Texas Community Bancshares, Inc. Income Taxes Disclosure
Note 10 - Income Taxes
Allocation of income taxes between current and deferred portions is as follows:
Years ended December 31, | ||||||
| 2025 | | 2024 | |||
Current federal income tax expense | $ | 114 | $ | — | ||
Current state income tax expense | 3 | — | ||||
Deferred federal income tax expense (benefit) |
| 394 |
| (484) | ||
Deferred state income tax expense |
| 11 |
| 8 | ||
Total provision (benefit) | $ | 522 | $ | (476) | ||
The differences in amounts and percentages between the statutory federal tax rate of 21% and the Company’s effective tax rate on net income before income taxes as reflected in the consolidated statements of operations during the year ended December 31, 2025, were as follows:
Year ended December 31, 2025 | |||||
Amount | Percentage | ||||
U.S. federal statutory tax rate | $ | 707 | 21.00 | % | |
State and local income taxes, net of federal income tax effect | 11 | 0.33 | |||
Nontaxable or nondeductible items | |||||
Nontaxable items - tax-exempt loan interest | (164) | (4.87) | |||
Nontaxable items - tax-exempt interest | (37) | (1.10) | |||
Nontaxable items - insurance officer life CSV (tax exempt build up) | (37) | (1.10) | |||
Nontaxable items - other nontaxable items | (2) | (0.06) | |||
Nondeductible items - disallowed interest expense | 38 | 1.13 | |||
Nondeductible items - other nondeductible items | (8) | (0.24) | |||
Other adjustments | 14 | 0.43 | |||
522 | 15.52 | % | |||
is the only state included in the state and local income taxes, net of federal income tax effect, category.
Income tax expense, as a percentage of pretax earnings, differs from the statutory federal income tax rate during the year ended December 31, 2024, is as follows:
Year ended December 31, 2024 |
| ||
Income tax expense at the statutory rate | 21.00 | % | |
State income taxes | (0.36) | ||
Nontaxable earnings | 8.47 | ||
Nondeductible expenses | (2.62) | ||
Other | 0.20 | ||
Total provision | 26.69 | % |
Income taxes paid were as follows:
Years ended December 31, | ||||||
| 2025 | | 2024 | |||
Jurisdiction | ||||||
Federal | $ | 175 | $ | — | ||
3 | — | |||||
Total |
| 178 |
| — | ||
The components of the net deferred tax asset are as follows:
December 31, | ||||||
| 2025 | | 2024 | |||
Deferred tax assets |
| |
| | ||
Allowance for credit losses | $ | 767 | $ | 701 | ||
Intangible assets |
| 104 |
| 89 | ||
Deferred compensation |
| 54 |
| 288 | ||
State income tax credit |
| 15 |
| 24 | ||
Stock options and restricted stock awards |
| 252 |
| 201 | ||
Charitable contribution credit |
| 31 |
| 77 | ||
Unrealized loss on securities available for sale |
| 814 |
| 1,267 | ||
Net operating losses | 257 | 574 | ||||
Other | 95 | 16 | ||||
| 2,389 |
| 3,237 | |||
Deferred tax liabilities |
| |
| | ||
Depreciable assets |
| (145) |
| (120) | ||
Accrual to cash |
| (278) |
| (261) | ||
Mortgage servicing rights |
| (44) |
| (48) | ||
Restricted stock dividends |
| (108) |
| (120) | ||
| (575) |
| (549) | |||
Net deferred tax asset | $ | 1,814 | $ | 2,688 | ||
No valuation allowance for deferred tax assets was recorded as of December 31, 2025 and 2024, as management believes the amounts representing future deferred tax benefits will more likely than not be recognized since the Company is expected to have sufficient taxable income of an appropriate character within the carryback and carryforward periods as permitted by the tax law to allow for utilization of the future deductible amounts.
Retained earnings at December 31, 2025 and 2024, includes $2,663 for which no deferred federal income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses or adjustments arising from carryback of net operating losses would create income for tax purposes only, which would be subject to the current corporate income tax rate. The unrecorded deferred income tax liability on the above amount was $559 at December 31, 2025 and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 25, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Mar 27, 2024 | |
| 2022 | Mar 30, 2023 | |
| 2021 | Mar 23, 2022 | |
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.