Note 11 — Income Taxes

In accordance with the provisions of ASC 740, the Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

There were no unrecognized tax benefits that would affect our effective tax rate if recognized as of December 31, 2025 or 2024. The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized as of December 31, 2023, was $0.3 million. The Company records interest expense and penalties related to unrecognized tax benefits in income tax expense. There was no accrued interest or penalties at December 31, 2025 or 2024. At December 31, 2023, the Company recorded accrued interest and accrued penalties that were each less than $0.1 million. Accrued interest and penalties are included within accrued expenses and other liabilities on the Consolidated Balance Sheets.

For the years ended December 31, 2025 and 2024, there were no unrecognized tax benefits. For the year ended December 31, 2023, there were no changes to unrecognized tax benefits related to California Enterprise Zone hiring credits.

As of December 31, 2025, the Company was subject to examination by federal and various state tax authorities for the years ended December 31, 2021 through 2024. As of December 31, 2025, the Company's audit with the State of California for tax years 2020 and 2021 was settled, resulting in an immaterial impact to the consolidated financial statements.

Pretax income from continuing operations was as follows:

As of each reporting date, management considered the realization of deferred tax assets based on management’s judgment of various future events and uncertainties, including the timing and amount of future income, as well as the implementation of various tax planning strategies to maximize realization of deferred tax assets. A valuation allowance is provided when it is more likely than not that some portion of deferred tax assets will not be realized. As of December 31, 2025, and 2024, management determined that a valuation allowance of $1.5 million was appropriate against certain state net operating losses. For all other deferred tax assets, management believes it was more likely than not that these deferred tax assets will be realized principally through future taxable income and reversal of existing taxable temporary differences.

As of December 31, 2025, the Company had net operating loss carryforwards of $2.2 million and $192.3 million for federal and state income tax purposes, respectively. The federal net operating loss carryforwards of $2.2 million expire in 2035. The state net operating loss carryforwards included California of $131.4 million which expire at various dates from 2034 through 2040, and Illinois of $60.9 million which expire at various dates from 2038 through 2039. Management determined that a partial valuation allowance was required against the Illinois net operating loss carryforwards.

On June 24, 2025, the Franchise Tax Board of the State of California amended Senate Bill 132 which, among other changes, enacted a single-sales-factor apportionment calculation for tax years beginning on or after January 1, 2025. This reduced the Company's effective tax rate in California for the year ended December 31, 2025. As a result, the Company re-measured its deferred tax assets, including those related to the net unrealized loss on securities available for sale within accumulated other comprehensive loss. The reduction in the effective tax rate resulted in a lower tax benefit on those unrealized losses, which created an amount stranded within accumulated other comprehensive loss equal to the difference in tax rate upon remeasurement, multiplied by net unrealized losses. At December 31, 2025, the stranded amount from deferred tax remeasurement was $1.1 million.