Serial Local Bank Builder

ServisFirst Bank President and CEO Tom Broughton seems nonchalant as he fields questions about goals and strategic planning. “We’ve never had goals … but we continue to grow, ” Broughton says. “We’re opportunistic, but there’s no real plan. We get bankers in a good market and try to get everybody on board. We just plan to keep doing what we’ve been doing.”

Since its creation in 2005, Birmingham-based ServisFirst has done what a lot of other banks would like to do — make money, grow assets and stay healthy.
Its modus operandi is simple — identify a market, recruit a team of experienced bankers to develop it and support those bankers with the latest technology and shareholders who are expected to bring business to the bank.

ServisFirst, a public, non-traded community bank, has been reporting record numbers as it seeks relationships with professionals and small- to medium-size businesses. Net income in 2012 was a record $34 million — almost 50 percent more than in 2011. First quarter 2013 net income was a record $9.2 million, 12 percent more than the same quarter last year. Assets stand at roughly $3 billion.

Along the way, American Banker magazine named Broughton its Community Banker of the Year in 2009. And earlier this year, SNL Financial listed ServisFirst as the 14th-best performer in 2012 among U.S. banks with assets between $500 million and $5 billion.

ServisFirst opened its first bank in Birmingham and followed that with banks in Huntsville, Montgomery, Dothan, Pensacola, Mobile and, most recently, Nashville. The bank does business in Atlanta. but does not have an office there.

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The idea, Broughton says, is to grow in concentric circles, but the bank will not lock itself into a rigid plan for growth. “We’re more entrepreneurial, ” Broughton says. “We’re going to look for opportunities. But our footprint will probably be generally in the Southeast.”

Broughton believes the foundation of ServisFirst’s success is a network of more than 1, 200 shareholders. In return for stock, shareholders are expected to bring business to the bank. “It’s sort of like a cooperative, ” Broughton says. “Harry Brock (founder of Central Bank, now BBVA Compass) says that he told a hundred people to require shareholders to bring in business and that I was the only person to ever do it.”

Asked if the shareholders are, in effect, like a sales network, Broughton quickly replies, “It isn’t sales. It’s service. People come to us because they don’t get the service they need.”

Supported by this shareholder arrangement, ServisFirst has tapped experienced bankers who know the lay of the land well enough to jump-start business in their markets. Consider these examples:

In Mobile, ServisFirst is headed by Bibb Lamar, 69, who has more than 40 years of banking experience in that area. He was CEO of BankTrust at the time it was sold to Trustmark of Jackson, Miss.

Ronald DeVane, 62, came out of retirement to serve as CEO of ServisFirst Bank in Dothan. When he retired from Wachovia in 2006, DeVane was CEO of the Midsouth Region, which covered three states and the Florida Panhandle.

Carl Barker, 65, headed Regions’ business in Montgomery but decided to leave in 2007 after the merger with AmSouth. He now is president and CEO of ServisFirst Bank of Montgomery.

ServisFirst Bank of Huntsville is headed by 44-year-old Andy Kattos, who was executive vice president/senior lender at First Commercial Bank when he left to join ServisFirst in 2006.

Conversations with Broughton and Kattos reveal a decidedly different culture at ServisFirst. For starters, Broughton has a strong disdain for meetings, so the company has as few as possible. “I’d much rather be out of the office visiting with customers, ” he says.

There is equal disdain for slow decision-making and bureaucratic layers. ServisFirst bases loans largely on a customer’s financial statements, his or her relationship with the bank and a simple loan agreement. It trusts its local bankers to make the right credit decisions. “We don’t do loan committees, ” Kattos says. “We don’t think committees are necessarily the best way to do loans. Politics and personalities can get in the way. Without question, the way we do loans eliminates layers of bureaucracy.”

ServisFirst does not have — and does not want — an expensive network of branch locations. It does everything possible to use technology to reduce costs and provide service and convenience for customers. That includes remote deposits, online banking and mobile banking. “The industry is changing, and we are aware of that, ” Kattos says. “We want to stay ahead of those changes.”

All of ServisFirst’s growth so far has been organic, so the bank does not deal with acquisition costs. Also, it is not afraid to be different. Its recent entry into Nashville was typical. There was next to no fanfare, and there was no grand opening. The banking team was named, office space was set up and work on growing the business began. “We started small in Nashville, ” Broughton says. “We started small in Mobile. We start small, but we’ve always been able to grow the business.”

An Andalusia native, the 58-year-old Broughton holds a degree in finance from the University of Alabama and an MBA from Northwestern University’s J. L. Kellogg Graduate School of Management. The ServisFirst story might have seemed improbable early in his career, when he was an up-and-coming executive at AmSouth, the largest bank in Alabama at the time. Broughton’s AmSouth mentors included John Woods, Dan Hendley and Newton Debardeleben, all of whom were executives at the highest level. “I learned a lot from each of them, and they were all so different, ” Broughton says.

Broughton jumped the AmSouth ship in ’85, just after the wave of statewide consolidations that left AmSouth as the largest bank in Alabama and left a lot of customers grumbling they’d become little fish a big sea. In ’86, at age 29, Broughton and another ex-AmSouth executive, Richard Anthony, and Jasper businessman John Oliver formed a denovo bank that aimed to serve Birmingham customers feeling alienated and underserved. That was First Commercial Bank, strategically located on the 280 cut through Red Mountain and capitalized with some of the oldest “over the mountain” money in Birmingham.

Broughton was First Commercial’s first president, and he continued to serve in that capacity and as CEO after the bank became part of Synovus Bank in 1992. In 1998, he became a regional CEO for Synovus, responsible for Alabama and Florida, and in 2011 his region’s territory changed to Alabama, Tennessee and parts of Georgia.

In 2004, Broughton retired from Synovus, which currently has $29 billion in assets and operates more than 30 financial institutions in five southeastern states. He started ServisFirst the following year.

Why did he leave established financial institutions not once, but twice, to create a startup?

“I think maybe it’s the aspect of growing a business, ” Broughton says. “A lot of people can manage a business, but very few can build a business and grow it. I left AmSouth because Birmingham needed a good community bank. Ten years ago, I thought there was a better model out there for another community bank — a better model than (First Commercial’s). And that’s why I started ServisFirst.”

Broughton exudes a sense of being at ease with where he is. It’s as if his game plan is in place, and he’s content to execute and let the cards fall where they will. If the company’s stock price is any indication, he and other shareholders are being dealt a strong hand. At the end of March, the book value of ServisFirst stock was $31.54, more than three times its initial value.

Andy Kattos

Photo by Dennis Keim

Andy Kattos was about where he wanted to be in his career with First Commercial Bank in Huntsville when the call came from Tom Broughton. Kattos knew him already. Broughton had co-founded the bank where Kattos worked and they’d been colleagues until Broughton left in 2004.

Now, a year later, Broughton wanted to talk about ServisFirst.

The two agreed to meet for breakfast in Birmingham on an autumn weekend in 2005. “Tom showed up in shorts and flip-flops, ” Kattos says. “It was a real informal get together. He told me what they were doing. He showed me their offices. He gave me some brochures, and that was about it. I left and didn’t hear anything from him for months.”

But early in 2006, Broughton called again. “He said things were going well, that they were going better than expected, ” Kattos says. “They were putting a team together for ServisFirst Bank in Huntsville, and he asked if I was interested in coming on board.”

For Kattos, then in his mid-30s, Broughton’s offer posed a definite risk. He had already been successful in a respected, successful organization, and he was being groomed for a larger role. Moreover, the ServisFirst gig would require him to help raise capital, a task he’d never done before.

Conservative by nature, Kattos was hesitant. But his mind kept going back to one of his first days at First Commercial, as the bank celebrated its seven-year anniversary.

“Everyone was talking that day about how good it felt to be part of a startup, to get in on the ground floor, ” he says. “That was exciting. And I kept thinking about being part of something from the ground floor, and it was just too much to pass up.”

Kattos recruited two executives to form the initial executive management team — competitor David Mathis and co-worker Hill Womble. Both are currently senior vice presidents at ServisFirst in Huntsville. Kattos is president and CEO.

“We spent the first six months raising capital, because we had to do that before we could open the Huntsville bank, ” Kattos says. ServisFirst Bank of Huntsville opened in August 2006 after $12.5 million in local capital had been raised. Only 18 months later, assets in the Huntsville bank had reached $200 million. The transition for Kattos had been successful.

“Going to work for ServisFirst was the best thing that ever happened in my career, ” he says. “I almost feel guilty saying that, because I have a lot of friends in the banking industry, and it’s been tough on a lot of people the past few years.  The recession was the second-worst economy in the nation’s history. But, for me, the past seven years have been a great ride. It really has been a lot of fun.”

Charlie Ingram is a freelance writer for Business Alabama. He lives in Birmingham.

Text By Charlie Ingram

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