NOTE

—INCOME TAXES

December 22, 2017,

the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act significantly revised the future ongoing U.S. corporate income tax structure by, among other things, decreasing U.S. corporate income tax rates to

21.0%

from a maximum of

35.0%.

As the Corporation has a

June 30

fiscal year-end, the lower corporate income tax rate was phased in, resulting in a blended U.S. statutory federal rate of approximately

27.55%

for the Corporation's fiscal year ending

June 30, 2018,

and

21.0%

for subsequent fiscal years. The provision for income taxes consisted of the following for the years ended

June

30,

calculated utilizing a statutory federal income tax rate of

21.0%

in the

2019

fiscal year and

27.55%

in the

2018

fiscal year:

	201 9		201 8
Current income taxes	$	840	$	687
Deferred income tax expense		173		114
Change in corporate tax rate		—		348
Total income tax expense	$	1,013	$	1,149

The reduction of the corporate tax rate required the Corporation to revalue its deferred tax assets and liabilities during the

2018

fiscal year based on the lower federal tax rate of

21.0%.

As a result of the new legislation, during the

2018

fiscal year, the Corporation recorded a charge to income tax expense of

$348

in conjunction with writing down its net deferred tax assets. The net deferred income tax asset consisted of the following components at

June

30:

	201 9			201 8
Deferred tax assets:
Allowance for loan losses	$	701		$	632
Deferred compensation		616			514
Recognized loss on impairment of security		—			164
Deferred income		55			68
Non-accrual loan interest income		50			42
Other		7			—
Net unrealized securities loss		—			435
Gross deferred tax asset		1,429			1,855

Deferred tax liabilities:
Depreciation		(645	)		(489	)
Loan fees		(278	)		(238	)
FHLB stock dividends		(102	)		(102	)
Prepaid expenses		(42	)		(56	)
Net unrealized securities gain		(416	)		—
Gross deferred tax liabilities		(1,483	)		(885	)
Net deferred asset (liability)	$	(54	)	$	970

The difference between the provision for income taxes and amounts computed by applying the statutory income tax rate of

21.0%

for

2019

and

27.55%

for

2018

to income before taxes consisted of the following for the years ended

June

30:

	201 9			201 8
Income taxes computed at the statutory rate on pretax income	$	1,382		$	1,303
Tax exempt income		(319	)		(408	)
Cash surrender value income		(57	)		(75	)
Tax credit		(28	)		(27	)
Change in corporate tax rate		—			348
Other non-deductible expenses		35			8
Total income tax expense	$	1,013		$	1,149

The effective tax rate was

15.4%

for the year ended

June 30, 2019

compared to

24.3%

for the year ended

June 30, 2018.

June 30, 2019

and

June 30, 2018,

the Corporation had

unrecognized tax benefits recorded. The Corporation does

not

expect the total amount of unrecognized tax benefits to significantly increase within the next

twelve

months. There were

interest or penalties recorded for the years ended

June 30, 2019

and

2018

and there were

amounts accrued for interest and penalties at

June 30, 2019

and

2018.

The Corporation and the Bank are subject to U.S. federal income tax as an income-based tax and a capital-based franchise tax in the State of Ohio. The Corporation and the Bank are

longer subject to examination by taxing authorities for years before

2015.