Income Taxes

12 Months Ended

Jun. 30, 2025

Income Taxes [Abstract]

Income Taxes

Note 10. Income Taxes

The Company and its subsidiary file consolidated federal income tax returns.  The current provision for federal and state income taxes is calculated on pretax accounting income adjusted by items considered to be permanent differences between book and taxable income.  Income tax expense for the years ended June 30, 2025 and 2024 is summarized as follows:

	2025			2024
	(In Thousands)
Current	$	929		$	354
Deferred		(163	)		122
Total	$	766		$	476

The effective federal income tax rate for the years ended June 30, 2025 and 2024 was 16.5% and 11.7%, respectively.  Reconciliations of income tax expense at the statutory rate to the Company’s effective rates are as follows:

	2025			2024
	(In Thousands)
Computed at Expected Statutory Rate	$	977		$	854
Non-Taxable Income		(44	)		(43	)
Equity Compensation		-			6
Other		(167	)		(341	)
Provision for Income Tax Expense	$	766		$	476

At June 30, 2025 and 2024, temporary differences between the financial statement carrying amount and tax bases of assets that gave rise to deferred tax recognition were related to the effect of loan bad debt deduction differences for tax and book purposes, deferred stock option compensation, and supplemental employee retirement benefits.  The deferred tax expense or benefit related to securities available-for-sale has no effect on the Company’s income tax provision since it is charged or credited to the Company’s other comprehensive income or loss equity component.

The net deferred income tax asset and liability consisted of the following components at June 30, 2025 and 2024:

	2025		2024
	(In Thousands)
Deferred Tax Assets
Stock Option and SERP Compensation		345		343
Market Value Adjustment to Available-for-Sale Securities		514		695
Loans Receivable – Bad Debt Loss Allowance		942		961
Lease Liability		180		181
Total Deferred Tax Assets	$	1,981	$	2,180
Deferred Tax Liabilities
Tax over Book Accumulated Depreciation		516		464
Purchase Accounting		103		107
ROU Asset		168		171
Other Liability		31		257
Total Deferred Tax Liabilities		818		999
Net Deferred Tax Asset	$	1,163	$	1,181

Included in retained earnings at June 30, 2025 and 2024 is approximately $3.3 million for which no deferred Federal income tax liability has been recorded. This amount consists of the total amount of bad debt reserves deducted for income tax reporting purposes prior to January 1, 1988. Under current tax law, these pre-1988 bad debt reserves are subject to recapture into taxable income if the Bank were to (a) make certain “non-dividend distributions,” which include distributions in excess of the Bank’s current and accumulated earnings and profits, distributions in redemption of stock, and distributions in partial or complete liquidation or (b) cease to maintain a bank or thrift charter. The unrecorded deferred tax liability was approximately $693,000 at June 30, 2025 and 2024.

Accounting principles generally accepted in the United States of America provide accounting and disclosure guidance about positions taken by an entity in its tax returns that might be uncertain. The Company believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the consolidated financial statements.

Penalties and interest assessed by income taxing authorities, if any, would be included in income tax expense.