BayCom Corp Income Taxes Disclosure
15. INCOME TAXES
Income tax expense for the dates indicated consisted of the following:
Year Ended December 31, | |||||||||
| 2024 |
| 2023 |
| 2022 | ||||
(As Restated) | |||||||||
Current income tax expense: | |||||||||
Federal | $ | 4,697 | $ | 7,021 | $ | 5,990 | |||
State |
| 3,008 |
| 3,711 |
| 3,638 | |||
Total current tax expense | 7,705 | 10,732 | 9,628 | ||||||
Deferred income tax expense (benefit): | |||||||||
Federal | 709 | (206) | (402) | ||||||
State | 92 | 207 | (518) | ||||||
Total deferred tax expense (benefit) | 801 | 1 | (920) | ||||||
Total income tax expense | $ | 8,506 | $ | 10,733 | $ | 8,708 | |||
Income tax expense results in effective tax rates that differ from the statutory federal income tax rate for the years indicated as follows:
December 31, 2024 | December 31, 2023 | December 31, 2022 |
| |||||||||||||
| Amount |
| Rate% |
| Amount |
| Rate% |
| Amount |
| Rate% |
| ||||
(As Restated) | (As Restated) | |||||||||||||||
Federal statutory tax rate | $ | 6,745 |
| 21.00 | % | $ | 8,013 |
| 21.00 | % | $ | 6,812 |
| 21.00 | % | |
State statutory tax rate, net of federal effective tax rate |
| 2,449 |
| 7.60 |
| 3,095 |
| 8.10 |
| 2,465 |
| 7.60 | ||||
Tax exempt interest |
| (75) |
| (0.20) |
| (76) |
| (0.20) |
| (94) |
| (0.29) | ||||
BOLI |
| (151) |
| (0.50) |
| (140) |
| (0.40) |
| (124) |
| 0.38 | ||||
Acquisition expenses |
| — |
| — |
| — |
| — |
| 94 |
| 0.29 | ||||
Other |
| (462) |
| (1.40) |
| (159) |
| (0.40) |
| (445) |
| 1.37 | ||||
Total income tax expense | $ | 8,506 |
| 26.50 | % | $ | 10,733 |
| 28.10 | % | $ | 8,708 |
| 26.85 | % | |
The Company is subject to US federal income tax as well as state income tax in multiple states, most notably in California, Colorado and New Mexico. Federal income tax returns for the years ended on or after December 31, 2021 are open to audit by the federal authorities and, with limited exception, state income tax returns for the years ended on or after December 31, 2020 are open to audit by state authorities.
Deferred tax assets at the dates indicated, included as a component of interest receivable and other assets in the consolidated balance sheets consisted of the following:
| December 31, |
| December 31, | |||
2024 | 2023 | |||||
Deferred tax assets |
|
|
|
| ||
Net operating loss carryforward | $ | 2,776 | $ | 3,191 | ||
Salary continuation plan |
| 1,465 |
| 1,453 | ||
Allowance for credit losses |
| 5,327 |
| 6,450 | ||
Stock based compensation |
| 150 |
| 153 | ||
Lease liability |
| 4,096 |
| 4,237 | ||
Unrealized loss on AFS securities |
| 5,178 |
| 5,885 | ||
Unrealized loss on equity securities | 1,496 | 1,642 | ||||
Other |
| 1,125 |
| 1,265 | ||
Total deferred tax assets |
| 21,613 |
| 24,276 | ||
Deferred tax liabilities |
|
|
|
| ||
Core deposit intangible |
| (767) |
| (1,125) | ||
Depreciation |
| 83 |
| — | ||
ROU assets |
| (3,811) |
| (4,004) | ||
FHLB stock dividend |
| (571) |
| (246) | ||
Partnership investments | (391) | (973) | ||||
Deferred loan costs and other |
| (940) |
| (1,204) | ||
Total deferred tax liability |
| (6,397) |
| (7,552) | ||
Deferred tax assets, net | $ | 15,216 | $ | 16,724 | ||
The utilization of the net operating losses (“NOLs”) is subject to an annual limit pursuant to Section 382 of the Internal Revenue Code. The annual limitations for Federal and California Franchise Tax purpose is $1.1 million and if not fully utilized, the NOLs will begin to expire in 2028. Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred tax assets are expected to be deductible, management believes it is more likely than not that we will realize the benefit of the remaining deferred tax assets. Accordingly, no valuation allowance has been established as of December 31, 2024 or 2023. At December 31, 2024, Federal, California and Colorado NOLs included in the deferred tax asset totaled $8.9 million, $9.6 million and $2.1 million, respectively.
During the years ended December 31, 2024, 2023 and 2022, the Company did not recognize any interest or penalties. The Company had no unrecognized tax benefits as of December 31, 2024 and 2023.
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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.