Note 16. Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction and the Commonwealth of Virginia. The Commonwealth of Virginia does not charge an income tax for regulated banking institutions.
The expense (benefit) for income taxes consisted of the following (in thousands):
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Year ended December 31, |
2016 | 2015 | ||||||
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Current |
$ | 1,054 | $ | 303 | ||||
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Deferred |
(88 | ) | (490 | ) | ||||
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| $ | 966 | $ | (187 | ) | ||||
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The reasons for the differences between the statutory Federal income tax rates and the effective tax rates are summarized as follows:
| 2016 | 2015 | |||||||
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Statutory rate |
34.0 | % | 34.0 | % | ||||
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Increase (decrease) resulting from: |
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Tax exempt interest |
-6.1 | % | -116.9 | % | ||||
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Bank owned life insurance |
-2.7 | % | -46.9 | % | ||||
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Merger costs |
2.5 | % | — | |||||
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Other, net |
-0.1 | % | 25.3 | % | ||||
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| 27.6 | % | -104.5 | % | |||||
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The components of the net deferred tax assets and liabilities included in other assets are as follows (in thousands):
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December 31, |
2016 | 2015 | ||||||
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Deferred tax assets |
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Allowance for loan losses |
$ | 908 | $ | 985 | ||||
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Interest on non-accrual loans |
130 | 89 | ||||||
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Other real estate |
446 | 419 | ||||||
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Pension plan |
242 | 233 | ||||||
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Postretirement benefits |
184 | 227 | ||||||
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Unrealized losses (gains) on available-for-sale securities |
268 | (55 | ) | |||||
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Deferred compensation |
191 | 162 | ||||||
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Stock-based compensation |
30 | 31 | ||||||
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Other |
27 | 20 | ||||||
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Total deferred tax assets |
2,426 | 2,111 | ||||||
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Deferred tax liabilities |
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Depreciation |
(126 | ) | (171 | ) | ||||
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Amortization of goodwill |
(955 | ) | (955 | ) | ||||
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Net deferred loan fees and costs |
(133 | ) | (110 | ) | ||||
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Other |
(58 | ) | (64 | ) | ||||
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Total deferred tax (liabilities) |
(1,272 | ) | (1,300 | ) | ||||
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Net deferred tax assets |
$ | 1,154 | $ | 811 | ||||
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