Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

Note 10. Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and the state of Virginia and various other states.  With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years prior to 2008.

The Company believes it is more likely than not that the benefit of deferred tax assets will be realized.  Consequently, no valuation allowance for deferred tax assets is deemed necessary at December 31, 2011 and 2010.

Net deferred tax assets consist of the following components as of December 31, 2011 and 2010:

	2011		2010
	(In Thousands)
Deferred tax assets:
Allowance for loan losses	$	4,934	$	4,684
Deferred compensation	527		502
Investment in affiliate	406		905
Accrued pension costs	-		227
Minimum pension adjustment	-		80
Interest rate swap	107		-
Securities available for sale	-		548
Other-than-temporary impairment	1,325		1,316
Other real estate owned	696		714
Other	1,312		1,480
Total deferred tax assets	$	9,307	$	10,456
Deferred tax liabilities:
Deferred loan costs, net	$	328	$	365
Securities available for sale	2,130		-
Interest rate swap	-		106
Property and equipment	285		352
Total deferred tax liabilities	$	2,743	$	823
Net deferred tax assets	$	6,564	$	9,633

The provision for income taxes charged to operations for the years ended December 31, 2011, 2010, and 2009, consists of the following:

	2011		2010			2009
	(In Thousands)
Current tax expense	$	825	$	611		$	772
Deferred tax expense (benefit)	525		(3,173		)	(708		)
Total income tax expense (benefit)	$	1,350	$	(2,562	)	$	64

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2011, 2010, and 2009, due to the following:

	2011			2010			2009
	(In Thousands)
Computed "expected" tax expense (benefit)	$	2,145		$	(1,785	)	$	1,219
Increase (decrease) in income taxes resulting from:
Tax-exempt interest income	(969		)	(1,026		)	(1,086		)
Other, net	174			249			(69		)
	$	1,350		$	(2,562	)	$	64