Income Taxes

3 Months Ended

Mar. 31, 2013

Notes

Income Taxes

Note 8: 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 2009.  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		For the nine-month period ended
	March 31, 2013	March 31, 2012	March 31, 2013	March 31, 2012
Income taxes
Current	$339,136	$1,767,778	$2,808,745	$5,027,237
Deferred	561,713	(761,671)	297,876	(1,259,816)
Total income tax provision	$900,849	$1,006,107	$3,106,621	$3,767,421

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

	March 31, 2013	June 30, 2012
Deferred tax assets:
Provision for losses on loans	$3,457,708	$3,247,995
Accrued compensation and benefits	189,481	171,113
Other-than-temporary impairment on             available for sale securities	261,405	261,405
NOL carry forwards acquired	152,606	159,613
Unrealized loss on other real estate	18,700	47,600
Total deferred tax assets	4,079,900	3,887,726
Deferred tax liabilities:
FHLB stock dividends	188,612	188,612
Purchase accounting adjustments	1,247,249	893,549
Depreciation	475,509	552,633
Prepaid expenses	202,612	123,704
Unrealized gain on available for sale             securities	382,880	400,554
Other	203,648	69,083
Total deferred tax liabilities	2,700,511	2,228,135
Net deferred tax (liability) asset	$1,379,389	$1,659,591

As of March 31, 2013, and June 30, 2012, the Company had approximately $447,000 and $467,000, respectively, in 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		For the nine-month period ended
	March 31, 2013	March 31, 2012	March 31, 2013	March 31, 2012
Tax at statutory rate	$1,144,766	$1,081,931	$3,618,928	$3,899,220
Increase (reduction) in taxes       resulting from:
Nontaxable municipal income	(127,011)	(126,381)	(379,671)	(344,055)
State tax, net of Federal benefit	80,520	75,240	257,400	294,327
Cash surrender value of                   Bank-owned life insurance	(42,765)	(24,201)	(129,307)	(72,804)
Tax credit benefits	(114,222)	(29,976)	(227,533)	(89,926)
Other, net	(40,439)	29,495	(33,195)	80,659
Actual provision	$900,849	$1,006,107	$3,106,621	$3,767,421

Tax credit benefits in the amount of $114,000 and $228,000, respectively, were recognized in the three- and nine-month periods ended March 31, 2013, as compared to $30,000 and $90,000, respectively, recognized in the three- and nine-month periods ended March 31, 2012, under the flow-through method of accounting for investments in tax credits.