Income Taxes

6 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes.

Note 8: Income Taxes

The Company and its subsidiaries file 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 tax years ending June 30, 2019 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 Company’s income tax provision is comprised of the following components:

	For the three-month periods ended				For the six-month periods ended
(dollars in thousands)	December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Income taxes
Current	$	3,173	$	3,261	$	6,660	$	5,697
Deferred		—		6		—		13
Total income tax provision	$	3,173	$	3,267	$	6,660	$	5,710

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

(dollars in thousands)	December 31, 2023		June 30, 2023
Deferred tax assets:
Provision for losses on loans	$	12,185	$	12,101
Accrued compensation and benefits		844		974
NOL carry forwards acquired		216		709
Low income tax credit carry forward		794		1,192
Unrealized loss on other real estate		944		818
Unrealized loss on available for sale securities		5,292		6,174
Total deferred tax assets		20,275		21,968
Deferred tax liabilities:
Purchase accounting adjustments		2,572		2,348
Depreciation		3,916		4,276
FHLB stock dividends		120		120
Prepaid expenses		775		728
Other		914		1,636
Total deferred tax liabilities		8,297		9,108
Net deferred tax asset	$	11,978	$	12,860

As of December 31, 2023, the Company had approximately $982,000 in federal net operating loss carryforwards, 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 & Trust Company (“Citizens Bank”) 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 three-month periods ended				For the six-month periods ended
(dollars in thousands)	December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Tax at statutory rate	$	3,227	$	3,136	$	6,721	$	5,665
Increase (reduction) in taxes resulting from:
Nontaxable municipal income		(117)		(76)		(225)		(157)
State tax, net of Federal benefit		131		165		295		179
Cash surrender value of Bank-owned life insurance		(99)		(67)		(195)		(134)
Tax credit benefits		(4)		(2)		(7)		(4)
Other, net		35		111		71		161
Actual provision	$	3,173	$	3,267	$	6,660	$	5,710

For the three- and six- month periods ended December 31, 2023 and 2022, 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.