Note 8: Income Taxes

6 Months Ended

Dec. 31, 2013

Notes

Note 8: 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 2010.  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 six-month period ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Income taxes
Current	$136,978	$1,328,723	$1,401,099	$2,469,609
Deferred	820,469	(263,837)	579,795	(263,837)
Total income tax provision	$957,447	$1,064,886	$1,980,894	$2,205,772

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

	December 31, 2013	June 30, 2013
Deferred tax assets:
Provision for losses on loans	$3,783,553	$3,545,918
Accrued compensation and benefits	225,813	211,117
Other-than-temporary impairment on             available for sale securities	120,780	261,405
NOL carry forwards acquired	150,270	150,270
Unrealized loss on other real estate	27,200	31,280
Unrealized loss on available for sale securities	620,781	116,157
Other	24,452	-
Total deferred tax assets	4,952,849	4,316,147
Deferred tax liabilities:
FHLB stock dividends	188,612	188,612
Purchase accounting adjustments	1,906,923	1,228,067
Depreciation	685,239	761,389
Prepaid expenses	301,330	151,939
Other	-	40,224
Total deferred tax liabilities	3,082,104	2,370,231
Net deferred tax (liability) asset	$1,870,745	$1,945,916

As of December 31 and June 30, 2013, the Company had approximately $443,000 and $440,000, respectively, 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		For the six-month period ended
	December 31, 2013	December 31, 2012	December 31, 2013	December 31, 2012
Tax at statutory rate	$1,181,934	$1,205,574	$2,401,353	$2,474,162
Increase (reduction) in taxes       resulting from:
Nontaxable municipal income	(133,668)	(128,391)	(262,244)	(252,659)
State tax, net of Federal benefit	71,280	84,480	152,460	176,880
Cash surrender value of                   Bank-owned life insurance	(44,088)	(43,764)	(87,918)	(86,543)
Tax credit benefits	(81,424)	(56,654)	(162,849)	(113,310)
Other, net	(36,587)	3,641	(59,909)	7,242
Actual provision	$957,447	$1,064,886	$1,980,894	$2,205,772

Tax credit benefits are recognized under the flow-through method of accounting for investments in tax credits.