Income Taxes

9 Months Ended

Mar. 31, 2024

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 examinations by tax authorities for tax years ending June 30, 2019 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, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Income taxes
Current	$	2,417	$	2,572	$	9,077	$	8,269
Deferred		420		(1,994)		420		(1,981)
Total income tax provision	$	2,837	$	578	$	9,497	$	6,288

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, 2024		June 30, 2023
Deferred tax assets:
Provision for losses on loans	$	12,070	$	12,101
Accrued compensation and benefits		969		974
NOL carry forwards acquired		123		709
Low income tax credit carry forward		595		1,192
Unrealized loss on other real estate		949		818
Unrealized loss on available for sale securities		5,363		6,174
Total deferred tax assets		20,069		21,968
Deferred tax liabilities:
Purchase accounting adjustments		2,449		2,348
Depreciation		4,684		4,276
FHLB stock dividends		120		120
Prepaid expenses		677		728
Other		509		1,636
Total deferred tax liabilities		8,439		9,108
Net deferred tax asset	$	11,630	$	12,860

As of March 31, 2024, the Company had approximately $557,000 in federal net operating loss carryforwards, which were acquired in the July 2009 Southern Bank of Commerce merger, the February 2014 Citizens State Bankshares of Bald Knob, Inc. merger, the April 2020 Central Federal Savings and Loan merger, the February 2022 Fortune merger, and the January 2023 Citizens merger. 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 2030.

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, 2024		March 31, 2023		March 31, 2024		March 31, 2023
Tax at statutory rate	$	2,970	$	627	$	9,692	$	6,292
Increase (reduction) in taxes resulting from:
Nontaxable municipal income		(124)		(54)		(349)		(211)
State tax, net of Federal benefit		61		(179)		356		—
Cash surrender value of Bank-owned life insurance		(101)		(77)		(297)		(211)
Tax credit benefits		(3)		(3)		(10)		(7)
Other, net		34		264		105		425
Actual provision	$	2,837	$	578	$	9,497	$	6,288

For the three- and nine- month periods ended March 31, 2024 and 2023, 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.