Income Taxes

3 Months Ended

Dec. 31, 2012

Notes

Income Taxes

Note 8: Income Taxes

The Company files income tax returns in the U.S. Federal jurisdiction and various states.  The Company is no longer subject to federal and state examinations by tax authorities for fiscal years before 2009.  The Company recognized no interest or penalties related to income taxes.

The Company’s income tax provision is comprised of the following components:

	For the three-month periods ended		For the six-month periods ended
	December 31, 2012	December 31, 2011	December 31, 2012	December 31, 2011
Income taxes
Current	$1,328,723	$1,815,252	$2,469,609	$3,259,459
Deferred	(263,837)	(498,145)	(263,837)	(498,145)
Total income tax provision	$1,064,886	$1,317,107	$2,205,772	$2,761,314

The components of net deferred tax assets are summarized as follows:

	December 31, 2012	June 30, 2012
Deferred tax assets:
Provision for losses on loans	$3,393,565	$3,247,995
Accrued compensation and benefits	176,279	171,113
Other-than-temporary impairment on available for sale securities	261,405	261,405
NOL carry forwards acquired	159,613	159,613
Unrealized loss on other real estate	18,700	47,600
Other	87,202	-
Total deferred tax assets	4,096,764	3,887,726
Deferred tax liabilities:
FHLB stock dividends	188,612	188,612
Purchase accounting adjustments	893,549	893,549
Depreciation	506,028	552,633
Prepaid expenses	184,593	123,704
Unrealized gain on available for sale securities	533,220	400,554
Other	-	69,083
Total deferred tax liabilities	2,306,002	2,228,135
Net deferred tax  asset	$1,790,762	$1,659,591

As of December 31, 2012, and June 30, 2012, the Company had approximately $515,000 of federal and state net operating loss carryforwards, which were acquired in the July 2009 acquisition of Southern Bank of Commerce.  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 2027. 

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

	For the three-month period ended		For the six-month period ended
	December 31, 2012	December 31, 2011	December 31, 2012	December 31, 2011
Tax at statutory rate	$1,205,574	$1,357,126	$2,474,162	$2,817,290
Increase (reduction) in taxes resulting from:
Nontaxable municipal income	(128,391)	(113,303)	(252,659)	(217,673)
State tax, net of Federal benefit	84,480	103,620	176,880	220,275
Cash surrender value of Bank-owned life insurance	(43,764)	(24,275)	(86,543)	(48,603)
Other, net	(53,013)	(6,060)	(106,068)	(9,974)
Actual provision	$1,064,886	$1,317,107	$2,205,772	$2,761,314

Tax credit benefits in the amount of $124,000 and $249,000, respectively, were recognized in the three- and six-month periods ended December 31, 2012, as compared to $73,000  and $146,000, respectively, recognized in the three- and six-month periods ended December 31, 2011, under the flow-through method of accounting for investments in tax credits.