Income Taxes

3 Months Ended

Mar. 31, 2022

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 sets forth the significant components of our deferred and other tax assets and liabilities as of March 31, 2022 and December 31, 2021.

(Dollars in thousands)	March 31, 2022			December 31, 2021
Goodwill and other intangibles	$	(43,766	)	$	(43,894	)
Provision for loan losses		10,115			11,057
Net operating loss carryforwards (1)		9,627			12,167
Accrued expenses, compensation, and other assets		1,901			2,579
Unrealized gains on other investments		2,687			2,176
Total deferred tax liability		(19,436	)		(15,915	)
Valuation allowance(2)		(2,295	)		(2,295	)
Deferred tax liability, net	$	(21,731	)	$	(18,210	)

(1)As of March 31, 2022, the Company and its subsidiaries had an estimated $42.3 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 a net carrying value of $7.3 million as of March 31, 2022.

(2)During the three months ended March 31, 2022, it was determined that the likelihood of utilization of certain net operating losses was remote and a valuation allowance of $1.8 million was assessed against these assets.

The components of our tax provision for the three months ended March 31, 2022 and 2021 was as follows:

	Three Months Ended March 31,
(Dollars in thousands)	2022		2021
Current
Federal	$	504	$	—
State		322		170
Deferred
Federal		3,220		3,053
State		785		655
Net provision for income taxes	$	4,831	$	3,878

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision for the three months ended March 31, 2022 and 2021.

	Three Months Ended March 31,
(Dollars in thousands)	2022		2021
Statutory Federal income tax provision at 21%	$	3,399	$	2,719
State and local income taxes, net of federal income tax		665		532
Change in state income tax accruals		—		170
Change in effective state income tax rates and accrual		—		(200	)
Income attributable to non-controlling interest		—		(219	)
Non deductible expenses		713		172
Other		54		704
Total income tax provision	$	4,831	$	3,878

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. Based upon these considerations, the Company determined the necessary valuation allowance as of March 31, 2022.

The Company has filed tax returns in many states. Federal, New York State, New York City, and Utah state tax filings of the Company for the tax years 2018 through the present are the more significant filings that are open for examination.