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Income Taxes

12 Months Ended

Jun. 30, 2024

Income Taxes

Provision for (Benefit from) Income Taxes

Note 12 -    Income Taxes

Deferred tax asset and liability consist of the following components as of June 30, 2024 and 2023:

​

​	​	​	​	​	​	​
​		2024			2023
Deferred tax asset	​	​	​	​	​	​
Net operating loss	​	$	212,557	​	$	—
Allowance for loan losses	​	​	448,749	​	​	459,764
Available for sale debt securities	​	​	203,576	​	​	277,048
Lease liability	​	​	144,001	​	​	160,516
Equity compensation	​	​	6,162	​	​	7,559
Accrued expenses	​	​	43,792	​	​	45,983
Impairment of foreclosed assets, net	​	​	257,047	​	​	—
Other	​	​	21,536	​	​	7,121
Subtotal	​	​	1,337,420	​	​	957,991
Less valuation allowance	​	​	(321,355)	​	​	—
​	​	​	1,016,065	​	​	957,991
​	​	​	​	​	​	​
Deferred tax liability	​	​	​	​	​	​
Property and equipment	​	​	62,866	​	​	60,384
Mortgage servicing rights	​	​	213,038	​	​	224,419
Right-of-use-asset	​	​	145,205	​	​	162,381
Deferred loan costs	​	​	14,616	​	​	23,858
Other	​	​	—	​	​	33
​	​	​	435,725	​	​	471,075
Net deferred tax asset	​	$	580,340	​	$	486,916

​

The provision for (benefit from) income taxes charged (credited) to income for the years ended June 30, 2024 and 2023, consist of the following:

​

​	​	​	​	​	​	​
​		2024			2023
Current tax expense	​	$	79,248	​	$	195,171
Deferred tax expense (benefit)	​	​	(138,356)	​	​	249,564
​	​	$	(59,108)	​	$	444,735

​

Income tax benefit was $59,000 for the year ended June 30, 2024, a decrease of $504,000, as compared to income tax expense of $445,000 for the year ended June 30, 2023. The decrease in income tax expense was primarily the result of a decrease in income (loss) before income taxes of $2.4 million which was offset by a change in Wisconsin tax law that provides for a subtraction from the Bank’s state taxable income for loan and fee interest income from certain commercial and agricultural loans. Based upon the provisions of this new state tax law, management determined that the Company was highly unlikely to incur a material Wisconsin tax liability in the foreseeable future, instead generating Wisconsin net

operating loss carryforwards that would never be realized.  Since the state rate at which net deferred tax assets are expected to be realized is 0%, the Company eliminated its state net deferred tax asset balances as of July 1, 2023, resulting in deferred tax expense of approximately $112,000 for the year ended June 30, 2024.

In accordance with ASC Topic 740, the Company evaluates on a quarterly basis, all evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. In conducting this evaluation, management explores all possible sources of taxable income available under existing tax laws to realize the deferred tax asset beginning with the most objectively verifiable evidence first, including available carry back claims and viable tax planning strategies. If needed, management will look to future taxable income as a potential source. Management reviews the Company’s current financial position and its results of operations for the current and preceding years. That historical information is supplemented by all currently available information about future years. The Company understands that projections about future performance are subjective. The Company recorded a valuation allowance of $321,000 as a complete offset of the state deferred tax impact associated with its net deferred tax assets. The deferred tax balance associated with the Company’s Wisconsin net operating loss carryforward of $3.3 million existing as of June 30, 2024 was reduced to zero as a component of the valuation allowance. No federal valuation allowance was deemed necessary as of June 30, 2024.

A summary of income taxes compared to the federal income tax statutory rate is set forth below.

​

​	​	​	​	​	​	​
​		2024			2023
At Federal statutory rate at 21%	​	$	(51,681)	​	$	444,529
Adjustments resulting from:	​	​	​	​	​	​
Tax exempt interest	​	​	(5,008)	​	​	(5,365)
Wisconsin change in tax law	​	​	112,058	​	​	—
Earnings and gain on bank owned life insurance	​	​	(52,245)	​	​	(104,520)
State tax, net of federal benefit	​	​	(321,355)	​	​	112,009
Equity compensation	​	​	23,534	​	​	5,664
Increase/decrease in valuation allowance	​	​	321,355	​	​	—
Other	​	​	(85,766)	​	​	(7,582)
Income tax expense	​	$	(59,108)	​	$	444,735

​

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