Income Taxes

12 Months Ended

Jun. 30, 2012

Notes

Income Taxes

NOTE 11: Income Taxes

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

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

	June 30, 2012	June 30, 2011
Deferred tax assets:
Provision for losses on loans	$3,247,995	$2,889,770
Accrued compensation and benefits	171,113	168,375
Other-than-temporary impairment on available for sale securities	261,405	261,405
NOL carry forwards acquired	159,613	169,005
Unrealized loss on other real estate	47,600	66,952
Other	-	-
Total deferred tax assets	3,887,726	3,555,507
Deferred tax liabilities:
FHLB stock dividends	188,612	188,612
Purchase accounting adjustments	893,549	1,828,472
Depreciation	552,633	525,096
Prepaid expenses	123,704	174,507
Unrealized gain on available for sale securities	400,554	306,199
Other	69,083	187,850
Total deferred tax liabilities	2,228,135	3,210,736
Net deferred tax (liability) asset	$1,659,591	$344,771

As of June 30, 2012, 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 the 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 expense is shown below:

	Year ended June 30
	2012	2011	2010
Tax at statutory rate	$4,996,426	$5,923,356	$2,086,476
Increase (reduction) in taxes resulting from:
Nontaxable municipal income	(469,200)	(384,457)	(327,299)
State tax, net of Federal benefit	275,847	460,690	104,354
Cash surrender value of
Bank-owned life insurance	(116,631)	(94,364)	(92,845)
Tax benefits realized on acquisition	-	-	(258,000)
Acquisition costs	-	-	51,594
Other, net	(89,334)	46,378	(53,175)
ACTUAL PROVISION	$4,597,108	$5,951,603	$1,511,105

Tax credit benefits in the amount of $499,000 were recognized in fiscal 2012, as compared to $292,000 and $220,000, respectively, in fiscal 2011 and 2010, under the flow-through method of accounting for investments in tax credits.