Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2019

Note

11.

Income Taxes

The Company is subject to U.S. federal and Virginia income tax as well as bank franchise tax in the state of Virginia. With few exceptions, the Company is

longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to

2016.

Net deferred tax assets consisted of the following components at

December 31, 2019

and

2018

(in thousands):

	2019		2018
Deferred Tax Assets
Allowance for loan losses	$	1,036	$	1,052
Unrealized losses on securities available for sale		—		481
Post-retirement benefits		46		—
Core deposit intangible		391		371
Unvested stock-based compensation		18		14
Limited partnership investments		13		14
Lease liability		67		—
Loan origination fees, net		71		58
	$	1,642	$	1,990
Deferred Tax Liabilities
Depreciation	$	741	$	682
Right of use asset		68		—
Discount accretion		—		1
Unrealized gains on securities available for sale		192		—
	$	1,001	$	683
Net deferred tax assets	$	641	$	1,307

The income tax expense for the years ended

December 31, 2019

and

2018

consisted of the following (in thousands):

	2019			2018
Current tax expense	$	2,246		$	2,152
Deferred tax (benefit) expense		(8	)		135
	$	2,238		$	2,287

The income tax expense 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, 2019

and

2018

, due to the following (in thousands):

	2019			2018
Computed tax expense at statutory federal rate	$	2,477		$	2,609
Increase in income taxes resulting from:
Other		14			12
Decrease in income taxes resulting from:
Tax-exempt interest and dividend income		(157	)		(158	)
Income from bank owned life insurance		(96	)		(176	)
	$	2,238		$	2,287