Income Taxes

3 Months Ended

Sep. 30, 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, 2017 and before. The Company’s Missouri income tax returns for the fiscal years ending June 30, 2016 through 2018 are under audit by the Missouri Department of Revenue. 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
(dollars in thousands)	September 30, 2021		September 30, 2020
Income taxes
Current	$	3,481	$	4,750
Deferred		7		(2,003)
Total income tax provision	$	3,488	$	2,747

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

(dollars in thousands)	September 30, 2021		June 30, 2021
Deferred tax assets:
Provision for losses on loans	$	7,573	$	7,626
Accrued compensation and benefits		549		826
NOL carry forwards acquired		135		147
Unrealized loss on other real estate		183		180
Other		—		182
Total deferred tax assets		8,440		8,961
Deferred tax liabilities:
Purchase accounting adjustments		210		210
Depreciation		1,765		1,842
FHLB stock dividends		120		120
Prepaid expenses		209		283
Unrealized gain on available for sale securities		824		821
Other		830		1,193
Total deferred tax liabilities		3,958		4,469
Net deferred tax asset	$	4,482	$	4,492

As of September 30, 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
(dollars in thousands)	September 30, 2021		September 30, 2020
Tax at statutory rate	$	3,409	$	2,674
Increase (reduction) in taxes resulting from:
Nontaxable municipal income		(107)		(103)
State tax, net of Federal benefit		252		241
Cash surrender value of Bank-owned life insurance		(59)		(59)
Tax credit benefits		(11)		26
Other, net		4		(32)
Actual provision	$	3,488	$	2,747

For the three- month periods ended September 30, 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.