When Birmingham, Ala.-based ServisFirst Bank opened a Nashville office in March 2013, Bradford Vieira was tapped to lead the office.
Coming from the commercial banking division at Fifth Third Bank in Nashville, he has built a team of five ServisFirst Nashville employees and launched ServisFirst’s health care division.
A year after launching, the Nashville office has $60 million in assets and expects to reach $100 million by year end. Last week, Vieira sat down with Tennessean reporter Jamie McGee.
A lot of banks that have been in the Nashville area for a while say the market is overcrowded. As a new player in town, how do you see it? It’s very crowded. There are way too many banks in Middle Tennessee, but I also think there is still a segment of middle-market companies not being attended to (by banks). There is a lot of big banks and a lot of small banks. (There are almost no banks) between $5 to $30 billion in asset size. There is a void there that can be filled.
Loans grew by 21 percent year-over-year with Servisfirst, even as we hear about weaker loan demand. What’s behind that? We try to stay out of the highly competitive situations. We don’t want to be in a situation where we’re up against Pinnacle, CapStar, Fifth Third and Regions and whoever is cheaper is going to get it. That’s not the relationships we want. Our model is our bankers are so good that our loan growth comes from people our bankers know. When they have an opportunity come up, they call up our bankers. We may not be the cheapest on the street, but they are not talking to anyone else.
What is your outlook for loan demand? There is a lot of cash on the sidelines and there are a lot of companies that are still skittish to spend money. I think you are going to see the spending environment of middle-market companies improve from this point on. The issue is you’ve got banks starved for assets, so the loan environment is changed in a big way. It affects all of us. What might have been a loan (at 6 percent interest) 12 months ago now is a 4 percent loan. Not because a company is any better, but because the competition has heated up. We need stability in Washington, we need manufacturing to pick up and we need some of these companies to start expanding. As soon as that happens, they will have a need for capital and the banks are going to be there to hopefully provide it.
You expanded into health care in January. Tell me what kind of opportunities you see in that area. Nashville is the health care mecca. It’s the biggest industry in Middle Tennessee. With the Affordable Care Act and and all these legislative changes, the opportunities are as unknown, as robust as they can be. Every dollar that the Affordable Care Act is cutting out of one segment of health care, it’s adding an opportunity into another.
ServisFirst announced it was offering a dividend last week to shareholders. Can you tell me about the thinking behind that? We are 100 percent owned by our clients and employees.
Our CEO (Tom Broughton) saw there was a missing part, a niche not being filled, and he started the bank in 2005 in Birmingham, Ala. They raised $35 million in capital from shareholders with this structure: if we sell you stock, you have to be a client of the bank. Then they went to Huntsville, Ala. They find a team of bankers in Huntsville, hire them and find 50, 75, 100 individuals they want to sell stock to in Huntsville to raise capital for the Huntsville market. We do that in every market.
One of the objectives of 2014 is going to be identifying who are individuals we want to ask to be on our advisory board in Nashville. Each market has their own advisory board who identify 100 to 125 names we want to go to and explain our strategy and pitch the notion of selling our stock to them to raise capital here. Probably in 2015 we will go through the physical exercise of selling stock to those individuals, forming the advisory board and raising that capital. Once we do that, we will open a branch and we will apply to become a full-service branch of ServisFirst.
That’s a unique approach. Why do you do it that way? It’s very unique. Primarily, if you are not going to bank with us, why would we sell you our stock? But the environment it breeds, I think, is the best indicator of why (CEO Tom Broughton) does it. When we opened the office here, as soon as the announcement went out, our phones started ringing off the hook from shareholders and advisory board members in Montgomery, Huntsville, Dothan. They are calling and saying, Bradford, welcome, I’ve got a fraternity brother that has a business in Nashville. I’m calling him right now. If that guy was just a client of the bank and not a shareholder, he most likely doesn’t make that phone call. We expect our shareholders to refer business to us.
If you look at our compounded annual growth rate, we are growing at 20 percent a year, which in this competitive market is phenomenal. That’s with zero acquisitions, all organic growth. So we’ve obviously done very well and the reason we’ve done very well is because we’ve had such a great group of shareholders that continually refer business to us that makes us so successful. So a dividend is Tom’s way to give a piece of that back to the shareholders.
There’s a lot of anticipation for bank mergers in the Southeast. Does the dividend announcement mean that’s not something ServisFirst is thinking about? Our strategy is to continue to grow organically market-by-market. We find a market that has a team that is experienced in that market, has long-time relationships. We hire them and let them keep doing what they are doing. We will continue to look in other markets for those good banking teams. The bank is now almost nine years old and we’ve done zero acquisitions. We want to use our capital and money on our clients.
How do you get talent and how competitive is the market here? (As Broughton says) we go into a market, we find the best bankers who have the best relationships (with people) who become the best shareholders who can become the best advisory board members. We are very consistent with what we are looking for. This is not an institution that is looking for professionals that need a lot of hand-holding. We are looking for experienced (bankers) that we can hire and say, ‘do what you do well, just do it for us and we’ll give you all the support, all the flexibility, anything you need to do what you need to do.’
Any other areas you are looking to grow in? I’d love to find a way to enter the entertainment industry in Nashville. Our focus for 2014 is primarily Middle Tennessee, privately-owned middle market companies in addition to the health care space.
ServisFirst reported growth in annual and fourth quarter net income. What has been the catalyst? We do two things really well. That is loans and deposits to commercial cliemts. We don’t want to spend the money to get good the other stuff we don’t know a lot about. We are not going to have a big wealth management shop, a 401K shop, those kinds of ancillary services.