Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 11 – Income Taxes

The Company files tax returns in the U.S. federal jurisdiction. With few exceptions, the Company is no longer subject to U.S. federal tax examinations by tax authorities for years prior to 2020.

The Commonwealth of Virginia assesses a Bank Franchise Tax on banks instead of a state income tax. The Bank Franchise Tax expense is reported in noninterest expense, and the calculation of that tax is unrelated to taxable income.

Net deferred tax assets consist of the following components as of year-end:

(Dollars in thousands)	2023		2022
Deferred tax assets:
Allowance for credit or loan losses	$	1,836	$	1,166
Acquisition accounting		1,974		3,362
Fixed assets		853		547
Investments in pass-throughs		182		221
Federal net operating loss carryforwards		-		224
Nonaccrual loan interest		39		22
Stock option/grant expense		101		86
Home equity closing costs		84		70
Deferred compensation expense		3		3
Deferred loan fees		528		159
Securities available for sale unrealized loss		10,940		12,925
Total deferred tax assets	$	16,540	$	18,785
Deferred tax liabilities:
Goodwill and other intangible assets		967		1,245
Trust preferred		140		149
Right of use asset		51		76
Total deferred tax liabilities		1,158		1,470
Net deferred tax assets	$	15,382	$	17,315

The provision for income taxes charged to operations for years ended December 31, 2023 and December 31, 2022 consists of the following:

(Dollars in thousands)	2023		2022
Current tax expense	$	3,537	$	5,246
Deferred tax expense (benefit)		473		(138	)
Provision for income taxes	$	4,010	$	5,108

The Company’s income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2023 and December 31, 2022 due to the following:

(Dollars in thousands)	2023			2022
Federal statutory rate	21%			21%
Computed statutory tax expense	$	4,887		$	5,995
Increase (decrease) in tax resulting from:
Tax-exempt interest income		(145	)		(255	)
Tax-exempt income from BOLI		(370	)		(202	)
Stock option/stock grant expense		13			14
Investment in qualified housing projects		(405	)		(458	)
Other expenses		30			14
Provision for income taxes	$	4,010		$	5,108