Income Taxes

12 Months Ended

Dec. 31, 2012

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 2009.

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, 2012 and 2011.

Net deferred tax assets consist of the following components as of December 31, 2012 and 2011:

	2012		2011
	(In Thousands)
Deferred tax assets:
Allowance for loan losses	$	4,843	$	4,934
Deferred compensation	553		527
Investment in affiliate	—		406
Interest rate swap	157		107
Impairment	—		1,325
Other real estate owned	873		696
Other	1,725		1,312
Total deferred tax assets	$	8,151	$	9,307
Deferred tax liabilities:
Deferred loan costs, net	$	114	$	328
Investment in affiliate	261		—
Securities available for sale	3,488		2,130
Property and equipment	293		285
Total deferred tax liabilities	$	4,156	$	2,743
Net deferred tax assets	$	3,995	$	6,564

The provision for income taxes charged to operations for the years ended December 31, 2012, 2011, and 2010, consists of the following:

	2012		2011		2010
	(In Thousands)
Current tax expense	$	759	$	825	$	611
Deferred tax expense (benefit)	1,207		525		(3,173		)
Total income tax expense (benefit)	$	1,966	$	1,350	$	(2,562	)

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, 2012, 2011, and 2010, due to the following:

	2012			2011			2010
	(In Thousands)
Computed "expected" tax expense (benefit)	$	2,874		$	2,145		$	(1,785	)
Increase (decrease) in income taxes resulting from:
Tax-exempt interest income	(975		)	(969		)	(1,026		)
Other, net	67			174			249
	$	1,966		$	1,350		$	(2,562	)