v3.26.1
Income Taxes
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

(7) INCOME TAXES

The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C of the Internal Revenue Code, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries in which it holds 80% or more of the outstanding equity interest measured by both vote and fair value.

The following table presents the significant components of the Company's deferred tax assets and liabilities as of March 31, 2026 and December 31, 2025.

(Dollars in thousands)

 

March 31, 2026

 

 

December 31, 2025

 

Deferred tax assets:

 

 

 

 

 

 

Provision for credit losses

 

$

17,836

 

 

$

17,700

 

Accrued expenses, compensation, and other assets

 

 

1,613

 

 

 

5,868

 

Net operating loss carryforwards (1)

 

 

2,648

 

 

 

2,648

 

Other investments and investment securities

 

 

2,574

 

 

 

2,553

 

Valuation allowance

 

 

(3,571

)

 

 

(5,957

)

Total deferred tax assets

 

 

21,100

 

 

 

22,812

 

Deferred tax liabilities:

 

 

 

 

 

 

Goodwill and other intangibles

 

 

42,317

 

 

 

42,408

 

Total deferred tax liabilities

 

 

42,317

 

 

 

42,408

 

Deferred tax liability, net

 

$

21,217

 

 

$

19,596

 
(1)
As of March 31, 2026, the Company had an estimated $11.1 million of net operating loss carryforwards, $1.7 million of which expires at various dates between December 31, 2026 and December 31, 2035, which had no net carrying value as of March 31, 2026.

The following table presents the components of the Company's tax provision for the three months ended March 31, 2026 and 2025:

 

 

Three Months Ended March 31,

 

(Dollars in thousands)

 

2026

 

 

2025

 

Current

 

 

 

 

 

 

Federal

 

$

1,961

 

 

$

4,661

 

State

 

 

740

 

 

 

1,522

 

Deferred

 

 

 

 

 

 

Federal

 

 

1,263

 

 

 

261

 

State

 

 

364

 

 

 

269

 

Net provision for income taxes

 

$

4,328

 

 

$

6,713

 

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision reported for the three months ended March 31, 2026 and 2025.

 

 

Three Months Ended March 31,

 

(Dollars in thousands)

 

2026

 

 

2025

 

 

 

Amount

 

 

Percent (1)

 

 

Amount

 

 

Percent (1)

 

Statutory Federal income tax provision

 

$

2,440

 

 

 

21

%

 

$

4,250

 

 

 

21

%

State and local income taxes, net of federal income tax benefit

 

 

910

 

 

 

8

 

 

 

923

 

 

 

5

 

Non-deductible expenses

 

 

3,385

 

 

 

29

 

 

 

1,572

 

 

 

8

 

Valuation allowance against deferred tax assets

 

 

(2,386

)

 

 

(21

)

 

 

(190

)

 

 

(1

)

Other

 

 

(21

)

 

 

(0

)

 

 

158

 

 

 

1

 

Total income tax provision

 

$

4,328

 

 

 

37

%

 

$

6,713

 

 

 

33

%
(1)
Percentage may not foot due to rounding.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. The Company has determined that a valuation allowance is necessary for net operating losses which the Company does not believe will be utilized as well as for deferred compensation in excess of statutory limits. Based upon these considerations, the Company determined the necessary valuation allowance as of March 31, 2026.

The Company has filed tax returns in many states. Federal, Utah, California, New York, Florida, and Texas tax filings of the Company for the tax years 2022 through the present are the more significant filings that are open for examination. For the three months ended March 31, 2026, Utah, California, Florida, New York, and Texas made up 34%, 7%, 6%, 5%, and 3% of the state and local income taxes, net of federal income tax benefit.