Income Taxes

9 Months Ended

Dec. 31, 2011

Income Taxes

Income Taxes

Note 10:Income Taxes

The provision for income taxes includes these components:

	December 31, 2011			March 31, 2011
	(In thousands)
Taxes currently payable	$	483		$	907
Deferred income taxes		(249	)		(322	)
Income tax expense	$	234		$	585

A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown below:

	December 31, 2011			March 31, 2011
	(In thousands)
Computed at the statutory rate (34%)	$	533		$	946
Increase (decrease) resulting from
Tax exempt interest		(222	)		(302	)
Earnings on bank-owned life insurance		(85	)		(79	)
Other		8			20
Actual tax expense	$	234		$	585

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

	December 31, 2011			March 31, 2011
	(In thousands)
Deferred tax assets
Deferred loan origination fees	$	139		$	143
Allowance for loan losses		1,310			1,089
Real estate owned valuation		388			226
Pension adjustment		349			221
Reserve for uncollected interest		109			64
Benefit plan expenses		116			140
Total deferred tax assets		2,411			1,883
Deferred tax liabilities
Prepaid pension		(119	)		(130	)
Federal Home Loan Bank stock dividends		(1,217	)		(1,217	)
Book/tax depreciation differences		(423	)		(235	)
Financed loan fees		(85	)		(83	)
Unrealized gains on securities available-or-sale		(1,317	)		(893	)
Mortgage servicing rights		(84	)		(88	)
Purchase price adjustments – net		(74	)		(98	)
Total deferred tax liabilities		(3,319	)		(2,744	)
Net deferred tax liability	$	(908	)	$	(861	)

Prior to fiscal 1997, Wayne Savings was allowed a special bad debt deduction based on a percentage of earnings, generally limited to 8% of otherwise taxable income and subject to certain limitations based on aggregate loans and deposit account balances at the end of the year. This cumulative percentage of earnings bad debt deduction totaled approximately $2.7 million as of December 31, 2011. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than bad debt losses, including distributions in liquidation, such distributions will be subject to federal income taxes at the then current corporate income tax rate. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $918,000 at December 31, 2011.