Commitments and Contingent Liabilities and Other Tax Matters

3 Months Ended

Mar. 31, 2013

Commitments and Contingent Liabilities and Other Tax Matters

Commitments and Contingent Liabilities and Other Tax Matters

Note 10 — Commitments and Contingent Liabilities and Other Tax Matters

The Company is involved in various legal proceedings that are in various stages of litigation.  Some of these actions allege “lender liability” claims on a variety of theories and claim substantial actual and punitive damages.  The Company has determined, based on discussions with its counsel that any material loss in such actions, individually or in the aggregate, is remote or the damages sought, even if fully recovered, would not be considered material to the consolidated financial position or results of operations of the Company.  However, many of these matters are in various stages of proceedings and further developments could cause management to revise its assessment of these matters.

During the first quarter of 2013, the Texas State Comptroller refunded approximately $1.5 million in tax in connection with an exam of the Company’s 2008 consolidated Franchise Tax return. Additionally, the Company recorded an adjustment of $2.5 million to reflect the difference between accrued and actual taxes on the 2012 Franchise Tax return.  Both items resulted in a credit to provision for income tax expense net of federal tax expense, of approximately $2.6 million on the consolidated statement of income and reduced the Company’s effective tax rate to 25.4% for the three months ended March 31, 2013.