$27.31
$73.82
bear $27.31
base $56.87
bull $73.82
margin of safety $27.00
ServisFirst Bancshares owns ServisFirst Bank, a commercial bank headquartered in Birmingham, Alabama. It runs a lean model of relatively few, large offices across Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, Texas and Virginia, lending mainly to businesses and commercial real estate owners, and it also provides correspondent banking services to other banks. At June 30, 2026 it had $18.35 billion of assets, $14.48 billion of loans, $14.55 billion of deposits and $1.98 billion of shareholders' equity. In July 2026 the board declared a two-for-one stock split, paid on August 20, 2026, which doubled the share count to about 109.4 million diluted shares; every per-share figure here is on that post-split basis, and book value is about $18.08 per share. Assets grew from $5.10 billion at the end of 2015 to $17.73 billion at the end of 2025, about 13% a year, without a meaningful rise in the share count, so growth was paid for from retained earnings. How we measured earnings. Operating cash flow adds back loan-loss provisions and the write-down of the bank's tax-credit investments; we treat both as real costs, because loan losses are the main cost of lending and the tax-credit investments are bought to lower taxes, so only their net benefit counts. We also remove timing swings such as mortgage loans held for sale. On that basis owner earnings per share were $1.16 in 2018, $1.39 in 2019, $1.52 in 2020, $1.91 in 2021, $2.33 in 2022, $1.83 in 2023, $2.00 in 2024 and $2.61 in 2025. The 2025 figure includes $16.4 million of realized losses on securities sold to reinvest at higher yields, which we treat as one-time, so 2025 is about $2.46 on a normal basis, up 23% from 2024. How debt is treated. For a bank, deposits and borrowings, including $1.58 billion of federal funds purchased from correspondent-bank clients at June 30, 2026, are the raw material of the business, and their interest is an operating cost already deducted above. We therefore value what shareholders earn after that interest and subtract no debt, so in every case the business value and the shareholders' value are the same figure. Leverage is charged in the bear case through a full credit cycle. Normal earning power. Because the bank keeps growing, we measure profitability as owner earnings over average assets. From 2018 through 2025, a span covering the 2020 pandemic, near-zero rates in 2021, the 2022 rate increases and the 2023-2024 squeeze from higher deposit costs, that return ranged from 1.30% to 1.77%, with a median of about 1.55% (excluding the 2025 securities loss). Recent results run above that: net income was $83.0 million in the first quarter of 2026 and $85.8 million in the second, against $61.4 million in the second quarter of 2025, and second-quarter net interest income rose to $155.6 million from $131.7 million. Several consecutive strong quarters justify moving the normal level up somewhat, but not all the way, since part of the gain reflects lower deposit costs that could reverse; the base case uses 1.62%. To keep equity near 10.4% of assets, each dollar of new assets needs about 10 cents of retained earnings, which we deduct from what owners could take out. Growth check. Owner earnings rose 23% in 2025 on a normal basis. The base case's first year implies owner earnings of about $2.78 per share, about 13% above 2025's $2.46 and below the trailing rate, with the gain coming from the profitability already visible in 2026 and 5% asset growth. Base case, about $56.87 per share: a 1.62% return on assets, with assets growing 5% a year for five years and tapering to 3% by year ten. We credit this growth because the bank has grown its balance sheet organically in every year since 2015 except 2022, when assets fell about 6%, including through 2020 and 2023, funded from its own earnings; 5% is far below the past decade's pace and close to recent years (7.6% in 2024, 2.2% in 2025 and about 7% annualized in the first half of 2026). We do not credit faster growth or new states. After year ten we assume no further growth, only continued earnings from the existing deposit franchise. About $18.00 of the value comes from the first ten years and about $38.87 from the years after. The business is worth about $56.87 per share, it owes nothing beyond the deposits and borrowings already charged through interest cost, so the shares are worth about $56.87. Bear case, about $27.31 per share: this case runs the bank through a commercial real estate credit cycle sized from the 2008-2010 record. Federal Reserve data show industry charge-offs at their 2009-2010 peaks running at about 8.4% a year on construction loans, 1.8% on non-owner-occupied commercial real estate and 1.1% on owner-occupied commercial real estate. Applied to ServisFirst's own mix at the end of 2025 (business loans 23%, construction 10.6%, owner-occupied commercial real estate 20%, non-owner-occupied commercial real estate 33.6% or $4.60 billion, and home mortgages 12%), we estimate that record implies cumulative losses of about 7% of loans, roughly $1.01 billion before tax and $801 million after tax. That total includes half of the $169.7 million of loans on nonaccrual at June 30, 2026; nonaccrual loans rose from $39.5 million at the end of 2024 to $168.4 million at the end of 2025, which the bank attributed to a large real-estate-secured relationship, and the allowance for credit losses stood at $181.9 million at June 30, 2026. We do not credit the bank's own lighter record in the last cycle (net loan losses of 0.41%, 0.60% and 0.55% of average loans in 2008, 2009 and 2010), because the bank had about $1.94 billion of assets at the end of 2010 and is roughly ten times that size today. In year one profitability slips to 1.40% of assets and the troubled relationship costs about $85 million before tax, leaving owner earnings of about $1.73 per share. Then come three recession years with no balance-sheet growth, in which earnings before credit losses fall to 1.40% of assets, the level the bank actually earned in the 2023-2024 squeeze; after the remaining losses, owners earn about -$0.33 per share in each of years two and three and $1.01 in year four. Common equity tier 1 capital was $1.84 billion, 11.65% of risk-weighted assets, at the end of 2025; on these assumptions it dips to about 11.2%, so the case does not require a share issue. Afterwards profitability settles at 1.15% of assets with no further growth, which is the 2023-2024 trough less an allowance for future credit cycles, worth about $1.93 per share a year. About $9.37 of the value comes from the first ten years and about $17.95 from the years after. The business, and therefore the shares, would be worth about $27.31. That is above book value of about $18.08 because the bank keeps its capital through the cycle and its commercial deposit franchise keeps earning once losses pass, as it did through the 2020 pandemic and the 2023 deposit squeeze; the cost of the downturn is charged in full rather than assumed away. Bull case, about $73.82 per share: return on assets holds at 1.80%, close to where the first half of 2026 ran and to 2019's 1.77%, with assets growing 8% a year for five years and tapering to 4% by year ten, still well below the bank's historical pace. About $19.64 of the value comes from the first ten years and about $54.18 from the years after. No further debt is subtracted. What changed since our last estimate. Earlier estimates were stated per pre-split share and are not comparable with the figures above. The margin-of-safety price. How sure are we of earnings? Fairly sure: the bank's profitability has stayed between 1.30% and 1.77% of assets through very different rate environments since 2018. The worst plausible outcome is a severe regional real estate bust combined with a withdrawal of correspondent-bank funding ($1.58 billion of federal funds purchased at June 30, 2026), which could force asset sales or a share issue at a low price; the bear case models the credit losses but not a funding run, and with assets roughly nine times equity, losses well beyond the bear case would consume a meaningful part of capital. If we are wrong about normal profitability (1.40% rather than 1.62%) and growth stops, the shares would be worth about $39.13; if losses instead reach 10% of loans, the bear value falls to about $24.65. The price assumes a three-to-five-year holding period, with a dividend of $0.38 a quarter before the split, or $0.19 per current share. At $27, if the base case plays out, the value would reach about $61.35 in three years, which with dividends implies roughly 33% a year, or about 20% a year if it takes five years; if the bear case's credit cycle arrives instead, its value of about $31.27 three years out implies roughly 7.5% a year, assuming the dividend is maintained. The margin-of-safety price is $27.