Business
QNB Corp. Reports Earnings for First Quarter 2026
QNB Corp. Reports Earnings for First Quarter
About this update from Qnb Corp.
QUAKERTOWN, Pa. , April 28, 2026 (GLOBE NEWSWIRE) -- QNB Corp. (the “Company” or “QNB”) (OTCQX: QNBC), the parent company of QNB Bank (the “Bank”), reported net income for the first quarter of 2026 of $2,765,000 or $0.73 per share on a diluted basis. This compares to net income of $2,578,000 , or $0.69 per share on a diluted basis, for the same period in 2025. For the three-month period of 2026, net income included after-tax merger-related cost of $754,000 . The merger-related costs are significant one-time costs and are not normal recurring operating expenses. Adjusted diluted earnings per share excluding the impact of the merger-related cost for the three-month period of 2026 was $0.93 * . For the first quarter ended March 31, 2026 , the annualized rate of return on average assets (ROAA) and average shareholders’ equity (ROAE) was 0.59% and 8.40%, respectively, compared with 0.56% and 9.73%, respectively, for the first quarter 2025. ROAA, excluding the impact of the merger-related cost, for the three-month period of 2026 was 0.75% * . ROAE, excluding the impact of the merger-related cost, for the three-month period of 2026 was 10.69% * . * QNB uses non-GAAP financial information in its analysis of performance. These non-GAAP ratios and calculations provide a better understanding of ongoing operations and comparability with prior period results by showing the effects of significant gains and charges in the periods presented. QNB believes that investors may use these non-GAAP measures to analyze QNB’s financial performance without the impact of unusual items or events that may obscure trends. This non-GAAP data is not a substitute for GAAP results and should be considered in addition to results prepared in accordance with GAAP. Non-GAAP financial measures include risks as companies might calculate these measures differently and persons might disagree as to the appropriateness of items included in these measures. Please see attached table "Impact of Merger-Related Costs--GAAP to Non-GAAP Measure Reconciliation." The merger-related expenses relate to the previously announced acquisition of Victory Bancorp, Inc , a highly complementary community banking franchise headquartered in Limerick, Pennsylvania . This strategic combination brings together two relationship-focused institutions with shared values, similar operating cultures, and strong community ties. The transaction officially closed on April 1, 2026 , creating a franchise with nearly $2.4 billion in assets and expanding our presence deeper into Montgomery County . The operating performance of the Bank, a wholly-owned subsidiary of QNB Corp. , improved for the quarter ended March 31, 2026 , in comparison with the same period in 2025, due primarily to improvement in the interest margin causing a $1,849,000 increase in net interest income and a $229,000 increase in non-interest income; this was partly offset by an increase in non-interest expense of $1,500,000 of which $622,000 was due to merger-related costs. The change in contribution from QNB Corp. for the quarter ended March 31, 2026 , compared with the same period in 2025, is primarily due to a decrease in net interest income of $27,000 , related to the subordinated debt issuance in 2024, and an increase in non-interest expense of $281,000 , primarily due to merger-related expenses of $266,000 . The following table presents disaggregated net income (loss): Three months ended, 3/31/2026 3/31/2025 Variance QNB Bank $ 3,759,000 $ 3,292,000 $ 467,000 QNB Corp (994,000 ) (714,000 ) (280,000 ) Consolidated net income $ 2,765,000 $ 2,578,000 $ 187,000 Total assets as of March 31, 2026 were $1,923,123,000 compared with $1,906,005,000 at December 31, 2025 . Loans receivable increased $20,699,000 , or 1.6%, to $1,282,773,000 . Total deposits increased $10,920,000 , or 0.7%, to $1,653,431,000 . “We reported solid first-quarter earnings growth driven by improved margins, higher net interest income, and continued loan growth,” said Dave Freeman , President and Chief Executive Officer. “While merger-related costs impacted reported earnings, our performance remained strong. The closing of the Victory Bancorp transaction ultimately strengthens our balance sheet, broadens our market presence, and positions QNB for sustainable growth in the periods ahead.” Net Interest Income and Net Interest Margin Net interest income for the quarter ended March 31, 2026 totaled $13,109,000 , an increase of $1,572,000 , from the same period in 2025. Net interest margin was 2.82% for the first quarter of 2026 and 2.51% for the same period in 2025, an increase of 31 basis points. The yield on earning assets was 4.81% for both the first quarter of 2026 and 2025. The cost of interest-bearing liabilities was 2.42% for the first quarter ended March 31, 2026 , compared with 2.76% for the same period in 2025, a decrease of 34 basis points. Average loan growth of $62,834,000 was primarily funded from payments on mortgage-backed securities and interest-earning deposits. Loan growth was primarily in commercial real estate, which comprised 47.8% of average earning assets in the first three months of 2026 compared with 45.5% for the same period in 2025, and the increases in both rates and volume in commercial real estate loans majorly contributed to the 14 basis-point increase in the yield on loans. The 47 basis point decrease in the rate on total borrowings was due to long-term debt maturities being replaced with lower cost short-term borrowings. The average rate paid on interest-bearing deposits decreased 35 basis points. Asset Quality, Provision for Credit Losses on Loans and Allowance for Credit Losses QNB recorded a $303,000 provision for credit losses on loans in the first quarter of 2026 compared to a $550,000 provision in the first quarter of 2025. QNB's allowance for credit losses on loans of $9,531,000 represents 0.74% of loans receivable at March 31, 2026 , compared to $9,215,000 , or 0.73% of loans receivable at December 31, 2025 . The one-basis point increase in the allowance for credit losses on loans was primarily due to reserves for collateral dependent loans. Net loan recoveries were $13,000 for the quarter ended March 31, 2026 , compared with charge-offs of $3,000 for the same period in 2025. Total non-performing loans, which represent loans on non-accrual status and loans past due 90 days or more and still accruing interest, were $9,614,000 , or 0.75% of loans receivable at March 31, 2026 , compared with $8,793,000 , or 0.70% of loans receivable at December 31, 2025 . The increase was primarily due to one retail customer. In cases where there is a collateral shortfall on non-accrual loans, specific reserves have been established based on updated collateral values even if the borrower continues to pay in accordance with the terms of the agreement. At March 31, 2026 , $7,563,000 , or approximately 79% of the loans classified as non-accrual, are current or past due less than 30 days. Commercial loans classified as substandard or doubtful loans totaled $38,845,000 at March 31, 2026 , compared with $39,516,000 at December 31, 2025 ; these were comprised primarily of commercial real estate loans. Non-Interest Income Total non-interest income was $1,801,000 for the first quarter of 2026 compared with $1,584,000 for the same period in 2025. Fees for service to customers increased $66,000 for the quarter ended March 31, 2026 , as overdraft fees increased $51,000 and other deposit-related fees increased $15,000 . ATM and debit card income increased $85,000 due to volume. Retail brokerage and advisory income increased $62,000 to $203,000 for the same period. Other non-interest income increased $14,000 for the same period due to an increase in Merchant fees of $7,000 and an increase in bank-owned life insurance of $5,000 . Non-Interest Expense Total non-interest expense was $11,138,000 for the first quarter of 2026 compared with $9,369,000 for the same period in 2025. Excluding pre-tax merger-related costs of $888,000 , noninterest expense increased $881,000 or 9.4% for the first quarter of 2026, compared to the same period in 2025. Salaries and benefits expense increased $584,000 , or 11.6%, to $5,616,000 when comparing for the first quarter of 2026, compared to the same period in 2025. Salary expense and related payroll taxes increased $461,000 , or 10.6%, to $4,805,000 during the first quarter of 2026 compared to the same period in 2025, primarily due to bonus accruals and pay increases. Benefits expense increased $113,000 , or 36.2%, when comparing the two periods primarily due to increase in medical costs. Net occupancy and furniture and equipment expense increased $156,000 due to software maintenance costs. Other non-interest expense increased $141,000 , or 5.4%, when comparing first quarter of 2026 with the same period in 2025 due to an increase in third-party services of $152,000 related to information technology services and consultant expense and an increase in marketing expense of $169,000 ; partly offset by decreases in FDIC insurance premiums of $82,000 and bank shares tax of $62,000 . Income Taxes Provision for income taxes increased $83,000 to $707,000 in the first quarter of 2026 due to higher taxable income, compared with the same period in 2025. The effective tax rate for the quarter ended March 31, 2026 was 20.4% compared with 19.5% for the same period in 2025. The increase in the tax rate in 2026 was due to non-taxable merger-related costs. About the Company QNB Corp. is the holding company for QNB Bank , which is headquartered in Quakertown, Pennsylvania . QNB Bank currently operates twelve branches in Bucks , Lehigh and Montgomery Counties and offers commercial and retail banking services in the communities it serves. In addition, the Company provides securities and advisory services under the name of QNB Financial Services through a registered Broker/Dealer and Registered Investment Advisor, and title insurance as a member of Laurel Abstract Company LLC . More information about QNB Corp. and QNB Bank is available at QNBBank.com. Forward Looking Statement This press release may contain forward-looking statements as defined in the Private Securities Litigation Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. Such factors include the possibility that increased demand or prices for the Company’s financial services and products may not occur, changing economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in the Company’s filings with the Securities and Exchange Commission, including "Item lA. Risk Factors," set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 . You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release. Contacts: David W. Freeman Jeffrey Lehocky President & Chief Executive Officer Chief Financial Officer 215-538-5600 x-5619 215-538-5600 x-5716 [email protected] [email protected] QNB Corp. Consolidated Selected Financial Data (unaudited) (Dollars in thousands) Balance Sheet (Period End) 3/31/26 12/31/25 9/30/25 6/30/25 3/31/25 Assets $ 1,923,123 $ 1,906,005 $ 1,903,244 $ 1,884,828 $ 1,896,189 Cash and cash equivalents 56,603 50,297 66,331 66,471 81,557 Investment securities Debt securities, AFS 528,007 542,830 538,318 544,262 547,138 Loans held-for-sale 1,199 246 — 1,166 248 Loans receivable 1,282,773 1,262,074 1,246,529 1,218,539 1,212,162 Allowance for credit losses on loans (9,531 ) (9,215 ) (9,255 ) (9,169 ) (9,298 ) Net loans 1,273,242 1,252,859 1,237,274 1,209,370 1,202,864 Deposits 1,653,431 1,642,511 1,681,540 1,651,667 1,664,555 Demand, non-interest bearing 187,580 189,957 189,492 201,460 203,666 Interest-bearing demand, money market and savings 1,099,480 1,076,757 1,104,761 1,060,688 1,083,011 Time 366,371 375,797 387,287 389,519 377,878 Short-term borrowings 86,806 80,601 48,703 67,464 43,299 Long-term debt — — — — 30,000 Subordinated debt 39,318 39,268 39,218 39,168 39,118 Shareholders' equity 131,384 129,563 121,487 113,269 108,223 Asset Quality Data (Period End) Non-accrual loans $ 9,614 $ 8,793 $ 8,947 $ 8,947 $ 8,651 Loans past due 90 days or more and still accruing — — — — — Non-performing loans 9,614 8,793 8,947 8,947 8,651 Other real estate owned and repossessed assets — — — — — Non-performing assets $ 9,614 $ 8,793 $ 8,947 $ 8,947 $ 8,651 Allowance for credit losses on loans $ 9,531 $ 9,215 $ 9,255 $ 9,169 $ 9,298 Non-performing loans / Loans excluding held-for-sale 0.75 % 0.70 % 0.72 % 0.73 % 0.71 % Non-performing assets / Assets 0.50 % 0.46 % 0.47 % 0.47 % 0.46 % Allowance for credit losses on loans / Loans excluding held-for-sale 0.74 % 0.73 % 0.74 % 0.75 % 0.77 % QNB Corp. Consolidated Selected Financial Data (unaudited) (Dollars in thousands, except per share data) Three months ended, For the period: 3/31/26 12/31/25 9/30/25 6/30/25 3/31/25 Interest income $ 22,476 $ 23,812 $ 23,518 $ 23,110 $ 22,198 Interest expense 9,367 9,770 10,520 10,458 10,661 Net interest income 13,109 14,042 12,998 12,652 11,537 (Reversal of) provision for credit losses 300 (48 ) 93 (146 ) 550 Net interest income after provision for credit losses 12,809 14,090 12,905 12,798 10,987 Non-interest income: Fees for services to customers 513 533 521 485 447 ATM and debit card 741 835 776 724 656 Retail brokerage and advisory income 203 171 196 140 141 Net (loss) gain on sale of loans 8 — 41 4 18 Other 336 335 313 299 322 Total non-interest income 1,801 1,874 1,847 1,652 1,584 Non-interest expense: Salaries and employee benefits 5,616 5,730 5,248 5,251 5,032 Net occupancy and furniture and equipment 1,892 1,649 1,688 1,681 1,736 Merger-related expense 888 619 519.00 — — Other 2,742 2,696 2,727 2,630 2,601 Total non-interest expense 11,138 10,694 10,182 9,562 9,369 Income before income taxes 3,472 5,270 4,570 4,888 3,202 Provision for income taxes 707 1,289 922 1,005 624 Net income $ 2,765 $ 3,981 $ 3,648 $ 3,883 $ 2,578 Share and Per Share Data: Net income - basic $ 0.74 $ 1.07 $ 0.98 $ 1.05 $ 0.70 Net income - diluted $ 0.73 $ 1.06 $ 0.98 $ 1.04 $ 0.69 Book value $ 32.90 $ 34.65 $ 32.59 $ 30.46 $ 29.17 Cash dividends $ 0.39 $ 0.38 $ 0.38 $ 0.38 $ 0.38 Average common shares outstanding -basic 3,760,664 3,730,591 3,721,501 3,710,878 3,699,854 Average common shares outstanding -diluted 3,775,579 3,745,230 3,735,993 3,724,808 3,713,141 Selected Ratios: Return on average asset 0.59 % 0.83 % 0.76 % 0.83 % 0.56 % Return on average shareholders' equity 8.40 % 12.52 % 12.49 % 14.25 % 9.73 % Net interest margin (tax equivalent) 2.82 % 2.95 % 2.72 % 2.69 % 2.51 % Efficiency ratio (tax equivalent) 73.97 % 66.79 % 68.09 % 66.39 % 70.65 % Average shareholders' equity to total average assets 6.99 % 6.64 % 6.09 % 5.79 % 5.74 % Net loan (recoveries) charge-offs $ (13 ) $ (4 ) $ 12 $ (16 ) $ (3 ) Net loan (recoveries) charge-offs-annualized / Average loans excluding held-for-sale 0.00 % 0.00 % 0.00 % -0.01 % 0.00 % Balance Sheet (Average) Assets $ 1,909,962 $ 1,901,870 $ 1,904,529 $ 1,887,138 $ 1,872,950 Investment securities 596,894 604,727 612,204 621,128 614,329 Loans receivable 1,273,380 1,249,481 1,224,490 1,216,011 1,193,949 Deposits 1,638,840 1,671,921 1,678,118 1,647,990 1,635,629 Shareholders' equity 133,514 126,202 115,907 109,299 107,503 QNB Corp. (Consolidated) Average Balances, Rate, and Interest Income and Expense Summary (Tax-Equivalent Basis) Three Months Ended March 31, 2026 March 31, 2025 Average Average Average Average Balance Rate Interest Balance Rate Interest Assets Investment securities: U.S. Treasury $ 20,827 3.71 % $ 191 $ 20,155 4.38 % $ 217 U.S. Government agencies 75,969 1.18 224 75,960 1.18 224 State and municipal 104,524 2.31 603 105,256 2.86 754 Mortgage-backed and CMOs 324,895 1.91 1,548 363,641 2.43 2,208 Corporate debt securities and mutual funds 70,679 5.82 1,028 61,545 6.88 1,058 Total investment securities 596,894 2.41 3,594 626,557 2.85 4,461 Loans: Commercial real estate 910,923 5.99 13,444 857,600 5.71 12,069 Residential real estate 122,369 4.55 1,392 114,271 4.33 1,238 Home equity loans 76,534 5.83 1,099 67,973 6.41 1,074 Commercial and industrial 141,204 7.03 2,448 148,680 7.41 2,717 Consumer loans 2,932 7.91 57 3,446 7.68 65 Tax-exempt loans 19,637 4.85 235 18,795 4.15 192 Total loans, net of unearned income* 1,273,599 5.95 18,675 1,210,765 5.81 17,355 Other earning assets 37,100 3.86 354 47,641 4.44 522 Total earning assets 1,907,593 4.81 22,623 1,884,963 4.81 22,338 Cash and due from banks 12,896 13,226 Accumulated other comprehensive loss, net of tax (44,460 ) (59,988 ) Allowance for credit losses on loans (9,296 ) (8,739 ) Other assets 43,229 43,488 Total assets $ 1,909,962 $ 1,872,950 Liabilities and Shareholders' Equity Interest-bearing deposits: Interest-bearing demand $ 399,248 0.95 % 931 $ 380,293 1.01 % 944 Municipals 135,142 3.19 1,063 149,579 3.95 1,456 Money market 255,220 2.55 1,603 256,265 2.88 1,818 Savings 284,256 1.29 903 279,657 1.30 893 Time < $100 165,865 3.24 1,327 178,500 3.79 1,670 Time $100 through $250 150,480 3.53 1,311 154,125 4.25 1,613 Time > $250 59,038 3.64 530 48,785 4.31 518 Total interest-bearing deposits 1,449,249 2.15 7,668 1,447,204 2.50 8,912 Short-term borrowings 83,573 3.70 762 47,529 3.89 456 Long-term debt — — — 30,111 4.73 356 Subordinated debt 39,291 9.54 937 39,092 9.59 937 Total borrowings 122,864 5.61 1,699 116,732 6.08 1,749 Total interest-bearing liabilities 1,572,113 2.42 9,367 1,563,936 2.76 10,661 Non-interest-bearing deposits 189,591 185,992 Other liabilities 14,744 15,519 Shareholders' equity 133,514 107,503 Total liabilities and shareholders' equity $ 1,909,962 $ 1,872,950 Net interest rate spread 2.39 % 2.05 % Margin/net interest income 2.82 % $ 13,256 2.51 % $ 11,677 Tax-exempt securities and loans were adjusted to a tax-equivalent basis and are based on the Federal corporate tax rate of 21% Non-accrual loans and investment securities are included in earning assets. * Includes loans held-for-sale QNB Corp. Consolidated Selected Financial Data (unaudited) Impact of Merger-Related Costs--GAAP to Non-GAAP Measure Reconciliation (Dollars in thousands, except per share data) Three months ended, For the period: 3/31/2026 3/31/2025 Variance Net income (GAAP) $ 2,765 $ 2,578 $ 187 Merger-related costs 888 — 888 Income tax benefit (134 ) — (134 ) Merger-related costs, net of tax 754 — 754 Net income excluding impact of merger-related costs (Non-GAAP) $ 3,519 $ 2,578 $ 941 Share and Earnings Per Share (EPS) Data: Basic: EPS using Net income (GAAP) $ 0.74 $ 0.70 $ 0.04 EPS using Net income excluding impact of merger-related costs (Non-GAAP) $ 0.94 $ 0.70 $ 0.24 Fully-diluted: EPS using Net income (GAAP) $ 0.73 $ 0.69 $ 0.04 EPS using Net income excluding impact of merger-related costs (Non-GAAP) $ 0.93 $ 0.69 $ 0.24 Average common shares outstanding -basic 3,760,664 3,699,854 Average common shares outstanding -diluted 3,775,579 3,713,141 Selected Ratios: Return on Average Assets (ROAA): ROAA using Net income (GAAP) 0.59 % 0.56 % 3 bp ROAA using Net income excluding impact of merger-related costs (Non-GAAP) 0.75 % 0.56 % 19 bp Return on Average Equity (ROAE): ROAE using Net income (GAAP) 8.40 % 9.73 % -133 bp ROAE using Net income excluding impact of merger-related costs (Non-GAAP) 10.69 % 9.73 % 96 bp Efficiency Ratio: Efficiency Ratio (GAAP) 73.97 % 70.65 % 332 bp Efficiency Ratio excluding impact of merger-related costs (Non-GAAP) 68.07 % 70.65 % -258 bp Source: QNB Corp. 2026 GlobeNewswire, Inc., source Press Releases