Avidbank Holdings, Inc. Income Taxes Disclosure

10.    INCOME TAXES

 

The (benefit) / provision for income taxes for the years ended December 31, 2025 and 2024 consisted of the following (in thousands). The Company does not have pretax income from continuing foreign operations or foreign tax expense.

 

		Years Ended December 31,
		2025				2024
Current income tax (benefit) / expense:
Federal		$	(43	)		$	5,763
State			(77	)			3,373
Total current (benefit) / expense		$	(120	)		$	9,136
Deferred income tax (benefit) / expense:
Federal		$	(5,572	)		$	(255	)
State			(1,725	)			(93	)
Total deferred (benefit) / expense		$	(7,297	)		$	(348	)
Total income tax (benefit) / expense		$	(7,417	)		$	8,788

 

The (benefit) / provision for income taxes differs from amounts computed by applying the statutory Federal income tax rate to income before income taxes. The effects of these differences are as follows (dollars in thousands):

 

		Years Ended December 31,
		2025								2024
		Amount				Rate %				Amount				Rate %
Federal income tax expense, at statutory rate		$	(5,664	)			21.0	%		$	6,259				21.0	%
Domestic federal reconciling items
Non-taxable and non-deductible items, net			(17	)			0.1	%			(35	)			(0.1	)%
Tax credits, net of proportional amortization			(16	)			0.1	%			(1	)			(0.0	)%
Other reconciling items			47				(0.3	)%			56				0.2	%
Domestic state and local income taxes, net of federal effect (1)			(1,767	)			6.6	%			2,509				8.4	%
Income tax (benefit) / expense		$	(7,417	)			27.5	%		$	8,788				29.5	%

 

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(1)	State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category.

 

The components of income taxes paid for the periods ended  December 31, 2025 and 2024 were as follows: (in thousands)

 

		Years Ended December 31,
		2025				2024
Total income taxes paid		$	4,415			$	7,484
Federal			3,218				4,463
State:
California			1,048				2,380
Other			149				641

 

Deferred tax assets (liabilities) at December 31, 2025 and 2024 are included in accrued interest receivable and other assets on the Consolidated Statements of Financial Condition and consisted of the following: (in thousands)

 

		Years Ended December 31,
		2025				2024
Deferred tax assets:
Federal & state net operating losses		$	7,367			$	-
Federal tax credit carryforwards			36				-
Allowance for credit losses on loans			6,323				5,471
State tax			-				671
Fixed assets			681				557
Lease liabilities			1,794				2,288
Accrued expenses			2,363				1,778
Share-based compensation			924				1,533
Other			832				785
Unrealized loss on available-for-sale debt securities			94				21,262
Total deferred tax assets		$	20,414			$	34,345
Deferred tax liabilities:
Right-of-use asset			(1,656	)			(2,133	)
Loan origination costs			(1,633	)			(1,476	)
Other		$	(566	)		$	(305	)
Total deferred tax liabilities			(3,855	)			(3,914	)
Net deferred tax asset including OCI items		$	16,559			$	30,431

 

In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. A valuation allowance is provided when it is deemed more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the ability to realize the deferred tax assets, management considers the four possible sources of taxable income including future reversals of existing taxable temporary differences, future taxable income, taxable income in prior carryback years and tax-planning strategies that would, if necessary, be implemented. At December 31, 2025 and 2024, management believed deferred tax asset balances were fully realizable, and no valuation allowances were recorded.

 

The Company had no uncertain tax positions at December 31, 2025 or 2024. The amount of tax benefits that would impact the effective rate, if recognized, is not expected to be material.

 

At December 31, 2025, the Company had $26.5 million of gross Federal net operating loss carryforwards and $22 million of gross state net operating loss carryforwards. The Federal carryforward period is indefinite. The state carryforward periods differ by state, with the majority having expiration dates between the years ending 2041 and 2046.

 

Status of Open Tax Years

 

The Company is subject to U.S. Federal income tax as well as various other state income tax. Federal income tax returns for 2022 through 2024 and state income tax returns generally for 2021 through 2024 are currently open for Federal or state income tax examinations. The Company is not currently under audit by the IRS or state taxing authorities.