BLUE RIDGE BANKSHARES, INC. Income Taxes Disclosure
Note 15. Income Taxes
The Company implemented ASU 2023-09 in 2025, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The Company elected to implement ASU 2023-09 on a prospective basis for disclosures as of and for the year ended December 31, 2025. Disclosures as of and for the year ended December 31, 2024 reflect pre-ASU 2023-09 requirements.
The following tables present the differences between the provision for income taxes at the federal statutory rate and the amounts computed as reported for the periods stated.
(Dollars in thousands) |
|
For the year ended December 31, 2025 |
|
|||||
Income tax at federal statutory rate |
|
$ |
2,893 |
|
|
|
21.0 |
% |
Increase (decrease) resulting from: |
|
|
|
|
|
|
||
State income taxes, net of federal tax effect (1) |
|
|
102 |
|
|
|
0.8 |
% |
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Nondeductible executive compensation |
|
|
148 |
|
|
|
1.1 |
% |
Other permanent differences |
|
|
113 |
|
|
|
0.8 |
% |
Tax credits |
|
|
|
|
|
|
||
Low income housing tax credit |
|
|
12 |
|
|
|
0.1 |
% |
Changes in unrecognized tax benefits |
|
|
(269 |
) |
|
|
(2.0 |
%) |
Other |
|
|
67 |
|
|
|
0.5 |
% |
Total income tax expense |
|
$ |
3,066 |
|
|
|
22.3 |
% |
(1) State tax obligations to North Carolina and Florida comprise more than 50% of the total amount shown. |
|
|||||||
(Dollars in thousands) |
|
For the year ended December 31, 2024 |
|
|||||
Income tax at federal statutory rate |
|
$ |
(3,466 |
) |
|
|
21.0 |
% |
(Decrease) increase resulting from: |
|
|
|
|
|
|
||
State income taxes, net of federal tax effect |
|
|
(398 |
) |
|
|
2.4 |
% |
Tax-exempt interest income |
|
|
(29 |
) |
|
|
0.2 |
% |
Tax-exempt BOLI income |
|
|
(180 |
) |
|
|
1.1 |
% |
Taxable gain and nondeductible penalties due to BOLI surrender |
|
|
2,215 |
|
|
|
(13.4 |
%) |
Equity compensation |
|
|
278 |
|
|
|
(1.7 |
%) |
Other permanent differences |
|
|
458 |
|
|
|
(2.8 |
%) |
Total income tax benefit |
|
$ |
(1,122 |
) |
|
|
6.8 |
% |
The following table presents the significant components of the provision for income taxes for the periods stated.
|
|
For the years ended December 31, |
|
|||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
||
Current tax expense (benefit) |
|
|
|
|
|
|
||
Federal |
|
$ |
2,178 |
|
|
$ |
5,046 |
|
State |
|
|
(348 |
) |
|
|
18 |
|
Total current tax expense |
|
|
1,830 |
|
|
|
5,064 |
|
Deferred tax expense (benefit) |
|
|
|
|
|
|
||
Federal |
|
|
889 |
|
|
|
(5,785 |
) |
State |
|
|
347 |
|
|
|
(401 |
) |
Total deferred tax expense (benefit) |
|
|
1,236 |
|
|
|
(6,186 |
) |
Total income tax expense (benefit) |
|
$ |
3,066 |
|
|
$ |
(1,122 |
) |
The following table presents significant components of deferred tax assets and liabilities as of the dates stated.
|
|
December 31, |
|
|||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
||
Deferred tax assets relating to: |
|
|
|
|
|
|
||
ACL |
|
$ |
4,270 |
|
|
$ |
5,138 |
|
Compensation |
|
|
1,706 |
|
|
|
1,391 |
|
Reserves for unfunded loan commitments and mortgage-related obligations |
|
|
281 |
|
|
|
721 |
|
Purchase accounting adjustments |
|
|
420 |
|
|
|
772 |
|
Net operating loss |
|
|
10,172 |
|
|
|
10,375 |
|
Unrealized losses on securities available for sale |
|
|
8,838 |
|
|
|
12,392 |
|
Other |
|
|
1,951 |
|
|
|
2,398 |
|
Total deferred tax assets |
|
|
27,638 |
|
|
|
33,187 |
|
Deferred tax liabilities relating to: |
|
|
|
|
|
|
||
Premises and equipment, net |
|
|
(2,229 |
) |
|
|
(2,424 |
) |
Core deposit and other intangible assets |
|
|
(347 |
) |
|
|
(554 |
) |
Unrealized gains on other investments |
|
|
(530 |
) |
|
|
(512 |
) |
Pass-through entities |
|
|
(293 |
) |
|
|
(463 |
) |
Other |
|
|
(1,518 |
) |
|
|
(1,922 |
) |
Total deferred tax liabilities |
|
|
(4,917 |
) |
|
|
(5,875 |
) |
Deferred tax asset, net |
|
$ |
22,721 |
|
|
$ |
27,312 |
|
Deferred income tax assets and liabilities are measured at the enacted tax rate for the period in which they are expected to reverse; therefore, as of December 31, 2025, they have been measured using the federal income tax rate enacted of 21% and applicable state income tax rates.
The Company’s deferred tax asset was $27.6 million and $33.2 million at December 31, 2025 and 2024, respectively. As of December 31, 2025, management concluded that the Company’s deferred tax assets were fully realizable, and accordingly, no valuation allowance was recorded. The Company will continue to monitor deferred tax assets to evaluate whether it will be able to realize the full benefit of the deferred tax asset or whether there is need for a valuation allowance. Significant negative trends in asset credit quality, losses from operations, or other factors could impact the realization of the deferred tax asset in the future.
As of December 31, 2025, the Company had an estimated gross federal net operating loss of approximately $47.3 million, which can be carried forward indefinitely, the tax effect of which is included in the $10.2 million deferred tax asset for net operating losses. However, due to the Private Placements, the Company experienced an ownership change for federal income tax purposes on April 3, 2024, which, among other effects, will subject its pre-change net operating losses to annual limitations under Section 382 of the Internal Revenue Code. The annual limitation is $1.8 million for 2025 and subsequent tax years.
The following table presents income taxes paid, net of refunds received, disaggregated by federal and state jurisdictions as of and for the period stated.
(Dollars in thousands) |
|
For the year ended December 31, 2025 |
|
|
Federal |
|
$ |
6,625 |
|
Various states |
|
|
(50 |
) |
Total cash paid for incomes taxes, net of refunds |
|
$ |
6,575 |
|
With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2022. The Company maintains unrecognized tax benefits ("UTBs") related to unfiled state income tax returns.
A reconciliation of the components of UTBs is presented in the following table for the period stated.
(Dollars in thousands) |
|
For the year ended December 31, 2025 |
|
|
Balance at January 1 |
|
$ |
969 |
|
Additions based on tax positions related to the current year |
|
|
94 |
|
Additions for tax positions of prior years |
|
|
44 |
|
Reductions for tax positions of prior years |
|
|
(407 |
) |
Balance at December 31 |
|
$ |
700 |
|
On December 31, 2025, the Company had a $0.7 million UTB balance that, if recognized, would affect the annual effective tax rate. The Company recognizes interest and penalties accrued related to UTBs in income tax expense. During the year ended December 31, 2025, the Company recognized a nominal amount in interest and penalties, with approximately $0.1 million accrued as of December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 10, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 29, 2021 | |
| 2019 | Apr 14, 2020 | |
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.