Income Taxes

9 Months Ended

Mar. 31, 2021

Income Taxes

Income Taxes

Note 8: Income Taxes

The Company and its subsidiaries file 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 tax years ending June 30, 2015 and before. The Company recognized no interest or penalties related to income taxes for the periods presented.

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

	For the three-month periods ended				For the nine-month periods ended
(dollars in thousands)	March 31, 2021		March 31, 2020		March 31, 2021		March 31, 2020
Income taxes
Current	$	3,552	$	1,116	$	11,441	$	5,007
Deferred		(456)		13		(2,445)		19
Total income tax provision	$	3,096	$	1,129	$	8,996	$	5,026

The components of net deferred tax assets (included in other assets on the condensed consolidated balance sheet) are summarized as follows:

(dollars in thousands)	March 31, 2021		June 30, 2020
Deferred tax assets:
Provision for losses on loans	$	8,185	$	5,802
Accrued compensation and benefits		722		825
NOL carry forwards acquired		155		149
Minimum Tax Credit		—		130
Unrealized loss on other real estate		180		257
Other		312		26
Total deferred tax assets		9,554		7,189
Deferred tax liabilities:
Purchase accounting adjustments		191		64
Depreciation		1,494		1,665
FHLB stock dividends		120		120
Prepaid expenses		326		259
Unrealized gain on available for sale securities		686		1,265
Other		—		104
Total deferred tax liabilities		2,817		3,477
Net deferred tax assets	$	6,737	$	3,712

As of March 31, 2021, the Company had approximately $706,000 and $0 in federal and state net operating loss carryforwards, respectively, which were acquired in the July 2009 acquisition of Southern Bank of Commerce, the February 2014 acquisition of Citizens State Bankshares of Bald Knob, Inc., and the April 2020 acquisition of Central Federal Savings and Loan. 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 expense is shown below:

	For the three-month periods ended				For the nine-month periods ended
(dollars in thousands)	March 31, 2021		March 31, 2020		March 31, 2021		March 31, 2020
Tax at statutory rate	$	3,056	$	1,308	$	8,922	$	5,391
Increase (reduction) in taxes resulting from:
Nontaxable municipal income		(117)		(109)		(327)		(335)
State tax, net of Federal benefit		215		27		717		223
Cash surrender value of Bank-owned life insurance		(57)		(52)		(320)		(159)
Tax credit benefits		(2)		(21)		(11)		(27)
Other, net		1		(24)		15		(67)
Actual provision	$	3,096	$	1,129	$	8,996	$	5,026

For the three- and nine- month periods ended March 31, 2021 and 2020, income tax expense at the statutory rate was calculated using a 21% annual effective tax rate (AETR).

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