ServisFirst Bancshares, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

Components of Income Tax Expense (Benefit)

The components of income tax expense are as follows:

	Year Ended December 31,
	2013		2012		2011
	(In Thousands)
Current tax expense:
Federal	$	21,264	$	17,993	$	12,045
State		899		1,308		1,584
Total current tax expense		22,163		19,301		13,629
Deferred tax expense (benefit):
Federal		(1,616)		(1,999)		(1,100)
State		(189)		(182)		(140)
Total deferred tax expense		(1,805)		(2,181)		(1,240)
Total income tax expense	$	20,358	$	17,120	$	12,389

Effective Income Tax Rate Reconciliation

The Company’s total income tax expense differs from the amounts computed by applying the Federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows:

	Year Ended December 31, 2013
	Amount		% of Pre-tax Earnings
	(In Thousands)
Income tax at statutory federal rate	$	21,691	35.00	%
Effect on rate of:
State income tax, net of federal tax effect		558	0.90	%
Tax-exempt income, net of expenses		(1,200)	(1.94)	%
Bank owned life insurance contracts		(698)	(1.13)	%
Incentive stock option expense		66	0.11	%
Other		(59)	(0.09)	%
Effective income tax and rate	$	20,358	32.85	%

	Year Ended December 31, 2012
	Amount		% of Pre-tax Earnings
	(In Thousands)
Income tax at statutory federal rate	$	18,047	35.00	%
Effect on rate of:
State income tax, net of federal tax effect		709	1.37	%
Tax-exempt income, net of expenses		(1,007)	(1.95)	%
Bank owned life insurance contracts		(568)	(1.10)	%
Incentive stock option expense		121	0.23	%
Other		(182)	(0.35)	%
Effective income tax and rate	$	17,120	33.20	%

	Year Ended December 31, 2011
	Amount		% of Pre-tax Earnings
	(In Thousands)
Income tax at statutory federal rate	$	12,540	35.00	%
Effect on rate of:
State income tax, net of federal tax effect		967	2.70	%
Tax-exempt income, net of expenses		(875)	(2.44)	%
Bank owned life insurance contracts		(137)	(0.38)	%
Incentive stock option expense		128	0.36	%
Other		(234)	(0.65)	%
Effective income tax and rate	$	12,389	34.59	%

Deferred Tax Assets and Liabilities

The components of net deferred tax asset are as follows:

	December 31,
	2013		2012

	(In Thousands)
Deferred tax assets:
Allowance for loan losses	$	11,844	$	10,142
Other real estate owned		1,222		1,064
Nonqualified equity awards		773		583
Nonaccrual interest		374		491
Other deferred tax assets		141		114
Total deferred tax assets		14,354		12,394

Deferred tax liabilities:
Net unrealized (gain) loss on securities available for sale		2,102		3,929
Depreciation		514		510
Prepaid expenses		161		140
Deferred loan fees		83		237
Investments		229		93
Other deferred tax liabilities		247		99
Total deferred tax liabilities		3,336		5,008
Net deferred income tax assets	$	11,018	$	7,386

Summary of the changes in the amount of unrecognized benefits

The following table presents a summary of the changes during 2013, 2012 and 2011 in the amount of unrecognized tax benefits that are included in the consolidated balance sheets.

	2013		2012		2011

	(In Thousands)
Balance, beginning of year	$	161	$	-	$	-
Increases related to prior year tax positions		276		-		-
Decreases related to prior year tax positions		-		-		-
Increases related to current year tax positions		-		161		-
Settlements		-		-		-
Lapse of statute		-		-		-
Balance, end of year	$	437	$	161	$	-

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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