we also do not offer loans that provide for negative amortization of principal , such as `` option arm `` loans , where the borrower can pay less than the interest owed on his or her loan , resulting in an increased principal balance during the life of the loan . we do not offer `` subprime loans `` ( loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies , previous charge-offs , judgments , bankruptcies , or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios ) or alt-a loans ( generally defined as loans having less than full documentation ) . our securities are typically high-quality securities issued or guaranteed by the u.s. government or by freddie mac , fannie mae or ginnie mae , all of which are u.s. government-sponsored enterprises . critical accounting policies we consider accounting policies that require management to exercise significant judgment or discretion or make significant assumptions that have , or could have , a material impact on the carrying 46 value of certain assets or on income , to be critical accounting policies . we consider the following to be our critical accounting policies : allowance for loan losses . our allowance for loan losses is the estimated amount considered necessary to reflect probable losses inherent in the loan portfolio at the balance sheet date . the allowance is established through the provision for loan losses , which is charged against income . in determining the allowance for loan losses , management makes significant estimates and has identified this policy as one of the most critical for us . the methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved , the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses . as a substantial amount of our loan portfolio is collateralized by real estate , appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans . assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties . overly optimistic assumptions or negative changes to assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined . the assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans . management performs a quarterly evaluation of the allowance for loan losses . the analysis of the allowance for loan losses has two components : specific and general allocations . specific allocations are made for loans that are determined to be impaired . impairment loss is measured by determining the present value of expected future cash flows or , for collateral-dependent loans , the fair value of the collateral adjusted for market conditions and selling expenses . the general allocation is determined by segregating classified loans from the remaining loans , and then categorizing each group by type of loan . loans within each type exhibit common characteristics including terms , collateral type , and other risk characteristics . in determining the amount of the allowance for loan losses , we apply loss factors to each category of loan . we estimate our loss factors taking into consideration both quantitative and qualitative aspects that would affect our estimation of probable incurred losses . these aspects include , but are not limited to historical charge-offs ; loan delinquencies and foreclosure trends ; current economic trends and demographic data within oconee county and the other surrounding areas , such as unemployment rates and population trends ; current trends in real estate values within the oconee county market area ; charge-off trends of other comparable institutions ; the results of any internal loan reviews ; loan-to-value ratios ; our historically conservative credit risk policy ; the strength of our underwriting and ongoing credit monitoring function ; and other relevant factors . this evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision based on changes in economic and real estate market conditions . actual loan losses may be significantly more than the allowance for loan losses we have established , which could have a material negative effect on our financial results . deferred income taxes . we use the asset and liability method of accounting for income taxes . under this method , deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . if current available information raises doubt as to the realization of the deferred tax assets , a valuation allowance is established . these judgments and estimates are reviewed on a continual basis as regulatory and business factors change . real estate owned valuation . real estate acquired through loan foreclosure is carried at the lower of carrying amount or fair value less estimated costs to sell . any initial losses at the time of foreclosure 47 are charged against the allowance for loan losses . valuation of these assets are periodically reviewed by management with the carrying value of such assets adjusted through non-interest expense to the then estimated fair value , net of estimated selling costs , if lower , until disposition . story_separator_special_tag esop expense increased $ 47 thousand , or 21.7 % , to $ 264 thousand for the year ended june 30 , 2013 from $ 217 thousand for the year ended june 30 , 2012 , which was primarily a result of increases in our stock prices during the year ended 2013 used in determining compensation expense for esop shares earned . stock based compensation expense for the year ended june 30 , 2013 was $ 227 thousand compared with $ 57 thousand for the year ended june 30 , 2012. the reason was due to the fact that we did not recognize a full year 's expense related to our equity incentive plans during the year ended june 30 , 2012 because the initial grant of options and awards under the equity incentive plans occurred in the third quarter of that fiscal year and expenses associated with options and awards are recognized ratably over the vesting period . the remaining portion of the increase is related to the addition of a new banking officer to serve as the company 's controller and pay increases of approximately 5 % for each employee . income tax expense . the provision for income taxes was $ 2.4 million for year ended june 30 , 2013 compared with $ 2.6 million at june 30 , 2012. our effective tax rates for the years ended june 30 , 2013 and 2012 were and , respectively . the decrease in our effective tax rates is primarily related to the increase income from bank owned life insurance , which is not taxable for income tax purposes . analysis of net interest income net interest income represents the difference between the income we earn on interest-earning assets and the interest expense we pay on interest-bearing liabilities . net interest income also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them . the following tables set forth average balance sheets , average yields and costs , and certain other information at the dates and for the periods indicated . all average balances are daily average balances . non-accrual loans were included in the computation of average balances , but have been reflected in the 51 tables as loans carrying a zero yield . the yields set forth below include the effect of deferred fees , discounts and premiums that are amortized or accreted to interest income . replace_table_token_25_th 52 rate/volume analysis the following table presents the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning assets and interest-bearing liabilities . information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to ( i ) changes attributable to changes in volume ( i.e . , changes in average balances multiplied by the prior-period average rate ) and ( ii ) changes attributable to rate ( i.e . , changes in average rate multiplied by prior-period average balances ) . for purposes of this table , changes attributable to both rate and volume , which can not be segregated , have been allocated proportionately to the change due to volume and the change due to rate . replace_table_token_26_th replace_table_token_27_th management of market risk our most significant form of market risk is interest rate risk because , as a financial institution , the majority of our assets and liabilities are sensitive to changes in interest rates . therefore , a principal part of our operations is to manage interest rate risk and limit the exposure of our net interest income to changes in market interest rates . our board of directors is responsible for the review and oversight of our asset/liability strategies . the asset/liability committee of our board of directors meets monthly and is charged with developing an asset/liability management plan . our board of directors has established an asset/liability management committee , consisting of senior management , which meets daily to review pricing and liquidity needs and to assess our interest rate risk . this committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities , for determining the level of risk that is appropriate , given our business strategy , operating environment , capital , liquidity and performance objectives , and for managing this risk consistent with the guidelines approved by our board of directors . 53 the techniques we are currently using to manage interest rate risk include : using pricing strategies in an effort to balance the proportions of 30-year and 15-year fixed rate loans in our portfolio ; maintaining a modest portfolio of adjustable-rate one- to four-family residential loans ; funding a portion of our operations with deposits with terms greater than one year ; focusing our business operations on local retail customers who value our community orientation and personal service and who may be somewhat less sensitive to interest rate changes than wholesale deposit customers ; and maintaining a strong capital position , which provides for a favorable level of interest-earning assets relative to interest-bearing liabilities . depending on market conditions , from time to time we place more emphasis on enhancing net interest margin rather than matching the interest rate sensitivity of our assets and liabilities . in particular , we believe that the increased net interest income resulting from a mismatch in the maturity of our assets and liabilities portfolios can , during periods of stable or declining interest rates , provide high enough returns to justify increased exposure to sudden and unexpected increases in interest rates . as a result of this philosophy , our results of operations and the economic value of our equity will remain vulnerable to increases in interest rates and to declines due to the difference between long- and short-term interest rates . an important measure of interest rate risk is the amount by which the net present value of ( `` npv `` ) an institution 's cash

liquidity and capital resources our primary sources of funds are deposits and the proceeds from principal and interest payments on loans and investment securities . while maturities and scheduled amortization of loans and securities are predictable sources of funds , deposit flows and mortgage prepayments are greatly influenced by general interest rates , economic conditions and competition . we generally manage the pricing of our deposits to be competitive within our market and to increase core deposit relationships . our cash flows are derived from operating activities , investing activities and financing activities . net cash flows provided by operating activities were $ 6.2 million for the year ended june 30 , 2013 and $ 5.1 million for the year ended june 30 , 2012. net cash flows provided by operating activities consisted primarily of our net income . net cash flows used in investing activities were $ 4.7 million for the year ended june 30 , 2013 and $ 17.1 million for the year ended june 30 , 2012. net cash flows used in investing activities consisted primarily of purchases of investment securities , offset by proceeds from maturities and paydowns on investment securities , and net loan repayments . net cash flows used in financing activities were $ 11.1 million for the year ended june 30 , 2013 and $ 1.3 million for the year ended june 30 , 2012. net cash flows used in financing activities consisted primarily of the payment of dividends and share repurchases of our common stock . the increase of $ 9.8 million is primarily related to the $ 7.8 million of share repurchases for the year ended june 30 , 2013. our most liquid assets are cash and short-term investments . the levels of these assets are dependent on our operating , financing , lending , and investing activities during any given period . at june 30 , 2013 and 2012 , cash and short-term investments totaled $ 37.9 million and $ 47.6 million , respectively . we may also utilize as sources of funds the sale of securities available-for-sale , federal funds purchased , federal home loan bank of atlanta advances and other borrowings .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources our primary sources of funds are deposits and the proceeds from principal and interest payments on loans and investment securities . while maturities and scheduled amortization of loans and securities are predictable sources of funds , deposit flows and mortgage prepayments are greatly influenced by general interest rates , economic conditions and competition . we generally manage the pricing of our deposits to be competitive within our market and to increase core deposit relationships . our cash flows are derived from operating activities , investing activities and financing activities . net cash flows provided by operating activities were $ 6.2 million for the year ended june 30 , 2013 and $ 5.1 million for the year ended june 30 , 2012. net cash flows provided by operating activities consisted primarily of our net income . net cash flows used in investing activities were $ 4.7 million for the year ended june 30 , 2013 and $ 17.1 million for the year ended june 30 , 2012. net cash flows used in investing activities consisted primarily of purchases of investment securities , offset by proceeds from maturities and paydowns on investment securities , and net loan repayments . net cash flows used in financing activities were $ 11.1 million for the year ended june 30 , 2013 and $ 1.3 million for the year ended june 30 , 2012. net cash flows used in financing activities consisted primarily of the payment of dividends and share repurchases of our common stock . the increase of $ 9.8 million is primarily related to the $ 7.8 million of share repurchases for the year ended june 30 , 2013. our most liquid assets are cash and short-term investments . the levels of these assets are dependent on our operating , financing , lending , and investing activities during any given period . at june 30 , 2013 and 2012 , cash and short-term investments totaled $ 37.9 million and $ 47.6 million , respectively . we may also utilize as sources of funds the sale of securities available-for-sale , federal funds purchased , federal home loan bank of atlanta advances and other borrowings .
```    
 Suspicious Activity Report : we also do not offer loans that provide for negative amortization of principal , such as `` option arm `` loans , where the borrower can pay less than the interest owed on his or her loan , resulting in an increased principal balance during the life of the loan . we do not offer `` subprime loans `` ( loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies , previous charge-offs , judgments , bankruptcies , or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios ) or alt-a loans ( generally defined as loans having less than full documentation ) . our securities are typically high-quality securities issued or guaranteed by the u.s. government or by freddie mac , fannie mae or ginnie mae , all of which are u.s. government-sponsored enterprises . critical accounting policies we consider accounting policies that require management to exercise significant judgment or discretion or make significant assumptions that have , or could have , a material impact on the carrying 46 value of certain assets or on income , to be critical accounting policies . we consider the following to be our critical accounting policies : allowance for loan losses . our allowance for loan losses is the estimated amount considered necessary to reflect probable losses inherent in the loan portfolio at the balance sheet date . the allowance is established through the provision for loan losses , which is charged against income . in determining the allowance for loan losses , management makes significant estimates and has identified this policy as one of the most critical for us . the methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved , the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses . as a substantial amount of our loan portfolio is collateralized by real estate , appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans . assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties . overly optimistic assumptions or negative changes to assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined . the assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans . management performs a quarterly evaluation of the allowance for loan losses . the analysis of the allowance for loan losses has two components : specific and general allocations . specific allocations are made for loans that are determined to be impaired . impairment loss is measured by determining the present value of expected future cash flows or , for collateral-dependent loans , the fair value of the collateral adjusted for market conditions and selling expenses . the general allocation is determined by segregating classified loans from the remaining loans , and then categorizing each group by type of loan . loans within each type exhibit common characteristics including terms , collateral type , and other risk characteristics . in determining the amount of the allowance for loan losses , we apply loss factors to each category of loan . we estimate our loss factors taking into consideration both quantitative and qualitative aspects that would affect our estimation of probable incurred losses . these aspects include , but are not limited to historical charge-offs ; loan delinquencies and foreclosure trends ; current economic trends and demographic data within oconee county and the other surrounding areas , such as unemployment rates and population trends ; current trends in real estate values within the oconee county market area ; charge-off trends of other comparable institutions ; the results of any internal loan reviews ; loan-to-value ratios ; our historically conservative credit risk policy ; the strength of our underwriting and ongoing credit monitoring function ; and other relevant factors . this evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision based on changes in economic and real estate market conditions . actual loan losses may be significantly more than the allowance for loan losses we have established , which could have a material negative effect on our financial results . deferred income taxes . we use the asset and liability method of accounting for income taxes . under this method , deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases . deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled . if current available information raises doubt as to the realization of the deferred tax assets , a valuation allowance is established . these judgments and estimates are reviewed on a continual basis as regulatory and business factors change . real estate owned valuation . real estate acquired through loan foreclosure is carried at the lower of carrying amount or fair value less estimated costs to sell . any initial losses at the time of foreclosure 47 are charged against the allowance for loan losses . valuation of these assets are periodically reviewed by management with the carrying value of such assets adjusted through non-interest expense to the then estimated fair value , net of estimated selling costs , if lower , until disposition . story_separator_special_tag esop expense increased $ 47 thousand , or 21.7 % , to $ 264 thousand for the year ended june 30 , 2013 from $ 217 thousand for the year ended june 30 , 2012 , which was primarily a result of increases in our stock prices during the year ended 2013 used in determining compensation expense for esop shares earned . stock based compensation expense for the year ended june 30 , 2013 was $ 227 thousand compared with $ 57 thousand for the year ended june 30 , 2012. the reason was due to the fact that we did not recognize a full year 's expense related to our equity incentive plans during the year ended june 30 , 2012 because the initial grant of options and awards under the equity incentive plans occurred in the third quarter of that fiscal year and expenses associated with options and awards are recognized ratably over the vesting period . the remaining portion of the increase is related to the addition of a new banking officer to serve as the company 's controller and pay increases of approximately 5 % for each employee . income tax expense . the provision for income taxes was $ 2.4 million for year ended june 30 , 2013 compared with $ 2.6 million at june 30 , 2012. our effective tax rates for the years ended june 30 , 2013 and 2012 were and , respectively . the decrease in our effective tax rates is primarily related to the increase income from bank owned life insurance , which is not taxable for income tax purposes . analysis of net interest income net interest income represents the difference between the income we earn on interest-earning assets and the interest expense we pay on interest-bearing liabilities . net interest income also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them . the following tables set forth average balance sheets , average yields and costs , and certain other information at the dates and for the periods indicated . all average balances are daily average balances . non-accrual loans were included in the computation of average balances , but have been reflected in the 51 tables as loans carrying a zero yield . the yields set forth below include the effect of deferred fees , discounts and premiums that are amortized or accreted to interest income . replace_table_token_25_th 52 rate/volume analysis the following table presents the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning assets and interest-bearing liabilities . information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to ( i ) changes attributable to changes in volume ( i.e . , changes in average balances multiplied by the prior-period average rate ) and ( ii ) changes attributable to rate ( i.e . , changes in average rate multiplied by prior-period average balances ) . for purposes of this table , changes attributable to both rate and volume , which can not be segregated , have been allocated proportionately to the change due to volume and the change due to rate . replace_table_token_26_th replace_table_token_27_th management of market risk our most significant form of market risk is interest rate risk because , as a financial institution , the majority of our assets and liabilities are sensitive to changes in interest rates . therefore , a principal part of our operations is to manage interest rate risk and limit the exposure of our net interest income to changes in market interest rates . our board of directors is responsible for the review and oversight of our asset/liability strategies . the asset/liability committee of our board of directors meets monthly and is charged with developing an asset/liability management plan . our board of directors has established an asset/liability management committee , consisting of senior management , which meets daily to review pricing and liquidity needs and to assess our interest rate risk . this committee is responsible for evaluating the interest rate risk inherent in our assets and liabilities , for determining the level of risk that is appropriate , given our business strategy , operating environment , capital , liquidity and performance objectives , and for managing this risk consistent with the guidelines approved by our board of directors . 53 the techniques we are currently using to manage interest rate risk include : using pricing strategies in an effort to balance the proportions of 30-year and 15-year fixed rate loans in our portfolio ; maintaining a modest portfolio of adjustable-rate one- to four-family residential loans ; funding a portion of our operations with deposits with terms greater than one year ; focusing our business operations on local retail customers who value our community orientation and personal service and who may be somewhat less sensitive to interest rate changes than wholesale deposit customers ; and maintaining a strong capital position , which provides for a favorable level of interest-earning assets relative to interest-bearing liabilities . depending on market conditions , from time to time we place more emphasis on enhancing net interest margin rather than matching the interest rate sensitivity of our assets and liabilities . in particular , we believe that the increased net interest income resulting from a mismatch in the maturity of our assets and liabilities portfolios can , during periods of stable or declining interest rates , provide high enough returns to justify increased exposure to sudden and unexpected increases in interest rates . as a result of this philosophy , our results of operations and the economic value of our equity will remain vulnerable to increases in interest rates and to declines due to the difference between long- and short-term interest rates . an important measure of interest rate risk is the amount by which the net present value of ( `` npv `` ) an institution 's cash

