v3.25.2
Income Taxes
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

8. Income Taxes

Allocation of federal and state income taxes between current and deferred portions is as follows:

 

 

For the Year Ended June 30,

 

(In thousands)

 

2025

 

 

2024

 

Current tax provision (benefit):

 

 

 

 

 

 

Federal

 

$

(25

)

 

$

4

 

State

 

 

43

 

 

 

37

 

 

 

 

18

 

 

 

41

 

Deferred tax expense (benefit):

 

 

 

 

 

 

Federal

 

 

(76

)

 

 

(134

)

State

 

 

(25

)

 

 

87

 

Valuation allowance

 

 

55

 

 

 

(33

)

 

 

 

(46

)

 

 

(80

)

Total income tax benefit

 

$

(28

)

 

$

(39

)

The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows:

 

 

Years Ended June 30,

 

(Dollars in thousands)

 

2025

 

 

2024

 

Statutory amount

 

$

(62

)

 

$

(1

)

Increase (decrease) resulting from:

 

 

 

 

 

 

State taxes, net of federal tax expense (benefit)

 

 

15

 

 

 

16

 

Tax exempt interest

 

 

(40

)

 

 

(42

)

Bank-owned life insurance

 

 

(57

)

 

 

(73

)

Stock-based compensation

 

 

27

 

 

 

21

 

Merger expenses

 

 

59

 

 

 

-

 

Other, net

 

 

(25

)

 

 

(47

)

Valuation allowance

 

 

55

 

 

 

87

 

Effective (benefit) tax

 

$

(28

)

 

$

(39

)

Effective tax rate

 

 

(9.6

%)

 

 

(650.0

%)

 

The components of the net deferred tax asset are as follows:

 

 

As of June 30,

 

(In thousands)

 

2025

 

 

2024

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

476

 

 

$

463

 

Employee benefit plans

 

 

490

 

 

 

469

 

ESOP

 

 

41

 

 

 

32

 

Stock-based compensation

 

 

55

 

 

 

38

 

Accrued rent

 

 

7

 

 

 

5

 

Federal net operating loss carryforward

 

 

115

 

 

 

104

 

Depreciation and amortization

 

 

54

 

 

 

26

 

Charitable Foundation contribution carryforward

 

 

374

 

 

 

374

 

Gross deferred tax assets

 

 

1,612

 

 

 

1,511

 

Valuation allowance

 

 

(321

)

 

 

(266

)

Net deferred tax asset

 

$

1,291

 

 

$

1,245

 

A summary of the change in the net deferred tax asset is as follows:

 

 

Years Ended June 30,

 

(In thousands)

 

2025

 

 

2024

 

Balance at beginning of fiscal year

 

$

1,245

 

 

$

1,079

 

Deferred tax expense

 

 

46

 

 

 

80

 

Adoption of ASU 2016-13 (CECL)

 

 

-

 

 

 

88

 

Deferred tax effects of net unrealized gain on available for sale securities

 

 

-

 

 

 

(2

)

Balance at end of fiscal year

 

$

1,291

 

 

$

1,245

 

The calculation of the Company's charitable contribution carryforward deferred tax asset is based upon a carryforward of approximately $1,251,000 of charitable contributions at June 30, 2025. As of June 30, 2025, it has been determined that it is more likely than not that a portion of the benefit from this charitable contribution carryforward will not be realized prior to expiration. As a result, a valuation allowance of $321,000 has been provided on this deferred tax asset for the year ended June 30, 2025. As of June 30, 2024, the valuation allowance related to the benefit from the charitable foundation contribution carryforward was $266,000. The increases of $55,000 in the year ended June 30, 2025 and $87,000 in the year ended June 30, 2024 relate to changes in assumptions regarding the realizability of the charitable contribution carryover. All other deferred tax assets as of June 30, 2025 and 2024 have not been reduced by a valuation allowance because management believes that it is more likely than not that the full amount of these deferred tax assets will be realized.

The federal income tax reserve for loan losses at the Company’s base year amounted to $2,582,000. If any portion of the reserve is used for purposes other than to absorb loan losses, approximately 150% of the amount actually used, limited to the amount of the reserve, would be subject to taxation in the fiscal year in which used. As the Company intends to use the reserve only to absorb loan losses, a deferred income tax liability of $726,000 has not been provided.

The Company and the Company’s income tax returns are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statues of limitations by the Internal Revenue Service for the years ended December 2021 through 2024. The years open to examination by state taxing authorities vary by jurisdiction; no years prior to 2021 are open.

At June 30, 2025, the Company has a net operating loss carryover of $549,000 with no expiration date.