UNION BANKSHARES INCUNB

UNION BANKSHARES INC Income Taxes Disclosure

10-KFiled Mar 20, 20263 min read
Income Taxes
The components of the provision for income taxes for the years ended December 31, were as follows:
 20252024
(Dollars in thousands)
Current federal tax provision$2,120 $2,251 
Current state tax provision (benefit)53 (53)
Deferred tax benefit(1,245)(1,829)
 $928 $369 

The total provision for income taxes differs from the amounts computed at the statutory federal income tax rate of 21% primarily due to the following for the years ended December 31:
 20252024
AmountPercentAmountPercent
(Dollars in thousands)
Computed “expected” tax expense$2,522 21.00 %$1,917 21.00 %
State tax expense (benefit), net of federal benefit (1)42 0.35 %(42)(0.46)%
Non-taxable or non-deductible items
Tax exempt interest(1,406)(11.71)%(1,222)(13.38)%
Increase in cash surrender value of COLI(146)(1.21)%(150)(1.65)%
Disallowed interest expense292 2.43 %283 3.10 %
Other non-deductible expenses12 0.10 %11 0.12 %
Tax credits
Low-income housing(1,856)(15.45)%(1,720)(18.84)%
Rehabilitation and energy
(77)(0.64)%(112)(1.23)%
Other (15)(0.13)%(17)(0.19)%
Equity in losses of limited partnerships1,559 12.98 %1,436 15.73 %
Other, net1 0.01 %(15)(0.16)%
 $928 7.73 %$369 4.04 %
____________________
(1)State taxes in New Hampshire made up the majority (greater than 50 percent) of the tax effect in this category.
Income taxes paid were as follows for the years ended December 31:
 20252024
(Dollars in thousands)
Federal taxes paid$200 $— 
New Hampshire taxes paid80 — 
Net payment$280 $— 

Listed below are the significant components of the net deferred tax asset at December 31:
 20252024
(Dollars in thousands)
Components of the deferred tax asset  
Allowance for credit losses
$2,117 $1,942 
Tax credit carryover2,444 1,478 
Deferred compensation481 426 
Loans held for sale13 22 
Core deposit intangible11 36 
Unrealized loss on investment securities available-for-sale7,257 9,571 
Other49 46 
Total deferred tax asset12,372 13,521 
   
Components of the deferred tax liability  
Depreciation(988)(1,131)
Mortgage servicing rights(407)(377)
Limited partnership investments(86)(46)
Goodwill(482)(447)
Prepaid expenses(172)(214)
Total deferred tax liability(2,135)(2,215)
Net deferred tax asset$10,237 $11,306 

Deferred tax assets are recognized subject to management's judgment that it is more likely than not that the deferred tax asset will be realized. Based on the temporary taxable items, historical taxable income and estimates of future taxable income, the Company believes that it is more likely than not that the deferred tax assets at December 31, 2025 will be realized and therefore no valuation allowance is warranted.
The net deferred income tax asset is included in Other assets in the consolidated balance sheets at December 31, 2025 and 2024.
Based on management's evaluation, management has concluded that there were no significant uncertain tax positions requiring recognition in the Company's financial statements at December 31, 2025 or 2024. The Company is subject to income tax at the federal level and in the state of New Hampshire. Although the Company is not currently the subject of an examination by any taxing authority, the Company's tax years ended December 31, 2022 through 2024 are open to examination under applicable statutes of limitation. The 2025 tax return has not yet been filed.

The Company may from time to time be assessed interest and/or penalties by federal or state tax jurisdictions, although any such assessments historically have been minimal and immaterial to the Company's financial results. In the event that the Company receives an assessment for interest and/or penalties, it will be classified in the financial statements as Other expenses.
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Historical Timeline

Fiscal YearFiled
2025Mar 20, 2026Showing above
2024Mar 25, 2025
2023Mar 26, 2024
2022Mar 24, 2023
2021Mar 24, 2022
2020Mar 19, 2021
2019Mar 13, 2020
2018Mar 15, 2019
2017Mar 16, 2018
2016Mar 15, 2017
2015Mar 15, 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.

Other Available Disclosures

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