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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES:
Income tax (benefit) expense consisted of the following: 
 Years Ended December 31,
(in thousands)20242023
Current expense (benefit)
Federal$6,731 $2,900 
State and local(841)980 
Deferred expense (benefit)
Federal(30,836)(7,407)
State and local(4,532)(1,722)
Total(29,478)(5,249)
Deferred tax assets valuation allowance
53,310 — 
Income tax expense (benefit)
$23,832 $(5,249)
Income tax expense (benefit) differed from amounts computed at the federal income tax statutory rate as follows: 
 Years Ended December 31,
20242023
(in thousands, except rate)RateAmountRateAmount
Income (loss) before income taxes$(120,512)$(32,757)
Federal tax statutory rate21.00 %(25,308)21.00 %(6,879)
State tax - net of federal tax benefit3.63 %(4,380)4.12 %(1,351)
Tax-exempt investments0.65 %(788)3.86 %(1,266)
Low income housing tax benefits
0.91 %(1,093)3.20 %(1,047)
Stock-based compensation expense(0.55)%672 (1.28)%421 
Goodwill— %— (14.13)%4,627 
Other(1.18)%1,419 (0.75)%246 
Total24.46 %(29,478)16.02 %(5,249)
Change in valuation allowance
53,310 — 
Total
$23,832 $(5,249)

The following is a summary of the Company's deferred tax assets and liabilities: 
At December 31,
(in thousands)20242023
Deferred tax assets
Provision for credit losses$10,220 $10,977 
Unrealized loss on investments AFS28,343 28,571 
LIHTC tax credits carryforwards
5,667 — 
Net operating loss carryforwards
26,736 370 
Accrued liabilities2,241 1,917 
Other investments786 463 
Lease liabilities8,071 9,019 
Nonaccrual interest1,695 1,112 
Intangibles4,796 4,725 
Stock based compensation849 782 
Loan valuation240 274 
Premises and equipment
681 — 
Other457 401 
   Total90,782 58,611 
Deferred tax liabilities
Mortgage servicing rights(22,805)(24,204)
Deferred loan fees and costs(8,465)(8,967)
Lease right-of-use assets(6,202)(6,906)
Premises and equipment— (364)
   Total(37,472)(40,441)
Net deferred tax asset (liability)53,310 18,170 
Valuation allowance(53,310)— 
Total
$— $18,170 

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to fully utilize the existing deferred tax assets. As of December 31, 2024, management determined that sufficient
evidence did not exist to support the future utilization of all of the Company's deferred tax assets. As a result the Company recorded a $53.3 million deferred tax assets valuation allowance.

During 2024, the Company created federal and state net operating loss carryforwards of $111.9 million and $111.0 million, respectively. The federal net operating loss carryforwards do not expire while the state net operating loss carryforwards generally expire in 2044. The Company’s LIHTC tax credits carryforwards expire in 2043 $0.4 million and 2044 $5.3 million.

The Company has state net operating loss carryforwards related to acquisitions in prior years of $4.3 million and $4.4 million as of December 31, 2024 and 2023, respectively, that will expire at various dates from 2025 to 2036. Utilization of net operating loss carryforwards is subject to an annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986, as amended.

Retained earnings at December 31, 2024 and 2023 include approximately $12.7 million in tax basis bad debt reserves for which no income tax liability has been recorded. This represents the balance of bad debt reserves created for tax purposes as of December 31, 1987. These amounts are subject to recapture (i.e., included in taxable income) if certain events occur, such as in the event HomeStreet Bank ceases to be a bank. In the event of recapture, the Company will incur both federal and state tax liabilities on this pre-1988 bad debt reserve balance at the then prevailing corporate tax rates.

The Company had no recorded unrecognized tax position as of December 31, 2024 or 2023.

We are currently under examination, or subject to examination, by various U.S. federal and state taxing authorities. The Company is no longer subject to federal income tax examinations for tax years prior to 2021 or state income tax examination for tax years prior to 2020, generally.