Meridian CorpMRBK

Meridian Corp Income Taxes Disclosure

10-KFiled Mar 13, 20263 min read
Income Taxes
The following table presents the components of federal and state income tax expense for the periods indicated. The Corporation did not have any foreign operations.
(dollars in thousands)December 31,
2025		December 31,
2024
Current Expense
     Federal
$6,042 $5,551 
     State
897 688 
Total current income tax expense
$6,939 $6,239 
Deferred Expense
     Federal
$(330)$(725)
     State
(43)(74)
Total deferred income tax expense
$(373)$(799)
Total income tax expense$6,566 $5,440 
A reconciliation of the statutory income tax at 21% to the income tax expense included in the statement of operations is as follows for 2025 and 2024, respectively:
(dollars in thousands)December 31, 2025December 31, 2024
Federal income tax at statutory rate$5,965 21.0 %$4,575 21.0 %
State tax expense, net of federal benefit (1)
675 2.4 485 2.2 
Tax credits, net of amortization
(548)(1.9)(164)(0.8)
Nontaxable or nondeductible items
    Tax exempt interest, net
76 0.3 (11)(0.1)
    Bank owned life insurance
46 0.2 (182)(0.8)
    Stock based compensation
34 0.1 70 0.3 
    ESOP
38 0.1 23 0.1 
Prior year return to provision adjustment195 0.7 490 2.3 
Other85 0.2 154 0.8 
Effective income tax rate$6,566 23.1 %$5,440 25.0 %
(1) State taxes in Maryland and Delaware made up the majority (greater than 50%) of the tax effect in this category for both periods presented.
The components of the net deferred tax asset at December 31, 2025 and 2024 are as follows:
(dollars in thousands)December 31,
2025		December 31,
2024
Deferred tax assets:
Allowance for credit losses$4,920 $4,179 
Accrued retirement1,196 948 
Unrealized loss on available for sale securities
1,496 2,373 
Unrealized loss on derivatives
64 14 
Mortgage pipeline fair-value adjustment324 541 
Deferred rent70 30 
Mortgage repurchase reserve116 113 
Unfunded commitment reserve222 185 
Other206 187 
Total deferred tax asset$8,614 $8,570 
Deferred tax liabilities:
Property and equipment$(735)$(616)
Intangibles(201)(154)
Loan servicing rights(897)(993)
Hedge instrument fair-value adjustment(77)(50)
Prepaid expenses(375)(293)
Deferred loan costs(1,975)(1,612)
Other(139)(183)
Total deferred tax liability$(4,399)$(3,901)
Net deferred tax asset$4,215 $4,669 
The effective tax rates for the twelve-month periods ended December 31, 2025 and 2024 were 23.1% and 25.0% respectively. The decrease in rate between 2024 and 2025 was primarily related to the impact of solar related tax credits purchased at the end of 2025, partially offset by the tax impact of a surrender of certain bank owned life insurance policies.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Corporation will realize the benefits of these deferred tax assets.
As of December 31, 2025, the Corporation had an investment in low-income housing tax credits of $4.2 million on which it recognized tax credits of $448 thousand, amortization of $413 thousand and tax benefits from losses of $91 thousand during the year ended December 31, 2025. As of December 31, 2024, the Corporation had an investment in low-income housing tax credits of $4.6 million on which it recognized tax credits of $415 thousand, amortization of $448 thousand and tax benefits from losses of $99 thousand during the year ended December 31, 2024.

Historical Timeline

Fiscal YearFiled
2025Mar 13, 2026Showing above
2024Mar 17, 2025
2023Mar 15, 2024
2022Mar 16, 2023
2021Mar 16, 2022
2020Mar 29, 2021
2019Mar 30, 2020
2018Apr 1, 2019

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.

Other Available Disclosures

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