Bridgewater Bancshares Inc Income Taxes Disclosure
Note 15: Income Taxes
The following table presents the allocation of federal and state income taxes between current and deferred portions as of December 31, 2025:
(dollars in thousands) | | 2025 | |
Current Tax Provision | |||
Federal | $ | 10,321 | |
State | 5,627 | ||
Total Current Tax Provision | $ | 15,948 | |
Deferred Tax Benefit | |||
Federal | $ | (1,500) | |
State | (504) | ||
Total Deferred Tax Benefit | $ | (2,004) | |
Total Income Tax Provision | |||
Federal | $ | 8,821 | |
State | 5,123 | ||
Total Income Tax Provision | $ | 13,944 | |
The Company does not have pretax income from continuing foreign operations or foreign tax expense.
The following table presents the allocation of federal and state income taxes between current and deferred portions as of December 31, 2024 and 2023 before the adoption of ASU 2023-09:
(dollars in thousands) | 2024 | 2023 | ||||
Current Tax Provision | $ | 9,887 | $ | 11,886 | ||
Deferred Tax Expense |
| 24 |
| 676 | ||
Total Income Tax Provision | $ | 9,911 | $ | 12,562 | ||
The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows as of December 31, 2025:
2025 | ||||||
(dollars in thousands) | | Amount | | Percent | | |
Amount of Statutory Rate | $ | 12,607 | 21.0 | % | ||
State Income Taxes (Net of Federal Income Tax Benefit) (1) |
| 4,047 | 6.7 | |||
Tax Credits | ||||||
Low Income Housing | (2,347) | (3.9) | ||||
Rehabilitation | (815) | (1.4) | ||||
Nontaxable or Nondeductible Items | ||||||
Interest on Investment Securities and Loans Exempt from Federal Income Tax | (1,468) | (2.4) | ||||
Other | (183) | (0.3) | ||||
Other Adjustments | ||||||
Proportional Amortization | 2,451 | 4.1 | ||||
Other | (348) | (0.6) | ||||
$ | 13,944 | 23.2 | % | |||
| (1) | State taxes in made up the majority (greater than 50 percent) of the tax effect in this category. |
The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows as of December 31, 2024 and 2023 before the adoption of ASU 2023-09:
2024 |
| 2023 |
| |||||||||
(dollars in thousands) | Amount | | Percent | Amount | | Percent | ||||||
Amount of Statutory Rate | $ | 8,974 | 21.0 | % | $ | 11,030 | 21.0 | % | ||||
State Income Taxes (Net of Federal Income Tax Benefit) (1) |
| 2,920 | 6.8 | 3,511 | 6.6 | |||||||
Interest on Investment Securities and Loans Exempt From Federal Income Tax |
| (984) | (2.3) | (1,175) | (2.3) | |||||||
Tax Credits |
| (360) | (0.8) | (91) | 0.0 | |||||||
Other Differences |
| (639) | (1.5) | (713) | (1.4) | |||||||
$ | 9,911 | 23.2 | % | 12,562 | 23.9 | % | ||||||
| (1) | State taxes in Minnesota made up the majority (greater than 50 percent) of the tax effect in this category. |
The Company’s effective tax rate may fluctuate as it is impacted by the level and timing of the Company’s utilization of historic tax credits, low-income housing tax credits, the level of tax-exempt investments and loans, and the overall level of pre-tax income.
The following table presents the components of the net deferred tax asset included in other assets, as of December 31, 2025 and 2024:
(dollars in thousands) | | 2025 | | 2024 | ||
Depreciation | $ | (832) | $ | (834) | ||
Allowance for Credit Losses |
| 15,764 |
| 14,559 | ||
Unrealized Loss on Securities Available for Sale |
| 2,940 |
| 11,189 | ||
Unrealized Gain on Cash Flow Hedges |
| (3,167) |
| (5,799) | ||
Intangibles | (443) | (315) | ||||
Deferred Loan Fees | 2,503 | 1,912 | ||||
Reserve for Off-Balance Sheet Credit Exposures | 1,120 | 1,015 | ||||
Other |
| 436 |
| 207 | ||
Totals | $ | 18,321 | $ | 21,934 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 7, 2023 | |
| 2021 | Mar 8, 2022 | |
| 2020 | Mar 11, 2021 | |
| 2019 | Mar 12, 2020 | |
| 2018 | Mar 14, 2019 | |
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.