Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 11 - Income Taxes

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

Year ended December 31,	2021		2020			2019
Current Federal income taxes	$	3,629	$	2,569		$	2,375
Current state income taxes		219		52			156
Deferred Federal income taxes (benefits)		21		(53	)		207
Deferred state income taxes (benefits)		92		(6	)		112
Net provision	$	3,961	$	2,562		$	2,850

At December 31, 2021 and 2020, the tax effects of temporary differences that represent the significant portion of deferred tax assets and liabilities are as follows:

December 31,	2021		2020
Deferred tax assets
Allowance for loan losses	$	2,349	$	2,273
Net unrealized holding losses on investment    securities available-for-sale		994		—
Non-accrual interest income		32		39
Leasing liability		788		965
Deferred revenue		23		46
Incurred but not reported medical expense		31		34
Bonus		248		154
Other		54		90
Total deferred tax assets		4,519		3,601
Deferred tax liabilities
Deferred loan income		430		419
Depreciation		295		406
Mortgage servicing rights		110		112
Net unrealized holding gains on investment    securities available-for-sale		—		1,502
Fair value adjustment on equity securities		286		19
Prepaid expenses		214		166
Right of use asset		719		894
Other		16		17
Total deferred tax liabilities		2,070		3,535
Net deferred tax asset	$	2,449	$	66

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.

A reconciliation of the tax provision on income before taxes computed at the statutory rates of 21 % for 2021, 2020 and 2019 and the actual tax provision was as follows:  

Year ended December 31,	2021						2020						2019
	Dollar			%			Dollar			%			Dollar			%
Provision at statutory rate	$	4,295			21.0	%	$	3,075			21.0	%	$	3,193			21.0	%
Tax-exempt interest and dividend income		(527	)		(2.6	)		(518	)		(3.5	)		(538	)		(3.5	)
Bank-owned life insurance		(104	)		(0.5	)		(62	)		(0.4	)		(61	)		(0.4	)
Stock-based compensation expense		19			0.1			20			0.1			20			0.1
State income tax		245			1.2			35			0.2			205			1.3
Other		33			0.2			12			0.1			31			0.2
Net provision	$	3,961			19.4	%	$	2,562			17.5	%	$	2,850			18.7	%