Income Taxes

3 Months Ended

Sep. 30, 2011

Income Taxes

Income Tax Disclosure [Text Block]

Note 10: Income Taxes

The Company files income tax returns in the U.S. Federal jurisdiction and various states.  The Company is no longer subject to federal and state examinations by tax authorities for fiscal years before 2008.  The Company recognized no interest or penalties related to income taxes.

The Company’s income tax provision is comprised of the following components:

	For the three-month period ended
	September 30, 2011	September 30, 2010
Income taxes
Current	$1,444,207	$527,750
Deferred	-	-
Total income tax provision	$1,444,207	$527,750

The components of net deferred tax assets (liabilities) are summarized as follows:

	September 30, 2011	June 30, 2011
Deferred tax assets:
Provision for losses on loans	$2,996,397	$2,889,770
Accrued compensation and benefits	216,258	168,375
Other-than-temporary impairment on             available for sale securities	261,405	261,405
NOL carry forwards acquired	169,005	169,005
Unrealized loss on other real estate	23,426	66,952
Total deferred tax assets	3,666,491	3,555,507
Deferred tax liabilities:
FHLB stock dividends	188,612	188,612
Purchase accounting adjustments	1,828,472	1,828,472
Depreciation	505,340	525,096
Prepaid expenses	178,407	174,507
Unrealized gain on available for sale             securities	458,642	306,229
Other	314,660	187,820
Total deferred tax liabilities	3,474,133	3,210,736
Net deferred tax (liability) asset	$192,358	$344,771

As of September 30, 2011, the Company had approximately $515,000 of federal and state net operating loss carryforwards, which were acquired in the July 2009 acquisition of Southern Bank of Commerce.  The amount reported is net of the IRC Sec. 382 limitation, or state equivalent, related to utilization of net operating loss carryforwards of acquired corporations.  Unless otherwise utilized, the net operating losses will begin to expire in 2027. 

A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax is shown below:

	For the three-month period ended
	September 30, 2011	September 30, 2010
Tax at statutory rate	$1,460,164	$622,316
Increase (reduction) in taxes       resulting from:
Nontaxable municipal income	(104,370)	(93,747)
State tax, net of Federal benefit	116,655	28,986
Cash surrender value of
Bank-owned life insurance	(24,328)	(23,530)
Other, net	(3,914)	(6,275)
Actual provision	$1,444,207	$527,750

Tax credit benefits in the amount of $73,000 were recognized in the three-month periods ended September 30, 2011 and 2010, under the flow-through method of accounting for investments in tax credits.