Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 11 – Income Taxes

The components of the provision for income taxes are as follows:

Year ended December 31,	2013		2012
Current Federal income taxes	$	2,134	$	3,018
Deferred Federal income taxes		212		(409	)
Net provision	$	2,346	$	2,609

At December 31, 2013 and 2012, the tax effects of temporary differences that represent the significant portion of deferred tax assets and liabilities are as follows:

December 31,	2013		2012
Deferred tax assets
Allowance for loan losses	$	3,035	$	3,322
Net unrealized holding losses on investment securities available-for-sale		1,456		-
Impaired securities		546		632
Non-credit OTTI on investment securities available-for-sale		302		335
Non-accrual interest income		569		426
OREO expenses		41		58
Deferred rent		55		45
Deferred revenue		33		40
Incurred but not reported (IBNR) medical expense		24		20
Other		13		26
Total deferred tax assets		6,074		4,904
Deferred tax liabilities
Depreciation		231		258
Mortgage servicing rights		176		152
Net unrealized holding gains on investment securities available-for-sale		-		2,630
Prepaid expenses		149		185
Other		-		2
Total deferred tax liabilities		556		3,227
Net deferred tax asset	$	5,518	$	1,677

The ability to realize deferred tax assets is dependent upon a variety of factors, including the generation of future taxable income, the existence of taxes paid and recoverable, the reversal of deferred tax liabilities and tax planning strategies. Based upon these and other factors, management believes it is more likely than not that QNB will realize the benefits of the above deferred tax assets. The net deferred tax asset is included in other assets on the consolidated balance sheet.

A reconciliation of the tax provision on income before taxes computed at the statutory rate of 34% and the actual tax provision was as follows:

Year ended December 31,	2013						2012
	Dollar			%			Dollar			%
Provision at statutory rate	$	3,651			34.0	%	$	4,007			34.0	%
Tax-exempt interest and dividend income		(1,249	)		(11.7	)		(1,341	)		(11.4	)
Bank-owned life insurance		(109	)		(1.0	)		(113	)		(1.0	)
Stock-based compensation expense		24			0.2			25			0.2
Other		29			0.3			31			0.3
Total provision	$	2,346			21.8	%	$	2,609			22.1	%