ServisFirst Bancshares, Inc. Income Taxes Disclosure
NOTE 15. INCOME TAXES
The components of income tax expense are as follows:
|
Year Ended December 31, |
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|
2025 |
2024 |
2023 |
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|
(In Thousands) |
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|
Current tax expense: |
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|
Federal |
$ | 58,121 | $ | 51,897 | $ | 35,124 | ||||||
|
State |
5,578 | 3,194 | 3,616 | |||||||||
|
Total current tax expense |
63,699 | 55,091 | 38,740 | |||||||||
|
Deferred tax (benefit) expense: |
||||||||||||
|
Federal |
1,082 | (2,227 | ) | (1,057 | ) | |||||||
|
State |
746 | (1,124 | ) | 52 | ||||||||
|
Total deferred tax (benefit) |
1,828 | (3,351 | ) | (1,005 | ) | |||||||
|
Total income tax expense |
$ | 65,527 | $ | 51,740 | $ | 37,735 | ||||||
The reconciliation of the effective income tax rate to the federal statutory rate is as follows:
|
Year Ended December 31, 2025 |
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|
Amount |
% of Pre-tax Earnings |
|||||||
|
(In Thousands) |
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|
US federal statutory income tax |
71,848 | 21.00 | % | |||||
|
State and local income taxes, net of federal income tax effect(2) |
5,023 | 1.47 |
% |
|||||
|
Tax credits: |
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|
Energy tax credits |
(4,500 | ) | (1.32 | )% | ||||
|
Other credits |
(4,592 | ) | (1.34 | )% | ||||
|
Nontaxable or nondeductible items |
(2,863 | ) | (0.84 | )% | ||||
|
Change in unrecognized tax positions |
176 | 0.05 | % | |||||
|
Other |
435 | 0.13 | % | |||||
|
Effective income tax and rate(1) |
$ | 65,527 | 19.15 |
% |
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|
(1) Post-adoption of ASU 2023-09 |
|
(2) State taxes in Alabama, Florida, and South Carolina make up the majority (greater than 50%) of the tax effect in this category |
|
Year Ended December 31, 2024 |
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|
Amount |
% of Pre-tax Earnings |
|||||||
|
(In Thousands) |
||||||||
|
Income tax at statutory federal rate |
$ | 58,585 | 21.00 |
% |
||||
|
Effect on rate of: |
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|
State income tax, net of federal tax effect |
1,787 | 0.64 |
% |
|||||
|
Tax-exempt income, net of expenses |
(14 | ) | (0.01 | )% | ||||
|
Bank-owned life insurance contracts |
(2,002 | ) | (0.72 | )% | ||||
|
Excess tax benefit from stock compensation |
(1,117 | ) | (0.40 | )% | ||||
|
Federal tax credits, net of related amortization |
(6,297 | ) | (2.26 | )% | ||||
|
Other |
798 | 0.36 | % | |||||
|
Effective income tax and rate(3) |
$ | 51,740 | 18.61 |
% |
||||
|
(3) 2024 and 2023 are pre-adoption of ASU 2023-09 |
|
Year Ended December 31, 2023 |
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|
Amount |
% of Pre-tax Earnings |
|||||||
|
(In Thousands) |
||||||||
|
Income tax at statutory federal rate |
$ | 51,363 | 21.00 |
% |
||||
|
Effect on rate of: |
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|
State income tax, net of federal tax effect |
3,339 | 1.37 |
% |
|||||
|
Tax-exempt income, net of expenses |
(92 | ) | (0.04 | )% | ||||
|
Bank-owned life insurance contracts |
(1,591 | ) | (0.65 | )% | ||||
|
Excess tax benefit from stock compensation |
(1,242 | ) | (0.51 | )% | ||||
|
Federal tax credits, net of related amortization |
(16,002 | ) | (6.54 | )% | ||||
|
Other |
1,960 | 0.80 | % | |||||
|
Effective income tax and rate(3) |
$ | 37,735 | 15.43 |
% |
||||
|
(3) 2024 and 2023 are pre-adoption of ASU 2023-09 |
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The components of net deferred tax asset are as follows:
|
December 31, |
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|
2025 |
2024 |
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|
(In Thousands) |
||||||||
|
Deferred tax assets: |
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|
Allowance for credit losses |
$ | 43,236 | $ | 41,431 | ||||
|
Other real estate owned |
- | 255 | ||||||
|
Nonqualified equity awards |
1,472 | 1,375 | ||||||
|
Nonaccrual interest |
216 | 814 | ||||||
|
State tax credits carryforward |
1,530 | 2,195 | ||||||
|
Deferred loan fees |
4,523 | 4,074 | ||||||
|
Reserve for unfunded commitments |
- | - | ||||||
|
Accrued bonus |
3,685 | 3,910 | ||||||
|
Capital loss carryforward |
662 | 1,716 | ||||||
|
Lease liability |
5,788 | 6,790 | ||||||
|
Deferred revenue |
- | - | ||||||
|
Net unrealized loss on securities available for sale |
722 | 10,937 | ||||||
|
Other deferred tax assets |
780 | 1,996 | ||||||
|
Total deferred tax assets |
62,614 | 75,493 | ||||||
|
Deferred tax liabilities: |
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|
Depreciation |
3,671 | 4,138 | ||||||
|
Prepaid expenses |
921 | 781 | ||||||
|
Investments |
1,178 | 950 | ||||||
|
Right-of-use assets and other leasing transactions |
5,527 | 6,541 | ||||||
|
Other deferred tax liabilities |
1,612 | 1,335 | ||||||
|
Total deferred tax liabilities |
12,909 | 13,745 | ||||||
|
Net deferred tax assets |
$ | 49,705 | $ | 61,748 | ||||
|
The Federal and State total of income taxes paid (net of refunds received): |
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|
2025 |
||||
|
Federal |
$ | 27,521,000 | ||
|
State(4) |
7,056,359 | |||
|
Total |
34,577,359 | |||
|
5% threshold (4) |
1,728,868 | |||
|
(4) No individual state payments over threshold |
The Company believes its net deferred tax asset is recoverable as of December 31, 2025 and 2024 based on the expectation of future taxable income and other relevant considerations.
Pursuant to ASC 740-10-30-2 Income Taxes, deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company and its subsidiaries file a consolidated U.S. Federal income tax return and various consolidated and separate company state income tax returns. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, through 2024. The Company is also currently open to audit by several state departments of revenue for the years ended December 31, through 2024. The audit periods differ depending on the date the Company began business activities in each state.
Accrued interest and penalties on unrecognized income tax benefits totaled $206,000 and $495,000 as of December 31, 2025 and 2024, respectively. Interest and penalties related to unrecognized income tax benefits are recorded in the provision for income taxes. The Company has $513,000 of unrecognized tax benefits (net of the federal benefit on state income tax issues) recorded as of December 31, 2025. Unrecognized income tax benefits as of December 31, 2025, and December 31, 2024, that, if recognized, would impact the effective income tax rate totaled $513,000 and $1,511,000 (net of the federal benefit on state income tax issues), respectively.
The following table presents a summary of the changes during 2025, 2024 and 2023 in the amount of unrecognized tax benefits that are included in the consolidated balance sheets:
|
2025 |
2024 |
2023 |
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|
(In Thousands) |
||||||||||||
|
Balance, beginning of year |
$ | 1,913 | $ | 2,092 | $ | - | ||||||
|
Increases related to prior year tax positions |
- | - | 1,285 | |||||||||
|
Decreases related to prior year tax positions |
(1,401 | ) | (854 | ) | - | |||||||
|
Increases related to current year tax positions |
137 | 675 | 807 | |||||||||
|
Balance, end of year |
$ | 649 | $ | 1,913 | $ | 2,092 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 28, 2017 | |
| 2015 | Feb 24, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.