v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
Income Taxes Note 12 - Income taxes

The Company files income tax returns in the U.S. federal jurisdiction and the states of Virginia and North Carolina. 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 2022.

The Company’s pre-tax earnings are derived solely from domestic sources. The following table provides information on the components of income tax expense for the years ended December 31, 2025 and 2024.

Year Ended December 31,

($ in thousands)

2025

2024

Current tax expense (benefit):

Federal

$            2,279

$      1,957

State

-

(6)

Total current tax expense

$            2,279

$      1,951

Deferred tax expense (benefit):

Federal

(282)

(106)

State

126 

134 

Total deferred tax (benefit) expense

(156)

28 

Total income tax expense

$            2,123

$      1,979

The following table provides a reconciliation of tax expense computed at the statutory federal tax rate and the recorded tax expense (in dollars and percentages) for the years ended December 31, 2025 and 2024.

Year Ended December 31,

2025

2024

($ in thousands)

Amount

Percent

Amount

Percent

Tax at federal statutory rate

$            2,340

21%

$       2,084

21%

State income taxes, net of federal tax effect (1)

100

0.9

101

1.0

Nontaxable or nondeductible items

Appreciation in cash surrender value of life insurance

(162)

(1.5)

(151)

(1.5)

Tax-exempt interest income

(109)

(1.0)

(113)

(1.1)

Other

(46)

(0.4)

58

0.6

Income tax expense

$            2,123

19.0%

$       1,979

19.9%

(1)The State of Virginia made up the majority of the tax effect in this category.


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Note 12 - Income taxes (continued)

The following table provides information on the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024.

($ in thousands)

2025

2024

Deferred tax assets

Lease liabilities

$              703

$           825

Allowance for credit losses

1,355

1,479

Unfunded commitment liability

141

114

Unrealized losses on available-for-sale securities

3,971

6,091

Non-accrual interest

120

36

Net operating losses

207

283

Deferred compensation

1,311

1,117

Other

26

-

Gross deferred tax assets

$           7,834

$        9,945

Deferred tax liabilities

Right-of-use assets

613

729

Depreciation

140

173

Intangibles

141

86

Other

50

103

Gross deferred tax liabilities

944

1,091

Net deferred tax asset

$           6,890

$        8,854

At December 31, 2025, the Company had state net operating losses of $4,376, of which $2,019 will begin to expire in 2034, if not fully utilized.  The Company has recorded a deferred tax asset of $207 at December 31, 2025, which represents the tax effect of these carryforwards.

During the years ended December 31, 2025 and 2024, the Company made payments to tax authorities for income taxes as set forth in the table below.

Years Ended December 31,

($ in thousands)

2025

2024

Federal

$            2,340

$      1,850

Income taxes paid represents amounts paid (net of refunds received) to taxing authorities during the respective years, including payments for income taxes related to prior years and excluding payments for the current year that will be made in subsequent periods.

For the years ended December 31, 2025 and 2024, federal income taxes paid includes amounts related to current year estimated tax payments and prior year tax liabilities. No state income taxes were paid during 2025 or 2024, as available net operating loss carryforwards offset state taxable income in the jurisdictions where the Company files. State income taxes paid represents amounts paid to the Commonwealth of Virginia.