FS Bancorp, Inc. Income Taxes Disclosure
NOTE 10 – INCOME TAXES
The components of income tax expense for the years indicated were as follows:
| For the Year Ending December 31, | ||||||||||||
| Provision for income taxes | 2025 | 2024 | 2023 | |||||||||
| Current federal income tax expense | $ | 7,699 | $ | 8,244 | $ | 9,685 | ||||||
| Current state and local income tax expense | 369 | 336 | 227 | |||||||||
| Deferred federal income tax benefit | (278 | ) | (1,965 | ) | (677 | ) | ||||||
| Deferred state and local income tax benefit | (16 | ) | (58 | ) | (16 | ) | ||||||
| Total provision for income taxes | $ | 7,774 | $ | 6,557 | $ | 9,219 | ||||||
A reconciliation of the effective income tax rate with the federal statutory tax rates at the dates indicated was as follows:
| December 31, | ||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||
| Pre-tax income - domestic | $ | 41,120 | $ | 41,581 | $ | 45,272 | ||||||||||||||||||
| Pre-tax income - foreign | — | — | — | |||||||||||||||||||||
| Total pre-tax income | $ | 41,120 | $ | 41,581 | $ | 45,272 | ||||||||||||||||||
| Effective tax rate | ||||||||||||||||||||||||
| US federal statutory tax rate | $ | 8,635 | 21.0 | % | $ | 8,732 | 21.0 | % | $ | 9,507 | 21.0 | % | ||||||||||||
| State and local income taxes, net of federal income tax effect | 279 | 0.7 | 219 | 0.5 | 166 | 0.4 | ||||||||||||||||||
| Foreign tax effects | — | — | — | — | — | — | ||||||||||||||||||
| Effect of changes in tax laws or rates enacted in the current period | — | — | — | — | — | — | ||||||||||||||||||
| Effect of cross-border tax laws | — | — | — | — | — | — | ||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||
| Purchased income tax credits | (660 | ) | (1.6 | ) | (2,277 | ) | (5.5 | ) | — | — | ||||||||||||||
| Other | (150 | ) | (0.3 | ) | (93 | ) | (0.2 | ) | (60 | ) | (0.1 | ) | ||||||||||||
| Changes in valuation allowance | — | — | — | — | — | — | ||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||
| Excess executive compensation | 104 | 0.3 | 560 | 1.3 | 52 | 0.1 | ||||||||||||||||||
| Bank owned life insurance | (470 | ) | (1.1 | ) | (223 | ) | (0.5 | ) | (193 | ) | (0.4 | ) | ||||||||||||
| Other | 183 | 0.3 | 204 | 0.5 | 25 | 0.1 | ||||||||||||||||||
| Changes in unrecognized tax benefits | — | — | — | — | — | — | ||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Stock-based compensation (windfalls) / shortfalls | (64 | ) | (0.2 | ) | (631 | ) | (1.5 | ) | (208 | ) | (0.5 | ) | ||||||||||||
| Other | (83 | ) | (0.2 | ) | 66 | 0.2 | (70 | ) | (0.2 | ) | ||||||||||||||
| Effective tax rate | $ | 7,774 | 18.9 | % | $ | 6,557 | 15.8 | % | $ | 9,219 | 20.4 | % | ||||||||||||
| Statement of Cash Flows - Cash income taxes paid net of refunds | ||||||||||||||||||||||||
| Federal | $ | 200 | $ | 2,060 | $ | 10,100 | ||||||||||||||||||
| State | ||||||||||||||||||||||||
| Oregon | $ | (18 | ) | $ | 305 | $ | 165 | |||||||||||||||||
| Other | 2 | (29 | ) | 101 | ||||||||||||||||||||
| Foreign | — | — | — | |||||||||||||||||||||
| Cash paid for transferred tax credits | ||||||||||||||||||||||||
| Federal | $ | 7,587 | $ | 26,008 | $ | — | ||||||||||||||||||
| Oregon | 209 | 209 | — | |||||||||||||||||||||
Total deferred tax assets and liabilities at the dates indicated were as follows:
| December 31, | ||||||||
| Deferred Tax Assets | 2025 | 2024 | ||||||
| ACL on loans | $ | 6,743 | $ | 6,859 | ||||
| Non-accrued loan interest | 65 | 42 | ||||||
| Restricted stock awards | 75 | 105 | ||||||
| Non-qualified stock options | 692 | 489 | ||||||
| Lease liability | 1,269 | 1,194 | ||||||
| Securities available-for-sale | 4,607 | 6,256 | ||||||
| ACL on unfunded commitments | 381 | 302 | ||||||
| Other | 132 | 36 | ||||||
| Purchase accounting adjustments | 835 | 481 | ||||||
| Total deferred tax assets | 14,799 | 15,764 | ||||||
| Deferred Tax Liabilities | ||||||||
| Loan origination costs | (2,565 | ) | (2,513 | ) | ||||
| MSRs | (1,856 | ) | (1,960 | ) | ||||
| Stock dividend - FHLB stock | (7 | ) | — | |||||
| Property, plant, and equipment | (1,859 | ) | (1,515 | ) | ||||
| Lease right-of-use assets | (1,247 | ) | (1,156 | ) | ||||
| Interest rate swaps designated as cash flow hedge | (272 | ) | (1,561 | ) | ||||
| Total deferred tax liabilities | (7,806 | ) | (8,705 | ) | ||||
| Net deferred tax assets | $ | 6,993 | $ | 7,059 | ||||
The Company files a U.S. Federal income tax return and Oregon, Idaho, and Arizona state income tax returns, which are subject to examination by tax authorities for years and later. At December 31, 2025 and 2024, the Company had no uncertain tax positions. The Company recognized no interest and penalties in tax expense for the years ended December 31, 2025, 2024 and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 16, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Mar 25, 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.