Note 8: Income Taxes

9 Months Ended

Mar. 31, 2015

Notes

Note 8: Income Taxes

Note 8: Income Taxes  

The Company files consolidated 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 2011. The Company recognized no interest or penalties related to income taxes.

The Company’s income tax provision is comprised of the following components:

(dollars in thousands)	For the three-month period ended		For the nin-month period ended
	March 31, 2015	March 31, 2014	March 31, 2015	March 31, 2014
Income taxes
Current	$1,616	$1,976	$5,081	$3,377
Deferred	(119)	(1,195	(743)	(615)
Total income tax provision	$1,497	$781	$4,338	$2,762

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

	March 31, 2015	June 30, 2014
(dollars in thousands)
Deferred tax assets:
Provision for losses on loans	$4,811	$3,696
Accrued compensation and benefits	499	450
Other-than-temporary impairment on available for sale securities	138	141
NOL carry forwards acquired	789	853
Minimum Tax Credit	130	130
Unrealized loss on other real estate	6	38
Other	662	-
Total deferred tax assets	7,035	5,308
Deferred tax liabilities:
FHLB stock dividends	71	157
Purchase accounting adjustments	1,919	1,533
Depreciation	885	767
Prepaid expenses	110	250
Unrealized gain on available for sale securities	973	336
Other	-	164
Total deferred tax liabilities	3,957	3,207
Net deferred tax (liability) asset	$3,078	$2,101

As of March 31, 2015 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 Internal Revenue Code Section 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:

(dollars in thousands)	For the three-month period ended		For the nine-month period ended
	March 31, 2015	March 31, 2014	March 31, 2015	March 31, 2014
Tax at statutory rate	$1,654	$1,028	$4,910	$3,430
Increase (reduction) in taxes resulting from:
Nontaxable municipal income	(133)	(133)	(398)	(395)
State tax, net of Federal benefit	133	59	380	212
Cash surrender value of Bank-owned life insurance	(47)	(43)	(145)	(131)
Tax credit benefits	(91)	(82)	(272)	(244)
Other, net	(18)	(49)	(136)	(110)
Actual provision	$1,497	$781	$4,338	$2,762

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