Note 8: Income Taxes

3 Months Ended

Dec. 31, 2014

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 2010. 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 period ended		For the six-month period ended
	December 31, 2014	December 31, 2013	December 31, 2014	December 31, 2013
Income taxes
Current	$2,101	$137	$3,465	$1,401
Deferred	(641)	820	(624)	580
Total income tax provision	$1,460	$957	$2,841	$1,981

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

	December 31, 2014	June 30, 2014
Deferred tax assets:
Provision for losses on loans	$4,372	$3,696
Accrued compensation and benefits	480	450
Other-than-temporary impairment on available for sale securities	139	141
NOL carry forwards acquired	853	853
Minimum Tax Credit	130	130
Unrealized loss on other real estate	41	38
Total deferred tax assets	6,015	5,308

Deferred tax liabilities:
FHLB stock dividends	103	157
Purchase accounting adjustments	994	1,533
Depreciation	711	767
Prepaid expenses	199	250
Unrealized gain on available for sale securities	814	336
Other	76	164
Total deferred tax liabilities	2,897	3,207
Net deferred tax (liability) asset	$3,118	$2,101

As of December 31 and June 30, 2014, the Company had approximately $2.3 million of federal and state net operating loss carryforwards, which were acquired in the July 2009 acquisition of Southern Bank of Commerce and February 2014 acquisition of Citizens State Bankshares of Bald Knob, Inc. 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, 2014	December 31, 2013	December 31, 2014	December 31, 2013
Tax at statutory rate	$1,665	$1,182	$3,256	$2,401
Increase (reduction) in taxes resulting from:
Nontaxable municipal income	(134)	(134)	(265)	(262)
State tax, net of Federal benefit	127	71	247	152
Cash surrender value of Bank-owned life insurance	(49)	(44)	(98)	(88)
Tax credit benefits	(91)	(82)	(181)	(163)
Other, net	(59)	(36)	(118)	(59)
Actual provision	$1,460	$957	$2,841	$1,981

Tax credit benefits are recognized under the flow-through method of accounting for investments in tax credits.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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