INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 10 INCOME TAXES

The Company files a consolidated federal income tax return. The following summarizes the provision for income taxes and the related deferred tax components for the years ended December 31, 2024 and 2023.

Income tax expense is summarized as follows for the years ended December 31, 2024 and 2023:

(Dollars are in thousands)		2024		2023
Current income tax expense	$	2,054	$	2,139
Deferred tax expense	95		8
Income tax expense	$	2,149	$	2,147

The following table summarizes the differences between the actual income tax expense and the amounts computed using the federal statutory tax rate of 21% for years ended December 31, 2024 and 2023, respectively:

(Dollars are in thousands)		2024		2023
Income tax expense at the applicable federal rate	$	2,637	$	2,152
Permanent differences resulting from:
Prior year tax		2		-
Nondeductible expenses		13		12
Tax exempt interest income		(1)		(2)
Bank owned life insurance		(15)		(9)
Surrender of bank owned life insurance		60		-
Penalty on surrender of bank owned life insurance		29		-
Bank owned life insurance benefit		(329)		-
Other adjustments		23		(6)
Income tax expense	$	2,149	$	2,147

The net deferred tax assets and liabilities resulting from temporary differences as of December 31, 2024 and 2023, are summarized as follows:

(Dollars are in thousands)		2024		2023
Deferred tax assets
Allowance for credit losses	$	1,828	$	1,696
Deferred compensation		69	75
Unrealized loss on securities available for sale		3,186	3,098
Other real estate owned		17	15
Self-insured health insurance		166	267
Lease liability		771	866
Other		413	355
Total assets, gross		6,450		6,372

Deferred tax liabilities
Depreciation		385	565
Prepaid expenses		31	30
Deferred loan costs		428	450
Right-of-use asset		771	866
Total liabilities, gross		1,615		1,911
Net deferred tax asset	$	4,835	$	4,461

In accordance with applicable accounting guidance, the Company determined that it was not required to establish a valuation allowance for deferred tax assets as it is more likely than not that the deferred tax asset will be realized through future taxable income, future reversals of existing taxable temporary differences and tax strategies. The Company’s net deferred tax asset is recorded in the consolidated financial statements separately.

As of December 31, 2024 and 2023, the Company had no unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to increase significantly over the next twelve months. The company recognizes interest and penalties as a component of income tax expense.

The Company and Bank are subject to U. S. federal income tax, a capital-based franchise tax in the Commonwealth of Virginia; and income and excise taxes in West Virginia, Tennessee and North Carolina, respectively, based on earnings realized from business activities within each state. Years prior to 2021 are no longer subject to examination by taxing authorities.