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Income Taxes
 12 Months Ended
Jun. 30, 2024
Income Taxes [Abstract]  
INCOME TAXES

NOTE I - INCOME TAXES

 

Federal income taxes on earnings differs from that computed at the statutory corporate tax rate for the years ended June 30, 2024 and 2023, as follows:

 

(in thousands)  2024   2023 
Income tax expense (benefit) at the statutory rate  $(411)  $258 
Increase (decrease) resulting from:          
Cash surrender value of life insurance   (18)   (17)
State income tax expense (benefit)   (30)   55 
Goodwill Impairment   

199

    
-
 
Other   21   (2)
   $(239)  $294 

 

The composition of the Company’s net deferred tax liability at June 30 is as follows:

 

(in thousands)  2024   2023 
Taxes (payable) refundable on temporary differences at estimated corporate tax rate:        
Deferred tax assets:        
General loan loss allowance  $531   $408 
Unfunded Commitments   14    
-
 
Accrued expenses   44    44 
Fair value accounting adjustments at acquisition   71    95 
Nonaccrued interest on loans   115    103 
Unrealized loss on available-for-sale securities   112    142 
Depreciation   82    68 
Net operating loss carryforwards   107    64 
Total deferred tax assets   1,076    924 
           
Deferred tax liabilities:          
Federal Home Loan Bank stock dividends   (344)   (606)
Deferred loan origination costs   (57)   (68)
Loan servicing rights   (41)   (43)
Accrual to cash adjustment   (216)   (185)
Fair value accounting adjustments on acquisition   (535)   (535)
Total deferred tax liabilities   (1,193)   (1,437)
Net deferred tax liability  $(117)  $(513)

 

The Company has federal and state net operating loss carryforward of $130,000 and $1.9 million, respectively. $1.0 million of the state net operating loss begins to expire in June of 2036 and fully expires in June of 2038, while the remaining $900,000 state net operating loss is carried forward indefinitely.  The federal net operating loss of $130,000 is carried forward indefinitely.

 

Prior to 1997, the Banks were allowed a special bad debt deduction, generally limited to 8% of otherwise taxable income, and subject to certain limitations based on aggregate loans and deposit account balances at the end of the year. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than bad debt losses, including distributions in excess of accumulated earnings and profits, such distributions will be subject to federal income taxes at the then current corporate income tax rate. Retained earnings at June 30, 2024 include approximately $5.2 million for which federal and state income taxes have not been provided. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $1.3 million at June 30, 2024.