Note 14 - Income Taxes

12 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

14:

     

Income Taxes

The provisions for income taxes for the years ended

March 31, 2017

and

2016

consist of the following components:

	March 31,
	2017			2016
Current:
Federal	$	(10,911	)	$	(19,684	)
State		(5,193	)		(5,205	)
Deferred income tax
Federal		(610,084	)		434,189
State		(131,817	)		12,391
Total	$	(758,005	)	$	421,691

A reconciliation of the provision for taxes on income from the statutory federal income tax rate to the effective income tax rates follows:

	March 31,
	2017			2016
Tax at statutory federal income tax rate	$	(573,507	)	$	111,886
Tax effect of:
Tax-exempt income		(260,637	)		(133,030	)
State income taxes, net of federal impact		(90,427	)		4,743
Nondeductible expenses and other		166,566			438,092
Income tax (benefit) expense	$	(758,005	)	$	421,691

The following is a summary of the tax effects of the temporary differences and tax attributes between financial and income tax accounting that give rise to deferred tax assets and deferred tax liabilities as of

March 31:

Deferred tax assets:	2017			2016
Allowance for loan losses	$	887,510		$	688,066
Nonaccrual interest		197,363			194,900
Deferred compensation		822,939			156,164
Foreclosed real estate write down and holding costs		221,010			221,010
Deferred loan costs		42,285			35,070
Capital loss carryforward		48,872			-
Charitable contribution carryforward		42,098			38,101
Net operating loss carryforward		4,414,529			625,612
Stock based payment awards		80,833			64,799
Unrealized loss on investment securities available for sale		862,673			14,410
AMT credit carryover		225,294			169,728
Acquisition activity		1,078,763			969,105
		8,924,169			3,176,965
Valuation allowance on deferred tax asset		(42,364	)		(21,218	)
		8,881,805			3,155,747
Deferred tax liabilities:
FHLB stock dividends		91,004			67,245
Goodwill and other intangible assets		717,933			588,727
Accumulated depreciation		65,193			93,576
Other		30,825			53,058
		904,955			802,606
Net deferred tax asset	$	7,976,850		$	2,353,141

It is more likely than

not

that the Company will be able to realize the recorded net deferred income tax asset. This is based on projections of future taxable income. As of

March 31, 2017

and

2016,

the Company recorded a valuation allowance of

$42,364

and

$21,218,

respectively, related to the holding company’s State of Maryland net operating loss carryforward. The Company has a federal net operating loss carryforward of

$11.2

million as of

March 31, 2017,

which will expire within the period of the years ending

March 31, 2030

through

2036.

In addition, other tax attributes consisted of capital loss carryforwards of

$123,900,

charitable contribution carryforwards of

$10,135,

and AMT credit carryovers of

$225,294

at

March 31, 2017.

Charitable contribution and AMT credit carryovers have a limited life of

fiv

e

years.

On

May 13, 2016

we acquired Fraternity, which had federal NOL carryforwards of approximately

$4.5

million at the date of acquisition that will expire between fiscal years ending

March 31, 2030

and

2036.

As a result of the change in ownership, the utilization of Fraternity’s NOL carryforwards is subject to limitations imposed by the Internal Revenue Code.

The Company’s tax returns are subject to review and examination by federal and state taxing authorities. The Company’s tax returns are currently open to audit under the applicable statutes of limitations by the Internal Revenue Service for the years ended

March 31, 2013

through

March 31, 2017.

The Company does

not

have any uncertain tax positions that are deemed material, and did

not

recognize any adjustments for unrecognized tax benefits.