Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of income tax expense or benefit were as follows:
Year Ended
December 31,
(in thousands)
 2024 2023
Current tax (benefit) expense:
Federal $ (83) $ (236)
State (4,211) 1,183 
$ (4,294) $ 947 
Deferred tax expense (benefit):
Federal $ 25,109  $ (10,091)
State 1,310  2,150 
26,419  (7,941)
Income tax expense (benefit) $ 22,125  $ (6,994)
The following table presents a reconciliation of the recorded income tax expense or benefit of continuing operations to the amount of taxes computed by applying the applicable federal statutory tax rate of 21.0% to income or loss from continuing operations before income taxes, as of December 31, 2024 and 2023, respectively:
Year Ended
December 31,
2024 2023
($ in thousands)
 Amount Percent Amount Percent
Income tax expense (benefit) at federal statutory rate $ 25,002  21.0  % $ (9,688) 21.0  %
State income taxes, net of federal tax benefit (2,043) (1.7) % 2,811  (6.1) %
Nondeductible compensation 2,572  2.2  % 1,605  (3.5) %
Excess tax benefit on share-based compensation
 (2,656) (2.2) % (577) 1.3  %
Federal and state tax credits, net of federal tax benefit (799) (0.7) % (804) 1.7  %
Other, net 49  0.0  % (341) 0.8  %
Total income tax expense (benefit) $ 22,125  18.6  % $ (6,994) 15.2  %
The tax effects of significant temporary differences which gave rise to the Company’s deferred tax assets and liabilities are as follows:
December 31,
(in thousands)
 2024 2023
Deferred tax assets:
Investor reserves $ 10,372  $ 8,613 
Deferred compensation 15,596  17,189 
Lease liability 19,375  19,364 
Net operating loss carryforwards 27,073  19,801 
Capitalized research and experimental expenditures 9,643  7,514 
Other
 8,150  6,944 
Total deferred tax assets $ 90,209  $ 79,425 
Deferred tax liabilities:
Mortgage servicing rights $ (315,597) $ (280,616)
Right-of-use assets (16,898) (17,391)
Other
 (9,154) (6,439)
Total deferred tax liabilities (341,649) (304,446)
Net deferred tax liabilities $ (251,440) $ (225,021)
At December 31, 2024, the Company has federal and state net operating loss (“NOL”) carryforwards of approximately $104.6 million and $96.0 million, respectively. The federal NOL carryforwards can be carried forward indefinitely and can offset up to 80% of future taxable income each year. The state NOL carryforwards begin to expire in 2027. The Company does not expect the federal and state net operating loss carryforwards to expire unused.
At December 31, 2024, the Company has federal and state research tax credit carryforwards of approximately $2.4 million and $1.2 million, respectively. The federal research tax credit carryovers begin to expire in 2042 and the state tax credit carryovers do not expire and can be carried forward indefinitely until utilized.
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 ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities including the impact of available carryback and carryforward periods and projected future taxable income. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. There are no valuation allowances on deferred tax assets as of December 31, 2024 or 2023.
The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes. There are no unrecognized tax benefits as of December 31, 2024 or 2023, and there were no changes in unrecognized tax benefits during the year. The Company is required to analyze all open years, as defined by the statutes of limitations, for all major jurisdictions, which includes federal and state jurisdictions. The Company is no longer subject to federal examinations prior to 2021 tax year or for state examinations prior to 2020 tax year.