NORTHPOINTE BANCSHARES INCNPB
NORTHPOINTE BANCSHARES INC Income Taxes Disclosure
Income Taxes
The components of the income tax provision are detailed as follows for the dates indicated (dollars in thousands):
| 2025 | 2024 | |||||||||||||
| Current income tax expense | ||||||||||||||
| Federal | $ | 22,291 | $ | 35,186 | ||||||||||
| State | 4,421 | $ | 3,362 | |||||||||||
| Total current income tax expense | 26,712 | 38,548 | ||||||||||||
| Deferred tax expense (benefit) | ||||||||||||||
| Federal | 173 | (20,275) | ||||||||||||
| State | 99 | (556) | ||||||||||||
| Total deferred tax expense (benefit) | 272 | (20,831) | ||||||||||||
| Total income tax expense | $ | 26,984 | $ | 17,717 | ||||||||||
A reconciliation of taxes on income from the statutory income tax rate to income tax expense is as follows for the years ended December 31, 2025 and 2024 (dollars in thousands):
| 2025 | 2024 | |||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||||||||||||
| Income tax expense, computed at statutory rate of pretax income | $ | 23,183 | 21.00 | % | $ | 15,304 | 21.00 | % | ||||||||||||||||||
| State and local income taxes | 3,377 | 3.06 | % | 2,216 | 3.04 | % | ||||||||||||||||||||
| Section 162(m) compensation limitation | 428 | 0.38 | % | — | — | % | ||||||||||||||||||||
| Effect of nontaxable income and nondeductible expenses | (4) | — | % | 90 | 0.12 | % | ||||||||||||||||||||
| Other | — | — | % | 107 | 0.15 | % | ||||||||||||||||||||
| Total income tax expense | $ | 26,984 | 24.44 | % | $ | 17,717 | 24.31 | % | ||||||||||||||||||
Income taxes paid were as follows for the years ended December 31, 2025 and 2024 (dollars in thousands):
| 2025 | 2024 | |||||||||||||
| Federal | $ | 22,350 | $ | 38,126 | ||||||||||
| State and local | ||||||||||||||
| Florida | 1,592 | 268 | ||||||||||||
| All other states | 4,854 | 4,958 | ||||||||||||
| Total income taxes paid | $ | 28,796 | $ | 43,352 | ||||||||||
Deferred tax assets and liabilities consisted of the following as of period end (dollars in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Allowance for credit losses | $ | 2,518 | $ | 2,649 | |||||||
| Accrued expenses and other reserve accounts | 1,802 | 1,762 | |||||||||
| Nonaccrual loan interest | 846 | 957 | |||||||||
| Stock compensation | 509 | 379 | |||||||||
| Unrealized loss on debt securities available for sale | 45 | 82 | |||||||||
| Other deferred tax assets | 107 | 211 | |||||||||
| Total deferred tax assets | 5,827 | 6,040 | |||||||||
| Mortgage servicing rights | 4,030 | 3,558 | |||||||||
| Fixed assets | 3,273 | 3,135 | |||||||||
| Goodwill and intangibles | 472 | 581 | |||||||||
| Net deferred loan costs/fees | 1,732 | 2,138 | |||||||||
| Other deferred tax liabilities | 106 | 106 | |||||||||
| Total deferred tax liabilities | 9,613 | 9,518 | |||||||||
| Net deferred tax liability | $ | (3,786) | $ | (3,478) | |||||||
The Company and its subsidiary file consolidated tax returns. The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Deferred tax assets are included in other assets in the consolidated balance sheets and deferred tax liabilities are included in other liabilities in the Consolidated Balance Sheets.
Uncertain tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than- not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. There were no uncertain tax positions recognized at December 31, 2025 or 2024.
With a few exceptions, the Company is no longer subject to U.S. federal tax examinations by tax authorities for years before 2022, and state and local income tax examinations by tax authorities for years before 2022. For federal tax purposes, the Company recognizes interest and penalties on income taxes as a component of income tax expense.
On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. These changes did not have a material impact on the Company’s federal income tax expense or liability for the year ended December 31, 2025. The Company does not expect these changes to have a material impact on future periods.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
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.