Practicing What They Preach
Tom Broughton has put the banking customer at the heart of the ServisFirst mission.
By Julie Keith Photo by Miller Mobley
Tom Broughton retired in 2004—for one week. After several formative years at AmSouth in the 1970s and 80s and then launching, with his cousin, FirstCommercial Bancshares in 1985, Broughton had made a name for himself in the crowded Birmingham banking community. After negotiating the sale of First Commercial to Synovus Financial Corp., he thought he was done. But as technology had finally begun to catch up to his vision of a community bank that didn't rely on a branch system to serve its customers, Broughton's restive mind pulled him out of his home and back into the industry. And ServisFirst was born.
"For 20 years I've fought the perception that bigger was better and safer," the Andalusia native says. With a public increasingly wary of federally bailed-out banks that were deemed "too big to fail," and with technology able to provide banking services to people in their homes or businesses, Broughton, ServisFirst's CEO and president, has seen his vision of a community, or "urban" bank, as he calls it, come to fruition. "Really the whole thought is we offer the big bank products, service and technology, but with the style and service of a community bank. To me, a 'community bank' means that when you walk in the lobby somebody knows your name. But typically community banks don't have the range of services to serve larger businesses. We are different from a community bank; we are an urban bank."
So far, the signs are good for ServisFirst. At its five-year anniversary, the bank recently reported a first-quarter record net income of $4,013,000, a 457-percent increase year-overyear and a 102-percent increase over first quarter 2009. With an annual deposit growth of 20 percent, and 18 straight quarters of profitability at a time when banks large and small are failing or teetering, ServisFirst seems to have hit the sweet spot in an unstable industry and sluggish economy.
"The smartest thing we did, or we think
we did, was be shareholder-centered,"
Broughton says. "[Central Bank founder]
Harry Brock, whose son Skip is our chairman,
told me 'Do not sell stock to anyone who isn't
going to do their banking with you.' Typically nobody does that. Back
in 1985, I drove all over the state of Alabama handing out prospectuses
to anyone I could find who had money to buy the [First Commercial]
stock. After we sold the stock we'd say, 'Now how about doing some
banking with us?' and they'd say, 'No, that's just an investment, I'm
not going to bank with you.' Today we have 1,050 shareholders who
are great supporters of the bank." Indeed, interest in being ServisFirst
investor remains high. At a recent offering of $15 million mandatory
convertible trust securities, the sale was 100 percent oversubscribed.
With locations in Birmingham, Montgomery, Huntsville and Dothan, the bank is "decentralized" as Broughton describes it, relying heavily on the leadership of local CEOs rather than a traditional reporting structure that pushes decisions up the chain to a central headquarters. Online banking and other services, like desktop "remote deposit capture" stations, which allow businesses to make all their check deposits from their offices via a secure scanner that immediately records the deposit into the checking account, has made the old branch system obsolete, according to Broughton. "I'm convinced, and I've been convinced even before the technology came out, that branches will go away," he says. "When is the last time you went into your local branch?" Broughton asked me. After I answered that it's been almost a year, Broughton said, "I rest my case. The big banks are stuck with these huge branch networks, and they really can't close them. It looks like they're going out of business if they start closing branches. One of our guys here, Paul Schabecker, has a saying that, 'Convenience is a perceived rather than an actual need.' A branch network to [most people] is a security blanket."
Broughton sees ServisFirst's success as the next chapter in the story of Birmingham banking. "You can ask anyone in the country in the banking industry where some of the more profitable banks are located, and they'll say 'Birmingham, Alabama.' We have had a number of well-run, profitable banks here for a long period of time. But we invest in people, not places. As we grow, as we add more territories, we'll have to add more people. Our model is not to add a lot of physical brick-andmortar locations. Our strategic plan is if we find the best banker in the best market, then we will expand. That may not make any sense, but the easiest thing to do in our industry is call a contractor and architect and get you a building built somewhere. The hard part is finding the good people to go in it."
As for the future of the bank, Broughton says, "We tell all of our customers we never intend the sell the company. We intend to stay here and grow. We are a public, non-traded company. We're not listed on the exchange, but when the time and the price are right we'll offer an IPO. Now having said that, if we don't do what we're supposed to do, if we don't grow shareholder value, all bets are off."
