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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes | Note 10. Income Taxes The Company is subject to U.S. federal income tax as well as bank franchise tax in the state of Virginia. 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 2008. Net deferred tax assets consisted of the following components at December 31, 2011 and 2010:
|  | (in thousands) |
|  | 2011 |  |  | 2010 |
Deferred Tax Assets |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 4,399 |  |  | $ | 5,452 |
Allowance for other real estate owned |  |  | 949 |  |  |  | 1,136 |
Interest on non-accrual loans |  |  | 218 |  |  |  | 194 |
Unfunded pension liability |  |  | 740 |  |  |  | 434 |
Split dollar liability |  |  | 398 |  |  |  | 363 |
Gain on other real estate owned |  |  | 1,085 |  |  |  | 710 |
Other |  |  | 236 |  |  |  | 124 |
|  | $ | 8,025 |  |  | $ | 8,413 |
Deferred Tax Liabilities |  |  |  |  |  |  |  |
Depreciation |  | $ | 728 |  |  | $ | 713 |
Prepaid pension |  |  | — |  |  |  | 92 |
Securities available for sale |  |  | 1,057 |  |  |  | 445 |
Discount accretion |  |  | 10 |  |  |  | 9 |
Loan origination costs, net |  |  | 105 |  |  |  | 124 |
|  | $ | 1,900 |  |  | $ | 1,383 |
Valuation allowance |  |  | 6,125 |  |  |  | — |
Net deferred tax assets |  | $ | — |  |  | $ | 7,030 |
As of December 31, 2011, the Company had recorded a full valuation allowance on its net deferred tax assets (DTAs). The realization of DTAs is assessed and a valuation allowance is recorded if it is "more likely than not" that all or a portion of the deferred tax asset will not be realized. "More likely than not" is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed. In assessing the need for a valuation allowance, the Company considered all available evidence about the realization of DTAs, both positive and negative, that could be objectively verified. The Company's positive evidence considered in support of its use of forecasted future earnings as a source of realizing DTAs was insufficient to overcome the negative evidence associated with its pre-tax cumulative loss position. Management's assessment is primarily dependent on historical taxable income and projections of future taxable income, which are directly related to the Company's core earnings capacity and its prospects to generate core earnings in the future. Projections of core earnings and taxable income are inherently subject to uncertainty and estimates that may change given an uncertain economic outlook, banking industry conditions and other factors. At December 31, 2011, management concluded that it is more likely than not that its full net deferred tax assets will not be realized and established a valuation allowance of $6.1 million. The provision (benefit) for income taxes for the years ended December 31, 2011, 2010 and 2009 consisted of the following:
|  | (in thousands) |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Current tax expense (benefit) |  | $ | (2,607 | ) |  | $ | 1,780 |  |  | $ | 2,605 |
Deferred tax expense (benefit) |  |  | 6,442 |  |  |  | (3,986 | ) |  |  | (1,850 | )
|  | $ | 3,835 |  |  | $ | (2,206 | ) |  | $ | 755 |
The income tax provision (benefit) differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2011, 2010 and 2009, due to the following:
|  | (in thousands) |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Computed tax expense (benefit) at statutory federal rate |  | $ | (2,423 | ) |  | $ | (1,975 | ) |  | $ | 988 |
Increase in income taxes from deferred tax valuation allowance |  |  | 6,442 |  |  |  | — |  |  |  | — |
Decrease in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt interest and dividend income |  |  | (186 | ) |  |  | (197 | ) |  |  | (202 | )
Other |  |  | 2 |  |  |  | (34 | ) |  |  | (31 | )
|  | $ | 3,835 |  |  | $ | (2,206 | ) |  | $ | 755 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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