v3.26.3
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Taxes [Abstract]  
INCOME TAXES

NOTE H - INCOME TAXES

 

Federal income taxes on earnings differs from that computed at the statutory corporate tax rate for the years ended June 30, 2026 and 2025, as follows:

 

    2026     2025  
(in thousands)   Amount     Percent     Amount     Percent  
Income tax expense (benefit) at the statutory rate   $ 526       21.0 %   $ 50       21.0 %
Increase (decrease) resulting from:                                
Cash surrender value of life insurance     (18 )     (0.7 )     (18 )     (7.6 )
State income tax expense (benefit)     87       3.5       13       5.5  
Other     -               12       5.0  
Total income tax expense   $ 595             $ 57          
Effective income tax rate     23.76 %             23.95 %        

 

Current and deferred income tax expense (benefit) at the federal and state level for the years ended June 30, 2026 and 2025, as follows:

 

(in thousands)   2026     2025  
Current income tax expense:                
Federal   $ 530     $ 200  
State     63       7  
      593       207  
Deferred income tax expense:                
Federal     (46 )     (146 )
State     48       (4 )
      2       (150 )
    $ 595     $ 57  

 

All state income taxes are attributed to the state of Kentucky for both 2026 and 2025.

 

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

 

(in thousands)   2026     2025  
Taxes (payable) refundable on temporary differences at estimated corporate tax rate:            
Deferred tax assets:            
General loan loss allowance   $ 563     $ 542  
Unfunded Commitments     15       15  
Accrued expenses     45       45  
Fair value accounting adjustments at acquisition     55       63  
Nonaccrued interest on loans     121       105  
Unrealized loss on available-for-sale securities     43       48  
Depreciation     71       86  
Net operating loss carryforwards     -       45  
Total deferred tax assets     913       949  
                 
Deferred tax liabilities:                
Federal Home Loan Bank stock dividends     (171 )     (269 )
Deferred loan origination costs     (11 )     (24 )
Loan servicing rights     (73 )     (51 )
Accrual to cash adjustment     (160 )     (101 )
Fair value accounting adjustments on acquisition     (535 )     (534 )
Total deferred tax liabilities     (950 )     (979 )
Net deferred tax liability   $ (37 )   $ (30 )

 

The Company has federal and state net operating loss carryforward of $0 and $1.1 million at June 30, 2026 and $0 and $1.1 million at June 30, 2025, respectively.

 

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, 2026 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, 2026.