Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

Income Taxes

NOTE 12. Income Taxes

The components of income tax expense for the current and prior year-ends are as follows:

(dollars in thousands)	2022			2021
Current income tax expense	$	1,525		$	1,021
Deferred income tax (benefit) expense		(51	)		275
Reported income tax expense	$	1,474		$	1,296

A reconciliation of the expected federal income tax expense on income before income taxes with the reported income tax expense for the same periods follows:

	Years Ended December 31,
(dollars in thousands)	2022			2021
Expected tax expense	$	2,222		$	2,045
Low-income housing tax credit		(349	)		(361	)
Tax-exempt interest, net		(220	)		(192	)
Bank-owned life insurance		(191	)		(213	)
Other, net		12			17
Reported tax expense	$	1,474		$	1,296

The effective tax rates for 2022 and 2021 were 13.9% and 13.3%, respectively.

The components of the net deferred tax asset, included in other assets, are as follows:

(dollars in thousands)	2022		2021
Deferred tax assets:
Allowance for loan losses	$	2,211	$	2,072
Nonaccrual loans		9		10
Acquisition accounting		-		5
Net operating losses		574		609
Investments in pass-through entities		320		267
Securities available-for-sale		5,520		-
Stock awards		117		116
Other accrued compensation		498		386
Deferred loan fees and costs		217		270
Lease liability		343		219
Other		11		61
	$	9,820	$	4,015
Deferred tax liabilities:
Premises and equipment	$	606	$	481
Acquisition accounting		49		58
Right of use asset		332		214
Securities available-for-sale		-		445
		987		1,198
Net deferred tax assets	$	8,833	$	2,817

The Company files income tax returns in the U.S. federal jurisdiction and the Commonwealth 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 2019.