First Guaranty Bancshares, Inc.FGBI

First Guaranty Bancshares, Inc. Income Taxes Disclosure

10-KFiled Mar 17, 20253 min read
Income Taxes
The following is a summary of the provision for income taxes included in the Consolidated Statements of Income:

 December 31,
(in thousands)20242023
Current$3,518 $2,857 
Deferred40 (180)
Total$3,558 $2,677 

The difference between income taxes computed by applying the statutory federal income tax rate and the provision for income taxes in the financial statements is reconciled as follows:

 December 31,
(in thousands except for %)20242023
Statutory tax rate21.0 %21.0 %
Federal income taxes at statutory rate$3,290 $2,452 
Tax exempt municipal income(146)(102)
Other74 107 
State tax expense340 220 
Total$3,558 $2,677 

Deferred taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities, and available tax credit carry forwards. Temporary differences between the financial statement and tax values of assets and liabilities give rise to deferred taxes. The significant components of deferred taxes classified in First Guaranty's Consolidated Balance Sheets at December 31, 2024 and 2023 are as follows:

 December 31,
(in thousands)20242023
Deferred tax assets:  
Allowance for credit losses$7,596 $7,101 
Other real estate owned— 18 
Unrealized losses on available for sale securities677 416 
Unrealized losses on available for sale securities transferred to held to maturity2,743 3,029 
Net operating loss822 914 
Other277 473 
Gross deferred tax assets12,115 11,951 
Deferred tax liabilities:  
Depreciation and amortization(2,058)(1,871)
Core deposit intangibles(622)(768)
Discount on purchased loans(118)(180)
Other(1,367)(927)
Gross deferred tax liabilities(4,165)(3,746)
Net deferred tax assets (liabilities)$7,950 $8,205 

First Guaranty determined that the net deferred tax asset at December 31, 2024 and 2023 was more likely than not to be realized based on an assessment of all available positive and negative evidence, and therefore no valuation allowance was recorded.

Net operating loss carryforwards for income tax purposes were $3.9 million and $4.4 million as of December 31, 2024 and 2023, respectively. The carryforwards were acquired in 2017 in the Premier acquisition and expire from 2027 to 2034, and will be utilized subject to annual Internal Revenue Code Section 382 limitations.
ASC 740-10, Income Taxes, clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attribute for the consolidated financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return. First Guaranty does not believe it has any unrecognized tax benefits included in its consolidated financial statements. First Guaranty has not had any settlements in the current period with taxing authorities, nor has it recognized tax benefits as a result of a lapse of the applicable statute of limitations. First Guaranty recognizes interest and penalties accrued related to unrecognized tax benefits, if applicable, in noninterest expense. During the years ended December 31, 2024 and 2023, First Guaranty did not recognize any interest or penalties in its consolidated financial statements, nor has it recorded an accrued liability for interest or penalty payments.
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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.

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