Ponce Financial Group, Inc. Income Taxes Disclosure
Note 10. Income Taxes
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023 consisted of the following:
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
|
(in thousands) |
|
|||||||||
Current tax provision: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
8,607 |
|
|
$ |
748 |
|
|
$ |
105 |
|
State |
|
|
1,757 |
|
|
|
1,482 |
|
|
|
1,452 |
|
Total current tax provision |
|
|
10,364 |
|
|
|
2,230 |
|
|
|
1,557 |
|
Deferred tax provision: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
(896 |
) |
|
|
2,410 |
|
|
|
773 |
|
State |
|
|
1,330 |
|
|
|
276 |
|
|
|
696 |
|
Total deferred tax provision |
|
|
434 |
|
|
|
2,686 |
|
|
|
1,469 |
|
Valuation allowance |
|
|
(1,070 |
) |
|
|
(203 |
) |
|
|
(525 |
) |
Total provision for income taxes |
|
$ |
9,728 |
|
|
$ |
4,713 |
|
|
$ |
2,501 |
|
Reconciliation between the reported income tax expense and the amount computed by multiplying consolidated income before taxes by the statutory federal income tax rate of 21 percent for the years ended December 31, 2025 2024 and 2023 were as follows:
|
|
For the Years Ended December 31, |
|
|||||||||||||||||||||
|
|
2025 |
|
|
|
|
|
2024 |
|
|
|
|
|
2023 |
|
|
|
|
||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||||
|
|
(Dollars in thousands) |
|
|
|
|
||||||||||||||||||
U.S. federal statutory tax rate |
|
$ |
8,071 |
|
|
|
21.0 |
% |
|
$ |
3,294 |
|
|
|
21.0 |
% |
|
$ |
1,229 |
|
|
|
21.0 |
% |
State and local tax, net of federal benefit (1) |
|
|
2,439 |
|
|
|
6.3 |
% |
|
|
1,389 |
|
|
|
8.9 |
% |
|
|
1,697 |
|
|
|
29.0 |
% |
Changes in valuation allowance |
|
|
(1,070 |
) |
|
|
(2.8 |
%) |
|
|
(203 |
) |
|
|
(1.3 |
%) |
|
|
(525 |
) |
|
|
(9.0 |
%) |
Nontaxable or nondeductible items (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other nontaxable or nondeductible |
|
|
429 |
|
|
|
1.1 |
% |
|
|
280 |
|
|
|
1.8 |
% |
|
|
211 |
|
|
|
3.6 |
% |
Other adjustments |
|
|
(141 |
) |
|
|
(0.4 |
%) |
|
|
(47 |
) |
|
|
(0.3 |
%) |
|
|
(111 |
) |
|
|
(1.9 |
%) |
Provision for income taxes |
|
$ |
9,728 |
|
|
|
25.2 |
% |
|
$ |
4,713 |
|
|
|
30.1 |
% |
|
$ |
2,501 |
|
|
|
42.7 |
% |
Total income taxes paid for the years ended December 31, 2025, 2024 and 2023 consists of the following:
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
|
(in thousands) |
|
|||||||||
Federal |
|
$ |
6,794 |
|
|
$ |
1,050 |
|
|
$ |
— |
|
State and Local: |
|
|
|
|
|
|
|
|
|
|||
New York State |
|
|
1,086 |
|
|
|
924 |
|
|
|
865 |
|
Other States |
|
|
30 |
|
|
|
4 |
|
|
|
— |
|
New York City |
|
|
545 |
|
|
|
493 |
|
|
|
673 |
|
Total income taxes paid |
|
$ |
8,455 |
|
|
$ |
2,471 |
|
|
$ |
1,538 |
|
Management maintains a valuation allowance against its net New York State and New York City deferred tax assets as it is unlikely these deferred tax assets will be utilized to reduce the Company's tax liability in future years. For the years ended December 31, 2025 and 2024, the valuation allowance decreased by $1.07 million and decreased by $0.2 million, respectively. In 2025, the Company utilized a portion of the net operating losses in New York State and New York City which in turn decreased the 2025 valuation allowance.
Management has determined that it is not required to establish a valuation allowance against any other deferred tax assets in accordance with GAAP since it is more likely than not that the deferred tax assets will be fully utilized in future periods. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax liabilities, the level of historical taxable income, and the projected future taxable income over the periods that the temporary differences comprising the deferred tax assets will be deductible.
For federal income tax purposes, a financial institution may carry net operating losses (“NOLs”) forward indefinitely. The use of NOLs to offset income is limited to 80% of taxable income. At December 31, 2025, the Company has no federal NOL carryforward.
The state and city of New York allow for a three-year carryback period and carryforward period of twenty years on NOLs generated on or after tax year 2015. For tax years prior to 2015, no carryback period is allowed. Ponce De Leon Federal Bank, the predecessor of Ponce Bank, has no pre-2015 carryforwards for New York State or New York City purposes. Furthermore, there are post-2015 carryforwards available of $58.0 million for New York State purposes and $20.3 million for New York City purposes. Finally, for New Jersey purposes, losses may only be carried forward 20 years, with no allowable carryback period. At December 31, 2025, the Bank had no Connecticut or New Jersey net operating losses carryforwards.
At December 31, 2025 and 2024, the Company had no unrecognized tax benefits recorded.
The Company is subject to U.S. federal income tax, New York State income tax, Connecticut income tax, New Jersey income tax, Florida income tax and New York City income tax. The Company is generally no longer subject to examination by taxing authorities for years before 2022.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are presented below:
|
|
At December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(in thousands) |
|
|||||
Deferred tax assets: |
|
|
|
|
|
|
||
Allowance for credit losses |
|
$ |
7,934 |
|
|
$ |
6,942 |
|
Interest on nonaccrual loans |
|
|
1,643 |
|
|
|
1,265 |
|
Unrealized loss on available-for-sale securities |
|
|
2,934 |
|
|
|
4,141 |
|
Amortization of intangible assets |
|
|
109 |
|
|
|
46 |
|
Operating lease liabilities |
|
|
9,152 |
|
|
|
9,470 |
|
Net operating losses |
|
|
5,191 |
|
|
|
6,656 |
|
Charitable contribution carryforward |
|
|
257 |
|
|
|
1,476 |
|
Compensation and benefits |
|
|
1,172 |
|
|
|
844 |
|
Deferred loan fees and cost, net |
|
|
154 |
|
|
|
— |
|
Other |
|
|
1,465 |
|
|
|
1,627 |
|
Total gross deferred tax assets |
|
|
30,011 |
|
|
|
32,467 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Depreciation of premises and equipment |
|
|
537 |
|
|
|
724 |
|
Right of use assets |
|
|
8,600 |
|
|
|
8,975 |
|
Deferred loan fees and cost, net |
|
|
— |
|
|
|
337 |
|
Other |
|
|
225 |
|
|
|
139 |
|
Total gross deferred tax liabilities |
|
|
9,362 |
|
|
|
10,175 |
|
Valuation allowance |
|
|
9,148 |
|
|
|
10,218 |
|
Net deferred tax assets |
|
$ |
11,501 |
|
|
$ |
12,074 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 19, 2024 | |
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.