XML 35 R21.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes
12 Months Ended
Dec. 31, 2018
Income Taxes [Abstract]  
Income Taxes



Note 12 - Income taxes



The Company files income tax returns in the U.S. federal jurisdiction and 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 2015.

Income tax expense attributable to income before income tax expense is summarized as follows:



 

 

 

 

 

 

 

 

December 31,



 

 

2018

 

2017



Current federal income tax expense

 

$1,461 

 

$1,674 



Deferred federal income tax (benefit) expense

 

(132)

 

764 



Income tax expense

 

$1,329 

 

$2,438 



Income tax expense differed from amounts computed by applying the U.S. Federal income tax rate of 21% to income before income tax expense as a result of the following:



 

 

2018

 

2017



Computed “expected” income tax expense

 

$1,393 

 

$1,822 



Increase (reduction) in income tax resulting from:

 

 

 

 



Non-taxable income

 

(73)

 

(127)



Non-deductible expenses

 

13 

 

18 



Other

 

(4)

 

(146)



Change in net deferred tax asset/liability due to rate change

 

-

 

871 



Income tax expense

 

$1,329 

 

$2,438 



The results for the year ended December 31, 2017 include the effect of the Tax Cuts and Jobs Act (the Act), which was signed into law on December 22, 2017.  Among other things, the Act permanently lowered the federal corporate income tax rate to 21% from the maximum rate prior to the passage of the Act of 35%, effective January 1, 2018.  As a result of the reduction of the federal corporate income tax rate, U.S. GAAP requires companies to re-measure their deferred tax assets and deferred tax liabilities, including those accounted for in accumulated other comprehensive income, as of the date of the Act’s enactment and record the corresponding effects in income tax expense in the fourth quarter of 2017.  As a result of the permanent reduction in the corporate income tax rate, the Company recognized a $871,000 reduction in the value of its net deferred tax asset and recorded a corresponding incremental income tax expense of $871,000 in the Company’s consolidated results of operations for the fourth quarter of 2017.  The Company’s evaluation of the effect of the Act was subject to refinement for up to one year after enactment.



Note 12 - Income taxes (continued)

The tax effects of temporary differences result in deferred tax assets and liabilities as presented below:



 

 

 

 

 



 

 

 



 

 

December 31,



 

 

2018

 

2017



Deferred tax assets

 

 

 

 



  Allowance for loan losses

 

$962 

 

$790 



  Unrealized losses on available-for-sale securities

 

596 

 

391 



  OREO

 

138 

 

100 



  Non-accrual interest

 

243 

 

263 



  Deferred Compensation

 

75 

 

70 



  Other

 

 

10 



Gross deferred tax assets

 

2,022 

 

1,624 



 

 

 

 

 



 

 

 

 

 



Deferred tax liabilities

 

 

 

 



  Depreciation

 

189 

 

130 



  Other

 

78 

 

76 



Gross deferred tax liabilities

 

267 

 

206 



Net deferred tax asset

 

$1,755 

 

$1,418