LINKBANCORP, Inc. Income Taxes Disclosure
The provision for income taxes consists of:
|
|
For the Year Ended December 31, |
|
|||||
(In Thousands) |
|
2025 |
|
|
2024 |
|
||
Current tax expense |
|
|
|
|
|
|
||
Federal |
|
|
7,213 |
|
|
|
716 |
|
State |
|
|
555 |
|
|
140 |
|
|
Total Current tax expense |
|
|
7,768 |
|
|
|
856 |
|
Deferred tax expense |
|
|
|
|
|
|
||
Federal |
|
|
1,439 |
|
|
|
6,182 |
|
State |
|
|
(115 |
) |
|
348 |
|
|
Total Deferred tax expense |
|
1324 |
|
|
6530 |
|
||
Total tax expense |
|
$ |
9,092 |
|
|
$ |
7,386 |
|
The Company does not have income from foreign sources and therefore does not have any foreign income tax.
The tax effects of deductible and taxable temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities, respectively, are as follows:
(In Thousands) |
|
December 31, |
|
|
December 31, |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Allowance for credit losses |
|
$ |
7,923 |
|
|
$ |
6,516 |
|
Deferred compensation |
|
|
1,164 |
|
|
|
965 |
|
Net fair value adjustment on acquired net assets |
|
|
5,924 |
|
|
|
8,550 |
|
Net unrealized loss on debt securities |
|
|
636 |
|
|
|
1,577 |
|
Net operating loss carryforwards |
|
|
970 |
|
|
|
2,652 |
|
Lease liability |
|
|
3,608 |
|
|
|
3,659 |
|
Other |
|
|
1,744 |
|
|
|
697 |
|
Total deferred tax assets |
|
$ |
21,969 |
|
|
$ |
24,616 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Premises and equipment |
|
$ |
(1,327 |
) |
|
$ |
(1,701 |
) |
Net unrealized gain on cash flow hedge |
|
|
— |
|
|
|
(347 |
) |
Right of use asset |
|
|
(3,529 |
) |
|
|
(3,488 |
) |
Other |
|
|
(224 |
) |
|
|
(214 |
) |
Total deferred tax liabilities |
|
|
(5,080 |
) |
|
|
(5,750 |
) |
Net deferred tax asset |
|
$ |
16,889 |
|
|
$ |
18,866 |
|
The Company also has a $4,617 net operating loss carryforward at December 31, 2025 of which $701 will begin to expire in 2029. The remaining $3,916 of net operating loss carryforward does not expire. The Company had no valuation allowance against its deferred tax assets in view of the Company's ability to realize the net deferred tax assets against future anticipated taxable income.
The reconciliation of the federal statutory rate and the Company's effective income tax rate is as follows:
|
|
For the Year Ended December 31, |
|
|
||||||||||||||
|
|
2025 |
|
|
|
2024 |
|
|
||||||||||
(In Thousands) |
|
Amount |
|
|
% of Pretax Income |
|
|
|
Amount |
|
|
% of Pretax Income |
|
|
||||
Federal statutory income tax |
|
$ |
8,947 |
|
|
|
21.0 |
|
% |
|
$ |
7,055 |
|
|
|
21.0 |
|
% |
Effect of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tax-exempt income, net of TEFRA disallowance |
|
|
(208 |
) |
|
|
(0.5 |
) |
|
|
|
(190 |
) |
|
|
(0.6 |
) |
|
State income taxes, net of federal income taxes |
|
|
347 |
|
|
|
0.8 |
|
|
|
|
385 |
|
|
|
1.2 |
|
|
Bank-owned life insurance |
|
|
(372 |
) |
|
|
(0.9 |
) |
|
|
|
(343 |
) |
|
|
(1.0 |
) |
|
Non-deductible merger expenses |
|
|
63 |
|
|
|
0.2 |
|
|
|
|
— |
|
|
|
— |
|
|
Other |
|
|
315 |
|
|
|
0.7 |
|
|
|
|
479 |
|
|
|
1.4 |
|
|
Actual tax expense and effective rate |
|
$ |
9,092 |
|
|
|
21.3 |
|
% |
|
$ |
7,386 |
|
|
|
22.0 |
|
% |
The Company recognized no adjustment for uncertain tax positions or unrecognized income tax benefits for the years ended December 31, 2025 and 2024. The Company's policy is to recognize interest and penalties on unrecognized tax benefits in the provision for income tax expense in the consolidated statements of operation. The Company did not recognize any interest and penalties for the years ended December 31, 2025 and 2024. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2022.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Mar 29, 2024 | |
| 2022 | Mar 30, 2023 | |
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.