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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Net income before income tax expense and significant components of income tax expense consisted of the following:
Years Ended
(Dollars in thousands)December 31, 2025
Net income before income tax expense$32,991 
Income tax expense:
Current
Federal$884 
State457 
Deferred
Federal4,939 
State1,332 
Change in valuation allowance for deferred tax asset20 
Income tax expense$7,632 
Years Ended December 31,
(Dollars in thousands)20242023
Income tax expense:
Current$9,162 $5,195 
Deferred(4,760)6,549 
Change in valuation allowance for deferred tax asset(24)(10)
Income tax expense$4,378 $11,734 
The Company does not have any material pre-tax income or income tax expense in foreign jurisdictions.
Income taxes paid, net of refunds received by jurisdiction consisted of the following:
Years Ended December 31,
(Dollars in thousands)2025
Income taxes paid, net of refunds received:
Federal$(1,500)
State
California401 
Illinois289 
Texas346 
Other418 
Total state taxes paid, net of refunds received1,454 
Total income taxes paid, net of refunds received$(46)
Effective tax rates differ from federal statutory rates applied to income before income taxes due to the following for the year ended December 31, 2025:
Years Ended December 31,
2025
(Dollars in thousands)AmountPercent
Tax provision computed at federal statutory rate$6,928 21.0 %
State and local income taxes, net of federal income tax effect(1)
1,374 4.2 %
Effects of changes in tax laws or rates enacted in the current period(199)(0.6)%
Tax Credits
Research and development tax credits(2,990)(9.1)%
Other(1)— %
Changes in valuation allowances20 0.1 %
Nontaxable or nondeductible items
Stock-based compensation(2)
1,119 3.4 %
Non-deductible executive compensation331 1.0 %
Non-deductible meals and entertainment834 2.5 %
Bank-owned life insurance(443)(1.3)%
Other250 0.8 %
Other409 1.1 %
Effective tax rate$7,632 23.1 %
(1) State taxes in Illinois and California made up the majority (greater than 50%) of the tax effect in this category for 2025.
(2) Includes excess benefits and shortfalls from restricted stock vesting and stock option exercises.
Effective tax rates differ from federal statutory rates applied to income before income taxes due to the following for the years ended December 31, 2024 and 2023:
Years Ended Years Ended December 31,
(Dollars in thousands)20242023
Tax provision computed at federal statutory rate$4,298 $11,091 
Effect of:
State taxes, net1,417 1,920 
Stock-based compensation(168)(2,661)
Non-deductible executive compensation562 1,943 
Non-deductible meals and entertainment887 808 
Federal tax credits(835)(835)
Bank-owned life insurance(138)(78)
Changes in valuation allowances(24)(10)
Other(1,621)(444)
Effective tax rate$4,378 $11,734 
Deferred income taxes reflect the net tax effects of temporary differences between the recorded amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
(Dollars in thousands)20252024
Deferred tax assets
Federal net operating loss carryforwards$10,560 $4,727 
State net operating loss carryforwards1,812 1,432 
Stock-based compensation4,995 5,132 
Unrealized loss on securities available for sale566 985 
Allowance for credit losses10,289 11,538 
Accrued liabilities5,931 5,949 
Lease liability6,004 6,939 
Qualified research expenses245 9,251 
Other5,034 919 
Total deferred tax assets45,436 46,872 
Deferred tax liabilities
Goodwill and intangible assets22,431 10,633 
Fair value adjustment on junior subordinated debentures1,867 1,970 
Premises and equipment11,891 12,228 
Lease right-of-use asset5,510 6,320 
Equity securities without readily determinable fair value1,704 1,669 
Other1,539 178 
Total deferred tax liabilities44,942 32,998 
Net deferred tax asset before valuation allowance494 13,874 
Valuation allowance(313)(293)
Net deferred tax asset$181 $13,581 
The Company's federal and state net operating loss carryforwards as of December 31, 2025 were $50,288,000 and $27,621,000, respectively, which will expire at various dates from 2031 through 2032, with the exception of $40,446,000 of net operating loss carryforwards that will not expire. The Company has a valuation allowance on certain net operating loss carryforwards that are not expected to be realized before expiration.
The Company's federal and state net operating loss carryforwards as of December 31, 2024 were $22,509,000 and $24,685,000, respectively.
An Internal Revenue Code Section 382 (“Section 382”) ownership change was triggered as part of previous acquisitions. A significant portion of the deferred tax asset relating to the Company's net operating loss carryforwards is subject to the annual limitation rules under Section 382. The utilization of tax carryforward attributes acquired from the EJ Financial Corp. (2010) acquisition is subject to an annual limitation of $341,000, with $1,985,000 of carryforwards remaining at December 31, 2025. The utilization of tax carryforward attributes acquired from the National Bancshares, Inc. (2013) acquisition is subject to an annual limitation of $2,040,000, with $7,856,000 of carryforwards remaining at December 31, 2025. The utilization of tax carryforward attributes acquired from HubTran, Inc. (2021) is subject to an annual limitation of $1,594,000, with $12,668,000 of carryforwards remaining at December 31, 2025. The utilization of tax carryforward attributes acquired from the Greenscreens AI, Inc. (2025) acquisition is subject to an annual limitation of $5,527,000, with $17,134,000 of carryforwards remaining at December 31, 2025.
At December 31, 2025 and 2024, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months. The Company recognizes interest and penalties related to income tax matters in income tax expense.
The Company is subject to U.S. federal income tax as well as income tax in various states. The Company is generally not subject to examination by taxing authorities for years prior to 2022.