SOUTHSIDE BANCSHARES INCSBSI

SOUTHSIDE BANCSHARES INC Income Taxes Disclosure

10-KFiled Feb 27, 20263 min read
INCOME TAXES
The income tax expense included in the accompanying consolidated statements of income consists of the following (in thousands):
 Years Ended December 31,
 202520242023
Current income tax expense$13,761 $19,909 $16,547 
Deferred income tax expense (benefit)(351)(1,026)(2,110)
Income tax expense$13,410 $18,883 $14,437 
The components of the net deferred tax asset/liability as of December 31, 2025 and 2024 are summarized below (in thousands):
 AssetsLiabilities
Allowance for loan losses$9,471 $
Retirement and other benefit plans 2,198 
Premises and equipment8,359 
Operating lease liabilities3,010 
Operating lease ROU assets2,604 
Core deposit intangible49 
Unrealized losses on securities AFS20,803 
Effective hedging derivatives309 
Fair value adjustment on loans327 
Unfunded status of defined benefit plan4,658  
State business tax credit60  
Stock-based compensation1,189  
Other442 
Gross deferred tax assets/liabilities40,269 13,210 
Net deferred tax asset at December 31, 2025$27,059 
Allowance for loan losses$9,426 $
Retirement and other benefit plans 2,674 
Premises and equipment 8,196 
Operating lease liabilities3,313 
Operating lease ROU assets2,911 
Core deposit intangible132 
Unrealized losses on securities AFS33,466 
Effective hedging derivatives4,926 
Fair value adjustment on loans385 
Unfunded status of defined benefit plan5,051  
State business tax credit121  
Stock-based compensation1,404  
Other165 
Gross deferred tax assets/liabilities53,331 18,839 
Net deferred tax asset at December 31, 2024$34,492 
A reconciliation of tax at statutory rates and total tax expense is as follows (dollars in thousands):
 Years Ended December 31,
 202520242023
 AmountPercent of Pre-Tax IncomeAmountPercent of Pre-Tax IncomeAmountPercent of Pre-Tax Income
Statutory tax expense$17,352 21.0 %$22,549 21.0 %$21,237 21.0 %
State business tax (1)
424 0.5 %883 0.8 %353 0.3 %
Nontaxable or Nondeductible Items:      
Tax exempt interest(3,954)(4.8)%(3,797)(3.5)%(6,107)(6.0)%
BOLI(762)(0.9)%(893)(0.8)%(1,222)(1.2)%
Other, net350 0.4 %141 0.1 %176 0.2 %
Income tax expense$13,410 16.2 %$18,883 17.6 %$14,437 14.3 %
(1) State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category.
We file income tax returns in the U.S. federal jurisdiction and in certain states.  Federal taxes paid, net of refunds, totaled $12.0 million for the year December 31, 2025, and state income taxes paid, net of refunds, totaled $1.0 million for the year ended December 31, 2025, of which $936,000 was for the state of Texas. We are no longer subject to U.S. federal income tax examinations by tax authorities for years before 2022 or Texas state tax examinations by tax authorities for years before 2021.  No valuation allowance was recorded at December 31, 2025 or 2024 as management believes it is more likely than not that all of the deferred tax asset items will be realized in future years. Unrecognized tax benefits were not material at December 31, 2025 or 2024.
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Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2023Feb 27, 2024
2022Feb 24, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2018Feb 28, 2019
2016Feb 24, 2017
2015Mar 8, 2016

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.

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