Note 8: Income Taxes

3 Months Ended

Sep. 30, 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
(dollars in thousands)	September 30, 2014	September 30, 2013
Income taxes
Current	$2,316	$1,263
Deferred	(935)	(240)
Total income tax provision	$1,381	$1,023

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

	September 30, 2014	June 30, 2014
Deferred tax assets:
Provision for losses on loans	$4,049	$3,696
Accrued compensation and benefits	449	450
Other-than-temporary impairment on             available for sale securities	140	141
NOL carry forwards acquired	853	853
Minimum Tax Credit	130	130
Unrealized loss on other real estate	38	38
Total deferred tax assets	5,659	5,308
Deferred tax liabilities:
FHLB stock dividends	135	157
Purchase accounting adjustments	702	1,533
Depreciation	762	767
Prepaid expenses	116	250
Unrealized gain on available for sale securities	413	336
Other	653	245
Total deferred tax liabilities	2,781	3,288
Net deferred tax (liability) asset	$2,878	$2,020

As of September 30 and June 30, 2014, the Company had approximately $2.3 million of federal and state net operating loss carryforwards, which were acquired in the July 2009 acquisition of Southern Bank of Commerce and February 2014 acquisition of Citizens State Bankshares of Bald Knob, Inc. 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
(dollars in thousands)	September 30, 2014	September 30, 2013
Tax at statutory rate	$1,591	$1,220
Increase (reduction) in taxes resulting from:
Nontaxable municipal income	(131)	(129)
State tax, net of Federal benefit	120	81
Cash surrender value of Bank-owned life insurance	(49)	(44)
Tax credit benefits	(98)	(82)
Other, net	(53)	(23)
Actual provision	$1,381	$1,023

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