Business
QNB Corp. Reports Earnings for Second Quarter 2026
QNB Corp. Reports Earnings for Second Quarter
About this update from Qnb Corp.
QUAKERTOWN, Pa., July 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 second quarter of 2026 of $3,015,000 or $0.60 per share on a diluted basis. The acquisition of Victory Bancorp, Inc. ("Victory"), a highly complementary community banking franchise headquartered in Limerick, Pennsylvania, was officially closed on April 1, 2026, creating a franchise with nearly $2.4 billion in assets and expanding our presence deeper into Montgomery County. This strategic combination brings together two relationship-focused institutions with shared values, similar operating cultures, and strong community ties. Results for the three and six months of 2026 include three months of post-merger activity related to the acquisition of Victory. Net income for the second quarter of 2026 included merger-related cost, net of tax, of $2,227,000. Excluding the impact of the merger-related costs, net income was $ 5,242,000 and adjusted diluted earnings per share was $1.05*. This compares to net income of $3,883,000, or $1.04 per share on a diluted basis, for the same period in 2025. For the six months ended June 30, 2026, QNB reported net income of $5,780,000, or $1.32 per share on a diluted basis. Net income included merger-related costs, net of tax, of $3,249,000. Excluding the impact of the merger-related cost, net income was $ 9,029,000 and adjusted diluted earnings per share was $2.06*. This compares to net income of $6,461,000, or $1.74 per share on a diluted basis, reported for the same period in 2025. The merger-related costs are significant one-time costs and are not normal recurring operating expenses. For the second quarter ended June 30, 2026, the annualized rate of return on average assets (ROAA) and average shareholders’ equity (ROAE) was 0.50% and 6.65%, respectively. Adjusted ROAA and ROAE, excluding the impact of the merger-related cost, for the three-month period of 2026 was 0.88% and 11.56%, respectively*. This compares with 0.83% and 14.25%, respectively, for the second quarter 2025. For the six months ended June 30, 2026, QNB reported ROAA and ROAE was 0.54% and 7.38%, respectively. Adjusted ROAA and ROAE, excluding the impact of the merger-related cost, for the six-month period of 2026 was 0.85% and 11.54%, respectively * . This compares with 0.69% and 12.02%, respectively, for the same period in 2025. * 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 operating performance of the Bank, a wholly-owned subsidiary of QNB Corp., included three months of post-merger activity and improved for the quarter ended June 30, 2026, in comparison with the same period in 2025, due primarily to improvement in the interest margin causing a $6,072,000 increase in net interest income and a $499,000 increase in non-interest income; this was partly offset by an increase in non-interest expense of $6,377,000 of which $2,677,000 was due to merger-related costs. The contribution from QNB Corp., which included three months of post-merger activity, for the quarter ended June 30, 2026, declined compared with the same period in 2025, primarily due to a decrease in net interest income of $373,000, related to the subordinated debt acquired in the acquisition, and an increase in non-interest expense of $509,000, primarily due to merger-related expenses of $407,000. The following table presents disaggregated net income (loss): Three months ended, Six months ended, 6/30/2026 6/30/2025 Variance 6/30/2026 6/30/2025 Variance QNB Bank $ 4,575,000 $ 4,679,000 $ (104,000 ) $ 8,334,000 $ 7,971,000 $ 363,000 QNB Corp (1,560,000 ) (796,000 ) (764,000 ) (2,554,000 ) (1,510,000 ) (1,044,000 ) Consolidated net income $ 3,015,000 $ 3,883,000 $ (868,000 ) $ 5,780,000 $ 6,461,000 $ (681,000 ) Adjusted Consolidated net income excluding impact of merger-related costs (Non-GAAP*) $ 5,242,000 $ 3,883,000 $ 1,359,000 $ 9,029,000 $ 6,461,000 $ 2,568,000 Total assets as of June 30, 2026 were $2,398,970,000 compared with $1,906,005,000 at December 31, 2025. Loans receivable increased to $1,716,599,000 and total deposits increased to $2,067,151,000. “Our second-quarter results reflect the strength of our core banking franchise and the successful completion of the Victory Bancorp acquisition,” said Dave Freeman, President and Chief Executive Officer. “While reported earnings were impacted by merger-related expenses, adjusted results demonstrated meaningful earnings growth driven by higher net interest income, improved net interest margin, and the addition of a quality loan and deposit portfolio. We are pleased with the early results of the integration and remain focused on delivering long-term value for our shareholders, customers, and communities.” Net Interest Income and Net Interest Margin Net interest income for the quarter ended June 2026 totaled $18,351,000, an increase of $5,699,000, from the same period in 2025. Tax-equivalent net interest margin was 3.16% for the second quarter of 2026 and 2.69% for the same period in 2025, an increase of 47 basis points. Tax-equivalent net interest margin was 3.00% for the six months ended June 30, 2026, compared with 2.60% for the same period in 2025. The yield on earning assets was 5.26% for the second quarter of 2026 compared to 4.90% for the second quarter of 2025, an increase of 36 basis points. For the six-month period ended June 30, 2026, the yield on earning assets was 5.06%, compared with 4.85% for the same period in 2025; an increase of 21 basis points. The cost of interest-bearing liabilities was 2.54% for the second quarter ended June 30, 2026, compared with 2.68% for the same period in 2025, a decrease of 14 basis points. For the six-month period ended June 30, 2026, the cost of interest-bearing liabilities was 2.49%, compared with 2.72% for the same period in 2025, a decrease of 23 basis points. Quarterly average loan growth of $493,981,000 was offset by an increase in average deposits of $426,776,000 an increase in subordinated debt of $14,850,000 and an increase in shareholders' equity of $72,612,000, primarily due to the acquisition as $408,379,000 in loans, $409,165,000 in deposits and $47,101,000 in equity were added upon the close of the Victory merger. Loan growth was primarily in commercial real estate, which comprised 54.4% of average earning assets in the second quarter 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 contributed to the 29 basis-point increase in the yield on loans. The average rate paid on interest-bearing deposits decreased 12 basis points. The ten basis point decrease in the rate on subordinated debt was due to volume. Asset Quality, Provision for Credit Losses on Loans and Allowance for Credit Losses QNB recorded a $218,000 provision for credit losses on loans in the second quarter of 2026 compared to a $145,000 reversal of provision in the second quarter of 2025. QNB recorded a $521,000 provision for credit losses on loans in the six months ended June 30, 2026 compared to a $406,000 provision in the same period of 2025. QNB added $3,020,00 in allowance for credit losses due to the acquisition. QNB's allowance for credit losses on loans of $12,770,000 represents 0.74% of loans receivable at June 30, 2026, compared to $9,215,000, or 0.73% of loans receivable at December 31, 2025. Net loan recoveries were $1,000 for the quarter ended June 30, 2026, compared with recoveries of $16,000 for the same period in 2025. Net recoveries for the six months ended June 30, 2026 were $14,000 compared with recoveries of $19,000 for the same period of 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 $10,418,000, or 0.61% of loans receivable at June 30, 2026, compared with $8,793,000, or 0.70% of loans receivable at December 31, 2025. The increase was primarily due to two commercial and 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 June 30, 2026, $7,832,000, or approximately 75% 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 $49,159,000 at June 30, 2026, compared with $39,516,000 at December 31, 2025, an increase of $9,937,000 which includes $6,475,000 of commercial real estate loans and $3,808,000 of commercial and industrial loans acquired. Non-Interest Income Total non-interest income for 2026 includes three months of impact from the acquisition. Noninterest income was $2,139,000 for the second quarter of 2026 compared with $1,652,000 for the same period in 2025; and $3,940,000 for the six months ended June 30, 2026 compared with $3,236,000 for the same period of 2025. The Bank also completed the exchange offer to convert its Visa B-2 shares to B-3 and C shares; the Bank subsequently converted one-third of the Visa C shares to Visa A shares and recorded a $268,000 unrealized gain. Non-interest income for the three- and six-months ended June 30, 2026 also included $96,000 of realized gains on the sales of investment securities and a $303,000 loss on the termination of an interest-rate swap acquired in the acquisition. Fees for services to customers increased $173,000 for the quarter ended June, 2026, as overdraft fees increased $44,000 and other deposit-related fees increased $127,000. ATM and debit card income increased $87,000. Retail brokerage and advisory income increased $8,000 for the same period. Other non-interest income increased $126,000 for the same period due to an increase in bank-owned life insurance of $52,000, an increase in letter of credit fees of $44,000 and an increase in gains on sales of loans of $32,000. Fees for services to customers increased $239,000 for the six months ended June, 2026, as overdraft fees increased $97,000 and other deposit-related fees increased $142,000. ATM and debit card income increased $172,000. Retail brokerage and advisory income increased $70,000 for the same six-month period. Other non-interest income increased $140,000 for the six-month period due to an increase in bank-owned life insurance of $57,000, an increase in letter of credit fees of $43,000 and an increase in gains on sales of loans of $22,000. Non-Interest Expense Total non-interest expense for 2026 includes three months of impact from the acquisition. Total non-interest expense was $16,436,000 for the second quarter of 2026 compared with $9,562,000 for the same period in 2025. Excluding pre-tax merger-related costs of $3,084,000, non-interest expense increased $3,790,000 for the second quarter of 2026, compared to the same period in 2025. Total non-interest expense was $27,574,000 for the six months ended June 30, 2026 compared with $18,931,000 for the same period in 2025. Excluding pre-tax merger-related costs of $3,972,000, non-interest expense increased $4,671,000 for the six months ended June 30, 2026, compared to the same period in 2025. Salaries and benefits expense increased $1,949,000 to $7,200,000 in the second quarter of 2026, compared to the same period in 2025. Salary expense and related payroll taxes increased $1,570,000 to $6,017,000 and benefits expense increased $379,000 to $1,183,000 when comparing the two periods. For the second quarter of 2026, net occupancy and furniture and equipment expense increased $508,000 to $2,189,000; software maintenance increased $291,000, rental expense increased $135,000 and other maintenance, utilities and costs increased $82,000. Other non-interest expense for the second quarter increased $1,333,000 due to an increase in third-party services of $405,000, core deposit amortization of $332,000, bank shares tax increased $205,000, business development cost increased $82,000, director fees increased $65,000, debit card expense increased $50,000, courier expense increased $36,000, FDIC insurance increased $33,000, communications and supplies increased $30,000, additional make-whole agreement reserve of $23,000 related the Visa stock exchange, regulatory assessments increased $22,000 and various other expenses increased a net total of $50,000. Six-month results for non-interest expense are similar to those discussed for the second quarter of 2026. Income Taxes Provision for income taxes decreased $188,000 to $817,000 in the second quarter of 2026 and decreased $105,000 to $1,524,000 for the six months ended June 30, 2026, due to lower taxable income, compared with the same periods in 2025. The effective tax rate increased for both the three- and six-month periods ended June 30, 2026 to 21.3% and 20.9%, respectively, from 20.6% and 20.1% for the same periods in 2025, respectively, due 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 fourteen branches in Bucks, Lehigh and Montgomery Counties along with two loan production offices in Montgomery and Berks Counties. The Bank offers commercial, small business, and personal customers banking services, borrowing solutions, and cash management tools in the communities they serve. 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) 6/30/26 3/31/26 12/31/25 9/30/25 6/30/25 Assets $ 2,398,970 $ 1,923,123 $ 1,906,005 $ 1,903,244 $ 1,884,828 Cash and cash equivalents 79,340 56,603 50,297 66,331 66,471 Investment securities Debt securities, AFS 516,978 528,007 542,830 538,318 544,262 Loans held-for-sale 395 1,199 246 — 1,166 Loans receivable 1,716,599 1,282,773 1,262,074 1,246,529 1,218,539 Allowance for credit losses on loans (12,770 ) (9,531 ) (9,215 ) (9,255 ) (9,169 ) Net loans 1,703,829 1,273,242 1,252,859 1,237,274 1,209,370 Deposits 2,067,151 1,653,431 1,642,511 1,681,540 1,651,667 Demand, non-interest bearing 266,120 187,580 189,957 189,492 201,460 Interest-bearing demand, money market and savings 1,367,300 1,099,480 1,076,757 1,104,761 1,060,688 Time 433,731 366,371 375,797 387,287 389,519 Short-term borrowings 75,428 86,806 80,601 48,703 67,464 Long-term debt — — — — — Subordinated debt 54,018 39,318 39,268 39,218 39,168 Shareholders' equity 183,514 131,384 129,563 121,487 113,269 Asset Quality Data (Period End) Non-accrual loans $ 10,418 $ 9,614 $ 8,793 $ 8,947 $ 8,947 Loans past due 90 days or more and still accruing — — — — — Non-performing loans 10,418 9,614 8,793 8,947 8,947 Other real estate owned and repossessed assets — — — — — Non-performing assets $ 10,418 $ 9,614 $ 8,793 $ 8,947 $ 8,947 Allowance for credit losses on loans $ 12,770 $ 9,531 $ 9,215 $ 9,255 $ 9,169 Non-performing loans / Loans excluding held-for-sale 0.61 % 0.75 % 0.70 % 0.72 % 0.73 % Non-performing assets / Assets 0.43 % 0.50 % 0.46 % 0.47 % 0.47 % Allowance for credit losses on loans / Loans excluding held-for-sale 0.74 % 0.74 % 0.73 % 0.74 % 0.75 % QNB Corp. Consolidated Selected Financial Data (unaudited) (Dollars in thousands, except per share data) Three months ended, Six months ended, For the period: 6/30/26 3/31/26 12/31/25 9/30/25 6/30/25 6/30/26 6/30/25 Interest income $ 30,631 $ 22,476 $ 23,812 $ 23,518 $ 23,110 $ 53,107 $ 45,308 Interest expense 12,280 9,367 9,770 10,520 10,458 21,647 21,119 Net interest income 18,351 13,109 14,042 12,998 12,652 31,460 24,189 (Reversal of) provision for credit losses 222 300 (48 ) 93 (146 ) 522 404 Net interest income after provision for credit losses 18,129 12,809 14,090 12,905 12,798 30,938 23,785 Non-interest income: Fees for services to customers 658 513 533 521 485 1,171 932 ATM and debit card 811 741 835 776 724 1,552 1,380 Retail brokerage and advisory income 148 203 171 196 140 351 281 Net gain on sale of securities 96 — — — — 96 — Net unrealized gain on equity securities 268 — — — — 268 — Net loss on interest-rate swap termination (303 ) — — — — (303 ) — Net (loss) gain on sale of loans 36 8 — 41 4 44 22 Other 425 336 335 313 299 761 621 Total non-interest income 2,139 1,801 1,874 1,847 1,652 3,940 3,236 Non-interest expense: Salaries and employee benefits 7,200 5,616 5,730 5,248 5,251 12,816 10,283 Net occupancy and furniture and equipment 2,189 1,892 1,649 1,688 1,681 4,081 3,417 Merger-related expense 3,084 888 619.00 519.00 — 3,972 — Other 3,963 2,742 2,696 2,727 2,630 6,705 5,231 Total non-interest expense 16,436 11,138 10,694 10,182 9,562 27,574 18,931 Income before income taxes 3,832 3,472 5,270 4,570 4,888 7,304 8,090 Provision for income taxes 817 707 1,289 922 1,005 1,524 1,629 Net income $ 3,015 $ 2,765 $ 3,981 $ 3,648 $ 3,883 $ 5,780 $ 6,461 Share and Per Share Data: Net income - basic $ 0.61 $ 0.74 $ 1.07 $ 0.98 $ 1.05 $ 1.32 $ 1.74 Net income - diluted $ 0.60 $ 0.73 $ 1.06 $ 0.98 $ 1.04 $ 1.32 $ 1.74 Book value $ 36.87 $ 34.72 $ 34.65 $ 32.59 $ 30.46 $ 36.87 $ 30.46 Cash dividends $ 0.39 $ 0.39 $ 0.38 $ 0.38 $ 0.38 $ 0.78 $ 0.76 Average common shares outstanding -basic 4,968,665 3,760,664 3,730,591 3,721,501 3,710,878 4,368,001 3,705,396 Average common shares outstanding -diluted 5,001,610 3,775,579 3,745,230 3,735,993 3,724,808 4,390,153 3,718,513 Selected Ratios: Return on average asset 0.50 % 0.59 % 0.83 % 0.76 % 0.83 % 0.54 % 0.69 % Return on average shareholders' equity 6.65 % 8.40 % 12.52 % 12.49 % 14.25 % 7.38 % 12.02 % Net interest margin (tax equivalent) 3.16 % 2.82 % 2.95 % 2.72 % 2.69 % 3.00 % 2.60 % Efficiency ratio (tax equivalent) 79.90 % 73.97 % 66.79 % 68.09 % 66.39 % 77.39 % 68.43 % Average shareholders' equity to total average assets 7.59 % 6.99 % 6.64 % 6.09 % 5.79 % 7.33 % 5.77 % Net loan (recoveries) charge-offs $ (1 ) $ (13 ) $ (4 ) $ 12 $ (16 ) $ (14 ) $ (19 ) Net loan (recoveries) charge-offs-annualized / Average loans excluding held-for-sale 0.00 % 0.00 % 0.00 % 0.00 % -0.01 % 0.00 % 0.00 % Balance Sheet (Average) Assets $ 2,395,752 $ 1,909,962 $ 1,901,870 $ 1,904,529 $ 1,887,138 $ 2,154,199 $ 1,880,127 Investment securities 587,867 596,894 604,727 612,204 621,128 592,355 623,827 Loans receivable 1,709,599 1,273,380 1,249,481 1,224,490 1,216,011 1,492,696 1,213,173 Deposits 2,074,766 1,638,840 1,671,921 1,678,118 1,647,990 1,858,007 1,640,634 Shareholders' equity 181,911 133,514 126,202 115,907 109,299 157,846 108,406 QNB Corp. (Consolidated) Average Balances, Rate, and Interest Income and Expense Summary (Tax-Equivalent Basis) Three Months Ended June 30, 2026 June 30, 2025 Average Average Average Average Balance Rate Interest Balance Rate Interest Assets Federal funds sold $ 1,163 3.63 % $ 11 $ — 0.00 % $ — Investment securities: U.S. Treasury 20,812 3.68 191 21,032 4.24 223 U.S. Government agencies 75,972 1.18 224 75,963 1.18 224 State and municipal 104,927 2.35 617 105,090 2.88 756 Mortgage-backed and CMOs 318,255 1.95 1,551 354,349 2.46 2,184 Corporate debt securities and mutual funds 67,798 5.90 1,000 64,694 6.38 1,031 Equities 103 - - - - Total investment securities 587,867 2.44 3,583 621,128 2.84 4,418 Loans: Commercial real estate 1,276,622 6.31 20,097 863,096 5.94 12,775 Residential real estate 122,950 4.63 1,424 114,600 4.38 1,255 Home equity loans 102,997 6.13 1,575 70,666 6.41 1,130 Commercial and industrial 181,167 7.12 3,213 145,261 7.41 2,682 Consumer loans 5,328 7.59 101 3,355 7.70 65 Tax-exempt loans 21,242 5.31 281 19,347 4.23 205 Total loans, net of unearned income* 1,710,306 6.26 26,691 1,216,325 5.97 18,112 Other earning assets 45,439 4.05 429 61,355 4.45 680 Total earning assets 2,344,775 5.26 30,714 1,898,808 4.90 23,210 Cash and due from banks 28,030 13,806 Accumulated other comprehensive loss, net of tax (45,720 ) (59,921 ) Allowance for credit losses on loans (12,668 ) (9,376 ) Other assets 81,335 43,864 Total assets $ 2,395,752 $ 1,887,181 Liabilities and Shareholders' Equity Interest-bearing deposits: Interest-bearing demand $ 483,798 1.19 % 1,438 $ 376,735 0.94 % 888 Municipals 150,200 3.26 1,222 146,214 3.92 1,427 Money market 386,952 2.79 2,691 259,621 2.88 1,862 Savings 352,087 1.55 1,361 281,076 1.29 901 Time < $250 358,826 3.30 2,956 334,437 3.79 3,159 Time > $250 82,968 3.56 736 51,832 4.08 527 Total interest-bearing deposits 1,814,831 2.30 10,404 1,449,915 2.42 8,764 Short-term borrowings 69,006 3.46 596 70,942 3.90 689 Long-term debt — — — 5,495 4.79 67 Subordinated debt 53,991 9.48 1,280 39,141 9.58 938 Total borrowings 122,997 6.12 1,876 115,578 5.88 1,694 Total interest-bearing liabilities 1,937,828 2.54 12,280 1,565,493 2.68 10,458 Non-interest-bearing deposits 259,935 198,075 Other liabilities 16,078 14,314 Shareholders' equity 181,911 109,299 Total liabilities and shareholders' equity $ 2,395,752 $ 1,887,181 Net interest rate spread 2.72 % 2.22 % Margin/net interest income 3.16 % $ 18,434 2.69 % $ 12,752 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) Average Balances, Rate, and Interest Income and Expense Summary (Tax-Equivalent Basis) Six Months Ended June 30, 2026 June 30, 2025 Average Average Average Average Balance Rate Interest Balance Rate Interest Assets Federal funds sold $ 585 3.63 % $ 11 $ — 0.00 % $ — Investment securities: U.S. Treasury 20,819 3.70 382 20,596 4.31 440 U.S. Government agencies 75,971 1.18 448 75,962 1.18 448 State and municipal 104,727 2.33 1,220 105,172 2.87 1,510 Mortgage-backed and CMOs 321,556 1.93 3,099 358,969 2.45 4,392 Corporate debt securities and mutual funds 69,230 5.86 2,028 63,128 6.62 2,089 Equities 52 — — — — — Total investment securities 592,355 2.42 7,177 623,827 2.85 8,879 Loans: Commercial real estate 1,094,783 6.18 33,541 860,363 5.82 24,844 Residential real estate 122,661 4.59 2,816 114,436 4.36 2,493 Home equity loans 89,839 6.00 2,674 69,327 6.41 2,204 Commercial and industrial 161,296 7.08 5,661 146,962 7.41 5,399 Consumer loans 4,137 7.70 158 3,400 7.69 130 Tax-exempt loans 20,444 5.09 516 19,073 4.19 397 Total loans, net of unearned income* 1,493,160 6.13 45,366 1,213,561 5.89 35,467 Other earning assets 41,293 3.82 783 54,536 4.44 1,202 Total earning assets 2,127,393 5.06 53,337 1,891,924 4.85 45,548 Cash and due from banks 20,505 13,517 Accumulated other comprehensive loss, net of tax (45,094 ) (59,954 ) Allowance for credit losses on loans (10,992 ) (9,059 ) Other assets 62,387 43,699 Total assets $ 2,154,199 $ 1,880,127 Liabilities and Shareholders' Equity Interest-bearing deposits: Interest-bearing demand $ 441,756 1.08 % 2,369 $ 378,504 0.98 % 1,832 Municipals 142,712 3.23 2,285 147,887 3.93 2,883 Money market 321,450 2.69 4,294 257,952 2.88 3,680 Savings 318,359 1.43 2,264 280,371 1.29 1,794 Time < $250 337,703 3.34 5,594 333,536 3.89 6,442 Time > $250 71,069 3.59 1,266 50,317 4.19 1,045 Total interest-bearing deposits 1,633,049 2.23 18,072 1,448,567 2.46 17,676 Short-term borrowings 76,249 3.59 1,358 59,300 3.90 1,145 Long-term debt — — — 17,735 4.74 423 Subordinated debt 46,681 9.50 2,217 39,117 9.59 1,875 Total borrowings 122,930 5.86 3,575 116,152 5.98 3,443 Total interest-bearing liabilities 1,755,979 2.49 21,647 1,564,719 2.72 21,119 Non-interest-bearing deposits 224,958 192,067 Other liabilities 15,416 14,935 Shareholders' equity 157,846 108,406 Total liabilities and shareholders' equity $ 2,154,199 $ 1,880,127 Net interest rate spread 2.57 % 2.13 % Margin/net interest income 3.00 % $ 31,690 2.60 % $ 24,429 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, Six months ended, For the period: 6/30/2026 6/30/2025 Variance 6/30/2026 6/30/2025 Variance Net income (GAAP) $ 3,015 $ 3,883 $ (868 ) $ 5,780 $ 6,461 $ (681 ) Merger-related costs 3,084 — 3,084 3,972 — 3,972 Income tax benefit (857 ) — (857 ) (723 ) — (723 ) Merger-related costs, net of tax 2,227 — 2,227 3,249 — 3,249 Net income excluding impact of merger-related costs (Non-GAAP) $ 5,242 $ 3,883 $ 1,359 $ 9,029 $ 6,461 $ 2,568 Share and Earnings Per Share (EPS) Data: Basic: EPS using Net income (GAAP) $ 0.61 $ 1.05 $ (0.44 ) $ 1.32 $ 1.74 $ (0.42 ) EPS using Net income excluding impact of merger-related costs (Non-GAAP) $ 1.06 $ 1.05 $ 0.01 $ 2.06 $ 1.74 $ 0.32 Fully-diluted: EPS using Net income (GAAP) $ 0.60 $ 1.04 $ (0.44 ) $ 1.32 $ 1.74 $ (0.42 ) EPS using Net income excluding impact of merger-related costs (Non-GAAP) $ 1.05 $ 1.04 $ 0.01 $ 2.06 $ 1.74 $ 0.32 Average common shares outstanding -basic 4,968,665 3,710,878 4,368,001 3,705,396 Average common shares outstanding -diluted 5,001,610 3,724,808 4,390,153 3,718,513 Selected Ratios: Return on Average Assets (ROAA): ROAA using Net income (GAAP) 0.50 % 0.83 % -33 bp 0.54 % 0.69 % -15 bp ROAA using Net income excluding impact of merger-related costs (Non-GAAP) 0.88 % 0.83 % 5 bp 0.85 % 0.69 % 16 bp Return on Average Equity (ROAE): ROAE using Net income (GAAP) 6.65 % 14.25 % -760 bp 7.38 % 12.02 % -464 bp ROAE using Net income excluding impact of merger-related costs (Non-GAAP) 11.56 % 14.25 % -269 bp 11.54 % 12.02 % -48 bp Efficiency Ratio: Efficiency Ratio (GAAP) 79.90 % 66.39 % 1351 bp 77.39 % 68.43 % 896 bp Efficiency Ratio excluding impact of merger-related costs (Non-GAAP) 64.90 % 66.39 % -149 bp 66.24 % 68.43 % -219 bp