Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

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 2018.

The components of the Company's net deferred tax assets were as follows (dollars in thousands):

	December 31,
	2021		2020
Deferred tax assets:
Allowance for loan losses	$	4,116	$	4,636
Nonaccrual loan interest		250		507
Other real estate owned valuation allowance		23		124
Deferred compensation		1,183		159
Acquisition accounting adjustments		1,258		3,404
Lease liability, net of right of use asset		18		13
Accrued pension liability		320		447
Net unrealized loss on cash flow hedges		588		1,022
Net unrealized loss on securities available for sale		469		—
Other		253		318
Total deferred tax assets		8,478		10,630
Deferred tax liabilities:
Depreciation		1,094		1,352
Core deposit intangibles		999		1,315
Prepaid pension		—		213
Deferred loan origination costs, net		72		533
Net unrealized gain on securities available for sale		—		2,180
Other		6		32
Total deferred tax liabilities		2,171		5,625
Net deferred tax assets	$	6,307	$	5,005

The provision for income taxes consists of the following (dollars in thousands):

	Year Ended December 31,
	2021		2020			2019
Current tax expense	$	10,905	$	7,777		$	3,793
Deferred tax (benefit) expense		808		(640	)		1,068
Total income tax expense	$	11,713	$	7,137		$	4,861

A reconcilement of the "expected" federal income tax expense to reported income tax expense is as follows (dollars in thousands):

	Year Ended December 31,
	2021			2020			2019
Expected federal tax expense	$	11,600		$	7,808		$	5,411
Nondeductible interest expense		8			31			67
Tax-exempt interest		(198	)		(259	)		(478	)
State income taxes		326			207			149
Other, net		(23	)		(650	)		(288	)
Total income tax expense	$	11,713		$	7,137		$	4,861