CITY HOLDING COCHCO

CITY HOLDING CO Income Taxes Disclosure

10-KFiled Feb 25, 20263 min read
INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
20252024
Allowance for credit losses$4,368 $4,495 
Deferred compensation payable3,712 3,441 
Accrued expenses2,122 2,365 
Unrealized losses on available for sale securities23,731 34,973 
Depreciation3,133 2,603 
Other
3,938 4,307 
Total Deferred Tax Assets41,004 52,184 
Goodwill and other intangible assets3,159 3,080 
Deferred loan fees2,875 2,550 
Other
4,965 4,850 
Total Deferred Tax Liabilities
10,999 10,480 
Deferred Tax Assets, net
$30,005 $41,704 

No material valuation allowances for deferred tax assets were recorded at December 31, 2025 or 2024 as the Company believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years. 
Significant components of the provision for income taxes are as follows (in thousands): 
202520242023
Current:
Federal$25,286 $23,883 $27,156 
State
5,744 3,151 4,349 
Total current tax expense31,030 27,034 31,505 
Deferred
Federal50 270 (2,497)
State
(100)111 (267)
Total deferred tax expense
(50)381 (2,764)
Income tax expense
$30,980 $27,415 $28,741 
A reconciliation of the significant differences between the federal statutory income tax rate and the Company’s effective income tax rate is as follows (in thousands):
202520242023
Computed federal taxes at statutory rate$33,907 21.0 %$30,348 21.0 %$30,052 21.0 %
State income taxes, net of federal tax benefit (1)
4,736 2.9 2,871 2.0 3,662 2.6 
Income tax credits
Low-income housing tax credits(4,933)(3.1)(4,008)(2.8)(2,747)(1.9)
   Other(291)(0.2)— — — — 
Nontaxable or nondeductible items
  Tax-exempt interest income(701)(0.4)(732)(0.5)(850)(0.6)
Bank-owned life insurance(809)(0.5)(818)(0.6)(1,254)(0.9)
Other nondeductible items284 0.2 144 0.1 217 0.2 
Other Adjustments (2)
  Changes in unrecognized tax benefits, net(277)(0.2)(294)(0.2)(437)(0.3)
  Stock compensation(420)(0.3)(337)(0.2)(195)(0.1)
  Other items, net
(516)(0.3)241 0.2 293 0.2 
Effective tax rate$30,980 19.2 %$27,415 19.0 %$28,741 20.1 %
1.During the years ended December 31, 2025, 2024, and 2023, state taxes in West Virginia made up the majority of the tax effect in this category.
2. None of the Company's pretax book income is from foreign sources

Additionally, the Company made income tax payments as follows (in thousands):
202520242023
U.S. Federal$30,100 $23,300 $28,350 
State:
West Virginia4,202 4,000 3,600 
Other1,515 740 863 
Total States$5,717 $4,740 $4,463 
Total Income Taxes Paid$35,817 $28,040 $32,813 

The entire amount of the Company’s unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate. A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):
20252024
Beginning balance$1,275 $1,256 
Additions for current year tax positions427 309 
Increases (decreases) for prior year tax positions118 78 
Decreases related to lapse of applicable statute of limitation
(351)(368)
Ending balance
$1,469 $1,275 
 
Interest and penalties on income tax uncertainties are included in income tax expense.  During 2025, 2024 and 2023, the provision related to interest and penalties was not material in any period. The balance of accrued interest and penalties at December 31, 2025 and 2024 was approximately $1.0 million.
The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and various state taxing authorities for the years ended December 31, 2022 and forward.

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 26, 2025
2023Feb 28, 2024
2022Feb 22, 2023
2021Feb 24, 2022
2020Feb 24, 2021
2019Feb 27, 2020
2018Mar 11, 2019
2017Feb 28, 2018
2016Feb 27, 2017
2015Mar 2, 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.

Other Available Disclosures

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