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Home Federal Bancorp, Inc. of Louisiana Income Taxes Disclosure

10-KFiled Sep 26, 20253 min read
Note 10.
Income Taxes

The Company and its subsidiary file consolidated federal income tax returns.  The current provision for federal and state income taxes is calculated on pretax accounting income adjusted by items considered to be permanent differences between book and taxable income.  Income tax expense for the years ended June 30, 2025 and 2024 is summarized as follows:

   
2025
    
2024
  
   
(In Thousands)
  
                 
Current
   $ 929    
$
354
  
Deferred
     (163 )    
122
                 
Total
   $ 766    
$
476
  

The effective federal income tax rate for the years ended June 30, 2025 and 2024 was 16.5% and 11.7%, respectively.  Reconciliations of income tax expense at the statutory rate to the Company’s effective rates are as follows:

   
2025
    
2024
  
   
(In Thousands)
  
             
Computed at Expected Statutory Rate
   $ 977    
$
854
  
Non-Taxable Income
     (44 )    
(43
)
Equity Compensation     -       6  
Other
     (167 )    
(341
)
                 
Provision for Income Tax Expense
   $ 766    
$
476
  

At June 30, 2025 and 2024, temporary differences between the financial statement carrying amount and tax bases of assets that gave rise to deferred tax recognition were related to the effect of loan bad debt deduction differences for tax and book purposes, deferred stock option compensation, and supplemental employee retirement benefits.  The deferred tax expense or benefit related to securities available-for-sale has no effect on the Company’s income tax provision since it is charged or credited to the Company’s other comprehensive income or loss equity component.

The net deferred income tax asset and liability consisted of the following components at June 30, 2025 and 2024:

   
2025
    
2024
  
    (In Thousands)  
             
Deferred Tax Assets
            

           
Stock Option and SERP Compensation
  
345    

343
  
Market Value Adjustment to Available-for-Sale Securities
     514       695  
Loans Receivable – Bad Debt Loss Allowance
     942      
961
  
Lease Liability
     180     181
                 
Total Deferred Tax Assets
   $ 1,981     $ 2,180  
                 
Deferred Tax Liabilities
                
 
                
Tax over Book Accumulated Depreciation
     516       464  
Purchase Accounting
    103     107
ROU Asset
     168       171  
Other Liability
     31     257  
                 
Total Deferred Tax Liabilities
     818     999  
Net Deferred Tax Asset
   $ 1,163    
$
1,181
 

Included in retained earnings at June 30, 2025 and 2024 is approximately $3.3 million for which no deferred Federal income tax liability has been recorded. This amount consists of the total amount of bad debt reserves deducted for income tax reporting purposes prior to January 1, 1988. Under current tax law, these pre-1988 bad debt reserves are subject to recapture into taxable income if the Bank were to (a) make certain “non-dividend distributions,” which include distributions in excess of the Bank’s current and accumulated earnings and profits, distributions in redemption of stock, and distributions in partial or complete liquidation or (b) cease to maintain a bank or thrift charter. The unrecorded deferred tax liability was approximately $693,000 at June 30, 2025 and 2024.

Accounting principles generally accepted in the United States of America provide accounting and disclosure guidance about positions taken by an entity in its tax returns that might be uncertain. The Company believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the consolidated financial statements.

Penalties and interest assessed by income taxing authorities, if any, would be included in income tax expense.

Historical Timeline

Fiscal YearFiled
2025Sep 26, 2025Showing above
2024Sep 30, 2024
2023Oct 2, 2023
2022Sep 26, 2022
2021Sep 28, 2021
2020Sep 29, 2020
2019Sep 30, 2019
2018Sep 26, 2018
2017Sep 21, 2017
2016Sep 21, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

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