Note 8: Income Taxes

3 Months Ended

Mar. 31, 2014

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 nine-month period ended
	March 31, 2014	March 31, 2013	March 31, 2014	March 31, 2013
Income taxes
Current	$1,976,851	$349,136	$3,377,950	$2,818,745
Deferred	(1,195,404)	551,713	(615,609)	287,876
Total income tax provision	$781,447	$900,849	$2,762,341	$3,106,621

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

	March 31, 2014	June 30, 2013
Deferred tax assets:
Provision for losses on loans	$3,721,702	$3,545,918
Accrued compensation and benefits	62,065	211,117
Other-than-temporary impairment on             available for sale securities	147,415	261,405
NOL carry forwards acquired	887,891	150,270
Minimum Tax Credit	129,864	-
Unrealized loss on other real estate	99,130	31,280
Unrealized loss on available for sale securities	167,285	116,157
Other	133,404	-
Total deferred tax assets	5,348,756	4,316,147
Deferred tax liabilities:
FHLB stock dividends	188,612	188,612
Purchase accounting adjustments	1,678,392	1,228,067
Depreciation	586,278	761,389
Prepaid expenses	275,560	151,939
Other	7,262	40,224
Total deferred tax liabilities	2,736,104	2,370,231
Net deferred tax (liability) asset	$2,612,652	$1,945,916

As of March 31, 2014 and June 30, 2013, the Company had approximately $421,000 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 nine-month period ended
	March 31, 2014	March 31, 2013	March 31, 2014	March 31, 2013
Tax at statutory rate	$1,028,253	$1,144,766	$3,429,606	$3,618,928
Increase (reduction) in taxes       resulting from:
Nontaxable municipal income	(132,788)	(127,011)	(395,031)	(379,671)
State tax, net of Federal benefit	59,400	80,520	211,860	257,400
Cash surrender value of                   Bank-owned life insurance	(42,753)	(42,765)	(130,670)	(129,307)
Tax credit benefits	(81,424)	(114,223)	(244,273)	(227,533)
Other, net	(49,241)	(40,438)	(109,151)	(33,196)
Actual provision	$781,447	$900,849	$2,762,341	$3,106,621

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