeping with guidance from regulators, the Company continues to work with COVID-19 affected borrowers to defer their payments and ~~Allowance for Loan Losses~~

interest. While interest continues to accrue to income, through normal GAAP accounting, should eventual credit losses on these deferred payments emerge, the related loans would be placed on nonaccrual status and interest income accrued would be reversed. In such a scenario, interest income in future periods could be negatively impacted. As of ~~September 30, 2020, we had impaired loans~~March 31, 2021, the Company carries $5.1 million of ~~$93.8~~accrued interest income on deferrals made to COVID-19 affected borrowers compared to $5.8 million ~~inclusive of nonaccrual loans, an increase of $50.7 million from $43.1 million as of~~at December 31, ~~2019. This increase~~2020. At this time, the Company is ~~primarily attributable to four commercial relationships newly classified as impaired during 2020. Substandard loans are detailed in Note 5,~~ ~~“Loans”~~, within the credit quality indicator table. While total impaired loans have increased, our overall collateral exposure on these impairments has remained consistent. We allocated $9.6 million of our allowance for loan losses at September 30, 2020 to these impaired loans, a decrease of $0.2 million compared to December 31, 2019. A loan is considered impaired, based on current information and events, if it is probable that we will be unable to ~~collect~~project the ~~scheduled payments~~materiality of ~~principal or interest when due according~~such an impact on future deferrals to COVID-19 affected borrowers but recognizes the ~~contractual terms~~breadth of the original loan agreement. Impairment does not always indicate credit loss, but provides an indication of collateral exposure based on prevailing market conditions and third-party valuations. Impaired loans are measured by either the present value of expectedeconomic impact may affect its borrowers’ ability to repay in future cash flows discounted at the interest rate implicit in the original loan agreement, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent. The amount of impairment, if any, and subsequent changes are included in the allowance for loan losses. Interest on accruing loans is recognized as long as such loans do not meet the criteria for nonaccrual status. Our credit administration team performs verification and testing to ensure appropriate identification of impaired loans and that proper reserves are held on these loans.

Of the $93.8 million of impaired loans reported as of September 30, 2020, $73.8 million were commercial, financial and agricultural loans, $587,000 were real estate construction loans and $19.4 million were real estate mortgage loans.periods.

Total deposits ~~were $9.67~~increased by $600 million to $10.58 billion at ~~September 30, 2020, an increase of $2.14 billion, or 29%, over $7.53~~March 31, 2021 compared to $9.98 billion at December 31, ~~2019. Increased growth rates during 2020 have been the result of Paycheck Protection Program (“PPP”) lending in which our borrowers have retained portions of their proceeds in the Bank.~~2020. 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~~Taxable-equivalent Basis” under the subheading “Net Interest ~~Income.”~~Income” below.

The following table summarizes balances of our deposits and the percentage of each type to the total at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020.

Our borrowings consist of federal funds purchased and subordinated notes payable. We had ~~$669.3~~$911.6 million and ~~$470.7~~$851.5 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, in federal funds purchased from correspondent banks that are clients of our correspondent banking unit. The average rate paid on these borrowings was 0.22% for the quarter ended ~~September 30, 2020.~~March 31, 2021. Other borrowings consist of the following:

~~During the fourth quarter of 2020, we expect to redeem the $34.75 million of 5% Subordinated Notes due July 15, 2025 in full, and issue $34.75 million of 4% Subordinated Notes.~~

●

$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 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 ~~were~~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 ~~September 30, 2020,~~March 31, 2021, liquid assets, which are represented by cash and due from banks, federal funds sold and unpledged available-for-sale securities, totaled ~~$2.13~~$3.3 billion. ~~At September 30, 2020,~~Additionally, the Bank had borrowing availability of approximately ~~$923.0~~$923 million in unused federal funds lines of credit with regional banks, subject to certain restrictions and collateral requirements. Additionally, the Bank had $2.84 billion in available lines from the Federal Reserve Bank-Atlanta. $1.79 billion of these lines from the Federal Reserve Bank-Atlanta are collateralized by loans of the Bank. The remaining $1.05 billion are collateralized by PPP loans originated by the Bank. We believe these sources of funding are adequate to meet ~~our~~immediate anticipated funding ~~needs.~~ needs, but we may need additional funding if we are able to maintain our current growth rate into the future.

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, ~~correspondent banking relationships and related federal funds purchased,~~ 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 ~~“Other Borrowings”.~~“Borrowings.”

We are subject to general FDIC guidelines that require a minimum level of liquidity. Management believes our liquidity ratios meet or exceed these guidelines. ~~Our management is not currently aware of any trends or demands that are reasonably likely to result in liquidity materially increasing or decreasing.~~ However, uncertainties brought about by the COVID-19 pandemic may adversely affect our ability to obtain funding or may increase the cost of funding.

The following table reflects the contractual maturities of our term liabilities as of ~~September 30, 2020.~~March 31, 2021. The amounts shown do not reflect any early withdrawal or prepayment assumptions.

		Payments due by Period										Payments due by Period
						Over 1 - 3		Over 3 - 5
		Total		1 year or less		years		years		Over 5 years		Total		1 year or less		1 - 3 years		3 - 5 years		Over 5 years
		(In Thousands)										(In Thousands)
Contractual Obligations (1)	Contractual Obligations (1)

Deposits without a stated maturity	Deposits without a stated maturity	$	8,879,041	$	-	$	-	$	-	$	-	$	9,769,510	$	-	$	-	$	-	$	-
Certificates of deposit (2)	Certificates of deposit (2)		744,742		458,475		248,499		37,768		-		808,100		318,734		344,991		144,300		75
Brokered certificates of deposit			50,000		-		50,000		-		-
Federal funds purchased	Federal funds purchased		669,350		669,350		-		-		-		911,558		911,558		-		-		-
Subordinated debentures			64,750		-		-		-		64,750
Subordinated notes payable													64,707		-		-		-		64,707
Operating lease commitments	Operating lease commitments		11,105		2,533		4,567		2,317		1,688		20,859		3,055		6,484		4,346		6,974
Total	Total	$	10,418,988	$	1,130,358	$	303,066	$	39,785	$	66,438	$	11,574,734	$	1,233,347	$	351,475	$	148,646	$	71,756

Total stockholders’ equity attributable to us at September 30, 2020 was $949.1 million, or 8.33% of total assets. At December 31, 2019, total stockholders’ equity attributable to us was $842.2 million, or 9.41% of total assets.

As of ~~September 30, 2020,~~March 31, 2021, 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, we must maintain minimum ~~total~~common equity Tier 1, Tier 1 risk-based, ~~Tier 1~~total risk-based, and Tier 1 leverage ~~ratios.~~ratios as disclosed in the table below. Our management believes that we are well-capitalized under the prompt corrective action provisions as of March 31, 2021.

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 new rules a covered banking organization is also 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, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer was phased in incrementally over time, beginning January 1, 2016 and became fully effective on January 1, 2019. As of January 1, 2019, an additional amount of Tier 1 common equity 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 conservation buffer.

The following table sets forth (i) the capital ratios required by the FDIC and the Alabama Banking Department’s leverage ratio requirement and (ii) our actual ratios ~~not including the capital conservation buffer,~~ of capital to total regulatory or risk-weighted assets, as of ~~September 30, 2020,~~March 31, 2021, December 31, ~~2019~~2020 and ~~September 30, 2019:~~March 31, 2020:

												To Be Well Capitalized					Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
							For Capital Adequacy					Under Prompt Corrective					Amount		Ratio			Amount		Ratio			Amount		Ratio
		Actual					Purposes					Action Provisions
		Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2020		(Dollars in Thousands)
CET 1 Capital to Risk-Weighted Assets:
As of March 31, 2021:
CET 1 Capital to Risk Weighted Assets:
Consolidated	Consolidated	$	916,373		11.24	%	$	366,802		4.50	%		N/A		N/A		$	999,447		10.73	%	$	419,190		4.50	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		978,584		12.01	%		366,724		4.50	%	$	529,712		6.50	%		1,061,620		11.40	%		419,127		4.50	%	$	605,405		6.50	%
Tier 1 Capital to Risk-Weighted Assets:
Tier 1 Capital to Risk Weighted Assets:
Consolidated	Consolidated		916,873		11.25	%		489,070		6.00	%		N/A		N/A			999,947		10.73	%		558,920		6.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		979,084		12.01	%		488,965		6.00	%		651,953		8.00	%		1,062,120		11.40	%		558,836		6.00	%		745,114		8.00	%
Total Capital to Risk-Weighted Assets:
Total Capital to Risk Weighted Assets:
Consolidated	Consolidated		1,067,583		13.10	%		652,093		8.00	%		N/A		N/A			1,162,344		12.48	%		745,227		8.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		1,072,024		13.15	%		651,953		8.00	%		814,941		10.00			1,159,826		12.45	%		745,114		8.00	%		931,393		10.00	%
Tier 1 Capital to Average Assets:	Tier 1 Capital to Average Assets:
Consolidated	Consolidated		916,873		8.22	%		446,428		4.00	%		N/A		N/A			999,947		8.25	%		484,571		4.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		979,084		8.78	%		446,243		4.00	%		557,804		5.00	%		1,062,120		8.77	%		484,521		4.00	%		605,651		5.00	%

As of December 31, 2019
CET 1 Capital to Risk-Weighted Assets:
As of December 31, 2020:
CET 1 Capital to Risk Weighted Assets:
Consolidated	Consolidated	$	822,396		10.50	%	$	342,283		4.50	%		N/A		N/A		$	958,300		10.50	%	$	410,816		4.50	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		885,172		11.30	%		342,269		4.50	%	$	494,389		6.50	%		1,018,031		11.15	%		410,766		4.50	%	$	593,328		6.50	%
Tier 1 Capital to Risk-Weighted Assets:
Tier 1 Capital to Risk Weighted Assets:
Consolidated	Consolidated		822,896		10.50	%		456,377		6.00	%		N/A		N/A			958,800		10.50	%		547,755		6.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		885,674		11.31	%		456,359		6.00	%		608,479		8.00	%		1,018,531		11.16	%		547,688		6.00	%		730,250		8.00	%
Total Capital to Risk-Weighted Assets:
Total Capital to Risk Weighted Assets:
Consolidated	Consolidated		964,683		12.31	%		608,502		8.00	%		N/A		N/A			1,113,690		12.20	%		730,340		8.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		962,758		12.29	%		608,479		8.00	%		760,598		10.00	%		1,108,673		12.15	%		730,250		8.00	%		912,813		10.00	%
Tier 1 Capital to Average Assets:	Tier 1 Capital to Average Assets:
Consolidated	Consolidated		822,896		9.13	%		356,012		4.00	%		N/A		N/A			958,800		8.23	%		465,980		4.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		885,674		9.83	%		355,998		4.00	%		444,997		5.00	%		1,018,531		8.75	%		465,448		4.00	%		581,810		5.00	%

As of September 30, 2019
CET 1 Capital to Risk-Weighted Assets:
As of March 31, 2020:
CET 1 Capital to Risk Weighted Assets:
Consolidated	Consolidated	$	790,168		10.39	%	$	342,283		4.50	%		N/A		N/A		$	849,949		10.46	%	$	365,531		4.50	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		852,807		11.21	%		342,269		4.50	%	$	494,389		6.50	%		912,858		11.24	%		365,460		4.50	%	$	527,886		6.50	%
Tier 1 Capital to Risk-Weighted Assets:
Tier 1 Capital to Risk Weighted Assets:
Consolidated	Consolidated		790,670		10.39	%		456,377		6.00	%		N/A		N/A			850,451		10.47	%		487,375		6.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		853,309		11.22	%		456,359		6.00	%		608,479		8.00	%		913,360		11.25	%		487,280		6.00	%		649,706		8.00	%
Total Capital to Risk-Weighted Assets:
Total Capital to Risk Weighted Assets:
Consolidated	Consolidated		933,055		12.27	%		608,502		8.00	%		N/A		N/A			1,001,072		12.32	%		649,833		8.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		931,001		12.24	%		608,479		8.00	%		760,598		10.00	%		999,274		12.30	%		649,706		8.00	%		812,133		10.00	%
Tier 1 Capital to Average Assets:	Tier 1 Capital to Average Assets:
Consolidated	Consolidated		790,670		8.88	%		356,012		4.00	%		N/A		N/A			850,451		9.37	%		363,121		4.00	%		N/A		N/A
ServisFirst Bank	ServisFirst Bank		853,309		9.59	%		355,998		4.00	%		444,997		5.00	%		913,360		10.06	%		363,065		4.00	%		453,831		5.00	%

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.

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

Our exposure to credit loss in the event of non-performance by the other party to ~~such~~the financial ~~instruments~~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 of September 30, 2020, we have reserved $500,000 for losses on such off-balance sheet arrangements consistent with guidance in the FRB’s Interagency Policy Statement SR 06-17.~~

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. ~~We had a reserve of $558,000 as of September 30, 2020 and $370,000 as of December 31, 2019 for the settlement of any repurchase demands by investors.~~

Financial instruments whose contract amounts represent credit risk at ~~September 30, 2020 and December~~March 31, ~~2019~~2021 are as follows:

	September 30, 2020		December 31, 2019		March 31, 2021
	(In Thousands)		(In Thousands)		(In Thousands)
Commitments to extend credit	$	2,557,139	$	2,303,788	$	2,932,352
Credit card arrangements		247,976		248,617		312,443
Standby letters of credit		72,138		48,394		60,435
	$	2,877,253	$	2,600,799	$	3,305,230

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.

Net income and net income available to common stockholders for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$43.4~~$51.5 million compared to ~~net income and net income available to common stockholders of $37.6~~$34.8 million for the three months ended September 30, 2019. Net income and net income available to common stockholders for the nine months ended September 30, 2020 was $118.6 million compared to net income and net income available to common stockholders of $108.2 million for the nine months ended September 30, 2019.March 31, 2020. The increase in net income ~~for the three months ended September 30, 2020 over the same period in 2019~~ was primarily attributable to a ~~$12.1~~$14.7 million increase in net interest income ~~resulting from a $2.15 billion~~during the three months ended March 31, 2021 to $92.4 million, compared to $77.6 million during the same period in 2020. The increase in net interest income is primarily attributable to growth in average earning assets and ~~a $2.0 million increase in~~non-interest-bearing deposit balances. Total non-interest income ~~led~~increased by ~~increased mortgage banking revenue. The same key drivers contributed~~$1.8 million to $8.5 million during the ~~increase in net income for the nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~2019 resulting~~$6.7 million during the same period in ~~a $34.1~~2020. Total non-interest expenses increased by $1.0 million ~~increase in net interest income on a $1.65 billion increase in average earning assets, and a $4.9~~to $28.9 million increase in non-interest income. Increases in provision for loan losses of $5.3 million and $19.4 million, increases in non-interest expense of $1.4 million and $6.8 million and increases in income tax expense of $1.5 million and $2.5 million, respectively, forduring the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 compared to ~~2019 partially offset increases~~$27.9 million during the same period in ~~income.~~2020.

Basic and diluted net income per common share were ~~$0.80~~$0.95 for the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~$0.70~~$0.65 and ~~$0.69, respectively,~~$0.64, for the corresponding period in 2019. Basic and diluted net income per common share were $2.20 and $2.19, respectively, for the nine months ended September 30, 2020, compared to $2.02 and $2.00, respectively, for the corresponding period in 2019.2020. Return on average assets for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 was ~~1.54%~~1.72% compared to ~~1.67% and 1.70%, respectively,~~1.54% for the corresponding ~~periods~~period in ~~2019. Return~~2020, and return on average ~~common~~ stockholders’ equity for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 was ~~18.43% and 17.73%, respectively,~~19.83% compared to ~~18.69% and 18.93%, respectively,~~16.23% for the corresponding ~~periods~~period in ~~2019.~~2020.

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 which 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 increased ~~$12.1~~$14.7 million, or ~~16.6%~~18.9%, to ~~$85.2~~$92.4 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$73.1~~$77.7 million for the corresponding period in ~~2019, and increased $34.2 million, or 16.1%, to $246.2 million for the nine months ended September 30, 2020 compared to $212.0 million for the corresponding period in 2019.~~2020. This increase was primarily attributable to ~~growth~~a $2.96 billion increase in average earning assets, ~~which increased $2.15 billion,~~ or ~~25.0%~~34%, ~~from the third quarter of 2019 to the third quarter of 2020, and $1.65 billion, or 20.1%, from the nine months ended September 30, 2019 to the same period in 2020.~~year over year. The taxable-equivalent yield on interest-earning assets decreased from 4.46% to 3.55% for the three months ended September 30, 2020 from 4.65% for the corresponding period in 2019, and decreased to 3.90% for the nine months ended September 30, 2020 from 4.76% for the corresponding period in 2019.3.48% year over year. The yield on loans for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~4.26%~~4.47% compared to ~~5.17%~~4.88% for the corresponding period in ~~2019, and 4.47% compared to 5.22% for the nine months ended September 30, 2020 and September 30, 2019, respectively.~~2020. The cost of total interest-bearing liabilities decreased to ~~0.59%~~0.40% for the three months ended ~~September 30, 2020 compared to 1.73%~~March 31, 2021 from 1.19% for the corresponding period in ~~2019, and decreased to 0.81% for the nine months ended September 30, 2020 from 1.77% for the corresponding period in 2019.~~2020. Net interest margin for the three months ended ~~September 30, 2020 was 3.14% compared~~March 31, 2021 decreased 38 basis points to ~~3.36%~~3.20% from 3.58% for the corresponding period in ~~2019, and 3.33% for the nine months ended September 30, 2020 compared to 3.45% for the corresponding period in 2019.~~2020.

The following ~~tables show,~~table shows, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and March 31, 2020, ~~and September 30, 2019,~~ the average balances of each principal category of our assets, liabilities and stockholders’ equity, and an analysis of net interest revenue. The accompanying ~~tables reflect~~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. ~~The~~Both tables are presented on a taxable-equivalent basis where applicable:

Average Balance Sheets and Net Interest Analysis
On a Fully Taxable-Equivalent Basis
For the Three Months Ended September 30,
(In thousands, except Average Yields and Rates)

		2020							2019							2021							2020
				Interest		Average					Interest		Average					Interest		Average					Interest		Average
		Average		Earned /		Yield /			Average		Earned /		Yield /			Average		Earned /		Yield /			Average		Earned /		Yield /
		Balance		Paid		Rate			Balance		Paid		Rate			Balance		Paid		Rate			Balance		Paid		Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (1)(2)
Loans, net of unearned income (1) (2)
Taxable		$	8,335,087	$	89,236		4.26	%	$	6,927,075	$	90,426		5.18	%	$	8,484,914	$	93,503		4.47	%	$	7,328,594	$	89,076		4.89	%
Tax-exempt (3)			30,068		313		4.14			34,195		343		3.98			27,592		284		4.17			32,555		327		4.04
Total loans, net of unearned income			8,365,155		89,549		4.26			6,961,270		90,769		5.17			8,512,506		93,787		4.47			7,361,149		89,403		4.88
Mortgage loans held for sale			20,053		71		1.41			6,482		40		2.45			13,601		65		1.94			4,282		23		2.16
Investment securities:
Taxable			820,526		5,858		2.86			595,405		4,367		2.93			878,118		5,807		2.65			750,413		5,154		2.75
Tax-exempt (3)			31,880		200		2.51			59,992		332		2.21			21,084		128		2.43			44,029		257		2.33
Total investment securities (4)			852,406		6,058		2.84			655,397		4,699		2.87			899,202		5,935		2.64			794,442		5,411		2.72
Federal funds sold			41,884		16		0.15			312,968		1,768		2.24			11,935		3		0.10			105,423		277		1.06
Interest-bearing balances with banks			1,500,563		506		0.13			690,973		3,912		2.25			2,262,233		676		0.12			469,199		1,718		1.47
Total interest-earning assets		$	10,780,061	$	96,200		3.55		$	8,627,090	$	101,188		4.65		$	11,699,477	$	100,466		3.48	%	$	8,734,495	$	96,832		4.46	%
Non-interest-earning assets:
Cash and due from banks			75,065							71,418							71,166							66,140
Net fixed assets and equipment			56,799							58,243
Allowance for loan losses, accrued interest and other assets			281,196							162,654
Net premises and equipment																	57,198							58,066
Allowance for credit losses, accrued interest and other assets																	320,407							241,479
Total assets		$	11,193,121						$	8,919,405						$	12,148,248						$	9,100,180


Liabilities and stockholders' equity:	Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing demand deposits		$	1,077,595	$	840		0.31	%	$	900,754	$	1,904		0.84	%	$	1,294,614	$	621		0.19	%	$	956,803	$	1,346		0.57	%
Savings deposits			82,671		75		0.36			57,431		87		0.60			93,375		41		0.18			67,380		84		0.50
Money market accounts			4,739,566		5,188		0.44			4,265,435		18,900		1.76			5,057,828		3,358		0.27			4,061,286		11,127		1.10
Time deposits			841,378		3,773		1.78			703,278		3,897		2.20			808,561		2,861		1.44			805,924		4,188		2.09
Total interest-bearing deposits			6,741,210		9,876		0.58			5,926,898		24,788		1.66			7,254,378		6,881		0.38			5,891,393		16,745		1.14
Federal funds purchased			682,971		375		0.22			441,526		2,557		2.30			849,772		460		0.22			492,638		1,601		1.31
Other borrowings			64,717		777		4.77			64,689		781		4.79			64,689		690		4.33			64,707		781		4.85
Total interest-bearing liabilities		$	7,488,898	$	11,028		0.59	%	$	6,433,113	$	28,126		1.73	%	$	8,168,839	$	8,031		0.40	%	$	6,448,738	$	19,127		1.19	%
Non-interest-bearing liabilities:
Non-interest-bearing demand deposits			2,728,513							1,654,928							2,923,041							1,749,671
Other liabilities			39,537							34,070							39,442							39,801
Stockholders' equity			917,626							792,284							996,741							853,800
Accumulated other comprehensive gain			18,547							5,010
Accumulated other comprehensive income																	20,185							8,170
Total liabilities and stockholders' equity		$	11,193,121						$	8,919,405						$	12,148,248						$	9,100,180
Net interest income				$	85,172						$	73,062						$	92,435						$	77,705
Net interest spread							2.96	%						2.92	%						3.08	%						3.27	%
Net interest margin							3.14	%						3.36	%						3.20	%						3.58	%

Decreases in average yields on loans drive unfavorable rate component. PPP loans carry an interest rate of 1.00%, well below the average yield on other loans. However, this lower yield is offset by the accretion of net origination fees paid by the Small Business Administration on PPP loans. Decreases in average rates paid on interest-bearing deposits drive favorable rate component change. Growth in average loans, noninterest bearing deposits and equity drive favorable volume component change and overall change.

	For the Nine Months Ended September 30,									For the Three Months Ended March 31,
	2020 Compared to 2019 Increase (Decrease) in Interest Income and Expense Due to Changes in:									2021 Compared to 2020 Increase (Decrease) in Interest Income and Expense Due to Changes in:
	Volume			Rate			Total			Volume			Rate			Total
	(In Thousands)									(In Thousands)
Interest-earning assets:
Loans, net of unearned income
Taxable	$	44,611		$	(41,199	)	$	3,412		$	12,686		$	(8,259	)	$	4,427
Tax-exempt		(23	)		57			34			(53	)		10			(43	)
Total loans, net of unearned income		44,588			(41,142	)		3,446			12,633			(8,249	)		4,384
Mortgages held for sale		129			(81	)		48			44			(2	)		42
Debt securities:
Taxable		4,549			(751	)		3,798			812			(159	)		653
Tax-exempt		(663	)		171			(492	)		(140	)		11			(129	)
Total debt securities		3,886			(580	)		3,306			672			(148	)		524
Federal funds sold		(2,265	)		(2,393	)		(4,658	)		(136	)		(138	)		(274	)
Interest-bearing balances with banks		4,477			(11,162	)		(6,685	)		1,682			(2,724	)		(1,042	)
Total interest-earning assets		50,815			(55,358	)		(4,543	)		14,895			(11,261	)		3,634

Interest-bearing liabilities:
Interest-bearing demand deposits		542			(3,392	)		(2,850	)		359			(1,084	)		(725	)
Savings		68			(71	)		(3	)		24			(67	)		(43	)
Money market accounts		4,676			(36,636	)		(31,960	)		2,184			(9,953	)		(7,769	)
Time deposits		2,146			(1,128	)		1,018			14			(1,341	)		(1,327	)
Total interest-bearing deposits		7,432			(41,227	)		(33,795	)		2,581			(12,445	)		(9,864	)
Federal funds purchased		2,477			(7,424	)		(4,947	)		699			(1,840	)		(1,141	)
Other borrowed funds		1			(6	)		(5	)		-			(91	)		(91	)
Total interest-bearing liabilities		9,910			(48,657	)		(38,747	)		3,280			(14,376	)		(11,096	)
Increase in net interest income	$	40,905		$	(6,701	)	$	34,204		$	11,615		$	3,115		$	14,730

~~Decreases in the average rates paid on interest-bearing deposits drive favorable rate component change. Decreases in average yields on loans drive unfavorable rate component while~~Our growth in loans ~~non-interest-bearing deposits and average equity~~ continues to drive favorable volume component change and overall change. The rate component was favorable as average rates paid on interest-bearing liabilities decreased 79 basis points while loan yields decreased 41 basis points. Growth in non-interest-bearing deposits and equity also contributed to the increase in net interest revenue during the three months ended March 31, 2021 compared to the same period in 2020.

The provision for ~~loan~~credit losses was ~~$12.3~~$7.5 million for the three months ended ~~September 30, 2020, an increase~~March 31, 2021, a decrease of ~~$5.3~~$6.1 million from ~~$7.0~~$13.6 million for the three months ended ~~September 30, 2019,~~March 31, 2020. The ACL for March 31, 2021 and December 31, 2020 was calculated under the current expected credit losses (“CECL”) methodology and totaled $94.9 million and 87.9 million, or 1.12% and 1.04% of loans, net of unearned income, respectively. The allowance totaled $85.4 million, or 1.13% of loans, net of unearned income, at March 31, 2020 and was ~~$36.2 million for~~calculated under the ~~nine months ended September 30, 2020, a $19.4 million increase compared to $16.8 million for the nine months ended September 30, 2019.~~incurred loss methodology. Annualized net credit charge-offs to quarter-to-date average loans ~~increased five basis points to 0.54%~~were 0.02% for the ~~third~~first quarter of ~~2020~~2021, a 24 basis point decrease compared to ~~0.49%~~0.26% for the ~~corresponding period in 2019 and increased three basis points to 0.34% for the nine months ended September 30, 2020 compared to 0.31% for the corresponding period in 2019.~~first quarter of 2020. Nonperforming loans decreased to ~~$26.6~~$17.9 million, or ~~0.31%~~0.21% of total loans, at ~~September 30, 2020~~March 31, 2021 from ~~$36.1~~$19.0 million, or ~~0.50%~~0.22% of total loans, at December 31, ~~2019,~~2020, and were ~~$41.0~~lower than $33.9 million, or ~~0.58%~~0.45% of total loans, at ~~September 30, 2019. Impaired loans increased~~March 31, 2020. See the section captioned “Asset Quality” located elsewhere in this item for additional discussion related to $93.8 million, or 1.10% of total loans, at September 30, 2020, compared to $43.1 million, or 0.59% of total loans, at December 31, 2019. An additional qualitative factor was incorporated beginning in the second quarter of 2020 due to COVID-19 and its effect on overall macroeconomic conditions. This COVID-19 qualitative factor totaled $14.9 million at June 30, 2020 and totaled $11.3 million at September 30, 2020. This decrease of $3.6 million was primarily due to improvement in the national unemployment rate at the end of the third quarter of 2020. The allowanceprovision for ~~loan losses totaled $92.4 million, or 1.09% of total loans, net of unearned income, at September 30, 2020, compared to $76.6 million, or 1.05% of loans, net of unearned income, at December 31, 2019.~~credit losses.

Noninterest income totaled ~~$8.2~~$8.5 million for the three months ended ~~September 30, 2020,~~March 31, 2021, an increase of ~~$2.0~~$1.8 million ~~or 31.6%,~~ compared to the corresponding period in ~~2019, and totaled $21.9 million for the nine months ended September 30, 2020, an increase of $4.9~~2020. Mortgage banking revenue increased $1.7 million, or ~~29.2%~~157%, ~~compared~~to $2.7 million from the first quarter of 2020 to the ~~corresponding period in 2019.~~first quarter of 2021. Mortgage banking income increased $1.2 million, or 89.0%, to $2.5 million for the three months ended September 30, 2020 compared to $1.3 million for the same period in 2019, and increased $2.7 million, or 90.2%, to $5.7 million for the nine months ended September 30, 2020 compared to $3.0 million for the same period in 2019. The number of loans originated for sale to investors during first nine months of 2020loan sales increased approximately ~~67%~~106% during the first quarter of 2021 when compared to the same period in ~~2019. Credit~~2020. Net credit card ~~income~~revenue decreased ~~$28,000~~$573,000, or 33%, to $1.2 million during the three months ended March 31, 2021, compared to $1.8 million during the three months ended March 31, 2020. This decrease was primarily attributable to additional accruals for awards obligations taken in the first quarter of 2021. The number of credit card accounts increased approximately 28% and the aggregate amount of spend on all credit card accounts increased 16% during the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Cash surrender value of life insurance increased $205,000, or 14%, to $1.7 million during the three months ended March 31, 2021, compared to $1.5 million during the three months ended March 31, 2020. We purchased $60 million of additional life insurance contracts during the second half of 2020.

Noninterest expense totaled $28.9 million for the three months ended ~~September 30, 2020~~March 31, 2021, an increase of $1.0 million compared to $27.9 million for the corresponding period in 2020. Salary and employee benefit expense decreased $115,000 to $15.5 million for the three months ended March 31, 2021 from $15.6 million for the corresponding period in 2020. The number of FTE employees decreased to 491 at March 31, 2021 compared to 492 at March 31, 2020. Equipment and occupancy expense increased $254,000 to $2.7 million for the three months ended March 31, 2021 from $2.4 million for the corresponding period in 2020. Third party processing and other services decreased $41,000 to $3.4 million for the three months ended March 31, 2021 compared to the ~~same~~corresponding period in ~~2019, and~~2020. Professional services decreased ~~$182,000~~$25,000 to ~~$5.0~~$923,000 for the three months ended March 31, 2021 from $948,000 for the corresponding period in 2020. FDIC insurance assessments increased $250,000 to $1.6 million for the ~~nine~~three months ended ~~September 30, 2020 compared to~~March 31, 2021 from $1.3 million for the ~~same~~corresponding period in ~~2019. The amount~~2020. Our assessment base increased by 31% year-over-year. Expenses related to other real estate owned decreased $444,000 to $157,000 for the three months ended March 31, 2021 from $601,000 for the corresponding period in 2020. First quarter 2020 included write-downs in value of ~~spend~~property based on ~~purchase cards~~updated appraisals related to one foreclosed loan relationship. Other operating expenses increased ~~$23.0~~$1.1 million ~~while~~to $4.6 million for the ~~amount of spend~~three months ended March 31, 2021 from $3.5 million for the corresponding period in 2020. We increased our allowance for credit losses on ~~business credit cards decreased $8.0 million during~~unfunded loan commitments by $600,000 in the ~~third~~first quarter of ~~2020 when compared~~2021 with a charge to ~~the third quarter of 2019. Purchase card spend carries lower profit margins than credit cards due to their higher rebates.~~other operating expenses.

~~Noninterest expense totaled $26.6 million for the three months ended September 30, 2020, an increase of $1.4 million, or 5.6%, compared to $25.2 million for the same period~~Changes in ~~2019, and totaled $83.3 million for the nine months ended September 30, 2020, an increase of $6.8 million, or 8.9%, compared to $76.5 million for the same period in 2019.~~

~~The following table presents~~ our non-interest income and ~~non-interest expense for~~expenses, including percentage changes, are detailed in the ~~three and nine month periods ending September 30, 2020 compared to the same periods in 2019.~~following table:

	Three Months Ended September 30,											Nine Months Ended September 30,										Three Months Ended March 31,
	2020		2019			$ change			% change			2020		2019		$ change			% change			2021		2020		$ change			% change
Non-interest income:
																						(Dollars In Thousands)
Noninterest income:
Service charges on deposit accounts	$	1,818	$	1,735		$	83			4.8	%	$	5,557	$	5,223	$	334			6.4	%	$	1,908	$	1,916	$	(8	)		(0.4	%)
Mortgage banking		2,519		1,333			1,186			89.0	%		5,697		2,995		2,702			90.2	%		2,747		1,071		1,676			156.5	%
Credit card income		1,840		1,868			(28	)		(1.5	%)		5,003		5,185		(182	)		(3.5	%)
Securities gains		-		34			(34	)		(100.0	%)		-		28		(28	)		(100.0	%)
Credit cards																							1,192		1,765		(573	)		(32.5	%)
Increase in cash surrender value life insurance		1,733		787			946			120.2	%		4,650		2,327		2,323			99.8	%		1,658		1,453		205			14.1	%
Other operating income		262		453			(191	)		(42.2	%)		972		1,172		(200	)		(17.1	%)		958		469		489			104.3	%
Total non-interest income	$	8,172	$	6,210		$	1,962			31.6	%	$	21,879	$	16,930	$	4,949			29.2	%
Total noninterest income																						$	8,463	$	6,674	$	1,789			26.8	%

Non-interest expense:
Noninterest expense:
Salaries and employee benefits	$	14,994	$	15,499		$	(505	)		(3.3	%)	$	46,444	$	44,103	$	2,341			5.3	%	$	15,543	$	15,658	$	(115	)		(0.7	%)
Equipment and occupancy expense		2,556		2,387			169			7.1	%		7,390		6,933		457			6.6	%
Equipment and occupancy																							2,654		2,400		254			10.6	%
Third party processing and other services		3,281		2,923			358			12.2	%		10,360		8,058		2,302			28.6	%		3,416		3,457		(41	)		(1.2	%)
Professional services		955		887			68			7.7	%		2,994		3,072		(78	)		(2.5	%)		923		948		(25	)		(2.6	%)
FDIC and other regulatory assessments		1,061		(296	)		1,357			(458.4	%)		2,988		1,804		1,184			65.6	%		1,582		1,332		250			18.8	%
OREO expense		119		78			41			52.6	%		2,023		312		1,711			548.4	%
Other real estate owned																							157		601		(444	)		(73.9	%)
Other operating expense		3,607		3,683			(76	)		(2.1	%)		11,110		12,227		(1,117	)		(9.1	%)		4,639		3,524		1,115			31.6	%
Total non-interest expense	$	26,573	$	25,161		$	1,412			5.6	%	$	83,309	$	76,509	$	6,800			8.9	%
Total noninterest expense																						$	28,914	$	27,920	$	994			3.6	%

Income tax expense was ~~$11.0~~$13.0 million for the three months ended ~~September 30, 2020 compared to $9.5~~March 31, 2021 versus $8.0 million for the same period in ~~2019, and was $29.8 million for the nine months ended September 30, 2020 compared to $27.3 million for the same period in 2019.~~2020. Our effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 was ~~20.3% and 20.1%~~20.18%, ~~respectively,~~ compared to ~~20.2% and 20.2%~~18.76% for the corresponding ~~periods~~period in ~~2019, respectively.~~2020. We recognized excess tax benefits as a credit to our income tax expense from the exercise ~~and vesting~~ of stock options and vesting of restricted stock ~~during~~of $1.6 million in the ~~three and nine months ended September 30, 2020~~first quarter of ~~$180,000 and $1.4 million, respectively,~~2021, compared to ~~$231,000 and $1.2~~$1.1 million ~~during~~in the ~~three and nine months ended September 30, 2019, respectively.~~first quarter of 2020. Our primary permanent differences are related to ~~tax exempt~~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.

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 ~~status of~~risks that our balance ~~sheet.~~sheet is exposed to. Our annual budget reflects the anticipated rate environment for the next 12 months.

The ~~asset-liability committee~~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 scenarios in the first and second year is -10% and -15%, respectively, and for the two-year cumulative is -15%. The ALCO conducts a quarterly analysis of the rate sensitivity position, reviews established limits, and reports its results to our board of directors.

~~The asset-liability committee thoroughly analyzes the maturities~~ As of rate-sensitive assets and liabilities. This analysis measures the “gap”, which is defined as the difference between the dollar amount of rate-sensitive assets repricing during a period and the volume of rate-sensitive liabilities repricing during the same period. The gap is also expressed as the ratio of rate-sensitive assets divided by rate-sensitive liabilities. If the ratio is greater than one, the dollar value of assets exceeds the dollar value of liabilities; the balance sheet is “asset-sensitive.” Conversely, if the value of liabilities exceeds the value of assets, the ratio is less than one and the balance sheet is “liability-sensitive.” Our internal policy requires management to maintain the gap such that net interest margins will not change more than 10% if interest rates change 100 basis points or more than 15% if interest rates change 200 basis points. There have been no changes to our policies or procedures for analyzing our interest rate risk since DecemberMarch 31, ~~2019, and~~2021, there have been no ~~material~~significant changes to our sensitivity to changes in interest rates since December 31, ~~2019, as disclosed~~2020. However, market disruptions brought about by the COVID-19 pandemic may adversely affect our sensitivity to market interest rates. We could experience an increase in the cost of funding our ~~Annual Report~~balance sheet. We could also experience increased pricing competition for our existing loans or future borrower prospects, which could decrease rates earned on ~~Form 10-K.~~our earning assets.

Appearing as exhibits to this report are Certifications of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”). The Certifications are required to be made by Rule 13a-14 ~~or Rule 15d-14~~ under the Securities Exchange Act of ~~1934.~~1934, as amended (the “Exchange Act”). This item contains the information about the evaluation that is referred to in the Certifications, and the information set forth below in this Item 4 should be read in conjunction with the Certifications for a more complete understanding of the Certifications.

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~~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"~~“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 ~~September 30, 2020.~~March 31, 2021. Based upon the Evaluation, our CEO and CFO have concluded that, as of ~~September 30, 2020,~~March 31, 2021, our disclosure controls and procedures are effective to ensure that material information relating to ~~the Company.~~ServisFirst Bancshares, Inc. and its subsidiaries is made known to management, including the CEO and CFO, particularly during the period when our periodic reports are being prepared.

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.

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.~~proceedings except as disclosed in Item 3, “Legal Proceedings”, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and there has been no material change in any matter described therein.

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, ~~2019,~~2020, 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, ~~2019, with the exception of:~~

The ongoing COVID-19 pandemic and measures intended to prevent its spread may adversely affect our business, financial condition and operations, and such effects will depend on future developments, which are highly uncertain and are difficult to predict.

Global health and economic concerns relating to the COVID-19 outbreak and government actions taken to reduce the spread of the virus have had a material adverse impact on the macroeconomic environment, and the outbreak has significantly increased economic uncertainty. The pandemic has resulted in federal, state and local authorities, including those who govern the markets in which we operate, implementing numerous measures to try to contain the virus. Such measures have included travel bans and restrictions, curfews, quarantines, shelter in place or total lock-down orders and business limitations and shutdowns. Such measures have significantly contributed to rising unemployment and negatively impacted consumer and business spending. The United States government has taken steps to attempt to mitigate some of the more severe anticipated economic effects of the virus, including the passage of the CARES Act, but there can be no assurance that such steps will be effective or achieve their desired results in the near future.

The outbreak has adversely impacted and is likely to continue to adversely impact our workforce and operations and the operations of our customers and business partners. In particular, we may experience financial losses due to a number of operational factors impacting us or our customers or business partners, including but not limited to:

~~These factors may exist for an extended period of time and may continue to adversely affect our business, financial condition and operations even after the COVID-19 outbreak has subsided.~~

The extent to which the pandemic impacts our business, financial condition and operations will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, its duration and severity, the actions to contain it or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Even after the pandemic has subsided, we may continue to experience materially adverse impacts to our business as a result of its economic impact, including the availability of credit, adverse impacts on our liquidity and any recession that has occurred or may occur in the future. Additionally, future outbreaks of COVID-19, or other viruses, may occur.

There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole. Therefore, the risk factors discussed in our Annual Report on Form 10-K could be heightened, changed or be added to in the future. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see “Forward-Looking Statements” under Part 1, Item 2 above.2020.

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.

PART I. FINANCIAL INFORMATION		4
	Item 1.	Consolidated Financial Statements	4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4339
	Item 4.	Controls and Procedures	4439

PART II. OTHER INFORMATION		40

~~PART II. OTHER INFORMATION~~			44
	Item 1.1	Legal Proceedings	4440
	Item 1A.	Risk Factors	4440
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4540
	Item 3.	Defaults Upon Senior Securities	4540
	Item 4.	Mine Safety Disclosures	4540
	Item 5.	Other Information	4540
	Item 6.	Exhibits	4540

													Revolving
December 31, 2020	2020		2019		2018		2017		2016		Prior		Loans		Total
	(In Thousands)
Commercial, financial and agricultural
Pass	$	1,260,341	$	332,690	$	229,838	$	169,616	$	89,893	$	137,021	$	988,093	$	3,207,492
Special Mention		2,551		1,404		10		253		163		281		14,948		19,610
Substandard		569		10,639		617		5,447		963		2,038		48,525		68,798
Doubtful		0		0		0		0		0		0		0		0
Total Commercial, financial and agricultural	$	1,263,461	$	344,733	$	230,465	$	175,316	$	91,019	$	139,340	$	1,051,566	$	3,295,900
Real estate - construction
Pass	$	230,931	$	222,357	$	53,981	$	16,361	$	7,677	$	13,816	$	48,256	$	593,379
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		0		0		0		0		235		0		235
Doubtful		0		0		0		0		0		0		0		0
Total Real estate - construction	$	230,931	$	222,357	$	53,981	$	16,361	$	7,677	$	14,051	$	48,256	$	593,614
Owner-occupied commercial
Pass	$	351,808	$	271,645	$	221,513	$	198,935	$	158,531	$	417,743	$	61,119	$	1,681,294
Special Mention		0		0		0		6,524		543		1,873		200		9,140
Substandard		0		0		12		780		0		1,962		240		2,994
Doubtful		0		0		0		0		0		0		0		0
Total Owner-occupied commercial	$	351,808	$	271,645	$	221,525	$	206,239	$	159,074	$	421,578	$	61,559	$	1,693,428
1-4 family mortgage
Pass	$	179,314	$	111,016	$	70,381	$	60,774	$	27,985	$	44,111	$	212,616	$	706,197
Special Mention		508		0		0		105		481		0		1,112		2,206
Substandard		350		126		0		235		218		0		2,360		3,289
Doubtful		0		0		0		0		0		0		0		0
Total 1-4 family mortgage	$	180,172	$	111,142	$	70,381	$	61,114	$	28,684	$	44,111	$	216,088	$	711,692
Other mortgage
Pass	$	470,086	$	470,092	$	250,945	$	368,283	$	180,244	$	272,722	$	68,721	$	2,081,093
Special Mention		0		0		0		2,793		541		8,566		0		11,900
Substandard		0		50		4,589		8,552		0		0		0		13,191
Doubtful		0		0		0		0		0		0		0		0
Total Other mortgage	$	470,086	$	470,142	$	255,534	$	379,628	$	180,785	$	281,288	$	68,721	$	2,106,184
Consumer
Pass	$	20,410	$	4,421	$	1,551	$	1,671	$	1,031	$	3,615	$	32,125	$	64,824
Special Mention		0		0		15		0		31		0		0		46
Substandard		0		0		0		0		0		0		0		0
Doubtful		0		0		0		0		0		0		0		0
Total Consumer	$	20,410	$	4,421	$	1,566	$	1,671	$	1,062	$	3,615	$	32,125	$	64,870
Total Loans
Pass	$	2,512,890	$	1,412,221	$	828,209	$	815,640	$	465,361	$	889,028	$	1,410,930	$	8,334,279
Special Mention		3,059		1,404		25		9,675		1,759		10,720		16,260		42,902
Substandard		919		10,815		5,218		15,014		1,181		4,235		51,125		88,507
Doubtful		0		0		0		0		0		0		0		0
Total Loans	$	2,516,868	$	1,424,440	$	833,452	$	840,329	$	468,301	$	903,983	$	1,478,315	$	8,465,688

	Commercial,
	financial and			Real estate -			Real estate -
	agricultural			construction			mortgage			Consumer			Total

	(In Thousands)
	Three Months Ended September 30, 2020
Allowance for loan losses:
Balance at June 30, 2020	$	47,986		$	4,531		$	38,399		$	591		$	91,507
Charge-offs		(11,146	)		0			(200	)		(44	)		(11,390	)
Recoveries		12			0			12			15			39
Provision		12,421			(441	)		304			0			12,284
Balance at September 30, 2020	$	49,273		$	4,090		$	38,515		$	562		$	92,440

	Three Months Ended September 30, 2019
Allowance for loan losses:
Balance at June, 2019	$	38,709		$	3,419		$	28,783		$	475		$	71,386
Charge-offs		(3,626	)		0			(4,974	)		(172	)		(8,772	)
Recoveries		126			1			0			60			187
Allocation from LGP		4,905			115			2,386			0			7,406
Provision		5,108			(343	)		2,069			151			6,985
Balance at September 30, 2019	$	45,222		$	3,192		$	28,264		$	514		$	77,192

	Nine Months Ended September 30, 2020
Balance at December 31, 2019
Allowance for loan losses:	$	43,666		$	2,768		$	29,653		$	497		$	76,584
Charge-offs		(15,144	)		(830	)		(4,397	)		(165	)		(20,536	)
Recoveries		158			2			26			55			241
Provision		20,593			2,150			13,233			175			36,151
Balance at September 30, 2020	$	49,273		$	4,090		$	38,515		$	562		$	92,440

	Nine Months Ended September 30, 2019
Allowance for loan losses:
Balance at December 31, 2018	$	39,016		$	3,522		$	25,508		$	554		$	68,600
Charge-offs		(10,273	)		0			(5,193	)		(453	)		(15,919	)
Recoveries		255			2			11			83			351
Allocation from LGP		4,905			115			2,386			0			7,406
Provision		11,319			(447	)		5,552			330			16,754
Balance at September 30, 2019	$	45,222		$	3,192		$	28,264		$	514		$	77,192

	As of September 30, 2020
Allowance for loan losses:
Individually Evaluated for Impairment	$	9,204		$	201		$	195		$	0		$	9,600
Collectively Evaluated for Impairment		40,069			3,889			38,320			562			82,840

Loans:
Ending Balance	$	3,466,189		$	530,919		$	4,453,612		$	57,834		$	8,508,554
Individually Evaluated for Impairment		73,800			587			19,376			0			93,763
Collectively Evaluated for Impairment		3,392,389			530,332			4,434,236			57,834			8,414,791

	As of December 31, 2019
Allowance for loan losses:
Individually Evaluated for Impairment	$	6,085		$	86		$	3,633		$	0		$	9,804
Collectively Evaluated for Impairment		37,581			2,682			26,020			497			66,780

Loans:
Ending Balance	$	2,696,210		$	521,392		$	3,979,060		$	64,789		$	7,261,451
Individually Evaluated for Impairment		20,843			4,320			17,985			0			43,148
Collectively Evaluated for Impairment		2,675,367			517,072			3,961,075			64,789			7,218,303

	Three Months Ended March 31, 2020
Allowance for loan losses:
Balance at December 31, 2019	$	43,666		$	2,768		$	29,653		$	497		$	76,584
Charge-offs		(2,640	)		(454	)		(1,678	)		(58	)		(4,830	)
Recoveries		62			1			1			12			76
Provision		7,692			1,442			4,384			66			13,584
Balance at March 31, 2020	$	48,780		$	3,757		$	32,360		$	517		$	85,414

	Commercial,
	financial and		Real estate -		Real estate -
	agricultural		construction		mortgage		Consumer		Total
	(In Thousands)

Allowance for loan losses:
Individually Evaluated for Impairment	$	8,840	$	351	$	931	$	0	$	10,122
Collectively Evaluated for Impairment		39,940		3,406		31,429		517		75,292

Loans:
Ending Balance	$	2,771,307	$	548,578	$	4,188,539	$	60,412	$	7,568,836
Individually Evaluated for Impairment		44,868		1,834		13,815		9		60,526
Collectively Evaluated for Impairment		2,726,439		546,744		4,174,724		60,403		7,508,310

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020		2019			2020		2019
Interest income:
Interest and fees on loans	$	89,564	$	90,767		$	268,332	$	264,901
Taxable securities		5,858		4,367			16,104		12,306
Nontaxable securities		166		316			610		1,155
Federal funds sold		16		1,768			327		4,985
Other interest and dividends		506		3,912			2,584		9,269
Total interest income		96,110		101,130			287,957		292,616
Interest expense:
Deposits		9,876		24,787			37,377		71,172
Borrowed funds		1,152		3,338			4,624		9,576
Total interest expense		11,028		28,125			42,001		80,748
Net interest income		85,082		73,005			245,956		211,868
Provision for loan losses		12,284		6,985			36,151		16,754
Net interest income after provision for loan losses		72,798		66,020			209,805		195,114
Noninterest income:
Service charges on deposit accounts		1,818		1,735			5,557		5,223
Mortgage banking		2,519		1,333			5,697		2,995
Credit card income		1,840		1,868			5,003		5,185
Securities gains		0		34			0		28
Increase in cash surrender value life insurance		1,733		787			4,650		2,327
Other operating income		262		453			972		1,172
Total noninterest income		8,172		6,210			21,879		16,930
Noninterest expenses:
Salaries and employee benefits		14,994		15,499			46,444		44,103
Equipment and occupancy expense		2,556		2,387			7,390		6,933
Third party processing and other services		3,281		2,923			10,360		8,058
Professional services		955		887			2,994		3,072
FDIC and other regulatory assessments (credits)		1,061		(296	)		2,988		1,804
OREO expense		119		78			2,023		312
Other operating expenses		3,607		3,683			11,110		12,227
Total noninterest expenses		26,573		25,161			83,309		76,509
Income before income taxes		54,397		47,069			148,375		135,535
Provision for income taxes		11,035		9,506			29,787		27,329
Net income		43,362		37,563			118,588		108,206
Preferred stock dividends		0		0			31		31
Net income available to common stockholders	$	43,362	$	37,563		$	118,557	$	108,175

Basic earnings per common share	$	0.80	$	0.70		$	2.20	$	2.02
Diluted earnings per common share	$	0.80	$	0.69		$	2.19	$	2.00

See Notes to Consolidated Financial Statements.

SERVISFIRST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
	Three Months Ended March 31,
	2021			2020
Net income	$	51,455		$	34,778
Other comprehensive (loss) income, net of tax:
Unrealized net holding (losses) gains arising during period from securities available for sale, net of tax of $(917) and $3,110 for 2021 and 2020, respectively		(3,464	)		11,699
Other comprehensive (loss) income, net of tax		(3,464	)		11,699
Comprehensive income	$	47,991		$	46,477

	Three Months Ended September 30,
	Common Shares		Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Noncontrolling interest			Total Stockholders' Equity
Balance, July 1, 2019		53,526,882	$	0	$	54	$	218,658		$	555,425		$	4,318	$	502		$	778,957
Common dividends declared, $0.15 per share		-		0		0		0			(8,020	)		0		0			(8,020	)
Issue restricted shares pursuant to stock incentives, net of forfeitures		10,500		0		0		0			0			0		0			0
Issue shares of common stock upon exercise of stock options		41,731		0		0		571			0			0		0			571
9,069 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(289	)		0			0		0			(289	)
Stock-based compensation expense		-		0		0		294			0			0		0			294
Other comprehensive income, net of tax		-		0		0		0			0			1,461		0			1,461
Net income		-		0		0		0			37,563			0		0			37,563
Balance, September 30, 2019		53,579,113	$	0	$	54	$	219,234		$	584,968		$	5,779	$	502		$	810,537

Balance, July 1, 2020		53,874,276	$	0	$	54	$	222,437		$	672,984		$	18,611	$	502		$	914,588
Common dividends declared, $0.175 per share		-		0		0		0			(9,422	)		0		0			(9,422	)
Issue restricted shares pursuant to stock incentives, net of forfeitures		3,500		0		0		0			0			0		0			0
Issue shares of common stock upon exercise of stock options		37,469		0		0		728			0			0		0			728
5,831 shares of common stock withheld in net settlement upon exercise of stock options		-		0		0		(225	)		0			0		0			(225	)
Stock-based compensation expense		-		0		0		340			0			0		0			340
Other comprehensive loss, net of tax		-		0		0		0			0			220		0			220
Net income		-		0		0		0			43,362			0		(2	)		43,360
Balance, September 30, 2020		53,915,245	$	0	$	54	$	223,280		$	706,924		$	18,831	$	500		$	949,589

~~SERVISFIRST BANCSHARES, INC.~~
~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~(In thousands) (Unaudited)~~

	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, 2021
Mortgage-backed securities	$	(2,795	)	$	191,402	$	0		$	0	$	(2,795	)	$	191,402
State and municipal securities		(189	)		5,467		0			0		(189	)		5,467
Corporate debt		(234	)		29,836		(45	)		1,990		(279	)		31,826
Total	$	(3,218	)	$	226,705	$	(45	)	$	1,990	$	(3,263	)	$	228,694

December 31, 2020
Mortgage-backed securities	$	(18	)	$	3,667	$	0		$	0	$	(18	)	$	3,667
Corporate debt		(504	)		59,576		0			0		(504	)		59,576
Total	$	(522	)	$	63,243	$	0		$	0	$	(522	)	$	63,243

	September 30,			December 31,
	2020			2019
	(Dollars In Thousands)
Commercial, financial and agricultural	$	3,466,189		$	2,696,210
Real estate - construction		530,919			521,392
Real estate - mortgage:
Owner-occupied commercial		1,725,222			1,587,478
1-4 family mortgage		671,841			644,188
Other mortgage		2,056,549			1,747,394
Subtotal: Real estate - mortgage		4,453,612			3,979,060
Consumer		57,834			64,789
Total Loans		8,508,554			7,261,451
Less: Allowance for loan losses		(92,440	)		(76,584	)
Net Loans	$	8,416,114		$	7,184,867
Commercial, financial and agricultural		40.74	%		37.13	%
Real estate - construction		6.24	%		7.18	%
Real estate - mortgage:
Owner-occupied commercial		20.27	%		21.86	%
1-4 family mortgage		7.90	%		8.87	%
Other mortgage		24.17	%		24.07	%
Subtotal: Real estate - mortgage		52.34	%		54.80	%
Consumer		0.68	%		0.89	%
Total Loans		100.00	%		100.00	%

	March 31,			December 31,
	2021			2020
	(Dollars In Thousands)
Commercial, financial and agricultural	$	3,323,093		$	3,295,900
Real estate - construction		666,592			593,614
Real estate - mortgage:
Owner-occupied commercial		1,698,695			1,693,428
1-4 family mortgage		685,840			711,692
Other mortgage		2,068,560			2,106,184
Subtotal: Real estate - mortgage		4,453,095			4,511,304
Consumer		62,200			64,870
Total Loans		8,504,980			8,465,688
Less: Allowance for credit losses		(94,906	)		(87,942	)
Net Loans	$	8,410,074		$	8,377,746


Commercial, financial and agricultural		39.07	%		38.93	%
Real estate - construction		7.84	%		7.01	%
Real estate - mortgage:
Owner-occupied commercial		19.97	%		20.00	%
1-4 family mortgage		8.07	%		8.41	%
Other mortgage		24.32	%		24.88	%
Subtotal: Real estate - mortgage		52.36	%		53.29	%
Consumer		0.73	%		0.77	%
Total Loans		100.00	%		100.00	%

							For the three months				For the nine months
							ended September 30,				ended September 30,
	September 30, 2020						2020				2020
									Interest				Interest
			Unpaid				Average		Income		Average		Income
	Recorded		Principal		Related		Recorded		Recognized		Recorded		Recognized
	Investment		Balance		Allowance		Investment		in Period		Investment		in Period

	(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural	$	50,898	$	60,687	$	-	$	61,374	$	442	$	61,967	$	1,605
Real estate - construction		0		0		-		0		0		0		0
Real estate - mortgage:
Owner-occupied commercial		1,581		1,581		-		1,582		12		1,600		52
1-4 family mortgage		2,899		2,899		-		2,882		26		2,814		78
Other mortgage		12,200		12,200		-		12,068		122		12,211		396
Total real estate - mortgage		16,680		16,680		-		16,532		160		16,625		526
Consumer		0		0		-		0		0		0		0
Total with no allowance recorded		67,578		77,367		-		77,906		602		78,592		2,131

With an allowance recorded:
Commercial, financial and agricultural		22,902		23,169		9,204		21,648		102		22,237		535
Real estate - construction		587		637		201		954		0		1,012		0
Real estate - mortgage:
Owner-occupied commercial		1,252		1,392		146		4,563		3		3,915		97
1-4 family mortgage		412		412		49		398		12		406		12
Other mortgage		1,032		1,032		0		1,022		11		1,077		35
Total real estate - mortgage		2,696		2,836		195		5,983		26		5,398		144
Consumer		0		0		0		0		0		0		0
Total with allowance recorded		26,185		26,642		9,600		28,585		128		28,647		679

Total Impaired Loans:
Commercial, financial and agricultural		73,800		83,856		9,204		83,022		544		84,204		2,140
Real estate - construction		587		637		201		954		0		1,012		0
Real estate - mortgage:
Owner-occupied commercial		2,833		2,973		146		6,145		15		5,515		149
1-4 family mortgage		3,311		3,311		49		3,280		38		3,220		90
Other mortgage		13,232		13,232		0		13,090		133		13,288		431
Total real estate - mortgage		19,376		19,516		195		22,515		186		22,023		670
Consumer		0		0		0		0		0		0		0
Total impaired loans	$	93,763	$	104,009	$	9,600	$	106,491	$	730	$	107,239	$	2,810

December 31, 2019
							For the twelve months
							ended December 31, 2019
			Unpaid				Average		Interest Income
	Recorded		Principal		Related		Recorded		Recognized in
	Investment		Balance		Allowance		Investment		Period

	(In Thousands)
With no allowance recorded:
Commercial, financial and agricultural	$	9,015	$	10,563	$	-	$	11,284	$	562
Real estate - construction		2,731		2,735		-		2,063		126
Real estate - mortgage:
Owner-occupied commercial		7,150		7,246		-		7,548		618
1-4 family mortgage		287		287		-		289		2
Other mortgage		0		0		-		0		0
Total real estate - mortgage		7,437		7,533		-		7,837		620
Consumer		0		0		-		0		0
Total with no allowance recorded		19,183		20,831		-		21,184		1,308

With an allowance recorded:
Commercial, financial and agricultural		11,828		19,307		6,085		19,714		395
Real estate - construction		1,589		1,589		86		1,614		27
Real estate - mortgage:
Owner-occupied commercial		7,888		11,028		2,456		13,627		301
1-4 family mortgage		1,153		1,153		176		1,157		1
Other mortgage		1,507		1,507		1,001		1,468		21
Total real estate - mortgage		10,548		13,688		3,633		16,252		323
Consumer		0		0		0		0		0
Total with allowance recorded		23,965		34,584		9,804		37,580		745

Total Impaired Loans:
Commercial, financial and agricultural		20,843		29,870		6,085		30,998		957
Real estate - construction		4,320		4,324		86		3,677		153
Real estate - mortgage:
Owner-occupied commercial		15,038		18,274		2,456		21,175		919
1-4 family mortgage		1,440		1,440		176		1,446		3
Other mortgage		1,507		1,507		1,001		1,468		21
Total real estate - mortgage		17,985		21,221		3,633		24,089		943
Consumer		0		0		0		0		0
Total impaired loans	$	43,148	$	55,415	$	9,804	$	58,764	$	2,053

			Accounts								ACL
March 31, 2021	Real Estate		Receivable		Equipment		Other		Total		Allocation
	(In Thousands)
Commercial, financial and agricultural	$	13,987	$	24,957	$	17,742	$	5,603	$	62,289	$	8,675
Real estate - construction		235		0		0		0		235		1
Real estate - mortgage:
Owner-occupied commercial		2,007		729		0		0		2,736		497
1-4 family mortgage		1,738		0		0		25		1,763		0
Other mortgage		13,079		0		0		0		13,079		0
Total real estate - mortgage		16,824		729		0		25		17,578		497
Consumer		0		0		0		0		0		0
Total	$	31,046	$	25,686	$	17,742	$	5,628	$	80,102	$	9,173

	~~2019~~2021
Expected volatility		40.00	%
Expected dividends		~~1.74~~1.78	%
Expected term (in years)		~~6.7~~7.5
Risk-free rate		~~2.56~~2.43	%

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (years)		Value
								(In Thousands)
Nine Months Ended September 30, 2020:
Outstanding at January 1, 2020		965,248		$	15.19		4.9	$	21,911
Granted		0			0		-		0
Exercised		(279,300	)		11.36		3.2		6,330
Forfeited		(18,000	)		30.79		6.4		58
Outstanding at September 30, 2020		667,948			16.37		4.5	$	11,720

Exercisable at September 30, 2020		209,200		$	12.41		3.2	$	4,425

Nine Months Ended September 30, 2019:
Outstanding at January 1, 2019		1,238,748		$	13.02		5.2	$	23,355
Granted		10,500			34.44		9.4		(14	)
Exercised		(239,300	)		7.02		2.3		6,162
Forfeited		(20,200	)		24.88		6.5		167
Outstanding at September 30, 2019		989,748			14.46		5.0	$	18,603

Exercisable at September 30, 2019		278,000		$	7.36		3.1	$	7,261

	Shares			Weighted Average Grant Date Fair Value
Nine Months Ended September 30, 2020:
Non-vested at January 1, 2020		71,290		$	31.53
Granted		29,067			33.20
Vested		(19,928	)		23.64
Forfeited		0			0
Non-vested at September 30, 2020		80,429			34.09

Nine Months Ended September 30, 2019:
Non-vested at January 1, 2019		56,576		$	29.94
Granted		21,274			34.08
Vested		(5,200	)		20.31
Forfeited		(2,500	)		38.17
Non-vested at September 30, 2019		70,150			31.62

	Restricted Stock					Performance Shares
	Shares			Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Three Months Ended March 31, 2021:
Non-vested at January 1, 2021		84,307		$	34.92		0	$	0
Granted		48,217			42.07		12,437		37.05
Vested		(5,158	)		22.72		0		0
Forfeited		(5,575	)		38.96		0		0
Non-vested at March 31, 2021		121,791			38.08		12,437		37.05

Three Months Ended March 31, 2020:
Non-vested at January 1, 2020		71,290		$	31.53		0	$	0
Granted		15,300			39.45		0		0
Vested		(8,376	)		18.64		0		0
Forfeited		0			0		0		0
Non-vested at March 31, 2020		78,214			34.46		0		0

	September 30, 2020				December 31, 2019
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
	(In Thousands)
Financial Assets:
Level 1 inputs:
Cash and due from banks	$	1,622,069	$	1,622,069	$	530,127	$	530,127

Level 2 inputs:
Federal funds sold		1,302		1,302		100,473		100,473
Mortgage loans held for sale		21,472		22,244		6,302		6,312

Level 3 inputs:
Held to maturity debt securities		250		250		250		250
Loans, net		8,331,951		8,232,972		7,151,523		7,099,198

Financial liabilities:
Level 2 inputs:
Deposits	$	9,673,783	$	9,687,830	$	7,530,433	$	7,534,984
Federal funds purchased		669,350		669,350		470,749		470,749
Other borrowings		64,719		63,840		64,703		65,048

	Percentage of Total Loans in ~~Market~~MSA
Birmingham, AL		~~39.8~~36.2	%
Huntsville, AL		~~8.4~~8.7	%
Dothan, AL		~~8.6~~9.3	%
Montgomery, AL		~~5.5~~5.7	%
Mobile, AL		~~6.1~~6.5	%
Total Alabama MSAs		~~68.4~~66.4	%
Pensacola, FL		~~6.3~~6.5	%
West Florida (1)		~~4.9~~6.2	%
Total Florida MSAs		~~11.2~~12.7	%
Nashville, TN		~~9.4~~9.6	%
Atlanta, GA		~~6.5~~6.9	%
Charleston, SC		4.4	%

	As of and for the Three Months Ended						As of and for the Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
	(Dollars in thousands)
Total loans outstanding, net of unearned income	$	8,508,554		$	7,022,069		$	8,508,554		$	7,022,069
Average loans outstanding, net of unearned income	$	8,365,155		$	6,961,270		$	8,021,262		$	6,785,257
Allowance for loan losses at beginning of period		91,507			71,386			76,584			68,600
Charge-offs:
Commercial, financial and agricultural loans		11,146			3,626			15,144			10,273
Real estate - construction		-			-			830			-
Real estate - mortgage		200			4,974			4,397			5,193
Consumer loans		44			172			165			453
Total charge-offs		11,390			8,772			20,536			15,919
Recoveries:
Commercial, financial and agricultural loans		12			126			158			255
Real estate - construction		-			1			2			2
Real estate - mortgage		12			-			26			11
Consumer loans		15			60			55			83
Total recoveries		39			187			241			351
Net charge-offs		11,351			8,585			20,295			15,568
Allocation from LGP		-			7,406			-			7,406
Provision for loan losses		12,284			6,985			36,151			16,754
Allowance for loan losses at period end	$	92,440		$	77,192		$	92,440		$	77,192
Allowance for loan losses to period end loans		1.09	%		1.10	%		1.09	%		1.10	%
Net charge-offs to average loans		0.54	%		0.49	%		0.34	%		0.31	%

			Percentage of loans
			in each category
September 30, 2020	Amount		to total loans
	(In Thousands)
Commercial, financial and agricultural	$	49,273		40.74	%
Real estate - construction		4,090		6.24	%
Real estate - mortgage		38,515		52.34	%
Consumer		562		0.68	%
Total	$	92,440		100.00	%

			Percentage
			of loans in
			each
			category to
March 31, 2021	Amount		total loans
	(In Thousands)
Commercial, financial and agricultural	$	38,232		39.07	%
Real estate - construction		19,391		7.84	%
Real estate - mortgage		35,607		52.36	%
Consumer		1,676		0.73	%
Total	$	94,906		100.00	%

	September 30, 2020					December 31, 2019
				Number of					Number of
	Balance			Loans		Balance			Loans
	(Dollar Amounts In Thousands)
Nonaccrual loans:
Commercial, financial and agricultural	$	18,636			24	$	14,729			29
Real estate - construction		587			3		1,589			2
Real estate - mortgage:
Owner-occupied commercial		1,838			6		10,826			3
1-4 family mortgage		614			6		1,440			5
Other mortgage		-			-		1,507			1
Total real estate - mortgage		2,452			12		13,773			9
Consumer		-			-		-			-
Total Nonaccrual loans:	$	21,675			39	$	30,091			40

90+ days past due and accruing:
Commercial, financial and agricultural	$	63			3	$	201			3
Real estate - construction		-			-		-			-
Real estate - mortgage:
Owner-occupied commercial		-			-		-			-
1-4 family mortgage		-			-		873			5
Other mortgage		4,827			1		4,924			1
Total real estate - mortgage		4,827			1		5,797			6
Consumer		8			4		23			8
Total 90+ days past due and accruing:	$	4,898			8	$	6,021			17

Total Nonperforming Loans:	$	26,573			47	$	36,112			57

Plus: Other real estate owned and repossessions		6,976			10		8,178			12
Total Nonperforming Assets	$	33,549			57	$	44,290			69

Restructured accruing loans:
Commercial, financial and agricultural	$	1,800			5	$	625			2
Real estate - construction		-			-		-			-
Real estate - mortgage:
Owner-occupied commercial		-			-		-			-
1-4 family mortgage		-			-		-			-
Other mortgage		-			-		-			-
Total real estate - mortgage		-			-		-			-
Consumer		-			-		-			-
Total restructured accruing loans:	$	1,800			5	$	625			2

Total Nonperforming assets and restructured accruing loans	$	35,349			62	$	44,915			71

Ratios:
Nonperforming loans to total loans		0.31	%				0.50	%
Nonperforming assets to total loans plus other real estate owned and repossessions		0.39	%				0.61	%
Nonperforming assets plus restructured accruing loans to total loans plus other real estate owned and repossessions		0.42	%				0.62	%

	September 30, 2020				December 31, 2019
Noninterest-bearing demand	$	2,762,814	28.56	%	$	1,749,879	23.24	%
Interest-bearing demand		6,030,311	62.34	%		4,986,193	66.21	%
Savings		85,916	0.89	%		65,808	0.87	%
Time deposits, $250,000 and under		276,127	2.85	%		267,221	3.55	%
Time deposits, over $250,000		468,615	4.84	%		461,332	6.13	%
Brokered time deposits		50,000	0.52	%		-	-	%
	$	9,673,783	100.00	%	$	7,530,433	100.00	%

	March 31, 2021				December 31, 2020
Non-interest-bearing demand	$	3,044,611	28.78	%	$	2,788,772	27.96	%
Interest-bearing		6,626,953	62.65	%		6,276,910	62.92	%
Savings		97,946	0.93	%		89,418	0.90	%
Time deposits, $250,000 and under		267,164	2.53	%		273,301	2.74	%
Time deposits, over $250,000		490,936	4.64	%		497,323	4.99	%
Brokered time deposits		50,000	0.47			50,000	0.50
	$	10,577,610	100.00	%	$	9,975,724	100.00	%

10.1*	Form of Executive Officer Change in Control Agreement (filed as Exhibit 10 to the Company’s Current Report on Form 8-K dated February 25, 2021)
10.2*	ServisFirst Bancshares, Inc. Annual Incentive Plan, effective January 1, 2021 (filed as Exhibit 10 to the Company’s Current Report on Form 8-K dated January 25, 2021)
10.3*	Form of ServisFirst Bancshares, Inc. Restricted Stock Award Agreement
10.4*	Form of ServisFirst Bancshares, Inc. Performance Share Award Agreement
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 ~~– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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)

	SERVISFIRST BANCSHARES, INC.

Date: April 29, 2021
By
~~Date: October 28, 2020~~	By	/s/ Thomas A. Broughton III
		Thomas A. Broughton III
		President and Chief Executive Officer

Date: April 29, 2021	By
~~Date: October 28, 2020~~	By	/s/ William M. Foshee
		William M. Foshee
		Chief Financial Officer