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Income Taxes
 12 Months Ended
Dec. 31, 2021
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 and West Virginia. With few exceptions, the Company is no longer subject to federal, state, or local income tax examinations for years prior to 2018.

The net deferred tax asset at December 31, 2021 and 2020 consisted of the following components:

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

1,845

 

 

$

1,490

 

Share-based compensation

 

 

136

 

 

 

95

 

Accrued postretirement benefits

 

 

21

 

 

 

21

 

Home equity origination costs

 

 

67

 

 

 

50

 

Nonaccrual interest

 

 

65

 

 

 

76

 

Lease liabilities

 

 

1,110

 

 

 

864

 

Credit carryforward

 

 

973

 

 

 

—

 

Securities available for sale

 

 

46

 

 

 

—

 

Other

 

 

27

 

 

 

29

 

 

 

$

4,290

 

 

$

2,625

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Property and equipment

 

$

659

 

 

$

713

 

Right-of-use assets

 

 

1,079

 

 

 

843

 

Securities available for sale

 

 

—

 

 

 

867

 

 

 

$

1,738

 

 

$

2,423

 

Net deferred tax asset

 

$

2,552

 

 

$

202

 

 

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.

Income tax expense for the years ended December 31, 2021 and 2020 consisted of the following components:

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Current tax expense

 

$

3,203

 

 

$

2,607

 

Deferred tax (benefit)

 

 

(1,437

)

 

 

(471

)

 

 

$

1,766

 

 

$

2,136

 

 

The following table reconciles 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, 2021 and 2020.

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Statutory federal corporate tax amount

 

$

2,685

 

 

$

2,795

 

Tax-exempt interest (income)

 

 

(135

)

 

 

(193

)

Officer insurance (income)

 

 

(102

)

 

 

(57

)

Net tax credits

 

 

(686

)

 

 

(439

)

Other, net

 

 

4

 

 

 

30

 

 

 

$

1,766

 

 

$

2,136

 

 

The effective tax rates were 13.81% and 16.05% for years ended December 31, 2021 and 2020, respectively. The effective tax rate is impacted by tax credits on qualified affordable housing project investments as discussed in Note 25 to the Consolidated Financial Statements as well as qualified rehabilitation credits.