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Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2020

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 no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2017.

Net deferred tax assets consisted of the following components at December 31, 2020 and 2019 (in thousands):

	*2020*		*2019*
Deferred Tax Assets
Allowance for loan losses	$	1,572	$	1,036
Post-retirement benefits		101		46
Core deposit intangible		381		391
Unvested stock-based compensation		31		18
Limited partnership investments		8		13
Lease liability		72		67
Loan origination fees, net		328		71
	$	2,493	$	1,642
Deferred Tax Liabilities
Depreciation	$	663	$	741
Right of use asset		73		68
Unrealized gains on securities available for sale		813		192
Cash flow hedges		91		—
	$	1,640	$	1,001
Net deferred tax assets	$	853	$	641

The income tax expense for the years ended December 31, 2020 and 2019 consisted of the following (in thousands):

	*2020*			*2019*
Current tax expense	$	2,972		$	2,246
Deferred tax benefit		(923	)		(8	)
	$	2,049		$	2,238

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, 2020 and 2019, due to the following (in thousands):

	*2020*			*2019*
Computed tax expense at statutory federal rate	$	2,290		$	2,477
Increase in income taxes resulting from:
Other		10			14
Decrease in income taxes resulting from:
Tax-exempt interest and dividend income		(153	)		(157	)
Income from bank owned life insurance		(98	)		(96	)
	$	2,049		$	2,238

- 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.

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