Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 9: Income Taxes

The Company files United States federal income tax returns, and Virginia, West Virginia and North Carolina state income tax returns. 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. Allocation of income tax expense between current and deferred portions is as follows:

	Year ended December 31,
	2022			2021
Current	$	5,940		$	4,099
Deferred (benefit) expense		(109	)		152
Total income tax expense	$	5,831		$	4,251

The following reconciles the “expected” income tax expense, computed by applying the U.S. federal income tax rate of 21% to income before tax expense, with the reported income tax expense:

	Year ended December 31,
	2022			2021
Computed “expected” income tax expense	$	6,670		$	5,173
Tax-exempt interest income		(728	)		(763	)
Nondeductible interest expense		24			25
Other, net		(135	)		(184	)
Reported income tax expense	$	5,831		$	4,251

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

	December 31,
	2022			2021
Deferred tax assets:
Allowance for loan losses and unearned fee income	$	1,906		$	1,774
Valuation allowance on other real estate owned		248			186
Defined benefit pension plan		623			1,837
Deferred compensation and other liabilities		919			899
Net unrealized loss on securities available for sale		21,644			-
Lease accounting		303			327
SBA fees		-			9
Total deferred tax assets	$	25,643		$	5,032
Deferred tax liabilities:
Fixed assets	$	(463	)	$	(415	)
Goodwill		(1,228	)		(1,228	)
Defined benefit pension plan, prepaid portion		(2,013	)		(2,021	)
Net unrealized loss on securities available for sale		-			(759	)
Lease accounting		(297	)		(321	)
Discount accretion of securities		(84	)		(27	)
Total deferred tax liabilities		(4,085	)		(4,771	)
Net deferred tax assets (liabilities)	$	21,558		$	261

The Company determined that no valuation allowance for gross deferred tax assets was necessary at December 31, 2022 and 2021.