Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 9. Income Taxes

The Company files income tax returns with the United States of America, the Commonwealth of Virginia, West Virginia, Maryland, Florida, and North Carolina. With few exceptions, the Company is no longer subject to federal, state, or local income tax examinations for years prior to 2022.

The net deferred tax asset at December 31, 2025 and 2024 consisted of the following components:

	December 31,
	2025		2024
	(in thousands)
Deferred tax assets:
Allowance for credit losses	$	3,299	$	3,156
Reserve for unfunded commitments		70		106
Share-based compensation		341		306
Accrued postretirement benefits		23		21
Home equity origination costs		99		95
Nonaccrual interest		148		20
Lease liabilities		2,120		2,054
Credit carryforward		682		1,033
Securities available for sale		1,397		4,956
Total deferred tax assets	$	8,179	$	11,747
Deferred tax liabilities:
Property and equipment	$	805	$	709
Right-of-use assets		2,032		1,988
Loan servicing rights		137		68
Total deferred tax liabilities	$	2,974	$	2,765
Net deferred tax asset	$	5,205	$	8,982

The Company has not recorded a valuation allowance for deferred tax assets because management believes that it is more likely than not that they will be ultimately realized.

Pretax income from continuing operations was as follows for the year ended December 31, 2025:

	December 31,
	2025
	(in thousands)
Domestic	$	9,925
Foreign		—
Total	$	9,925

Income tax expense from continuing operations for the years ended December 31, 2025 and 2024 consisted of the following components:

	December 31,
	2025			2024
	(in thousands)
Current tax expense
Federal	$	1,313		$	2,824
State
Maryland		121			127
Other States		56			7
Foreign1		—
Deferred tax accrual (benefit)
Federal		298			600
State
Maryland		(52	)		—
Other States		(25	)		—
Foreign1		—
Total	$	1,711		$	3,558

(1)Disclosure of foreign tax is required for 2025 as a result of the adoption of ASU 2023-09, on a prospective basis.

The following tables reconcile income tax expense to the statutory federal corporate income tax amount, which was calculated by applying the federal corporate income tax rate to pre-tax income for the years ended December 31, 2025 and 2024:

	2025
	Amount			Percent
	(dollars in thousands)
Federal statutory income tax	$	2,084			21.0	%
Effect of:
State income taxes, net of federal effect 1		(22	)		-0.22	%
Foreign tax effects		—			0.00	%
Tax credits:
Qualified affordable housing projects		10			0.10	%
Rehabilitation programs		(27	)		-0.28	%
Nontaxable or nondeductible items:
Tax-exempt interest income		(77	)		-0.78	%
Officer insurance income		(234	)		-2.36	%
Other, net		(23	)		-0.23	%
Effective tax rate	$	1,711			17.23	%

(1)State taxes in Maryland made up the majority (greater than 50 percent of the tax effect in this category).

	December 31, 2024
	(in thousands)
Federal statutory income tax	$	3,969
Effect of:
Tax-exempt interest income		(78	)
Officer insurance income		(404	)
Net tax credits		(53	)
Other, net		124
Total	$	3,558

The effective tax rates were 17.23% and 18.82% for the years ended December 31, 2025 and 2024, respectively, which were impacted by the recognition of tax-exempt life insurance income, tax-exempt interest income, qualified rehabilitation credits, and affordable housing credits. Qualified affordable housing project investments are further discussed in Note 25 to the Consolidated Financial Statements.

Income taxes paid during the year ended December 31, 2025 were as follows:

	December 31,
	2025
	(in thousands)
Federal	$	1,853
State and Local:
Maryland		131
Other		30
Total	$	2,014

Income taxes paid during the year ended December 31, 2024 totaled $80 thousand.