The current and deferred components of income tax expense follows:

 

 

The reconciliation between the statutory federal income tax rate of for fiscal and for fiscal and and the effective tax rate on income follows:

 

 

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at follows:

 

 

The net deferred tax asset was included in other assets in the accompanying balance sheet as of and

 

In accordance with ASC , deferred tax assets are to be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than that some portion or all of the deferred tax assets will be realized. The realization of the tax benefit depends upon the existence of sufficient taxable income within the carry-back and future periods. The Company believes that it is more likely than that the net deferred tax asset as of will be realized, based upon the ability to generate future taxable income as well as the availability of current and historical taxable income.

 

For federal tax purposes, the Company has a  million reserve for loan losses which remains subject to recapture. If any portion of the reserve is used for purposes other than to absorb the losses for which it was established, approximately of the amount actually used (limited to the amount of the reserve) would be subject to taxation in the year in which used. As the Company intends to use the reserve only to absorb loan losses, provision has been made for potential liability that would result if of the reserve were recaptured.

 

From time to time, the Internal Revenue Service (the "IRS") and state tax authorities review or challenge specific tax positions taken by the Company in its ordinary course of business. The Company accounts for uncertainties in income taxes by reserving for tax positions that be upheld under examination. Increases to the Company's unrealized tax positions occur as a result of accruing for the unrecognized tax benefit as well the accrual of interest and penalties related to prior year positions. Decreases in the Company's unrealized tax positions occur as a result of the statute of limitation lapsing on prior year positions or settlements relating to outstanding positions. The Company reserves for uncertain tax positions, as well as related interest and penalties, as a component of income tax expense therefore affecting the effective tax rate. The following is a reconciliation of the beginning and ending amounts of the Company's uncertain tax positions:

 

 

The Company is currently open to audit under the statute of limitations by the IRS and state taxing authorities for the fiscal tax return and forward.