Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 14. Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and the Commonwealth 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 2010. The Company has operating loss carryforwards of $889 thousand for federal income tax purposes that may be used to offset future taxable income. If not previously utilized, the federal loss carryforwards will begin to expire in 2025.

The current and deferred components of income tax expense (benefit) for the periods ended December 31, 2013 and 2012 are as follows:

(Dollars In Thousands)	2013		2012
Current	$	68	$	853
Deferred		1,272		(1	)
Deferred tax asset valuation allowance change		-		(2,925	)
Income tax expense (benefit)	$	1,340	$	(2,073	)

Rate Reconciliation

Total income tax expense (benefit) differed from the “expected” amount computed by applying the U.S. Federal income tax rate of 34 percent to income before income taxes as a result of the following.

(Dollars In Thousands)	2013			2012
Tax at statutory federal rate	$	1,384		$	858
Tax-exempt interest income		(96	)		(16	)
Tax-exempt interest disallowance		26			1
Other		26			9
Deferred tax asset valuation allowance change		-			(2,925	)
Income tax expense (benefit)	$	1,340		$	(2,073	)

Deferred Income Tax Analysis

The significant components of net deferred tax assets at December 31, 2013 and 2012 are summarized as follows:

(Dollars In Thousands)	2013		2012
Deferred tax assets
Net operating losses	$	302	$	1,362
Alternative minimum tax		98		62
Pre-opening expenses		110		126
Allowance for loan losses		675		694
Stock-based compensation		236		236
Other real estate expenses		290		449
Unrealized loss on securities available for sale		308		-
Other		25		23
Deferred tax asset		2,044		2,952
Deferred tax liabilities
Depreciation		297		329
Unrealized gain on securities available for sale		-		723
Accretion of bond discount		1		7
Deferred loan fees		587		493
Deferred tax liability		885		1,552
Net Deferred tax asset	$	1,159	$	1,400