Community West BancsharesCWBC
Community West Bancshares Income Taxes Disclosure
INCOME TAXES
The provision for income taxes for the years ended December 31, 2025, 2024, and 2023 consisted of the following (in thousands):
| Federal | State | Total | ||||||||||||||||||
| 2025 | ||||||||||||||||||||
| Current | $ | 7,374 | $ | 4,527 | $ | 11,901 | ||||||||||||||
| Deferred | 1,737 | 722 | 2,459 | |||||||||||||||||
| Provision for income taxes | $ | 9,111 | $ | 5,249 | $ | 14,360 | ||||||||||||||
| 2024 | ||||||||||||||||||||
| Current | $ | 2,706 | $ | 1,493 | $ | 4,199 | ||||||||||||||
| Deferred | (463) | (404) | (867) | |||||||||||||||||
| Provision for income taxes | $ | 2,243 | $ | 1,089 | $ | 3,332 | ||||||||||||||
| 2023 | ||||||||||||||||||||
| Current | $ | 4,692 | $ | 3,502 | $ | 8,194 | ||||||||||||||
| Deferred | 176 | (66) | 110 | |||||||||||||||||
| Provision for income taxes | $ | 4,868 | $ | 3,436 | $ | 8,304 | ||||||||||||||
Deferred tax assets (liabilities) consisted of the following (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets: | ||||||||||||||
| Unrealized loss on available-for-sale investment securities | $ | 16,631 | $ | 23,132 | ||||||||||
| Allowance for credit losses | 8,890 | 7,970 | ||||||||||||
| Purchase accounting fair value adjustment | 8,866 | 11,218 | ||||||||||||
| Deferred compensation | 3,693 | 4,081 | ||||||||||||
| Operating lease liabilities | 3,382 | 3,049 | ||||||||||||
| Net operating loss carryovers | 2,075 | 3,175 | ||||||||||||
| Other deferred tax assets | 1,018 | 848 | ||||||||||||
| State taxes | 945 | 253 | ||||||||||||
| Mark-to-market adjustment | 318 | 411 | ||||||||||||
| Loan and investment impairment | 113 | 133 | ||||||||||||
| Partnership income | 72 | 128 | ||||||||||||
| Other-than-temporary impairment | 29 | 30 | ||||||||||||
| Low income housing tax credit carry-forward | — | 942 | ||||||||||||
| Total deferred tax assets | 46,032 | 55,370 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Operating lease right-of-use assets | (3,032) | (2,811) | ||||||||||||
| Core deposit intangible | (2,408) | (2,814) | ||||||||||||
| Loan origination costs | (1,349) | (1,643) | ||||||||||||
| Bank premises and equipment | (1,119) | (920) | ||||||||||||
| Finance leases | (474) | (570) | ||||||||||||
| FHLB stock | (189) | (191) | ||||||||||||
| Total deferred tax liabilities | (8,571) | (8,949) | ||||||||||||
| Net deferred tax assets | $ | 37,461 | $ | 46,421 | ||||||||||
The determination of the amount of deferred income tax assets which are more likely than not to be realized is primarily dependent on projections of future earnings, which are subject to uncertainty and estimates that may change given economic conditions and other factors. The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is more likely than not that all or a portion of the deferred tax asset will not be realized. More likely than not is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of the evidence, a valuation allowance is needed. Thus, management concludes no valuation allowance is necessary against deferred tax assets as of December 31, 2025 and 2024.
The provision for income taxes differs from amounts computed by applying the statutory Federal income tax rates to operating income before income taxes. The significant items comprising these differences for the years ended December 31, 2025, 2024, and 2023 consisted of the following (amounts in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| $ | 11,031 | 21.0 | % | $ | 2,310 | 21.0 | % | $ | 7,106 | 21.0 | % | ||||||||||||||||||||||||
State taxes, net of federal tax benefit (1) | 4,147 | 7.9 | % | 860 | 7.8 | % | 2,714 | 8.0 | % | ||||||||||||||||||||||||||
| Tax credits: | |||||||||||||||||||||||||||||||||||
| Low income housing tax credits | (1,912) | (3.6) | % | (1,720) | (15.6) | % | (847) | (2.5) | % | ||||||||||||||||||||||||||
| Other tax credits | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items: | |||||||||||||||||||||||||||||||||||
| Tax exempt investment security income, net | (461) | (0.9) | % | (438) | (4.0) | % | (1,176) | (3.5) | % | ||||||||||||||||||||||||||
| Bank owned life insurance, net | (322) | (0.6) | % | (272) | (2.4) | % | (214) | (0.6) | % | ||||||||||||||||||||||||||
| Compensation - stock compensation | (48) | (0.1) | % | (72) | (0.6) | % | (13) | — | % | ||||||||||||||||||||||||||
| Nondeductible employee compensation | — | — | % | 113 | 1.0 | % | — | — | % | ||||||||||||||||||||||||||
| Nondeductible acquisition‑related expense | — | — | % | 416 | 3.8 | % | — | — | % | ||||||||||||||||||||||||||
| Other nontaxable or nondeductible items | 239 | 0.4 | % | 194 | 1.7 | % | (64) | (0.2) | % | ||||||||||||||||||||||||||
| Other Adjustments: | |||||||||||||||||||||||||||||||||||
| Amortization - low income housing tax credit investments | 1,899 | 3.6 | % | 1,976 | 17.9 | % | 1,055 | 3.1 | % | ||||||||||||||||||||||||||
| Other tax benefits - low income housing tax credit investments | (399) | (0.8) | % | (496) | (4.5) | % | (257) | (0.8) | % | ||||||||||||||||||||||||||
| Other | 186 | 0.4 | % | 461 | 4.2 | % | — | — | % | ||||||||||||||||||||||||||
| Total provision for income taxes | $ | 14,360 | 27.3 | % | $ | 3,332 | 30.3 | % | $ | 8,304 | 24.5 | % | |||||||||||||||||||||||
| (1) State taxes in California accounted for the majority of the tax effect within this category. | |||||||||||||||||||||||||||||||||||
As of December 31, 2025, the Company had federal and California net operating loss (“NOL”) carry-forwards of $4,703,000 and $13,366,000, respectively. These NOLs were acquired through business combinations and are subject to Section 382 of the Internal Revenue Code of 1986, as amended (“IRC 382”). The federal and California NOLs begin to expire at various dates between 2033 and 2044, if not used. While they are subject to IRC 382, management has determined that all of the NOLs are more than likely than not to be utilized before they expire.
The Company and its subsidiary file income tax returns in the U.S. federal and California jurisdictions. The Company conducts all of its business activities in the State of California. There are no pending U.S. federal or state income tax examinations by those taxing authorities. The Company is no longer subject to the examination by U.S. federal taxing authorities for the years ended before December 31, 2022 and by the state taxing authorities for the years ended before December 31, 2021.
The Company's investments, net of amortization, in low income housing tax credit funds were $16,731,000 and $18,630,000 as of December 31, 2025 and 2024. The Company had gross commitments of $24,526,000 and $24,526,000 at December 31, 2025 and 2024, respectively of which $6,453,000 and $9,289,000 were unfunded as of December 31, 2025 and 2024, respectively. These investments are included in other assets on the consolidated balance sheets and the unfunded commitments are included in other liabilities. The Company recognized tax credits and other income tax benefits of $2,311,000 and $2,216,000 for the year ended December 2025 and 2024, respectively. Amortization of the investments recorded for the same periods were $1,899,000 and $1,976,000, respectively.
As of December 31, 2025, the Company has no unrecognized tax benefits and does not expect any material changes in the next 12 months.
During the years ended December 31, 2025 and 2024, the Company recorded no interest or penalties related to uncertain tax positions.
The following table presents the income taxes paid, net of refunds, for the years ended December 31, 2025, 2024, and 2023:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal | $ | 4,000 | $ | 1,400 | $ | 4,400 | ||||||||||||||
| State and local: | ||||||||||||||||||||
| California | 4,000 | 1,170 | 3,300 | |||||||||||||||||
| Other | 5 | 2 | — | |||||||||||||||||
| Total state and local | 4,005 | 1,172 | 3,300 | |||||||||||||||||
| Total income taxes paid, net of refunds | $ | 8,005 | $ | 2,572 | $ | 7,700 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 9, 2022 | |
| 2020 | Mar 10, 2021 | |
| 2019 | Mar 6, 2020 | |
| 2018 | Mar 8, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Mar 29, 2017 | |
| 2015 | Mar 15, 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.