EAGLE BANCORP INCEGBN
EAGLE BANCORP INC Income Taxes Disclosure
Note 12 – Income Taxes
The table below presents the federal and state income tax expense.
As of December 31, | ||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Pre-tax Income (Loss) from continuing operations | ||||||||||||||||||||
US | $ | (196,184) | $ | (30,240) | $ | 127,520 | ||||||||||||||
Foreign | — | — | — | |||||||||||||||||
Total - Pre-tax income (loss) from continuing operations | (196,184) | (30,240) | 127,520 | |||||||||||||||||
Income tax expense (benefit) | ||||||||||||||||||||
Current taxes: | ||||||||||||||||||||
U.S. federal | 10,094 | 9,897 | 25,291 | |||||||||||||||||
U.S. state and local | 154 | 4,297 | 5,072 | |||||||||||||||||
| Foreign | — | — | — | |||||||||||||||||
Subtotal - Current tax expense | 10,248 | 14,194 | 30,363 | |||||||||||||||||
Deferred taxes: | ||||||||||||||||||||
U.S. federal | (59,583) | 2,823 | (2,966) | |||||||||||||||||
U.S. state and local | (8,797) | (222) | (411) | |||||||||||||||||
| Foreign | — | — | — | |||||||||||||||||
Subtotal - Deferred taxes | (68,380) | 2,601 | (3,377) | |||||||||||||||||
Total income tax expense (benefit) from continuing operations | $ | (58,132) | $ | 16,795 | $ | 26,986 | ||||||||||||||
The Company had net deferred tax assets (deferred tax assets in excess of deferred tax liabilities) of $132.3 million and $91.5 million for the years ended as of December 31, 2025 and 2024, respectively, which related primarily to the net loss generated in 2025, unrealized losses on securities, allowance for credit losses, and unused LIHTC carried forward. Management believes it is more likely than not that all of the deferred tax assets will be realized with the exception of certain state net operating losses.
Temporary timing differences between the amounts reported in the Consolidated Financial Statements and the tax bases of assets and liabilities result in deferred taxes.
The table below summarizes significant components of our deferred tax assets and liabilities.
| As of December 31, | ||||||||||||||
| (dollars in thousands) | 2025 | 2024 | ||||||||||||
Deferred tax assets: | ||||||||||||||
| Allowance for credit losses | $ | 38,927 | $ | 27,998 | ||||||||||
| Deferred loan fees and costs | 4,274 | 4,551 | ||||||||||||
| Unrealized loss on securities available-for-sale | 19,188 | 34,656 | ||||||||||||
| Unrealized loss on securities held-to-maturity | 8,696 | 10,160 | ||||||||||||
| LIHTC and Investment Tax Credits ("ITC") | 9,787 | 5,793 | ||||||||||||
| Lease liabilities | 8,575 | 5,774 | ||||||||||||
| Supplemental executive retirement and death benefit agreements | 3,167 | 2,075 | ||||||||||||
| Stock-based compensation | 1,705 | 1,785 | ||||||||||||
| Premises and equipment | — | 217 | ||||||||||||
| Net operating loss | 51,740 | 8,104 | ||||||||||||
| Other assets | 3,537 | 3,549 | ||||||||||||
| Deferred tax assets before valuation allowances | 149,596 | 104,662 | ||||||||||||
Valuation allowances | (8,357) | (7,715) | ||||||||||||
| Total deferred tax assets | 141,239 | 96,947 | ||||||||||||
Deferred tax liabilities: | ||||||||||||||
| Right-of-use Assets | (6,920) | (4,483) | ||||||||||||
| Interest Rate Swaps & Derivatives | (324) | (602) | ||||||||||||
| Investment in Partnership | (444) | (384) | ||||||||||||
| Premises and equipment | (1,194) | — | ||||||||||||
| Other liabilities | (27) | (6) | ||||||||||||
| Total deferred tax liabilities | (8,909) | (5,475) | ||||||||||||
| Net deferred income tax assets | $ | 132,330 | $ | 91,472 | ||||||||||
As of December 31, 2025, the Company has $180.9 million of federal net operating loss and $211.0 million of state net operating loss carryforward. The Company has concluded, based on the weight of available positive and negative evidence, a portion of its state net operating loss deferred tax asset is not more-likely-than-not to be realized and accordingly, a valuation allowance of $8.4 million and $7.7 million is carried as of December 31, 2025 and 2024, respectively.
The table below presents a reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate.
| For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||
| U.S. federal statutory income tax rate | $ | (41,199) | 21.00 | % | $ | (6,350) | 21.00 | % | $ | 26,779 | 21.00 | % | ||||||||||||||||||||||||||
State and Local Income Taxes, Net of Federal Income Tax Effect(1) | (6,828) | 3.48 | % | 3,194 | (10.57) | % | 3,596 | 2.82 | % | |||||||||||||||||||||||||||||
| Effect of Changes in Tax Laws or Rates Enacted in the Current Period | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| Tax Credits: | ||||||||||||||||||||||||||||||||||||||
| Purchased transferable tax credits | (3,195) | 1.63 | % | (1,700) | 5.62 | % | — | — | % | |||||||||||||||||||||||||||||
Investment tax credits (2) | (1,203) | 0.61 | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
Low income housing tax credits(3) | (2,124) | 1.08 | % | (1,003) | 3.32 | % | (569) | (0.45) | % | |||||||||||||||||||||||||||||
Bond credits(4) | (532) | 0.27 | % | (532) | 1.76 | % | (532) | (0.42) | % | |||||||||||||||||||||||||||||
| Changes in Valuation Allowances | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
Nontaxable or Nondeductible Items: | ||||||||||||||||||||||||||||||||||||||
| Goodwill Impairment | — | — | % | 21,875 | (72.34) | % | — | — | % | |||||||||||||||||||||||||||||
| Bank owned life insurance income | (4,245) | 2.16 | % | (606) | 2.00 | % | (736) | (0.58) | % | |||||||||||||||||||||||||||||
| Tax-exempt interest, net of expense disallowance | (2,072) | 1.06 | % | (492) | 1.63 | % | (2,229) | (1.75) | % | |||||||||||||||||||||||||||||
Stock-based compensation expense(5) | 512 | (0.26) | % | 1,034 | (3.42) | % | 219 | 0.17 | % | |||||||||||||||||||||||||||||
| Non-deductible fines and penalties | 2,100 | (1.07) | % | — | — | % | — | — | % | |||||||||||||||||||||||||||||
| All other nontaxable or nondeductible items | 241 | (0.12) | % | 398 | (1.31) | % | 458 | 0.37 | % | |||||||||||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | 436 | (0.22) | % | 1,097 | (3.63) | % | — | — | % | |||||||||||||||||||||||||||||
Other Adjustments: | (23) | 0.01 | % | (120) | 0.40 | % | — | — | % | |||||||||||||||||||||||||||||
| Effective tax rate | $ | (58,132) | 29.63 | % | $ | 16,795 | (55.54) | % | $ | 26,986 | 21.16 | % | ||||||||||||||||||||||||||
(1) State taxes in Maryland made up the majority (greater than 50 percent) of the tax effect in this category.
(2) EagleBank's investment in solar tax equity qualifies for proportional amortization accounting method ("PAM"). Includes tax expense related to proportional amortization of $9.4 million, $0, and $0 and tax benefit related to flow-through losses of $0.1 million, $0, and $0 in 2025, 2024 and 2023, respectively.
(3) Includes tax expense related to proportional amortization of $5.3 million, $5.7 million, and $5.4 million and tax benefit related to flow-through losses of $1.7 million, $1.1 million, and $1.0 million in 2025, 2024 and 2023, respectively.
(4) The amount is net of the federal income tax add-back related to the bond credits.
(5) The amount includes the federal income tax effect of the windfall/shortfall adjustments related to the vesting of stock awards.
Unrecognized tax benefits ("UTBs") for the years ended December 31, 2025, 2024, and 2023, were $7.0 million, $6.6 million and $0, respectively. The table below details the UTBs for the periods shown below.
For the Year Ended December 31, | ||||||||||||||
| (dollars in thousands) | 2025 | 2024 | ||||||||||||
| Balance at beginning of year | $ | 6,550 | $ | — | ||||||||||
| Gross increases - tax positions related to prior periods | 434 | 6,254 | ||||||||||||
| Gross decreases - tax positions related to prior periods | — | — | ||||||||||||
| Gross increases - tax positions related to the current period | — | 296 | ||||||||||||
| Settlements with tax authorities | — | — | ||||||||||||
| Lapse of statute of limitations | — | — | ||||||||||||
| Balance at end of year | $ | 6,984 | $ | 6,550 | ||||||||||
Included in the balance of UTBs as of December 31, 2025, 2024, and 2023, are $5.6 million, $4.1 million, and $0, respectively, of tax benefits that, if recognized, would affect the ETR. Also, included in the balance of UTBs are some items the recognition of which would not affect the effective tax rate, such as the tax effect of certain temporary differences, the portion of gross state UTBs that would be offset by the tax benefit of the associated federal deduction.
We recognize interest accrued related to UTBs and penalties in other noninterest expense. We accrued no penalties and interest of $206 thousand during the year ended December 31, 2025.
The Company’s federal income tax returns are open and subject to examination from the 2022 tax return year and forward. The Company’s state income tax returns are generally open from the 2021 and later tax return years based on individual state statutes of limitations. There are currently no examinations in process as of December 31, 2025.
In July 2025, the One Big Beautiful Bill Act was signed into law, which included a broad range of tax reform provisions affecting businesses, including extending and modifying certain key provisions from the Tax Cuts and Jobs Act of 2017 and expanding certain incentives from the Inflation Reduction Act of 2022 while accelerating the phase-out of others. The tax provisions of the One Big Beautiful Bill Act did not have a material impact on our overall tax position.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 9, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 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.