Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 13. Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return. The Company files consolidated or separate state income tax returns as required by individual states in which it operates. The Company is generally no longer subject to federal, state, or local income tax examinations by taxing authorities before 2017, though the Company remains subject to examination for the Texas tax return for the 2016 tax year.

Income tax expense differed from the amount computed by applying the federal income tax rate to total income before income taxes as a result of the following:

	Year Ended December 31,
	2021						2020						2019
Dollars in thousands	$			%			$			%			$			%
Federal tax expense at statutory rate	$	23,619			21.0	%	$	7,545			21.0	%	$	12,389			21.0	%
Increase (reduction) in income taxes resulting    from:
State tax, net of federal benefit		2,620			2.3	%		1,086			3.0	%		1,961			3.3	%
Non-deductible compensation		672			0.6	%		837			2.3	%		362			0.6	%
Excess tax benefits from share-based awards		(2,711	)		(2.4	)%		(93	)		(0.3	)%		(152	)		(0.3	)%
Other		(414	)		(0.4	)%		(177	)		(0.4	)%		(299	)		(0.4	)%
Total tax expense	$	23,786			21.1	%	$	9,198			25.6	%	$	14,261			24.2	%

Income tax expense attributable to total income before income taxes consists of the following for the periods indicated:

	Year Ended December 31,
Dollars in thousands	2021			2020		2019
Current:
Federal	$	24,735		$	5,874	$	13,270
State and local		3,350			2,648		2,357
		28,085			8,522		15,627
Deferred:
Federal		(4,169	)		585		(1,298	)
State and local		(130	)		91		(68	)
		(4,299	)		676		(1,366	)
Total	$	23,786		$	9,198	$	14,261

Net deferred tax assets and liabilities consist of the following as of the periods indicated:

	December 31,
Dollars in thousands	2021		2020
Deferred tax assets:
Allowance for credit losses	$	37,179	$	35,400
Unearned insurance commissions		7,930		5,932
Lease liability		7,223		6,863
Accrued expenses		3,949		2,296
Share-based compensation		1,942		2,530
Unearned premium reserves		517		—
CARES Act payroll tax deferral		349		739
State net operating loss carryforward		310		457
Other		154		493
Gross deferred tax assets		59,553		54,710
Deferred tax liabilities:
Fair market value adjustment of net finance receivables		26,995		26,748
Lease assets		6,763		6,372
Depreciation and software amortization		3,779		4,000
Deferred loan costs		2,581		1,757
Prepaid expenses		899		1,207
Other		116		505
Gross deferred tax liabilities		41,133		40,589
Net deferred tax asset	$	18,420	$	14,121

The Company had a state net operating loss carryforward of approximately $10.6 million as of December 31, 2021. This carryforward is available to offset future taxable income. If not used, the carryforward will expire beginning in 2032.

Companies are not permitted to recognize the tax benefit attributable to a tax position unless such position is more likely than not to be sustained upon examination by taxing authorities, based solely on the technical merits of the position. The Company had $0.8 million of unrecognized tax benefits as of December 31, 2019. Included in these amounts were interest and penalties accrued related to unrecognized tax benefits of $52 thousand for the year ended December 31, 2019. These components are included in the income tax line of the consolidated statements of income. As of and for the year ended December 31, 2020 and since, the Company has neither required nor included an unrecognized tax benefit.

The following schedule reconciles unrecognized tax positions for the periods indicated:

	Year Ended December 31,
Dollars in thousands	2021		2020			2019
Balance at January 1	$	—	$	815		$	—
Additions based on tax positions related to the    current year		—		—			363
Additions for tax positions of prior years		—		—			452
Reductions for tax positions of prior years		—		(815	)		—
Settlements		—		—			—
Balance at December 31	$	—	$	—		$	815