Central Bancompany, Inc.CBC
Central Bancompany, Inc. Income Taxes Disclosure
Income Taxes
The Company's income from continuing operations is derived entirely from domestic sources. The components of income tax expense related to continuing operations for the years ended December 31, 2025 and 2024 are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Current income tax expense: | |||||||||||
| Federal | $ | 103,748 | $ | 88,526 | |||||||
| State | 15,398 | 6,044 | |||||||||
| Total current income tax expense | 119,146 | 94,570 | |||||||||
| Deferred income tax expense: | |||||||||||
| Federal | (2,923) | (5,656) | |||||||||
| State | (518) | (1,004) | |||||||||
| Total deferred income tax expense | (3,441) | (6,660) | |||||||||
| Total income tax expense: | |||||||||||
| Federal | 100,825 | 82,870 | |||||||||
| State | 14,880 | 5,040 | |||||||||
| Total income tax expense on operations | $ | 115,705 | $ | 87,910 | |||||||
The components of income tax expense record directly to shareholders' equity for the years ended 2025 and 2024 were as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Unrealized gain on AFS debt securities | $ | 34,270 | $ | 34,309 | |||||||
| Accumulated pension loss | 4,248 | 5,653 | |||||||||
| Income tax expense allocated to shareholders' equity | $ | 38,518 | $ | 39,962 | |||||||
The reasons for the difference between the effective tax rates of 22.8% and 22.3% for 2025 and 2024, respectively, and the current federal statutory income tax rate of 21%, are as follows:
| December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Amount | Percent | Amount | Percent | ||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Income tax expense at federal statutory rate | $ | 106,375 | 21.0 | % | $ | 82,681 | 21.0 | % | |||||||||
| Increase (reduction) in income taxes resulting from: | |||||||||||||||||
| Tax-exempt interest | (2,517) | (0.5) | % | (2,165) | (0.6) | % | |||||||||||
| Other tax-exempt income | (143) | - | % | (134) | - | % | |||||||||||
| Dividend exclusion | (35) | - | % | (41) | - | % | |||||||||||
State income taxes, net of federal income tax and excluding state credits1 | 12,553 | 2.5 | % | 10,103 | 2.6 | % | |||||||||||
| Nondeductible expenses | 1,433 | 0.3 | % | 819 | 0.2 | % | |||||||||||
| Partnership Amortization | 3,993 | 0.8 | % | 6,189 | 1.6 | % | |||||||||||
Tax credits2 | (5,689) | (1.1) | % | (9,528) | (2.4) | % | |||||||||||
| Changes in unrecognized tax benefits | - | - | % | 100 | - | % | |||||||||||
| Other, net | (265) | (0.1) | % | (114) | - | % | |||||||||||
| Total income tax expense | $ | 115,705 | 22.8 | % | $ | 87,910 | 22.3 | % | |||||||||
| ¹ Missouri accounted for the majority of our state income tax expense. | |||||||||||||||||
² Tax credits were comprised primarily of Low Income Housing Tax Credits, totaling $4.6 million in 2025 and $8.8 million in 2024 | |||||||||||||||||
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 2024 are presented below:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Loans, principally due to allowance for loan losses | $ | 35,766 | $ | 36,901 | |||||||
| Accrued expenses | 25,958 | 26,983 | |||||||||
| Buildings and equipment | 711 | 928 | |||||||||
| Unrealized loss on available-for-sale securities | 11,303 | 45,573 | |||||||||
| Core deposit intangible | 1,201 | 749 | |||||||||
| Unearned revenue | 297 | 526 | |||||||||
| Total gross deferred tax assets | 75,236 | 111,660 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Prepaid pension expense | 10,802 | 10,602 | |||||||||
| Mortgage servicing rights | 7,007 | 7,253 | |||||||||
| Goodwill | 37,014 | 35,924 | |||||||||
| Lease financing | 22,063 | 29,502 | |||||||||
| Unrealized gain on equity securities | 909 | 698 | |||||||||
| Capitalized loan costs | 1,766 | 1,214 | |||||||||
| Defined benefit plan | 6,021 | 1,773 | |||||||||
| Other | 1,399 | 1,362 | |||||||||
| Total gross deferred tax liabilities | 86,981 | 88,328 | |||||||||
| Net deferred taxes | $ | (11,745) | $ | 23,332 | |||||||
The Company has not recorded a valuation allowance related to the net deferred tax assets at December 31, 2025 or 2024 due to historical and expected future earnings of the Company.
The Company classifies interest and penalties on uncertain tax benefits as income tax expense. In the normal course of business, the Company provides for uncertain tax positions and the related interest and penalties and adjusts its unrecognized tax benefits and related interest and penalties accordingly. Unrecognized tax benefits remained the same during 2025, totaling $1.5 million at December 31, 2025.
Federal net operating loss (NOL) carryovers were acquired in certain acquisitions. The remaining amount of NOL carryover is $0.5 million and $0.6 million as of December 31, 2025 and 2024, respectively. The NOL expires in 2033. The annual use of the NOL is limited and the Company expects to use the remaining carryover before expiration.
The Company’s U.S. federal tax returns for years prior to 2022 are no longer subject to examination by federal tax authorities, and with few exceptions, state tax returns prior to 2022 are no longer subject to examination by state tax authorities.
The following table presents income taxes paid by jurisdiction in amounts exceeding 5% of total income taxes paid, net of refunds for 2025 and 2024. As required by ASU 2023‑09, these amounts are presented on a net‑of‑refund basis, whereas cash paid for income taxes for the 2024 period reported in the Consolidated Statements of Cash Flows was presented on a gross basis.
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Federal | $ | 124,250 | $ | 77,200 | |||||||
| Missouri | 15,629 | 8,395 | |||||||||
| Other, net | 4,501 | 2,953 | |||||||||
| Total income taxes paid | $ | 144,380 | $ | 88,548 | |||||||
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.