| Income Tax Disclosure [Text Block] |
Note 11. Income Taxes
The Company files tax returns in the U.S. federal jurisdiction and required states. With few exceptions, the Bank is no longer subject to tax examination by tax authorities for years prior to 2020.
The Commonwealth of Virginia assesses a Bank Franchise Tax on banks instead of a state income tax. The Bank Franchise Tax expense is reported in non-interest expense and the tax’s calculation is unrelated to taxable income.
The provision for income taxes consists of the following components:
| (Dollars in thousands) | | 2024 | | | 2023 | | | 2022 | |
| Current expense | | $ | 604 | | | $ | 6,430 | | | $ | 7,608 | |
| Deferred (benefit) | | | (4,528 | ) | | | (191 | ) | | | (894 | ) |
| Total | | $ | (3,924 | ) | | $ | 6,239 | | | $ | 6,714 | |
Income tax expense for the years ended December 31, 2024, 2023, and 2022 differed from the federal statutory rate applied to income before income taxes for the following reasons:
| | | Year ended December 31, | |
| (Dollars in thousands) | | 2024 | | | 2023 | | | 2022 | |
| Computed “expected” income tax expense | | $ | (2,921 | ) | | $ | 6,893 | | | $ | 7,012 | |
| Increase (decrease)in income taxes resulting from: | | | | | | | | | | | | |
| Tax exempt Interest | | | (112 | ) | | | (136 | ) | | | (200 | ) |
| BOLI Income | | | (250 | ) | | | (225 | ) | | | (211 | ) |
| Low Income Housing Investment amortization | | | 1,700 | | | | 386 | | | | 130 | |
| State Income Taxes | | | (279 | ) | | | 649 | | | | 637 | |
| Restricted Stock Adjustment | | | (36 | ) | | | (100 | ) | | | (119 | ) |
| Federal tax credits | | | (2,363 | ) | | | (1,317 | ) | | | (472 | ) |
| Other Adjustments | | | 337 | | | | 89 | | | | (63 | ) |
| Total | | $ | (3,924 | ) | | $ | 6,239 | | | $ | 6,714 | |
The tax effects of temporary differences result in deferred tax assets and liabilities as presented below:
| | | December 31, | |
| (Dollars in thousands) | | 2024 | | | 2023 | |
| Deferred tax assets: | | | | | | | | |
| Allowance for credit losses | | $ | 4,475 | | | $ | 3,798 | |
| Restricted stock | | | 625 | | | | 533 | |
| Net loan fees | | | 1,148 | | | | 1,253 | |
| Right-of-use liability | | | 1,490 | | | | 1,588 | |
| Accrued compensation | | | 354 | | | | 638 | |
| Unrealized losses on securities available-for-sale | | | 2,303 | | | | 2,240 | |
| Internally developed software costs | | | 3,612 | | | | — | |
| Other | | | 209 | | | | 320 | |
| Gross deferred tax assets | | | 14,216 | | | | 10,370 | |
| Deferred tax liabilities: | | | | | | | | |
| Depreciation | | | 110 | | | | 253 | |
| Prepaid expense | | | 16 | | | | 12 | |
| Right-of-use asset | | | 1,326 | | | | 1,429 | |
| Internally developed software costs | | | — | | | | 527 | |
| Other | | | 110 | | | | 215 | |
| Gross deferred tax liabilities | | | 1,562 | | | | 2,436 | |
| Net deferred tax asset | | $ | 12,654 | | | $ | 7,934 | |
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