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Income Taxes
 12 Months Ended
Dec. 31, 2023
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 2020.

The net deferred tax asset at December 31, 2023 and 2022 consisted of the following components:

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

3,043

 

 

$

2,342

 

Reserve for unfunded commitments

 

 

101

 

 

 

14

 

Share-based compensation

 

 

327

 

 

 

222

 

Accrued postretirement benefits

 

 

18

 

 

 

21

 

Home equity origination costs

 

 

85

 

 

 

81

 

Accrued incentive benefit

 

 

89

 

 

 

—

 

Nonaccrual interest

 

 

75

 

 

 

48

 

Lease liabilities

 

 

977

 

 

 

1,045

 

Credit carryforward

 

 

1,689

 

 

 

648

 

Securities available for sale

 

 

4,790

 

 

 

5,440

 

Other

 

 

25

 

 

 

26

 

 

 

$

11,219

 

 

$

9,887

 

Deferred tax liabilities:

 

 

 

 

 

 

Property and equipment

 

$

853

 

 

$

710

 

Right-of-use assets

 

 

921

 

 

 

1,001

 

Loan servicing rights

 

 

32

 

 

 

144

 

 

 

$

1,806

 

 

$

1,855

 

Net deferred tax asset

 

$

9,413

 

 

$

8,032

 

 

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, 2023 and 2022 consisted of the following components:

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Current tax expense

 

$

2,785

 

 

$

3,236

 

Deferred tax (benefit)

 

 

(1,509

)

 

 

(86

)

 

 

$

1,276

 

 

$

3,150

 

 

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, 2023 and 2022.

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Statutory federal corporate tax amount

 

$

2,232

 

 

$

3,711

 

Tax-exempt interest (income)

 

 

(76

)

 

 

(81

)

Officer insurance (income)

 

 

(134

)

 

 

(131

)

Net tax credits

 

 

(756

)

 

 

(353

)

Other, net

 

 

10

 

 

 

4

 

 

$

1,276

 

 

$

3,150

 

 

The effective tax rates were 12.00% and 17.83% for years ended December 31, 2023 and 2022, respectively. The effective tax rates were 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.