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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 21—INCOME TAXES:

The Company elected to be treated as a RIC under the Code beginning with the 2015 tax year and, through the year ended December 31, 2022, operated in a manner so as to continue to qualify for the tax treatment applicable to RICs. The Company filed its final RIC tax return for the year ended December 31, 2022. Beginning with 2023, the Company no longer qualifies as a RIC and instead will file a consolidated U.S. federal income tax return. Financial holding companies are subject to federal and state income taxes in essentially the same manner as other corporations.

One of the Company’s wholly owned subsidiaries is undergoing a federal income tax audit for the fiscal year ended December 31, 2022.
Effective Tax Rate and Net Operating Losses

The effective tax rate was 25.97% for the year ended December 31, 2024. The effective tax rate differs from the federal tax rate of 21% for the year ended December 31, 2024, due primarily to the addition of estimated state tax.
The components of income tax expense for the years ended December 31, 2024 and 2023, were as follows:

Years ended December 31,
20242023
Current income tax expense/(benefit):
Federal$4,637 $1,251 
State2,799 1,593 
Total current expense/(benefit)7,436 2,844 
Deferred income tax expense/(benefit):
Federal9,076 (4,318)
State1,327 (482)
Total deferred expense/(benefit)10,403 (4,800)
Total income tax expense/(benefit)$17,839 $(1,956)
For the years ended December 31, 2024 and 2023, income taxes for financial reporting purposes differ from the amount computed by applying the statutory federal income tax rate of 21% as shown in the following table:

Years ended December 31,
20242023
Tax on income computed at statutory federal income tax rate$14,425 9,528 
Increase (decrease) in taxes resulting from:
State income tax, net of federal tax effect3,538 911 
Non-deductible expenses(148)788 
Realization of net operating loss carryforwards— (7,430)
DTA realization due to change in taxpayer status— (5,550)
Other, net24 (203)
Income tax expense/(benefit)$17,839 (1,956)
Effective tax rate25.97 %(4.31)%
Significant components of the Company’s net deferred tax asset at December 31, 2024 and 2023 are listed below:

December 31, 2024December 31, 2023
Deferred tax assets:
Allowance for Credit Losses$7,914 $3,313 
Lease Liabilities1,737 1,832 
Other2,757 1,669 
Purchase Accounting, net183 331 
Stock Compensation1,134 396 
Loans— 2,677 
Goodwill and Intangible Assets217 — 
Federal and state net operating losses, net of federal tax effect201 2,428 
Total deferred tax assets14,143 12,646 
Deferred tax liabilities:
Investments2,481 650 
Servicing Rights6,234 2,737 
Right of Use Assets1,488 1,502 
Goodwill and Intangible Assets— 2,330 
Loans6,069 — 
Other115 197 
Total deferred tax liabilities16,387 7,416 
Net deferred tax asset (liability)$(2,244)$5,230 

At December 31, 2024, the Company has $4.1 million of state net operating loss carryforwards. Of the $4.1 million, $4.0 million is expected to expire at various dates through 2043 with the remainder of the net operating losses having indefinite lives. If substantial changes in the Company’s ownership occur, there would be an annual limitation on the amount of carryforward(s) that can be utilized.

The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The Company files tax returns in federal and certain state and local jurisdictions. The periods subject to examination are generally for tax years ended in 2020 and beyond, including the following major jurisdictions: U.S. Federal, New York, and Florida. However, the Company’s net operating losses continue to be subject to review by tax authorities in the period utilized notwithstanding origination in closed periods.

As of December 31, 2024, the Company had no uncertain tax positions. The Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2024 and 2023.