Income Taxes

12 Months Ended

Dec. 31, 2025

Income Taxes [Abstract]

Income Taxes

Note 14. Income Taxes

Pretax income is entirely related to domestic activities and the Corporation did not have any foreign operations.

The components of income taxes attributable to income from continuing operations were as follows:

	For the Years Ended December 31
(Dollars in thousands)	2025		2024
Current tax expense (benefit)
Federal	$	5,496	$	2,567
State		296		122
Total current tax expense (benefit)		5,792		2,689
Deferred tax expense (benefit)
Federal		(698)		(437)
State		(53)		(36)
Total deferred tax expense (benefit)		(751)		(473)
Total income tax provision	$	5,041	$	2,216

Income taxes paid were as follows:

(Dollars in thousands)	2025		2024
Federal	$	5,220	$	1,700
Other		125		159
Total	$	5,345	$	1,859

The temporary differences which give rise to significant portions of deferred tax assets and liabilities at December 31 are as follows:

(Dollars in thousands)
Deferred Tax Assets	2025		2024
Allowance for credit losses	$	4,591	$	3,810
Deferred compensation		1,014		951
Purchase accounting		—		20
Accumulated other comprehensive loss		5,739		9,439
Lease liabilities		836		920
Other		634		605
Total gross deferred tax assets		12,814		15,745
Deferred Tax Liabilities
Depreciation		2,828		2,936
Right-of-use asset		796		886
Joint ventures and partnerships		56		48
Pension		827		663
Deferred loan fees and costs, net		426		381
Total gross deferred tax liabilities		4,933		4,914
Net deferred tax asset	$	7,881	$	10,831

In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, Management believes it is more likely than not that the Bank will realize the benefits of these deferred tax assets other than those for which a valuation allowance has been recorded.

For the years ended December 31, 2025 and 2024, the income tax provisions are different from the tax expense which would be computed by applying the Federal statutory rate to pretax operating earnings. The Federal statutory rate was 21% for 2025 and 2024. A reconciliation between the tax provision at the statutory rate and the tax provision at the effective tax rate is as follows:

	For the Years Ended December 31
(Dollars in thousands)	2025		%	2024		%
Tax provision at statutory rate	$	5,516	21.0%	$	2,796	21.0%
State income taxes, net of federal tax effect (1)		215	0.8%		81	0.6%
Nontaxable or nondeductible items
Nontaxable interest income		(831)	-3.2%		(881)	-6.6%
Appreciation in cash surrender value of life insurance		(90)	-0.3%		(107)	-0.8%
Disallowed interest expense		290	1.1%		323	2.4%
Share-based compensation		(26)	-0.1%		12	0.1%
Other nondeductible expenses		(33)	-0.1%		(8)	-0.1%
Income tax provision	$	5,041	19.2%	$	2,216	16.6%
(1) The State of Maryland made up the majority (greater than 50%) of the tax effect in this category

The Corporation recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense for all periods presented. No penalties or interest were recognized in 2025 or 2024. The Corporation had no uncertain tax positions at December 31, 2025. The Corporation is no longer subject to U.S. Federal and state examinations by tax authorities for the years before 2022.