There’s a new DRIP plan for this bank, which has a current annual dividend yield of 2.01%, paid quarterly.
ServisFirst Bancshares, Inc. (SFBS)
From DRIP Investor
ServisFirst Bancshares, founded in 2005, is a regional bank headquartered in Birmingham, Alabama. The company has offices in Alabama, Georgia, Tennessee, South Carolina, and Florida. Total assets are more than $9 billion and have grown at a compound annual rate of 28% since fiscal 2005.
ServisFirst has a number of attractions. First, the company’s service region in the Southeast should show above-average population growth. Second, the loan portfolio is quite diverse, with fairly limited exposure to sectors especially hurt by the coronavirus. Indeed, hotel loans account for less than 2% of outstanding loans. Restaurants comprise less than 3%. And oil and gas loans are less than 1%. Third, the firm’s track record of growth has been impressive.
Total deposits have grown at a compound annual rate of 28% since fiscal 2005. Per-share earnings have increased at a 24% compound annual rate since fiscal 2006. And tangible book value—an important metric for banks—has grown at a compound annual rate of 18% since fiscal 2005.
Banking stocks have been fairly sluggish this year as investors worry about the weakened economy’s impact on business and the low interest rate environment affecting banks’ net interest margins. ServisFirst has felt some pressure but has performed better than a lot of banks. The stock’s performance over the last 12 months has been better than the S&P 500—a noteworthy accomplishment for a bank stock.
The firm has increased its dividend every year since going public in 2014, with a nearly 17% increase at the beginning of 2020. Trading at a 13% discount to its 52-week high of nearly $41 per share, I don’t expect ServisFirst to be among the leaders should the market’s recent upside action continue. However, I do expect these shares to continue to be among the leaders of the banking sector and view the stock’s long-term total-return potential as solid.
Minimum initial investment in the company’s direct-purchase plan is $250. Alternatively, you may authorize a minimum of five monthly automatic deductions of $50 each from your bank account to fund your initial investment. Subsequent minimum additional purchase amounts are $50. There is no enrollment fee. Optional cash purchase fees are $5 ($2.50 if made with automatic monthly investment) plus $0.05 per share. There is no fee to reinvest dividends. Batch order sales are $15 plus $0.12 per share. Market and limit order sales are $25 plus $0.12 per share. The plan administrator is Computershare. For enrollment information call (800) 368-5948 or visit www.computershare.com.
Charles B. Carlson, CFA, DRIP Investor, dripinvestor.com, 800-233-5922, July 2020