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Income Taxes
 12 Months Ended
Dec. 31, 2024
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 2021.

The net deferred tax asset at December 31, 2024 and 2023 consisted of the following components:

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

3,156

 

 

$

3,043

 

Reserve for unfunded commitments

 

 

106

 

 

 

101

 

Share-based compensation

 

 

306

 

 

 

327

 

Accrued postretirement benefits

 

 

21

 

 

 

18

 

Home equity origination costs

 

 

95

 

 

 

85

 

Accrued incentive benefit

 

 

—

 

 

 

89

 

Nonaccrual interest

 

 

20

 

 

 

75

 

Lease liabilities

 

 

2,054

 

 

 

977

 

Credit carryforward

 

 

1,033

 

 

 

1,689

 

Securities available for sale

 

 

4,956

 

 

 

4,790

 

Other

 

 

—

 

 

 

25

 

 

 

$

11,747

 

 

$

11,219

 

Deferred tax liabilities:

 

 

 

 

 

 

Property and equipment

 

$

709

 

 

$

853

 

Right-of-use assets

 

 

1,988

 

 

 

921

 

Loan servicing rights

 

 

68

 

 

 

32

 

 

 

$

2,765

 

 

$

1,806

 

Net deferred tax asset

 

$

8,982

 

 

$

9,413

 

 

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, 2024 and 2023 consisted of the following components:

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Current tax expense

 

$

2,958

 

 

$

2,785

 

Deferred tax accrual (benefit)

 

 

600

 

 

 

(1,509

)

 

 

$

3,558

 

 

$

1,276

 

 

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, 2024 and 2023.

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Statutory federal corporate tax amount

 

$

3,969

 

 

$

2,232

 

Tax-exempt interest (income)

 

 

(78

)

 

 

(76

)

Officer insurance (income)

 

 

(404

)

 

 

(134

)

Net tax credits

 

 

(53

)

 

 

(756

)

Other, net

 

 

124

 

 

 

10

 

 

$

3,558

 

 

$

1,276

 

 

The effective tax rates were 18.82% and 12.00% for years ended December 31, 2024 and 2023, respectively, which were impacted by the recognition of tax-exempt life insurance income and qualified rehabilitation credits. For the year ended December 31, 2023, tax credits on qualified affordable housing project investments also had an impact on the effective tax rate. Qualified affordable housing project investments are further discussed in Note 25 to the Consolidated Financial Statements.