INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2025

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
State	457
Deferred
Federal	4,939
State	1,332
Change in valuation allowance for deferred tax asset	20
Income tax expense	$	7,632


	Years Ended December 31,
(Dollars in thousands)	2024		2023
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

Schedule of Income Taxes Paid, Net of Refunds

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
California	401
Illinois	289
Texas	346
Other	418
Total state taxes paid, net of refunds received	1,454

Total income taxes paid, net of refunds received	$	(46)

Schedule of Effective Income Tax Rate Reconciliation

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)	Amount		Percent
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 allowances	20		0.1	%
Nontaxable or nondeductible items
Stock-based compensation(2)	1,119		3.4	%
Non-deductible executive compensation	331		1.0	%
Non-deductible meals and entertainment	834		2.5	%
Bank-owned life insurance	(443)		(1.3)	%
Other	250		0.8	%

Other	409		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)	2024		2023
Tax provision computed at federal statutory rate	$	4,298	$	11,091
Effect of:
State taxes, net	1,417		1,920
Stock-based compensation	(168)		(2,661)
Non-deductible executive compensation	562		1,943
Non-deductible meals and entertainment	887		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

Schedule of Significant Components of Deferred Tax Assets and Liabilities

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)	2025		2024
Deferred tax assets
Federal net operating loss carryforwards	$	10,560	$	4,727
State net operating loss carryforwards	1,812		1,432
Stock-based compensation	4,995		5,132
Unrealized loss on securities available for sale	566		985
Allowance for credit losses	10,289		11,538
Accrued liabilities	5,931		5,949
Lease liability	6,004		6,939
Qualified research expenses	245		9,251
Other	5,034		919
Total deferred tax assets	45,436		46,872
Deferred tax liabilities
Goodwill and intangible assets	22,431		10,633
Fair value adjustment on junior subordinated debentures	1,867		1,970
Premises and equipment	11,891		12,228


Lease right-of-use asset	5,510		6,320


Equity securities without readily determinable fair value	1,704		1,669
Other	1,539		178
Total deferred tax liabilities	44,942		32,998
Net deferred tax asset before valuation allowance	494		13,874
Valuation allowance	(313)		(293)
Net deferred tax asset	$	181	$	13,581