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Income Taxes
9 Months Ended
Sep. 30, 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 September 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

September 30, 2022

 

 

December 31, 2021

 

Goodwill and other intangibles

 

$

(43,509

)

 

$

(43,894

)

Provision for loan losses

 

 

10,360

 

 

 

11,057

 

Net operating loss carryforwards (1)

 

 

3,570

 

 

 

12,167

 

Accrued expenses, compensation, and other assets

 

 

4,042

 

 

 

2,579

 

Unrealized gains on other investments

 

 

1,700

 

 

 

2,176

 

Total deferred tax liability

 

 

(23,837

)

 

 

(15,915

)

Valuation allowance

 

 

(2,295

)

 

 

(2,295

)

Deferred tax liability, net

 

$

(26,132

)

 

$

(18,210

)

(1)
As of September 30, 2022, the Company and its subsidiaries had an estimated $10.9 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 $1.3 million as of September 30, 2022.

The components of our tax provision for the three and nine months ended September 30, 2022 and 2021 was as follows:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

693

 

 

$

1,359

 

 

$

2,181

 

 

$

2,154

 

State

 

 

340

 

 

 

721

 

 

 

1,109

 

 

 

991

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

2,081

 

 

 

3,198

 

 

 

7,679

 

 

 

9,252

 

State

 

 

91

 

 

 

889

 

 

 

1,923

 

 

 

4,176

 

Net provision for income taxes

 

$

3,205

 

 

$

6,167

 

 

$

12,892

 

 

$

16,573

 

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision for the three and nine months ended September 30, 2022 and 2021.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Statutory Federal income tax provision at 21%

 

$

2,613

 

 

$

4,807

 

 

$

10,142

 

 

$

11,331

 

State and local income taxes, net of federal income tax

 

 

511

 

 

 

942

 

 

 

1,984

 

 

 

2,217

 

Change in state income tax accruals

 

 

 

 

 

 

 

 

 

 

 

1,833

 

Change in effective state income tax rates and accrual

 

 

 

 

 

110

 

 

 

 

 

 

1,479

 

Income attributable to non-controlling interest

 

 

 

 

 

(183

)

 

 

 

 

 

(449

)

Non-deductible expenses

 

 

410

 

 

 

132

 

 

 

1,484

 

 

 

(81

)

Other

 

 

(329

)

 

 

359

 

 

 

(718

)

 

 

243

 

Total income tax provision

 

$

3,205

 

 

$

6,167

 

 

$

12,892

 

 

$

16,573

 

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 September 30, 2022.

The Company has filed tax returns in many states and jurisdictions. Federal, New York State, New York City, and Utah tax filings of the Company for the tax years 2019 through the present are the more significant filings that are open for examination.