SB FINANCIAL GROUP, INC. Income Taxes Disclosure
Note 14: Income Taxes
The provision for income taxes includes these components:
| For The Year Ended December 31, | ||||||||
| ($ in thousands) | 2025 | 2024 | ||||||
| Current expense | ||||||||
| Federal | $ | 3,392 | $ | 369 | ||||
| Current income tax expense | 3,392 | 369 | ||||||
| Deferred expense | ||||||||
| Federal | (111 | ) | 2,017 | |||||
| Deferred income tax expense | (111 | ) | 2,017 | |||||
| Income tax expense | $ | 3,281 | $ | 2,386 | ||||
A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown below:
| For The Year Ended December 31, | ||||||||||||||||
| ($ in thousands) | 2025 | 2024 | ||||||||||||||
| US federal statutory income tax rate | $ | 3,624 | 21.0 | % | $ | 2,910 | 21.0 | % | ||||||||
| State and local income taxes - net of federal income tax effect* | 0.00 | % | 0.00 | % | ||||||||||||
| Tax credits | ||||||||||||||||
| Low-income housing tax credits | (89 | ) | -0.52 | % | (89 | ) | -0.64 | % | ||||||||
| Amortization of LIHTC Investments net of other benefits | 78 | 0.40 | % | 78 | 0.50 | % | ||||||||||
| Nontaxable and nondeductible items | ||||||||||||||||
| Tax-exempt interest income net of disallowed interest expense | (103 | ) | -0.60 | % | (111 | ) | -0.80 | % | ||||||||
| BOLI income | (162 | ) | -0.94 | % | (161 | ) | -1.16 | % | ||||||||
| Captive premium income | (117 | ) | -0.68 | % | (147 | ) | -1.06 | % | ||||||||
| Other nontaxable and nondeductible items | 50 | 0.34 | % | (94 | ) | -0.61 | % | |||||||||
| Income tax expense; effective tax rate | $ | 3,281 | 19.00 | % | $ | 2,386 | 17.23 | % | ||||||||
| * | The majority of the Company's activities for 2025 and 2024 are sourced to states that do not impose an income tax on financial institutions. |
Given Company’s business activity, there were no State and local income tax, net of federal (national) income tax effect; Foreign tax effects; Effect of changes in tax laws or rates enacted in the current period; Effect of cross-border tax laws; valuation allowances; unrecognized tax benefits.
Income taxes paid were as follows:
| For The Year Ended December 31, | ||||||||
| ($ in thousands) | 2025 | 2024 | ||||||
| Federal | $ | 2,050 | $ | 417 | ||||
| State and local | ||||||||
| Total | $ | 2,050 | $ | 417 | ||||
The tax effects of temporary differences related to deferred taxes shown on the balance sheets are:
| For The Year Ended December 31, | ||||||||
| ($ in thousands) | 2025 | 2024 | ||||||
| Deferred tax assets | ||||||||
| Allowance for credit losses | $ | 3,383 | $ | 3,170 | ||||
| Unrealized losses on available-for-sale securities | 5,710 | 8,037 | ||||||
| Capitalized research and development costs | 102 | |||||||
| Accrued bonus | 363 | 120 | ||||||
| Net operating loss | 296 | 791 | ||||||
| Unearned loan fees | 115 | |||||||
| Other | 968 | 911 | ||||||
| 10,835 | 13,131 | |||||||
| Deferred tax liabilities | ||||||||
| Depreciation | (1,097 | ) | (849 | ) | ||||
| Mortgage servicing rights | (3,203 | ) | (3,122 | ) | ||||
| Purchase accounting adjustments | (1,964 | ) | (1,475 | ) | ||||
| Prepaids | (457 | ) | (434 | ) | ||||
| Net deferred loan costs | (31 | ) | ||||||
| Section 475 MTM | (5,710 | ) | (8,037 | ) | ||||
| FHLB stock dividends | (67 | ) | (67 | ) | ||||
| (12,498 | ) | (14,015 | ) | |||||
| Net deferred tax liability | $ | (1,663 | ) | $ | (884 | ) | ||
At December 31, 2024, the Company had $3.8 million in net operating losses. During 2025, the Company acquired Net Operating Losses with a remaining balance of $1.4 million. The Net Operating Losses is subject to an annual limitation of $171 thousand with no expiration period..
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 7, 2023 | |
| 2021 | Mar 7, 2022 | |
| 2020 | Mar 8, 2021 | |
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.