INCOME TAXES

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXESThe Company’s effective tax rate was 12.9% and 34.9% for the three and nine months ended September 30, 2022, respectively. The Company’s effective tax rate was 14.1% and 18.8% for the three and nine months ended September 30, 2021, respectively. The effective tax rate differs from the Company’s marginal tax rate of 27.3% due to the non-taxable fair value adjustments related to the non-compensatory private warrant liability being recorded through earnings, offset by changes to the valuation allowance established against deferred tax assets.

The deferred tax asset at September 30, 2022 and 2021 was $30.5 million and $27.5 million, respectively. These balances consisted mainly of Section 197 intangibles. These Section 197 intangibles resulted from a step-up in tax basis of the assets acquired from BankMobile Technologies, Inc., which for GAAP purposes, were not recorded at fair value.

A full valuation allowance has been recorded against the deferred tax asset balance for all periods presented. The Company has no net operating loss or other carryforward deferred tax assets. A valuation allowance is recognized when it is more likely than not that all, or a portion of, the deferred tax asset will be realized based on the weight of the available positive and negative evidence. Management determined the verifiable negative evidence from the three years of cumulative losses outweighs any available positive evidence as of September 30, 2022, but will continue to evaluate this determination each quarterly period going forward.