Income Taxes

12 Months Ended

Jun. 30, 2023

Income Taxes

Income Taxes.

NOTE 9: Income Taxes

The Company and its subsidiary files income tax returns in the U.S. Federal jurisdiction and various states. The Company is no longer subject to federal and state tax examinations by tax authorities for tax years ending June 30, 2017 and before. The Company’s Missouri income tax returns for the fiscal years ending June 30, 2016 through 2018 are under audit by the Missouri Department of Revenue. The Company recognized no interest or penalties related to income taxes for the periods presented.

The components of net deferred tax assets (included in other assets on the condensed consolidated balance sheet) are summarized as follows:

(dollars in thousands)	June 30, 2023		June 30, 2022
Deferred tax assets:
Provision for losses on loans	$	12,101	$	7,761
Accrued compensation and benefits		974		828
NOL carry forwards acquired		709		57
Low income tax credit carry forward		1,192		—
Unrealized loss on other real estate		818		72
Unrealized loss on available for sale securities		6,174		4,921
Total deferred tax assets		21,968		13,639
Deferred tax liabilities:
Purchase accounting adjustments		2,348		224
Depreciation		4,276		1,974
FHLB stock dividends		120		120
Prepaid expenses		728		415
Other		1,636		181
Total deferred tax liabilities		9,108		2,914
Net deferred tax asset	$	12,860	$	10,725

As of June 30, 2023, the Company had approximately $3.2 million and $0 in federal and state net operating loss carryforwards, respectively, which were acquired in the July 2009 Southern Bank of Commerce merger, the February 2014 Citizens State Bankshares of Bald Knob, Inc. merger, the April 2020 Central Federal Savings and Loan merger, the February 2022 Fortune Bank merger, and the January 2023 Citizens Bank and Trust merger. 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 2030.

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

	For the year ended June 30
(dollars in thousands)	2023		2022		2021
Tax at statutory rate	$	10,387	$	12,580	$	12,538
Increase (reduction) in taxes resulting from:
Nontaxable municipal income		(327)		(349)		(453)
State tax, net of Federal benefit		46		812		1,018
Cash surrender value of Bank-owned life insurance		(318)		(245)		(378)
Tax credit benefits		(19)		(45)		(11)
Other, net		457		(18)		(189)
Actual provision	$	10,226	$	12,735	$	12,525

For the years ended June 30, 2023, 2022, and 2021, income tax expense at the statutory rate was calculated using a 21% annual effective tax rate (AETR). Tax credit benefits are recognized under the deferral method of accounting for investments in tax credits.