Income Taxes

9 Months Ended

Mar. 31, 2023

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				For the nine-month periods ended
(dollars in thousands)	March 31, 2023		March 31, 2022		March 31, 2023		March 31, 2022
Income taxes
Current	$	2,572	$	1,852	$	8,269	$	8,114
Deferred		(1,994)		506		(1,981)		1,019
Total income tax provision	$	578	$	2,358	$	6,288	$	9,133

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, 2023		June 30, 2022
Deferred tax assets:
Provision for losses on loans	$	11,560	$	7,761
Accrued compensation and benefits		881		828
NOL carry forwards acquired		846		57
Tax credit carry forward		1,035		—
Unrealized loss on other real estate		868		72
Unrealized loss on available for sale securities		5,087		4,921
Total deferred tax assets		20,277		13,639
Deferred tax liabilities:
Purchase accounting adjustments		728		224
Depreciation		4,327		1,974
FHLB stock dividends		120		120
Prepaid expenses		545		415
Other		1,777		181
Total deferred tax liabilities		7,497		2,914
Net deferred tax asset	$	12,780	$	10,725

As of March 31, 2023, the Company had approximately $3.8 million 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., the April 2020 acquisition of Central Federal Savings and Loan, the February 2022 acquisition of Fortune Bank, and the January 2023 acquisition of Citizens Bank and Trust. 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, 2023		March 31, 2022		March 31, 2023		March 31, 2022
Tax at statutory rate	$	627	$	2,459	$	6,292	$	9,075
Increase (reduction) in taxes resulting from:
Nontaxable municipal income		(54)		(80)		(211)		(273)
State tax, net of Federal benefit		(179)		32		—		501
Cash surrender value of Bank-owned life insurance		(77)		(61)		(211)		(179)
Tax credit benefits		(3)		(13)		(7)		(34)
Other, net		264		21		425		43
Actual provision	$	578	$	2,358	$	6,288	$	9,133

For the three- and nine- month periods ended March 31, 2023 and 2022, 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.