QNB CORP.
For the period ended Jun 30, 2025. Filed Aug 12, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 12, 2025
QNBC$47.46+1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0000950170-25-063961
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-12.
0000950170-25-106928
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 117 previous paragraphs and 138 current paragraphs.
47 unchanged; 66 reworded; 23 added; 4 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 9 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
In 2025, the Company changed its calculation of average assets and average equity to include the impact of accumulated other comprehensive income (loss), net of tax, to align its calculation with its peer group. Prior period information has been restated for this new calculation; specifically impacting the non-GAAP performance ratios for return on average assets and return on average equity.
Current report
Net interest income increased $2,060,000, or 19.45%, to $12,652,000 and increased $3,429,000, or 16.52%, to $24,189,000 for the three and six months ended June 30, 2025, respectively.
Current report
Net interest margin on a tax-equivalent basis increased 23 basis points for the quarter to 2.69% compared to 2.46% for the same period in 2024. Net interest margin on a tax-equivalent basis increased 17 basis points for the six months ended June 30, 2025 to 2.60% compared to 2.43% for the same period in 2024.
Current report
Non-interest expense increased $628,000 to $9,562,000 for the second quarter of 2025 and increased $1,164,000, to $18,931,000 for the six months ended June 30, 2025 compared with the same periods in 2024.
Current report
2024, primarily due to a 48-basis point increase in rate from 5.46% in 2024 to 5.94% and increased average balances of $61,405,000, or 7.7%.
Current report
For the six-month period ending June 30, 2025 average earning assets increased $148,576,000, or 8.5%, to $1,891,924,000, with average loans increasing 7.9% and average investment securities increasing 8.7%. Average total deposits increased $120,458,000, or 7.9%, to $1,640,634,000 for the six-month period ended June 30, 2025 compared to the same period in 2024. The net interest margin on a tax-equivalent basis was 2.60% for the six-month period ended June 30, 2025, a 17-basis point increase from the same period in 2024.
Current report
Total interest income on a tax-equivalent basis increased $5,355,000, or 13.3%, to $45,548,000, when comparing the six-month periods ended June 30, 2025 and June 30, 2024 due to an increase in volume and rate on loans. Interest income on loans increased $2,357,000 as a result of volume and increased $1,795,000 as a result of yields. The analysis of the six-month comparison periods is similar to what was described in the quarterly analysis.
Current report
The yield on earning assets increased from 4.64% to 4.85% for the six-month periods with the yield on loans up 29 basis points to 5.89%. QNB continues to experience pressure on yields due to competitive pressures on loan pricing.
Current report
Total interest expense increased $1,965,000 for the six-month period ended June 30, 2025 compared with the same period in 2024 attributable to an increase in volume. Average interest-bearing liabilities increased $139,090,000 and the average rate paid on interest-bearing deposits increased two basis points to 2.72% for the six-month period ended June 30, 2025 versus the same period in 2024. Average interest-bearing deposits increased $113,916,000 and the related interest expense decreased $100,000 for the six-month period ended June 30, 2025 versus the same period in 2024. The average balance of total short-term borrowings decreased $10,612,000 primarily due to reductions in customer repurchase agreements and FRB borrowings, partly offset by an increase in FHLB borrowings of $40,858,000. During the first quarter of 2023, QNB borrowed $50,000,000 from the FRB under its Bank Term Funding Program and locked in a rate of 4.39%; there were no pre-payment penalties. The FRB borrowings were paid off during the first quarter of 2024; there was an average balance of $20,055,000 for the six-month period ended June 30, 2024 compared to no average balance for the same period in 2025. QNB invested proceeds from the issuance of subordinated debt and deposit growth into loans and investments.
Current report
Net recoveries were $19,000 for the six months ended June 30, 2025 compared to net charge-offs of $33,000 for the six months ended June 30, 2024. Charge-offs of approximately $43,000 during the six months ended June 30, 2025 consisted primarily of overdrafts of $44,000 and consumer loans of $12,000. These were offset by $75,000 in recoveries comprising $65,000 in repayments from borrowers of previously charged-off credits, and $10,000 related to overdraft recoveries. Annualized net recoveries as a percentage of average loans receivable were 0.00% for the six months ended June 30, 2025, compared to annualized net charge-offs of 0.01% for the six months ended June 30, 2024.
Current report
ATM and debit card income increased $19,000 due to usage and merchant fees remained level for the second quarter of 2025 compared with the same period in 2024. Other non-interest income increased $8,000 due to growth in letter of credit fees of $7,000 for the second quarter of 2025 compared with the same period in 2024.
Current report
Six-Month Comparison
Current report
Total non-interest income for the six-month period ended June 30, 2025 was $3,236,000, a decrease of $65,000 over the same period in 2024. Excluding realized and unrealized gain and losses on securities, total non-interest income increased of $202,000, or 6.7%, over the same period in 2024.
Current report
Net gains on sales of loans increased $9,000 to $22,000, when comparing the six months ended June 30, 2025 to the same period in 2023. Proceeds from the sale of residential mortgages were $668,000 and $801,000 for the six-month period ended June 30, 2025 and 2024, respectively.
Current report
Fees for services to customers increased $85,000 to $932,000 for the six months ended June 30, 2025, as overdraft fees increased $57,000 and other deposit-related fees increased $28,000. ATM and debit card decreased $39,000 over the same period due to volume.
Current report
Retail brokerage and advisory fees increased $62,000, or 28.3%, to $281,000 for the six months ended June 30, 2025 compared to the same period in 2024; advisory fees increased $32,000 and transaction-based fees increased $30,000.
Current report
Six-Month Comparison
Current report
Total non-interest expense was $18,931,000 for the six-month period ended June 30, 2025, an increase of $1,164,000, or 6.6%, compared to the six months ended June 30, 2024.
Current report
Salaries and benefits expense increased $271,000 to $10,283,000 for the six months ended June 30, 2025 compared to the same period in 2024. Salary and related payroll tax expense increased $548,000 during the period, to $8,791,000 and medical and dental costs decreased $331,000, due to the reasons described in the quarter-to-quarter comparison.
Current report
Net occupancy and furniture and equipment expense increased $421,000, or 14.1%, to $3,417,000, due to the reasons described in the quarter-to-quarter comparison. Marketing expenses decreased $55,000 due to timing of advertising and promotions. Third-party services increased $165,000, or 12.8%, to $1,450,000 for the six months ended June 30, 2025.
Current report
FDIC insurance premiums decreased $144,000 and state taxes increased $187,000, due to the reasons described in the quarter- to-quarter comparison.
Current report
Other non-interest expense increased $324,000 due to the reasons described above in the quarter-to-quarter comparison.
Current report
Loans receivable increased $2,491,000 with retail loans increasing $2,576,000, to $189,318,000 at June 30, 2025 compared to $186,742,000 at year-end 2024; partly offset by commercial loans decreasing $174,000 to $1,029,635,000 at June 30, 2025, compared with $1,029,809,000 at year-end 2024.
Removed paragraphs (4)
Previous report
Net interest income increased $1,369,000, or 13.46%, to $11,537,000.
Previous report
Net interest margin on a tax-equivalent basis increased 12 basis points for the quarter to 2.51% compared to 2.39% for the same period in 2024.
Previous report
Non-interest expense increased $536,000 to $9,369,000 for the first quarter of 2025 compared to the same period in 2024.
Previous report
Loans receivable decreased $3,886,000 with commercial loans decreasing $3,465,000 to $1,026,344,000 at March 31, 2025, compared with $1,029,809,000 at year-end 2024 and retail loans decreasing $468,000 over the same period.
Reworded paragraphs (66)
Previous wording
QNB reported net income for the first quarter of 2025 of $2,578,000, or $0.69 per share on a diluted basis, compared to net income of $2,594,000, or $0.71 per share on a diluted basis, for the same period in 2024. The Bank contributed $3,292,000 to net income for the three months ended March 31, 2025 compared to $2,331,000 for the same period 2024; and the holding company had a negative contribution of $714,000 to net income for the three months ended March 31, 2025 compared to a positive contribution of $263,000 for the same period 2024. The results at the Bank were primarily due to an increase in the net interest income and an increase in non-interest income, partly offset by an increase in non-interest expense and the provision for credit losses. The results at the holding company are due primarily to interest expense on the subordinated debt issued in the third quarter of 2024.
Current wording
QNB reported net income for the second quarter of 2025 of $3,883,000, or $1.04 per share on a diluted basis, compared to net income of $2,465,000, or $0.67 per share on a diluted basis, for the same period in 2024. For the six-month period ended June 30, 2025, QNB reported net income of $6,461,000, or $1.74 per share on a diluted basis, compared to net income of $5,059,000, or $1.38 per share on a diluted basis, for the same period in 2024. The Bank contributed $7,971,000 to net income for the six months ended June 30, 2025 compared to $5,072,000 for the same period 2024; and the holding company had a negative contribution of $1,510,000 to net income for the six months ended June 30, 2025 compared to a negative contribution of $13,000 for the same period 2024. The results at the Bank were primarily due to an increase in the net interest income, partly offset by increases in non-interest expense and the provision for credit losses. The results at the holding company are due primarily to interest expense on the subordinated debt issued in the third quarter of 2024.
Previous wording
Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.54% and 6.24%, respectively, for the quarter ended March 31, 2025 compared with 0.59% and 6.53%, respectively, for the quarter ended March 31, 2024.
Current wording
Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.83% and 14.25%, respectively, for the quarter ended June 30, 2025 compared with 0.57% and 10.73%, respectively, for the quarter ended June 30, 2024. Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.69% and 12.02%, respectively, for the six months ended June 30, 2025 compared with 0.59% and 11.05%, respectively, for the six months ended June 30, 2024.
Previous wording
Total assets as of March 31, 2025 were $1,896,189,000, compared with $1,870,894,000 at December 31, 2024. Loans receivable at March 31, 2025 were $1,212,162,000, a $3,886,000 decrease from $1,216,048,000 at December 31, 2024. Total deposits of $1,664,555,000 at March 31, 2025 increased $36,014,000 compared with total deposits of $1,628,541,000 at December 31, 2024.
Current wording
Total assets as of June 30, 2025 were $1,884,828,000, compared with $1,870,894,000 at December 31, 2024. Loans receivable at June 30, 2025 were $1,218,539,000, a $2,491,000 increase from $1,216,048,000 at December 31, 2024. Total deposits of $1,651,667,000 at June 30, 2025 increased $23,126,000 compared with total deposits of $1,628,541,000 at December 31, 2024.
Previous wording
Results for the three months ended March 31, 2025 include the following significant components:
Current wording
Results for the three and six months ended June 30, 2025 include the following significant components:
Previous wording
QNB recorded $550,000 in its provision for credit losses on loans for the quarter of 2025, compared with a reversal in provision of $86,000 for the same period in 2024.
Current wording
QNB recorded a $145,000 reversal of its provision for credit losses on loans for the second quarter of 2025, compared with additional provision of $132,000 for the same period in 2024. QNB recorded $406,000 in its provision for credit losses on loans for the six months ended June 30, 2025, compared with $39,000 for the same period in 2024.
Previous wording
Non-interest income decreased $252,000, to $1,584,000 for the first quarter of 2025 compared with the same period in 2024. Excluding realized and unrealized gains (losses) on securities, non-interest income increased $95,000, or 6.4%, to $1,584,000 for the first quarter of 2025 compared to $1,489,000 for the same period in 2024.
Current wording
Non-interest income increased $187,000, to $1,652,000 for the second quarter and decreased $65,000, to $3,236,000 for the six months ended June 30, 2025 compared with the same periods in 2024. Excluding realized and unrealized gains (losses) on securities, non-interest income increased $107,000, or 6.9%, to $1,652,000 for the second quarter of 2025 compared to $1,545,000 for the same period in 2024; and increased $202,000, to $3,236,000 for the six months ended June 30, 2025 compared with $3,034,000 the same period in 2024.
Previous wording
Total non-performing loans, comprised of loans on non-accrual status, were $8,651,000, or 0.71% of loans receivable at March 31, 2025, compared to $1,975,000, or 0.16% of loans receivable at December 31, 2024. Net loan recoveries for the three months ended March 31, 2025 were $3,000, compared with net charge-offs of $21,000 for the same period in 2024.
Current wording
Total non-performing loans, comprised of loans on non-accrual status, were $8,947,000, or 0.73% of loans receivable at June 30, 2025, compared to $1,975,000, or 0.16% of loans receivable at December 31, 2024. Net loan recoveries for the six months ended June 30, 2025 were $19,000, compared with net charge-offs of $33,000 for the same period in 2024.
Previous wording
The following table presents the adjustment to convert net interest income to net interest income on a fully taxable-equivalent basis for the three-month periods ended March 31, 2025 and 2024.
Current wording
The following table presents the adjustment to convert net interest income to net interest income on a fully taxable-equivalent basis for the three- and six-month periods ended June 30, 2025 and 2024.
Previous wording
Tax-exempt securities and loans were adjusted to a tax-equivalent basis and are based on the marginal Federal corporate tax rate of 21 percent for three months ended March 31, 2025 and 2024.
Current wording
Tax-exempt securities and loans were adjusted to a tax-equivalent basis and are based on the marginal Federal corporate tax rate of 21 percent for three and six months ended June 30, 2025 and 2024.
Previous wording
Average earning assets for the first quarter of 2025 were $1,884,963,000, an increase of $150,799,000, or 8.7%, from the first quarter of 2024, with average loans increasing $101,861,000, or 9.2%, and average investment securities increasing $47,942,000, or 8.3%, over the same period in 2024. Proceeds from the growth in average deposits and the issuance of both long-term and subordinated debt over the past year were invested in loans, higher-yielding securities and used to pay down short-term borrowings. Average loans as a percent of average earning assets was 64.2% for the first quarter of 2025, compared with 63.9% for the first quarter of 2024. On the funding side, average deposits increased $135,504,000, or 9.0%, to $1,633,196,000 for the first quarter of 2025 primarily due to an increase in interest-bearing demand, money market products and time deposits. Average short-term borrowed funds, which consisted primarily of average commercial repurchase agreements, Federal Reserve Bank ("FRB") borrowings and FHLB borrowings, decreased $39,912,000 to $47,529,000 for the first quarter of 2025 compared to $87,441,000 for the same period in 2024. During the third quarter of 2024, QNB Corp. issued $40,000,000 of subordinated debt; the carrying value net of deferred costs was $39,118,000 at March 31, 2025.
Current wording
Average earning assets for the second quarter of 2025 were $1,898,808,000, an increase of $146,275,000, or 8.3%, from the second quarter of 2024, with average loans increasing $76,127,000, or 6.7%, and average investment securities increasing $51,993,000, or 9.1%, over the same period in 2024. Proceeds from the growth in average deposits and the issuance of subordinated debt over the past year were invested in loans and higher-yielding securities. Average loans as a percentage of average earning assets was 64.1% for the second quarter of 2025, compared with 65.1% for the second quarter of 2024. On the funding side, average deposits increased $105,329,000, or 6.8%, to $1,647,990,000 for the second quarter of 2025 primarily due to an increase in interest-bearing and non-interest-bearing demand, money market products and time deposits. Average short-term borrowed funds, which consisted primarily of average commercial repurchase agreements and FHLB borrowings, increased $18,559,000 to $70,942,000 for the second quarter of 2025 compared to $52,383,000 for the same period in 2024. During the third quarter of 2024, QNB Corp. issued $40,000,000 of subordinated debt; the carrying value net of deferred costs was $39,168,000 at June 30, 2025.
Previous wording
The net interest margin for the first quarter of 2025 increased 12 basis points to 2.51% from 2.39% for the same period in 2024. Competition for quality loans and deposits in our local market continues to exert pressure on the net interest margin. Repricing strategies on loans and deposits and the sale of lower-yielding investments have had a positive impact on the net interest margin. The net interest margin is expected to improve as loans and deposits reprice.
Current wording
The net interest margin for the second quarter of 2025 increased 23 basis points to 2.69% from 2.46% for the same period in 2024. Competition for quality loans and deposits in our local market continues to exert pressure on the net interest margin. Repricing strategies on loans and deposits and the sale of lower-yielding investments have had a positive impact on the net interest margin. The net interest margin is expected to improve as loans and deposits reprice.
Previous wording
The Rate-Volume Analysis tables, as presented on a tax-equivalent basis, highlight the impact of changing rates and volumes on interest income and interest expense. Total interest income on a tax-equivalent basis increased $2,628,000, or 13.3%, to $22,338,000 for the first quarter of 2025; total interest expense increased $1,260,000 to $10,661,000.
Current wording
The Rate-Volume Analysis tables, as presented on a tax-equivalent basis, highlight the impact of changing rates and volumes on interest income and interest expense. Total interest income on a tax-equivalent basis increased $2,727,000, or 13.3%, to $23,210,000 for the second quarter of 2025; total interest expense increased $705,000 to $10,458,000.
Previous wording
The yield on earning assets on a tax-equivalent basis increased 24 basis points to 4.81% for the first quarter of 2025, from 4.57% for the first quarter of 2024. The cost of interest-bearing liabilities was 2.76% for the first quarter of 2025, compared with 2.66% for the same period in 2024.
Current wording
The yield on earning assets on a tax-equivalent basis increased 20 basis points to 4.90% for the second quarter of 2025, from 4.70% for the second quarter of 2024. The cost of interest-bearing liabilities was 2.68% for the second quarter of 2025, compared with 2.73% for the same period in 2024.
Previous wording
Interest income on investment securities (available-for-sale and equity) increased $676,000 when comparing the quarters ended March 31, 2025 and 2024. The average yield on the investment portfolio was 2.85% for the first quarter of 2025 compared with 2.62% for the same period in 2024, an increase of 23 basis points.
Current wording
Interest income on investment securities (available-for-sale and equity) increased $548,000 when comparing the second quarters of 2025 and 2024. The average yield on the investment portfolio was 2.84% for the second quarter of 2025 compared with 2.72% for the same period in 2024, an increase of 12 basis points.
Previous wording
The yield on U.S. Treasury securities was 4.38% for the first quarter of 2025 compared to 5.33% for the same period in 2024. The average balances of U.S. Government agency securities decreased $8,991,000 as the average rate slightly increased for a net reduction in interest income of $24,000.
Current wording
The yield on U.S. Treasury securities was 4.24% for the second quarter of 2025 compared to 5.19% for the same period in 2024; the decline in rate was more than offset by the average balances increase of $14,208,000 for a net increase in interest income of $135,000. The average balances of U.S. Government agency securities decreased $8,595,000 as the average rate slightly increased for a net reduction in interest income of $22,000.
Previous wording
Interest income on municipal securities, which are primarily tax-exempt, decreased $170,000 due to a 56 basis-point decrease in rate, and a $2,917,000 decrease in average balances. Typically, QNB purchases municipal bonds with 10- to 20-year maturities and may have call dates between 2-10 years.
Current wording
Interest income on municipal securities, which are primarily tax-exempt, decreased $191,000 due to a 63 basis-point decrease in rate, and a $2,791,000 decrease in average balances. Typically, QNB purchases municipal bonds with 10- to 20-year maturities and may have call dates between 2-10 years.
Previous wording
Interest income on mortgage-backed securities and CMOs decreased $165,000 and average balances decreased $2,342,000 and the yield decreased 16 basis points. This portfolio generally provides higher yields relative to agency bonds and also provides monthly cash flow which can be used for liquidity purposes or can be reinvested as interest rates increase. Since most of these securities were purchased at a premium, any prepayments result in a shorter amortization period of this premium and therefore a reduction in income.
Current wording
Interest income on mortgage-backed securities and CMOs decreased $252,000 and average balances decreased $2,301,000 and the yield decreased 27 basis points. This portfolio generally provides higher yields relative to agency bonds and also provides monthly cash flow which can be used for liquidity purposes or can be reinvested as interest rates increase. Since most of these securities were purchased at a premium, any prepayments result in a shorter amortization period of this premium and therefore a reduction in income.
Previous wording
Interest income on corporate debt and mutual funds increased $964,000 as average balances increased $54,838,000 and the average yield increased 129 basis points. Proceeds from the issuance of subordinated debt were invested in high-yielding securities.
Current wording
Interest income on corporate debt and mutual funds increased $935,000 as average balances increased $57,973,000 and the average yield increased 66 basis points. Proceeds from the issuance of subordinated debt were invested in high-yielding securities.
Previous wording
Average balances on equities decreased $6,019,000 as the portfolio was sold during 2024; this was the cause of the $56,000 decrease in dividends comparing the first quarter of 2025 to the same period in 2024. Proceeds from sales of equities in 2024 were reinvested in higher yielding treasury securities.
Current wording
Average balances on equities decreased $6,501,000 as the portfolio was sold during 2024; this was the cause of the $57,000 decrease in dividends comparing the second quarter of 2025 to the same period in 2024. Proceeds from sales of equities in 2024 were reinvested in higher yielding treasury securities.
Previous wording
Income on loans increased $2,069,000 to $17,355,000 when comparing the first quarters of 2025 and 2024, with an $101,861,000 increase in average balances contributing to an increase in interest income of $1,271,000 and a 27-basis point increase in yield contributing to a $798,000 increase in interest income. Higher interest rates during the repricing period were partially offset by competitive pressures that compressed the yields on new loans.
Current wording
Income on loans increased $2,083,000 to $18,112,000 when comparing the second quarters of 2025 and 2024, with a $76,127,000 increase in average balances contributing to an increase in interest income of $1,085,000 and a 32-basis point increase in yield contributing to a $998,000 increase in interest income. Higher interest rates during the repricing period were partially offset by competitive pressures that compressed the yields on new loans.
Previous wording
The largest category of the loan portfolio is commercial real estate loans. This category of loans includes commercial purpose loans secured by either commercial properties such as office buildings, factories, warehouses, hotels and restaurants, medical facilities and retail establishments, or residential real estate, usually the residence of the business owner. The category also includes construction and land development loans. Income on commercial real estate loans increased $1,769,000 when comparing the first quarters of 2025 and 2024, primarily due to a 37-basis point increase in rate from 5.34% in 2024 to 5.71% and increased average balances of $82,465,000, or 10.6%.
Current wording
The largest category of the loan portfolio is commercial real estate loans. This category of loans includes commercial purpose loans secured by either commercial properties such as office buildings, factories, warehouses, hotels and restaurants, medical facilities and retail establishments, or residential real estate, usually the residence of the business owner. The category also includes construction and land development loans. Income on commercial real estate loans increased $1,899,000 when comparing the second quarters of 2025 and
Previous wording
Income on commercial and industrial loans increased $102,000 when comparing the first quarters of 2025 and 2024. The average yield on these loans decreased nine basis points to 7.41% resulting in a decrease in income of $32,000; average balances increased $8,387,000, to $148,680,000 for the first quarter of 2025 resulting in a $134,000 increase in interest income. Many of the loans in this category are indexed to the prime interest rate.
Current wording
Income on commercial and industrial loans decreased $4,000 when comparing the second quarters of 2025 and 2024. The average yield on these loans decreased 19 basis points to 7.41% resulting in a decrease in income of $69,000; average balances increased $3,087,000, to $145,261,000 for the second quarter of 2025 resulting in a $65,000 increase in interest income. Many of the loans in this category are indexed to the prime interest rate.
Previous wording
Tax-exempt loan income increased $15,000 for the first quarter of 2025 compared to the same period in 2024. Average balances increased $154,000 to $18,795,000 for the first quarter of 2025. The yield on municipal loans increased 33 basis points, to 4.15% for the first quarter of 2025, compared with the same period in 2024.
Current wording
Tax-exempt loan income increased $29,000 for the second quarter of 2025 compared to the same period in 2024. Average balances increased $1,063,000 to $19,347,000 for the second quarter of 2025. The yield on municipal loans increased 36 basis points, to 4.23% for the second quarter of 2025, compared with the same period in 2024.
Previous wording
QNB desires to be the “local consumer lender of choice”, focusing its retail lending efforts on product offerings and marketing and promotion. Interest income on residential mortgage loans secured by first lien 1-4 family increased $172,000 when comparing the first quarter of 2025 to the same period in 2024. Average residential mortgage loan balances increased by $5,349,000, or 4.9%, to $114,271,000 for the first quarter of 2025 compared to the same period in 2024, which contributed a $53,000 increase in interest income. The average yield on the portfolio increased 41 basis points and contributed an increase of $119,000 to interest income. QNB chose to retain certain mortgage loans instead of selling them in the secondary market, as the yield on our originated mortgages was higher than comparable mortgage-backed securities. Average home equity loans increased during the 2025 period by $5,704,000 to $67,973,000 and the average yield decreased 40 basis points to 6.41% resulting in a $19,000 net increase in interest income. The yield on the consumer portfolio decreased 42 basis points to 7.68% for the first quarter of 2025 and there was a $198,000 decrease in average balances resulting in a net $8,000 decrease in interest income. The decrease in consumer loans was primarily due to the repayment of student loan balances.
Current wording
QNB desires to be the “local consumer lender of choice”, focusing its retail lending efforts on product offerings and marketing and promotion. Interest income on residential mortgage loans secured by first lien 1-4 family increased $149,000 when comparing the second quarter of 2025 to the same period in 2024. Average residential mortgage loan balances increased by $5,907,000, or 5.4%, to $114,600,000 for the second quarter of 2025 compared to the same period in 2024, which contributed a $60,000 increase in interest income. The average yield on the portfolio increased 31 basis points and contributed an increase of $89,000 to interest income. QNB chose to retain certain mortgage loans instead of selling them in the secondary market, as the yield on our originated mortgages was higher than comparable mortgage-backed securities. Average home equity loans increased during the 2025 period by $5,091,000 to $70,666,000 and the average yield decreased 42 basis points to 6.41% resulting in a $16,000 net increase in interest income. The yield on the consumer portfolio increased 20 basis points to 7.70% for the second quarter of 2025 and there was a $426,000 decrease in average balances resulting in a net $6,000 decrease in interest income. The decrease in consumer loans was primarily due to the repayment of student loan balances.
Previous wording
Earning assets are funded by deposits and borrowed funds. Interest expense increased $1,260,000, when comparing the first quarter of 2025 to the same period in 2024. QNB experienced average balance increases in all deposit categories except savings accounts. Average savings balances decreased $18,696,000 to $279,657,000. QNB offered several new interest-bearing demand and money market products offering higher yields to retain large depositors and reduce the reliance on higher-cost short-term borrowings. Average non-interest-bearing demand accounts increased $3,397,000 to $185,992,000 for the first quarter of 2025. Average interest-bearing demand accounts increased $58,389,000, or 18.1%, to $380,293,000 for the first quarter of 2025 and the average rate paid on these deposits increased 21 basis points; interest expense on interest-bearing demand accounts increased $301,000 to $944,000 for the same period. Average money market accounts increased $28,393,000, or 12.5%, to $256,265,000 for the first quarter of 2025 compared with the same period in 2024. Interest expense on money market accounts decreased $197,000 to $1,818,000, and the average interest rate paid on money market accounts decreased 68 basis points to 2.88% for the first quarter of 2025. Most of the balances in this category are in products that pay tiered rates based on account balances.
Current wording
Earning assets are funded by deposits and borrowed funds. Interest expense increased $705,000, when comparing the second quarter of 2025 to the same period in 2024. QNB experienced average balance increases in all deposit categories except savings accounts. Average savings balances decreased $9,096,000 to $281,076,000. QNB offered several new interest-bearing demand and money market products offering higher yields to retain large depositors and reduce the reliance on higher-cost short-term borrowings. Average non-interest-bearing demand accounts increased $9,620,000 to $198,075,000 for the second quarter of 2025. Average interest-bearing demand accounts increased $42,718,000, or 12.8%, to $376,735,000 for the second quarter of 2025 and the average rate paid on these deposits increased ten basis points; interest expense on interest-bearing demand accounts increased $186,000 to $888,000 for the same period. Average money market accounts increased $29,637,000, or 12.9%, to $259,621,000 for the second quarter of 2025 compared with the same period in 2024. Interest expense on money market accounts decreased $187,000 to $1,862,000, and the average interest rate paid on money market accounts decreased 70 basis points to 2.88% for the second quarter of 2025. Most of the balances in this category are in products that pay tiered rates based on account balances.
Previous wording
Interest expense on municipal interest-bearing demand accounts decreased $121,000 to $1,456,000 for the first quarter of 2025. The average interest rate paid on municipal interest-bearing demand accounts decreased 86 basis points to 3.95% for the first quarter of 2025 over the same quarter of 2024, and average balances increased $17,7692,000 to $149,579,000. Many of these accounts are indexed to the Federal funds rate with rate floors. Municipal deposits are seasonal in nature and are received during the second and third quarters as tax receipts are collected and are withdrawn over the course of the year.
Current wording
Interest expense on municipal interest-bearing demand accounts decreased $160,000 to $1,427,000 for the second quarter of 2025. The average interest rate paid on municipal interest-bearing demand accounts decreased 89 basis points to 3.92% for the second quarter of 2025 over the same quarter of 2024, and average balances increased $13,452,000 to $146,214,000. Many of these accounts are indexed to the Federal funds rate with rate floors. Municipal deposits are seasonal in nature and are received during the second and third quarters as tax receipts are collected and are withdrawn over the course of the year.
Previous wording
Interest expense on savings accounts decreased $56,000 when comparing the first quarter of 2025 to the same quarter of 2024. The average interest rate paid on savings accounts increased two basis point to 1.30% for the first quarter of 2025. When comparing these same periods, average savings accounts decreased $18,696,000, or 6.3%, to $279,657,000 for the first quarter of 2025 primarily due to decreases in the e-Savings product. QNB’s online e-Savings product is the largest category of savings deposits, with average balances for the first quarter of 2025 of $206,579,000 compared to $217,409,000 in the same period of 2024. The average yield paid on these accounts was 1.71% for both the first quarter of 2025 and 2024. Traditional statement savings accounts, passbook savings and club accounts are also included in the savings category and average balances in these types of savings accounts decreased $7,866,000 when comparing the first quarter of 2025 to the same period in 2024.
Current wording
Interest expense on savings accounts decreased $23,000 when comparing the second quarter of 2025 to the same quarter of 2024. The average interest rate paid on savings accounts increased one basis point to 1.29% for the second quarter of 2025. When comparing these same periods, average savings accounts decreased $9,096,000, or 3.1%, to $281,076,000 for the second quarter of 2025. QNB’s online e-Savings product is the largest category of savings deposits, with average balances for the second quarter of 2025 of $208,239,000 compared to $211,598,000 in the same period of 2024. The average yield paid on these accounts was 1.70% for the second quarter of 2025 compared to 1.71% for the same period in 2024. Traditional statement savings accounts, passbook savings and club accounts are also included in the savings category and average balances in these types of savings accounts decreased $5,737,000 when comparing the second quarter of 2025 to the same period in 2024.
Previous wording
Interest expense on time deposits totaled $3,801,000 for the first quarter of 2025 compared to $3,372,000 in 2024. Average total time deposits increased $46,329,000 to $381,410,000 for the first quarter of 2025. As with fixed-rate loans and investment securities, these deposits reprice over time and, therefore, have less of an immediate impact on costs in either a rising or falling rate environment; however, the maturity and repricing characteristics of time deposits tend to be shorter.
Current wording
Interest expense on time deposits totaled $3,686,000 for the second quarter of 2025 compared to $3,958,000 in 2024. Average total time deposits increased $18,998,000 to $386,269,000 for the second quarter of 2025. As with fixed-rate loans and investment securities, these deposits reprice over time and, therefore, have less of an immediate impact on costs in either a rising or falling rate environment; however, the maturity and repricing characteristics of time deposits tend to be shorter.
Previous wording
Approximately $356,547,000, or 94%, of time deposits at March 31, 2025 will mature over the next 12 months. The average rate paid on these time deposits is approximately 3.96%. The yield on the time deposit portfolio may change in the next quarter as short-term time deposits reprice; however, given the short-term nature of these deposits, interest expense may increase if short-term time deposit rates were to increase suddenly or if customers select higher paying time deposits.
Current wording
Approximately $369,830,000, or 95%, of time deposits at June 30, 2025 will mature over the next 12 months. The average rate paid on these time deposits is approximately 3.63%. The yield on the time deposit portfolio may change in the next quarter as short-term time deposits reprice; however, given the short-term nature of these deposits, interest expense may increase if short-term time deposit rates were to increase suddenly or if customers select higher paying time deposits.
Previous wording
Short-term borrowings are comprised of sweep accounts structured as repurchase agreements with our commercial customers, short-term FHLB borrowing and short-term FRB borrowing. Interest expense on short-term borrowings decreased $169,000 for the first quarter of 2025 to $456,000 when compared to the same period in 2024. When comparing these same periods, average balances decreased $39,912,000 to $47,529,000. The yield on customer repos increased 22 basis points for the first quarter of 2025 to 0.61%. There were no FHLB borrowings during 2024 and $29,170,000 in average balance in the first quarter of 2025 at an average rate of 4.78%. During the first quarter of 2023, QNB borrowed $50,000,000 from the FRB under its Bank Term Funding Program and locked in a rate of 4.39%; there were no pre-payment penalties. The FRB borrowings were paid off during the first quarter of 2024; there was an average balance of $40,110,000 for the first quarter of 2024 compared to no average balance in the first quarter of 2025.
Current wording
Short-term borrowings are comprised of sweep accounts structured as repurchase agreements with our commercial customers and short-term FHLB borrowing. Interest expense on short-term borrowings increased $490,000 for the second quarter of 2025 to $689,000 when compared to the same period in 2024. When comparing these same periods, average balances increased $18,559,000 to $70,942,000. The yield on customer repos increased 103 basis points for the second quarter of 2025 to 2.55%. There were no FHLB borrowings during 2024 and $52,418,000 in average balance in the second quarter of 2025 at an average rate of 4.37%.
Previous wording
Average long-term borrowings increased $10,111,000 and the interest rate increased 37 basis points when comparing the first quarter of 2025 to the same period in 2024.
Current wording
Average long-term borrowings decreased $22,637,000 and the interest rate increased nine basis points when comparing the second quarter of 2025 to the same period in 2024.
Previous wording
During the third quarter of 2024, the QNB Corp. issued $40,000,000 of subordinated debt; the average carrying value net of deferred costs was $39,092,000 for the first quarter of 2025. The average yield of 9.59% includes the amortization of the deferred costs. The subordinated debt will initially bear interest at 8.875% per annum from and including the original issue date of the subordinated notes to but excluding September 1, 2029, payable semi-annually in arrears. From September 1, 2029, through maturity or up to an early redemption date, the interest rate resets quarterly to an interest rate per annum equal to the then current three-month SOFR plus a spread, payable quarterly in arrears. On or after the fifth anniversary of the original issue date through maturity, the QNB has the option to redeem the subordinated debt, in whole or in part, on any scheduled interest payment date. QNB may also redeem the subordinated debt in whole at any time in the event of certain specified events. The subordinated debt will mature on September 1, 2034.
Current wording
During the third quarter of 2024, the QNB Corp. issued $40,000,000 of subordinated debt; the average carrying value net of deferred costs was $39,141,000 for the second quarter of 2025. The average yield of 9.58% includes the amortization of the deferred costs. The subordinated debt will initially bear interest at 8.875% per annum from and including the original issue date of the subordinated notes to but excluding September 1, 2029, payable semi-annually in arrears. From September 1, 2029, through maturity or up to an early redemption date, the interest rate resets quarterly to an interest rate per annum equal to the then current three-month SOFR plus a spread, payable quarterly in arrears. On or after the fifth anniversary of the original issue date through maturity, the QNB has the option to redeem the subordinated debt, in whole or in part, on any scheduled interest payment date. QNB may also redeem the subordinated debt in whole at any time in the event of certain specified events. The subordinated debt will mature on September 1, 2034.
Previous wording
Based on this analysis, QNB recorded $551,000 in the provision for credit losses on loans for the three months ended March 31, 2025, through the allowance for credit losses on loans, compared to a reversal of $93,000 through the provision for credit losses for the same period in 2024. QNB recorded a reversal of provision of $1,000 for the allowance for credit losses for unused commitments in the three months ended March 31, 2025 compared to a provision of $7,000 for the same period in 2024.
Current wording
Based on this analysis, QNB recorded $406,000 in the provision for credit losses on loans for the six months ended June 30, 2025, through the allowance for credit losses on loans, compared to $39,000 through the provision for credit losses for the same period in 2024. QNB recorded a reversal of provision of $2,000 for the allowance for credit losses for unused commitments in the six months ended June 30, 2025 compared to a reversal in provision of $11,000 for the same period in 2024.
Previous wording
QNB's allowance for credit losses on loans of $9,298,000 represents 0.77% of loans receivable at March 31, 2025 compared with an allowance for credit losses on loans of $8,744,000, or 0.72% of loans receivable, at December 31, 2024, and $8,738,000, or 0.78%, at March 31, 2024. Management believes the allowance for credit losses on loans at March 31, 2025 is adequate as of that date based on its analysis of historical loss experience, current conditions and reasonable and supportable forecasts in the portfolio.
Current wording
QNB's allowance for credit losses on loans of $9,169,000 represents 0.75% of loans receivable at June 30, 2025 compared with an allowance for credit losses on loans of $8,744,000, or 0.72% of loans receivable, at December 31, 2024, and $8,858,000, or 0.76%, at June 30, 2024. Management believes the allowance for credit losses on loans at June 30, 2025 is adequate as of that date based on its analysis of historical loss experience, current conditions and reasonable and supportable forecasts in the portfolio.
Previous wording
Net recoveries were $3,000 for the three months ended March 31, 2025 compared to net charge-offs of $21,000 for the three months ended March 31, 2024. Charge-offs consisted of overdrafts of $13,000 and other consumer loans of $11,000. Recoveries of approximately $27,000 during the three months ended March 31, 2025 consisted of $21,000 in repayments from borrowers of previously charged-off credits and overdrafts recoveries of $6,000. Annualized net recoveries as a percentage of average loans receivable were 0.00% for the three months ended March 31, 2025, compared to annualized net charge-offs of 0.01% for the three months ended March 31, 2024.
Current wording
Net recoveries were $16,000 for the three months ended June 30, 2025 compared to net charge-offs of $12,000 for the three months ended June 30, 2024. Charge-offs consisted of overdrafts of $31,000 and other consumer loans of $1,000. Recoveries of approximately $48,000 during the three months ended June 30, 2025 consisted of $44,000 in repayments from borrowers of previously charged-off credits and overdrafts recoveries of $4,000. Annualized net recoveries as a percentage of average loans receivable were 0.01% for the three months ended June 30, 2025, compared to annualized net charge-offs of 0.00% for the three months ended June 30, 2024.
Previous wording
Non-performing assets were $8,651,000 at March 31, 2025 compared to $1,975,000 as of December 31, 2024 and $6,676,000 at March 31, 2024. Total non-performing loans, which represent loans on non-accrual status, loans past due 90 days or more and still accruing interest, were 0.71% of loans receivable at March 31, 2025, 0.16% at December 31, 2024 and 0.59% of loans receivable at March 31, 2024. In cases where there is a collateral shortfall on non-accrual loans, specific impairment reserves have been established based on updated collateral values even if the borrower continues to pay in accordance with the terms of the agreement. Commercial loans classified as substandard or doubtful totaled $34,448,000, an increase of $147,000 from the $34,301,000 reported at December 31, 2024 and an increase of $22,596,000 from the $11,852,000 reported at March 31, 2024. The increase in classified loans since March 31, 2024 was due to two commercial relationships downgraded; one of these relationships was placed on nonaccrual in the first quarter of 2025.
Current wording
Non-performing assets were $8,947,000 at June 30, 2025 compared to $1,975,000 as of December 31, 2024 and $2,078,000 at June 30, 2024. Total non-performing loans, which represent loans on non-accrual status, loans past due 90 days or more and still accruing interest, were 0.73% of loans receivable at June 30, 2025, 0.16% at December 31, 2024 and 0.18% of loans receivable at June 30, 2024. The increase in non-accrual loans was due to one commercial relationship placed on nonaccrual status during 2025. In cases where there is a collateral shortfall on non-accrual loans, specific impairment reserves have been established based on updated collateral values even if the borrower continues to pay in accordance with the terms of the agreement. Commercial loans classified as substandard or doubtful totaled $34,275,000, a decrease of $26,000 from the $34,301,000 reported at December 31, 2024 and an increase of $1,565,000 from the $32,710,000 reported at June 30, 2024.
Previous wording
QNB had no loans past due 90 days or more and still accruing interest at March 31, 2025, December 31, 2024, or March 31, 2024. Total loans 30 days or more past due, which includes non-accrual loans by actual number of days delinquent, represented 0.69% of loans receivable at March 31, 2025 compared with .018% at December 31, 2024, and 0.37% at March 31, 2024. The March 31, 2025 past-dues included one large relationship that was placed on nonaccrual during the first quarter of 2025.
Current wording
QNB had no loans past due 90 days or more and still accruing interest at June 30, 2025, December 31, 2024, or June 30, 2024. Total loans 30 days or more past due, which includes non-accrual loans by actual number of days delinquent, represented 0.98% of loans receivable at June 30, 2025 compared with 0.18% at December 31, 2024, and 0.44% at June 30, 2024.
Previous wording
There were no modifications to borrowers experiencing financial difficulty identified during the first quarter of 2025. QNB had no other real estate owned or repossessed assets at March 31, 2025, December 31, 2024 or March 31, 2024.
Current wording
There were two loan modifications to one borrower experiencing financial difficulty identified during the six months ended June 30, 2025. These two loans continue to be reported as nonaccrual as there is a collateral deficiency. The loans were modified to interest only payments for twelve months. QNB had no other real estate owned or repossessed assets at June 30, 2025, December 31, 2024 or June 30, 2024.
Previous wording
An analysis of net loan charge-offs (recoveries) for the three months ended March 31, 2025 compared to 2024 is as follows:
Current wording
An analysis of net loan charge-offs (recoveries) for the three and six months ended June 30, 2025 compared to the same periods in 2024 is as follows:
Previous wording
At March 31, 2025 and December 31, 2024, the recorded investment in collateral dependent loans totaled $8,640,000 and $1,923,000 of which $1,575,000 and $1,607,000, respectively, required no specific allowance for loan loss. The recorded investment in collateral dependent loans requiring an allowance for loan losses was $7,065,000 and $357,000 at March 31, 2025 and December 31, 2024, respectively, and the related allowance for loan losses associated with these loans was $1,082,000 and $308,000, respectively. See Note 8 to the Notes to Consolidated Financial Statements for additional detail of collateral dependent loans.
Current wording
At June 30, 2025 and December 31, 2024, the recorded investment in collateral dependent loans totaled $8,936,000 and $1,923,000 of which $1,808,000 and $1,607,000, respectively, required no specific allowance for loan loss. The recorded investment in collateral dependent loans requiring an allowance for loan losses was $7,128,000 and $357,000 at June 30, 2025 and December 31, 2024, respectively, and the related allowance for loan losses associated with these loans was $890,000 and $308,000, respectively. See Note 8 to the Notes to Consolidated Financial Statements for additional detail of collateral dependent loans.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Net Interest Income and Net Interest Margin – Six-Month Comparison
Current report — wording carried from elsewhere
There was a net realized loss of $719,000 on the sale of investments for the six-month period ended June 30, 2024 compared to no gains on the sales of securities in the same period in 2025. During the six-month period ended June 30, 2024, unrealized gains on investment equity securities of $986,000 were recorded compared to no unrealized gains or losses the same period of 2025.