Bancorp, Inc. Income Taxes Disclosure
The Company operates in the and is subject to corporate net income taxes for federal and state purposes. The components of income tax expense included in the statements of continuing operations are as follows:
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| For the years ended | |||||||
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| December 31, | |||||||
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| 2025 |
| 2024 |
| 2023 | |||
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| (Dollars in thousands) | ||||||
Current tax provision |
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Federal |
| $ | 70,206 |
| $ | 54,569 |
| $ | 55,314 |
State |
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| 13,864 |
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| 17,730 |
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| 14,845 |
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| 84,070 |
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| 72,299 |
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| 70,159 |
Deferred tax provision (benefit) |
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Federal |
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| (8,318) |
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| 2,272 |
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| (4,925) |
State |
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| (928) |
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| 45 |
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| (756) |
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| (9,246) |
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| 2,317 |
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| (5,681) |
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| $ | 74,824 |
| $ | 74,616 |
| $ | 64,478 |
The specific categories in the rate reconciliation and additional information for reconciling items are as follows:
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| For the year ended | ||||
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| December 31, | ||||
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| 2025 | ||||
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| (Dollars in thousands) | |||
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Federal statutory tax rate |
| $ | 63,638 |
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| 21.0% |
State and local income taxes, net of federal income tax effect(1) |
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| 9,757 |
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| 3.2% |
Nontaxable or nondeductible items |
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Excess tax benefits from vesting or settlement of stock compensation awards |
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| (5,381) |
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| (1.8%) |
Limitation on executive compensation |
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| 6,501 |
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| 2.2% |
Other |
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| (714) |
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| (0.2%) |
Other |
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| 1,023 |
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| 0.3% |
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| $ | 74,824 |
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| 24.7% |
(1)State taxes in Florida, South Dakota, and New York made up the majority (greater than 50 percent) of the tax effect in this category.
The differences between applicable income tax expense (benefit) from continuing operations and the amounts computed by applying the statutory federal income tax rate of 21% for 2024 and 2023, are as follows:
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| For the years ended | ||||
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| December 31, | ||||
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| 2024 |
| 2023 | ||
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Computed tax expense at statutory rate |
| $ | 61,353 |
| $ | 53,923 |
State taxes |
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| 12,011 |
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| 10,885 |
Tax-exempt interest income |
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| (766) |
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| (459) |
Meals and entertainment |
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| 57 |
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| 82 |
Other net nondeductible (deductible) items |
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| 1,281 |
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| (49) |
Other |
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| 680 |
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| 96 |
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| $ | 74,616 |
| $ | 64,478 |
Income taxes paid, net of refunds received, is disaggregated by federal and state jurisdictions as follows:
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| For the year ended | |
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| December 31, | |
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| 2025 | |
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| (Dollars in thousands) | |
Tax summary |
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Federal |
| $ | 63,500 |
State: |
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Delaware |
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| (4,279) |
Other |
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| 10,599 |
State subtotal |
| $ | 6,320 |
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Total cash paid for income taxes (net of refunds) |
| $ | 69,820 |
Deferred income taxes are provided for the temporary difference between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Cumulative temporary differences recognized in the financial statement of position are as follows:
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| For the years ended | ||||
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| December 31, | ||||
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| 2025 |
| 2024 | ||
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Deferred tax assets: |
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Allowance for credit losses |
| $ | 16,621 |
| $ | 8,526 |
Non-accrual interest |
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| 3,569 |
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| 1,993 |
Deferred compensation |
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| 728 |
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| 747 |
Nonqualified stock options |
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| 2,023 |
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| 1,623 |
Capital loss limitations |
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| 4,255 |
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| 5,701 |
Tax deductible goodwill |
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| 627 |
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| 682 |
Operating lease liabilities |
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| 4,887 |
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| 5,515 |
Unrealized losses on investment securities available-for-sale |
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| — |
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| 5,909 |
Deferred income |
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| 299 |
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| 225 |
Other |
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| 912 |
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| 1,044 |
Total gross deferred tax assets |
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| 33,921 |
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| 31,965 |
Federal and state valuation allowance |
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| (4,255) |
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| (5,701) |
Deferred tax liabilities: |
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Depreciation |
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| 2,842 |
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| 2,140 |
Unrealized gain on investment securities available-for-sale |
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| 3,532 |
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| — |
Right of use asset |
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| 4,613 |
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| 5,250 |
Total deferred tax liabilities |
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| 10,987 |
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| 7,390 |
Net deferred tax asset |
| $ | 18,679 |
| $ | 18,874 |
The table below presents the changes in the Company’s valuation allowance:
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| For the years ended | ||||
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| December 31, | ||||
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| 2025 |
| 2024 | ||
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Beginning balance at January 1 |
| $ | 5,701 |
| $ | 6,280 |
Allowances written off |
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| (1,446) |
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| (579) |
Valuation allowance at December 31 |
| $ | 4,255 |
| $ | 5,701 |
Management assesses all available positive and negative evidence to determine whether it is more likely than not that the Company will be able to recognize the existing deferred tax assets. If that threshold is not met, a valuation allowance is established against the deferred tax asset. The federal and state valuation allowance at December 31, 2025 and 2024, respectively, was $4.3 million and $5.7 million and resulted from Walnut Street assets, primarily because related capital losses will likely be non-deductible. Walnut Street reflected the Bank’s prior investment in an entity through which a portion of its discontinued loan portfolio was sold.
For the years ended December 31, 2025, 2024, or 2023 there were no unrecognized tax benefits and no amounts of interest or penalties related to unrecognized tax benefits have been recognized.
Tax years after 2022 remain subject to examination by the federal authorities, and tax years 2021 and after remain subject to examination by most state tax authorities.
On July 4, 2025, the United States enacted the One Big Beautiful Bill Act of 2025 (the “Act”). The Act includes, among other provisions, changes to the U.S. corporate income tax system, including permanent extensions of certain provisions of the Tax Cuts and Jobs Act. The Act contains multiple effective dates, with certain provisions effective beginning in calendar year 2025 and others phased in through calendar year 2027. Based on the Company’s current analysis of the Act’s provisions, the Company does not expect the Act to have a material impact on its financial position, results of operations, or cash flows.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Mar 15, 2016 | |
| 2014 | Sep 28, 2015 | |
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.