Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2022

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 2019.

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

	December 31,
	2022		2021
Deferred tax assets:
Allowance for loan losses	$	4,226	$	4,116
Nonaccrual loan interest		229		250
Other real estate owned valuation allowance		12		23
Deferred compensation		1,277		1,183
Acquisition accounting		1,174		1,258
Lease liability, net of right of use asset		16		18
Accrued pension liability		86		320
Net unrealized loss on cash flow hedges		—		588
Net unrealized loss on securities available for sale		15,339		469
Other		374		253
Total deferred tax assets		22,733		8,478
Deferred tax liabilities:
Depreciation		1,044		1,094
Core deposit intangibles		728		999
Deferred loan origination costs, net		42		72
Net unrealized gain on cash flow hedges		278		—
Other		179		6
Total deferred tax liabilities		2,271		2,171
Net deferred tax assets	$	20,462	$	6,307

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

	Year Ended December 31,
	2022			2021		2020
Current tax expense	$	9,319		$	10,905	$	7,777
Deferred tax (benefit) expense		(385	)		808		(640	)
Total income tax expense	$	8,934		$	11,713	$	7,137

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

	Year Ended December 31,
	2022			2021			2020
Expected federal tax expense	$	9,106		$	11,600		$	7,808
Nondeductible interest expense		10			8			31
Tax-exempt interest		(202	)		(198	)		(259	)
State income taxes		308			326			207
Other, net		(288	)		(23	)		(650	)
Total income tax expense	$	8,934		$	11,713		$	7,137