BV Financial, Inc. Income Taxes Disclosure
Note 11– Income Taxes
The income tax provision consisted of the following for the years ended December 31, 2025 and December 31, 2024:
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
(dollars in thousands) |
|
|
|
|
|
|
||
Current expense |
|
|
|
|
|
|
||
Federal |
|
$ |
3,329 |
|
|
$ |
3,273 |
|
State |
|
|
889 |
|
|
|
1,468 |
|
Total Current Expense |
|
|
4,218 |
|
|
|
4,741 |
|
Deferred expense |
|
|
1,150 |
|
|
|
(58 |
) |
Income tax expense |
|
$ |
5,368 |
|
|
$ |
4,683 |
|
Note 11– Income Taxes (Continued)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and December 31, 2024 are presented below:
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
(dollars in thousands) |
|
|
|
|
|
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Deferred compensation |
|
$ |
615 |
|
|
$ |
660 |
|
Allowance for credit losses |
|
|
1,691 |
|
|
|
2,455 |
|
Merger fair value adjustments |
|
|
1,857 |
|
|
|
1,938 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
Foreclosed real estate write-downs and deferred gain |
|
|
— |
|
|
|
7 |
|
Stock grants |
|
|
488 |
|
|
|
294 |
|
Non-qualified stock options |
|
|
519 |
|
|
|
60 |
|
Net operating loss carryover |
|
|
5,107 |
|
|
|
6,123 |
|
Non-accrual interest |
|
|
83 |
|
|
|
265 |
|
Other |
|
|
984 |
|
|
|
1,181 |
|
Total deferred tax assets |
|
|
11,344 |
|
|
|
12,983 |
|
|
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
173 |
|
|
|
176 |
|
Core deposit intangible |
|
|
169 |
|
|
|
229 |
|
Depreciation |
|
|
3,439 |
|
|
|
3,679 |
|
Total deferred tax liabilities |
|
|
3,781 |
|
|
|
4,084 |
|
Total deferred tax assets, net |
|
$ |
7,563 |
|
|
$ |
8,899 |
|
The amount computed by applying the statutory federal income tax rate to income before income tax provision is different than the taxes provided for the following reasons for the year ended December 31, 2025.
|
|
December 31, 2025 |
|
|||||
|
|
|
|
|
Percent of |
|
||
|
|
Amount |
|
|
pretax income |
|
||
(dollars in thousands) |
|
|
|
|
|
|
||
Statutory federal income tax rate |
|
$ |
3,961 |
|
|
|
21.0 |
% |
State tax, net of federal income tax provision |
|
|
1,227 |
|
|
|
6.5 |
|
Non-Taxable and Non-Deductible Items |
|
|
|
|
|
|
||
Tax exempt income |
|
|
(130 |
) |
|
|
(0.7 |
) |
Other non-taxablle ans non-deductible |
|
|
1 |
|
|
|
— |
|
Other |
|
|
309 |
|
|
|
1.6 |
|
Income Tax Expense |
|
$ |
5,368 |
|
|
|
28.5 |
% |
The amount computed by applying the statutory federal income tax rate to income before income tax provision is different than the taxes provided for the following reasons for the year ended December 31, 2024.
|
|
December 31, 2024 |
|
|||||
|
|
|
|
|
Percent of |
|
||
|
|
Amount |
|
|
pretax income |
|
||
(dollars in thousands) |
|
|
|
|
|
|
||
Statutory federal income tax rate |
|
$ |
3,445 |
|
|
|
21.0 |
% |
State tax, net of federal income tax provision |
|
|
1,154 |
|
|
|
7.0 |
|
Tax exempt income |
|
|
(113 |
) |
|
|
(0.7 |
) |
Nondeductible expenses |
|
|
142 |
|
|
|
0.9 |
|
Other |
|
|
55 |
|
|
|
0.3 |
|
Income Tax Expense |
|
$ |
4,683 |
|
|
|
28.5 |
% |
In the years ended December 31, 2025 and 2024, more than 50% of state tax expense was related to Maryland.
Disclosed below is a summary of income taxes paid by jurisdiction pursuant to the disclosure requirements of ASU No. 2023-09 for the year ended December 31, 2025:
|
|
Amount |
|
|
(dollars in thousands) |
|
|
|
|
United States - Federal |
|
$ |
2,550 |
|
United States - States |
|
|
464 |
|
Total taxes paid |
|
$ |
3,014 |
|
|
|
|
|
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Mar 22, 2024 | |
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.