Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

Note 10. Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and the state of Virginia.  With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2009.

The components of the net deferred tax assets included in other assets at December 31, 2012 and 2011 are as follows:

(In thousands)	2012		2011
Deferred tax assets:
Allowance for loan losses	$	2,128	$	2,288
Securities available for sale		720		709
Impairment on securities		719		785
Interest on nonaccrual loans		158		64
Accrued vacation		108		141
SERP obligation		556		414
OREO		359		226
Accumulated depreciation		74		9
Interest rate swap		186		93
Restricted stock		87		152
Other		111		121
		5,206		5,002
Deferred tax liabilities:
Other		2		1
		2		1
Net deferred tax assets	$	5,204	$	5,001

The Company has not recorded a valuation allowance for deferred tax assets as management feels it is more likely than not, that they will be ultimately realized.

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

	Year Ended December 31,
(In thousands)	2012			2011			2010
Current tax expense	$	413		$	1,554		$	1,947
Deferred tax (benefit)		(53	)		(119	)		(854	)
	$	360		$	1,435		$	1,093

The reasons for the difference between the statutory federal income tax rate and the effective tax rates for the three years ended December 31, 2012 are summarized as follows:

(In thousands)	2012			2011			2010
Computed "expected" tax expense	$	821		$	1,888		$	1,618
Decrease in income taxes resulting from:
Tax-exempt interest income		(345	)		(380	)		(422	)
Other		(116	)		(73	)		(103	)
	$	360		$	1,435		$	1,093