Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes [Abstract]

Income Taxes

NOTE 12, Income Taxes

The components of income tax expense for the current and prior year-ends are as follows:

	2013				2012
	(in thousands)
Current tax expense		$	664		$	1,002
Deferred tax benefit			(316	)		(7	)
Reported tax expense		$	348		$	995

A reconciliation of the expected federal income tax expense on income before income taxes with the reported income tax expense for the same periods follows:

	Years Ended December 31,
	2013			2012
	(in thousands)
Expected tax expense (34%)	$	1,194		$	1,762
Interest expense on tax-exempt assets		21			14
Tax credit for investment		(122	)		(95	)
Tax-exempt interest		(481	)		(272	)
Bank-owned life insurance		(288	)		(455	)
Other, net		24			41
Reported tax expense	$	348		$	995

The effective tax rates for 2013 and 2012 were 9.9% and 19.2%, respectively.

The components of the net deferred tax asset, included in other assets, are as follows:

	December 31,
	2013			2012
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	2,322		$	2,490
Interest on nonaccrual loans		381			325
Other real estate owned		1,256			924
Pension - other comprehensive income		797			1,125
Bank owned life insurance benefit		108			99
Charitable contributions carried forward		55			64
Net unrealized loss on securities available-for-sale		2,739			0
Net unrealized loss on securities transferred from available-for-sale to held-to-maturity		2,028			0
Unexercised nonqualified options		36			36
Other		25			12
	$	9,747		$	5,075
Deferred tax liabilities:
Depreciation	$	(737	)	$	(763	)
Deferred loan fees and costs		(279	)		(267	)
Pension		(684	)		(753	)
Net unrealized gains on securities available-for-sale		0			(1,026	)
		(1,700	)		(2,809	)
Net deferred tax assets	$	8,047		$	2,266

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.