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Note 12 - Income Taxes
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 12. 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 2020.

 

Net deferred tax assets consisted of the following components at December 31, 2024 and 2023 (in thousands):

 

  

2024

  

2023

 

Deferred Tax Assets

        

Allowance for credit losses

 $3,641  $2,624 

Acquisition accounting adjustments, net

  450   420 

Post-retirement benefits

  333   214 

Core deposit intangible

  —   232 

Unvested stock-based compensation

  94   87 

Reserve for letter of credit losses

  18   44 

Limited partnership investments

  2   39 

Lease liability

  425   69 

Unrealized loss on securities available for sale

  5,534   5,495 

NOL carryover - acquired from Fincastle

  1,207   1,337 

Loan origination fees, net

  2,937   241 
  $14,641  $10,802 

Deferred Tax Liabilities

        

Depreciation

 $1,043  $638 

Right of use asset

  421   69 

Investment in partnerships

  70   — 

Core deposit intangible

  2,937   — 

Cash flow hedges

  565   523 
  $5,036  $1,230 

Net deferred tax assets

 $9,605  $9,572 

 

The income tax expense for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

 

  

2024

  

2023

 

Current tax expense

 $1,519  $2,580 

Deferred tax expense (benefit)

  (437)  (399)
  $1,082  $2,181 

 

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, 2024 and 2023, due to the following (in thousands):

 

  

2024

  

2023

 

Computed tax expense at statutory federal rate

 $1,690  $2,479 

Increase in income taxes resulting from:

        

Merger expenses

  240   — 

Other

  25   29 

Decrease in income taxes resulting from:

        

Tax-exempt interest and dividend income

  (102)  (156)

Bargain purchase gain

  (613)  — 

Income from bank owned life insurance

  (159)  (171)
  $1,082  $2,181