Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

1

0

: Income Taxes

The Company files United States federal income tax returns, and Virginia, West Virginia and North Carolina state income tax returns. 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

2013.

Allocation of income tax expense between current and deferred portions is as follows:

	Years ended December 31,
	20 16		20 15		20 14
Current	$	3,934	$	4,730	$	5,105
Deferred expense		18		10		73
Total income tax expense	$	3,952	$	4,740	$	5,178

The following is a reconciliation of the “expected” income tax expense, computed by applying the U.S. Federal income tax rate of

35%

to income before income tax expense, with the reported income tax expense:

	Years ended December 31,
	20 16			20 15			20 14
Computed “expected” income tax expense	$	6,613		$	7,201		$	7,732
Tax-exempt interest income		(2,234	)		(2,381	)		(2,422	)
Nondeductible interest expense		92			101			102
Other, net		(519	)		(181	)		(234	)
Reported income tax expense	$	3,952		$	4,740		$	5,178

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

	December 31,
	20 16			20 15
Deferred tax assets:
Allowance for loan losses and unearned fee income	$	3,347		$	3,229
Valuation allowance on other real estate owned		237			188
Defined benefit plan		2,730			2,798
Deferred compensation and other liabilities		1,336			1,334
Discount accretion of securities		15			19
Net unrealized loss on securities available for sale		1,932			1,436
Total deferred tax assets	$	9,597		$	9,004
Deferred tax liabilities:
Fixed assets	$	(620	)	$	(620	)
Deposit intangibles		(1,573	)		(1,432	)
Defined benefit plan, prepaid portion		(1,345	)		(1,303	)
Total deferred tax liabilities		(3,538	)		(3,355	)
Net deferred tax asset s	$	6,059		$	5,649

The Company has determined that a valuation allowance for the gross deferred tax assets is not necessary at

December

31,

2016

and

2015

because the realization of all gross deferred tax assets can be supported by the amount of taxes paid during the carryback period available under current tax laws.