Income Taxes

6 Months Ended

Jun. 30, 2025

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 June 30, 2025 and December 31, 2024.

(Dollars in thousands)	June 30, 2025			December 31, 2024
Deferred tax assets:
Provision for credit losses	$	17,035		$	14,530
Accrued expenses, compensation, and other assets		4,888			5,612
Net operating loss carryforwards (1)		3,168			3,168
Other investments and investment securities		2,790			2,885
Valuation allowance		(4,552	)		(4,418	)
Total deferred tax assets		23,329			21,777
Deferred tax liabilities:
Goodwill and other intangibles		42,590			42,772
Total deferred tax liabilities		42,590			42,772
Deferred tax liability, net	$	19,261		$	20,995

(1)As of June 30, 2025, 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 a net carrying value of $0.5 million as of June 30, 2025.

The following table presents the components of the Company's tax provision for the three and six months ended June 30, 2025 and 2024:

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2025			2024			2025			2024
Current
Federal	$	5,757		$	4,792		$	10,418		$	6,521
State		2,569			1,476			4,091			2,119
Deferred
Federal		(1,709	)		(1,916	)		(1,448	)		1,200
State		(812	)		(570	)		(543	)		300
Net provision for income taxes	$	5,805		$	3,782		$	12,518		$	10,140

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision reported for the three and six months ended June 30, 2025 and 2024.

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2025			2024		2025		2024
Statutory Federal income tax provision at 21%	$	4,089		$	2,603	$	8,339	$	6,361
State and local income taxes, net of federal income tax benefit		889			509		1,812		1,244
Non-deductible (benefits) expenses		(562	)		374		1,010		2,154
Valuation allowance against deferred tax assets		324			—		134		—
Change in effective state income tax rates and accrual		696			—		696		—
Other		369			296		527		381
Total income tax provision	$	5,805		$	3,782	$	12,518	$	10,140

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 June 30, 2025.

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 2021 through the present are the more significant filings that are open for examination.