Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes [Abstract]

Income Taxes

Note 14 – Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and the states of Virginia and North Carolina.  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 components of the Company's net deferred tax assets (liabilities) were as follows:

(in thousands)	December 31,
	2013		2012
Deferred tax assets:
Allowance for loan losses	$	4,410	$	4,241
Nonaccrual loan interest		363		362
Other real estate owned expense		-		127
Other real estate owned valuation allowance		1,420		869
Deferred compensation		665		579
Loans		5,390		8,165
Other		543		889
Total deferred tax assets		12,791		15,232

Deferred tax liabilities:
Depreciation		1,021		1,055
Accretion of discounts on securities		210		147
Core deposit intangibles		1,105		1,631
Net unrealized gains on securities		1,927		5,277
Prepaid pension expense		656		265
Pension liability		570		1,186
Trust preferred fair value adjustment		687		723
Other		253		528
Total deferred tax liabilities		6,429		10,812
Net deferred tax assets	$	6,362	$	4,420

The provision for income taxes consists of the following:

(in thousands)	Years Ended December 31,
	2013			2012			2011
Taxes currently payable		$	4,030		$	736		$	1,857
Deferred tax expense			2,024			5,557			3,053
Total income tax expense		$	6,054		$	6,293		$	4,910

A reconcilement of the "expected" Federal income tax expense to reported income tax expense is as follows:

(in thousands)	Years Ended December 31,
	2013			2012			2011
Expected federal tax expense	$	7,630		$	7,805		$	5,768
Nondeductible interest expense		77			97			83
Tax-exempt interest		(1,491	)		(1,545	)		(1,331	)
State income taxes		254			214			68
Other, net		(416	)		(278	)		322
Total income tax expense	$	6,054		$	6,293		$	4,910