COLONY BANKCORP INCCBAN
COLONY BANKCORP INC Income Taxes Disclosure
INCOME TAXES
The Company adopted ASU No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures ("ASU 2023-09") on January 1, 2025 on a prospective basis.
Cash Taxes Paid in Current Period
| Year ended December 31, | |||||
| (dollars in thousands) | 2025 | ||||
| Federal | $ | 4,210 | |||
| States | |||||
| Other | 226 | ||||
| Foreign | — | ||||
| Total | $ | 4,436 | |||
Income Taxes
The Company files tax returns in the U.S federal jurisdiction and required states. With few exceptions, the Bank is no longer subject to tax examination by tax authorities for years prior to 2022.
The provision for income taxes from continuing operations consists of the following components:
| Year ended December 31, | |||||
| (dollars in thousands) | 2025 | ||||
| Current | |||||
| Federal | $ | 4,607 | |||
| State | 211 | ||||
| Total current tax provision | 4,818 | ||||
| Deferred | |||||
| Federal | 1,699 | ||||
| State | 365 | ||||
| Total deferred tax provision | 2,064 | ||||
| Total tax provision from continuing operations* | $ | 6,882 | |||
*The Company does not have pretax income from continuing foreign operations or foreign tax expense.
Components of Tax Expense
| Year ended December 31, | |||||
| (dollars in thousands) | 2024 | ||||
| Current federal expense | $ | 4,808 | |||
| Deferred federal expense | 759 | ||||
| Federal income tax expense | 5,567 | ||||
| Current state expense | 136 | ||||
| Deferred state expense | (4) | ||||
| State income tax expense | 132 | ||||
| Provision for income taxes | $ | 5,699 | |||
Income tax expense for the years ended December 31, 2025, 2024 and 2023 differed from the federal statutory rate applied to income before income taxes for the following reasons in accordance with ASU 2023-09:
| Year ended December 31, | |||||||||||
| 2025 | |||||||||||
| (dollars in thousands) | |||||||||||
| U.S. Federal statutory tax rate | $ | 7,379 | 21.00 | % | |||||||
State and local income taxes, net of federal income tax effect (a) | 455 | 1.30 | |||||||||
| Nontaxable or nondeductible items | |||||||||||
| BOLI income | (373) | (1.06) | |||||||||
| Tax-exempt interest | (491) | (1.40) | |||||||||
| Other | (88) | (0.18) | |||||||||
| Total | $ | 6,882 | 19.66 | % | |||||||
(a) State taxes in Georgia made up the majority (greater than 50%) of the tax effect in this category.
Income tax expense for the year ended December 31, 2024 differed from the federal statutory rate applied to income before income taxes for the following reasons before the adoption of ASU-09:
| Year ended December 31, | |||||
| (dollars in thousands) | 2024 | ||||
| $ | 6,209 | ||||
| Increase (decrease) resulting from: | |||||
| State income tax expense, net of federal | 104 | ||||
| Tax-exempt interest | (128) | ||||
| Income in cash value of bank owned life insurance | (362) | ||||
| Tax-exempt insurance premiums | (218) | ||||
| Other items, net | 94 | ||||
| Income tax expense | $ | 5,699 | |||
The tax effects of temporary differences result in deferred tax assets and liabilities as presented below:
| December 31, | |||||||||||
| (dollars in thousands) | 2025 | 2024 | |||||||||
| Deferred Tax Assets | |||||||||||
| Allowance for credit losses | $ | 4,576 | $ | 4,751 | |||||||
| Lease liability | 2,571 | 330 | |||||||||
| Net operating loss carryforwards | 1,927 | 1,276 | |||||||||
| Tax credit carryforwards | 937 | 688 | |||||||||
| Deferred compensation | 296 | 233 | |||||||||
| Unrealized loss on securities available for sale | 11,599 | 16,443 | |||||||||
| Restricted stock | 122 | 178 | |||||||||
| Investment in partnerships | — | 39 | |||||||||
| Unrealized loss on hedging investments | 166 | — | |||||||||
| Nonaccrual interest | 875 | 694 | |||||||||
| Allowance for unfunded commitments | 236 | 203 | |||||||||
| Purchase accounting adjustments | 1,575 | — | |||||||||
| Other | — | 103 | |||||||||
| Total deferred tax assets | 24,880 | 24,938 | |||||||||
| Deferred Tax Liabilities | |||||||||||
| Premises and equipment | 1,462 | 659 | |||||||||
| Right of use lease asset | 2,553 | 307 | |||||||||
| Purchase accounting adjustments | — | 1,773 | |||||||||
| Core deposit intangible | 1,095 | 120 | |||||||||
| Investment in partnerships | 43 | — | |||||||||
| Unrealized gain on hedging investments | — | 188 | |||||||||
| Other | 145 | — | |||||||||
| Total deferred tax liabilities | 5,298 | 3,047 | |||||||||
| Net deferred tax assets | $ | 19,582 | $ | 21,891 | |||||||
Management assesses the realizability of deferred tax assets at each reporting period and considers whether it is more likely than not that a deferred tax asset will not be realized. The realization of a deferred tax asset is dependent upon the generation of future taxable income during periods in which the related temporary difference becomes deductible or realizable prior to its expiration. Management considers projected future taxable income, scheduled reversal of deferred tax liabilities, and tax planning strategies in making this assessment. Based on these considerations, management believes it is more likely than not that the deferred tax assets will be realized.
The Company does not have any material uncertain tax positions and does not have any interest and penalties recorded in the income statement for years ended December 31, 2025 or 2024. The Company files a consolidated income tax return in the U.S. federal tax jurisdiction.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 18, 2022 | |
| 2020 | Mar 23, 2021 | |
| 2019 | Mar 30, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 10, 2017 | |
| 2015 | Mar 10, 2016 | |
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.