QNB CORP.
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
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.
Sep 30, 2026 · Filed Nov 5, 2026
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 2026-06-30; filed 2026-08-10.
0001193125-26-342264
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001193125-26-449518
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 147 previous paragraphs and 146 current paragraphs.
48 unchanged; 89 reworded; 9 added; 8 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 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 (9)
Current report
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.
Current report
QNB completed a public offering on August 20, 2026 for the issuance of 1,232,142 common shares at $42.00 per share which added $48,284,000 in net proceeds to shareholders' equity. The net proceeds include underwriting discounts and associated costs of $3,466,000. The Company intends to use the net proceeds from this offering for general corporate purposes, which includes a balance sheet restructuring through the repositioning of a portion of our available-for-sale fixed income securities portfolio, redemption of a portion of our subordinated notes; excess funds will be used to fund new loans, supporting our capital ratios, and our continued growth. QNB also commenced trading of its common stock on the Nasdaq Capital Market on August 20, 2026 under the ticker symbol “QNBC”.
Current report
QNB executed a strategic repositioning of a portion of its securities available-for-sale portfolio (the "balance sheet restructuring") in September 2026 and sold $250,712,000 in low-yielding available-for-sale securities at a loss of $29,049,000 and unwound the related swap for a gain of $1,336,000. QNB also called and paid off $13,000,000 in subordinated notes in the third quarter of 2026. Net proceeds were used to purchase high-yielding, low risk available-for-sale securities and will fund loan growth.
Current report
The operating performance of the Bank for the nine months ended September 30, 2026 included six months of post-merger activity and the impact of the balance sheet restructuring during the nine-month period of 2026. Excluding the impacts of the balance sheet restructuring and merger related costs, net of tax, at the Bank, the operating performance at the Bank improved for the nine months ended September 30, 2026, in comparison with the same period in 2025, due primarily to improvement in the interest margin causing a $14,203,000 increase in net interest income and a $1,655,000 increase in non-interest income; this was partly offset by an increase in non-interest expense of $7,287,000. The contribution from QNB Corp., which included six months of post-merger activity, for the nine months ended September 30, 2026, declined compared with the same period in 2025, primarily due to a decrease in net interest income of $769,000, related to the subordinated debt acquired in the acquisition, an increase in merger-related costs of $318,000 and an increase in other non-interest expense of $240,000.
Current report
$1,847,000 for the same period in 2025; and increased $946,000, to $6,029,000 for the nine months ended September 30, 2026 compared with $5,083,000 the same period in 2025.
Current report
Non-interest expense for the three and nine months ended September 30, 2026 includes three and six months, respectively, of post-merger activity related to the acquisition of Victory. Non-interest expense increased $2,552,000 to $12,734,000 for the third quarter of 2026 compared with the same period in 2025. Non-interest expense, excluding merger-related costs increased $2,820,000 to $12,483,000 for the third quarter of 2026 compared with $9,663,000 for same period in 2025. Non-interest expense increased $11,195,000 to $40,308,000 for the nine months ended September 30, 2026 compared with the same period in 2025. Non-interest expense, excluding merger-related costs increased $7,491,000 to $36,085,000 for the nine months ended September 30, 2026 from $28,594,000 for with the same period in 2025.
Current report
NON-INTEREST (LOSS) INCOME
Current report
Nine-Month Comparison
Current report
Nine-Month Comparison
Removed paragraphs (8)
Previous report
The Bank contributed $8,334,000 of net income for the six months ended June 30 2026 compared to $7,971,000 for the same period 2025; and the holding company had a negative contribution of $2,554,000 to net income for the six months ended June 30, 2026 compared to a negative contribution of $1,510,000 for the same period 2025. The improved results at the Bank were primarily due to improvement in the interest margin causing a $7,671,000 increase in net interest income and a $728,000 increase in non-interest income; this was partly offset by and an increase in non-interest expense of $7,877,000, of which $3,299,000 was related to merger-related costs. The change in contribution from QNB Corp. is primarily due to a decrease in net interest income of $400,000 and an increase in non-interest expense of $790,000, primarily due to merger-related expenses of $673,000.
Previous report
Non-interest expense increased $6,874,000 to $16,436,000 for the second quarter of 2026 compared with the same period in 2025. Non-interest expense, excluding merger-related costs increased $3,790,000 to $13,352,000 for the second quarter of 2026 compared with the same period in 2025. Non-interest expense increased $1,769,000 to $11,138,000 for the second quarter of 2026 compared with the same period in 2025. Non-interest expense, excluding merger-related costs increased $4,671,000 to $23,602,000 for the six months ended June 30, 2026 compared with the same period in 2025. Non-interest expense includes three months of post-merger activity related to the acquisition of Victory.
Previous report
2025, primarily due to a $413,526,000 increase in average balances contributing to an increase in interest income of $6,121,000 and a 37-basis point increase in rate from 5.94% in 2025 to 6.31% contributing to an increase of $1,201,000 to interest income.
Previous report
Average long-term borrowings decreased $5,495,000 as short-term borrowing were used to payoff maturing long-term borrowings during the past year.
Previous report
2025 is as follows:
Previous report
NON-INTEREST INCOME
Previous report
Six-Month Comparison
Previous report
Six-Month Comparison
Reworded paragraphs (89)
Previous wording
On April 1, 2026, QNB closed the acquisition of Victory Bancorp, Inc. ("Victory"), a highly complementary community banking franchise headquartered in Limerick, Pennsylvania, 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.
Current wording
On April 1, 2026, QNB closed the acquisition of Victory Bancorp, Inc. ("Victory"), a highly complementary community banking franchise headquartered in Limerick, Pennsylvania, 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 nine months of 2026 include three and six months, respectively, of post-merger activity related to the acquisition of Victory.
Previous wording
Results for the three and six months of 2026 include three months of post-merger activity related to the acquisition of Victory. QNB reported net income for the second quarter of 2026 of $3,015,000, or $0.60 per share on a diluted basis, compared to net income of $3,883,000, or $1.04 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 $2,227,000. The merger-related costs are significant one-time costs, related to the acquisition of Victory 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 $1.05.
Current wording
Results for the three and nine months ended September 30, 2026 include three and six months, respectively, of post-merger activity related to the acquisition of Victory. Results also include the net loss on the balance sheet restructuring of $27,713,000. QNB reported a net loss for the third quarter of 2026 of $14,774,000, or a negative $2.67 per share on a diluted basis, compared to net income of $3,648,000, or $0.98 per share on a diluted basis, for the same period in 2025. For the three-month period of 2026, the net loss included merger-related costs of $251,000 and the net loss on the balance sheet restructuring of $27,713,000, for a total after-tax cost of $21,981,000. For the three-month period of 2025, net income included merger-related costs of $519,000, for an after-tax cost of $410,000. The merger-related costs are significant one-time costs, related to the acquisition of Victory and are not normal recurring operating expenses. Adjusted diluted earnings per share excluding the impact of the balance- sheet restructuring and merger-related costs for the three-month periods of 2026 and 2025 was $1.30 and $1.09, respectively.
Previous wording
QNB reported net income for the six months ended June 2026 of $5,780,000, or $1.32 per share on a diluted basis, compared to net income of $6,461,000, or $1.74 per share on a diluted basis, for the same period in 2025. For the six-month period of 2026, net income included after-tax merger-related cost of $3,249,000. Adjusted diluted earnings per share excluding the impact of the merger-related cost for the six-month period of 2026 was $2.06.
Current wording
QNB reported a net loss for the nine months ended September 2026 of $8,994,000, or a negative $1.89 per share on a diluted basis, compared to net income of $10,109,000, or $2.72 per share on a diluted basis, for the same period in 2025. For the nine-month period of 2026, the net loss included merger-related costs of $4,223,000 and the net loss on the balance sheet restructuring of $27,713,000, for a total after-tax cost of $25,230,000. For the nine-month period of 2025, net income included merger-related costs of $519,000, for an after-tax cost of $410,000. Adjusted diluted earnings per share excluding the impact of the merger-related cost for the nine-month periods of 2026 and 2025 was $3.39 and $2.83, respectively.
Previous wording
The following table shows calculated impact of the merger-related costs on net income and ratios, reconciling GAAP to non-GAAP measurements:
Current wording
The following table shows calculated impact of the balance sheet restructuring and merger-related costs on net income and ratios, reconciling GAAP to non-GAAP measurements:
Previous wording
The Bank contributed $4,575,000 to net income for the three months ended June 30, 2026 compared to $4,679,000 for the same period 2025; and the holding company had a negative contribution of $1,560,000 to net income for the three months ended June 30, 2026 compared to a negative contribution of $796,000 for the same period of 2025. The operating performance of the Bank 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.
Current wording
The operating performance of the Bank for the three months ended September 30, 2026 included three months of post-merger activity and the impact of the balance sheet restructuring during the third quarter of 2026. Excluding the impacts of the balance sheet restructuring and merger related costs, net of tax, at the Bank, the operating performance at the Bank improved for the quarter ended September 30, 2026, in comparison with the same period in 2025, due primarily to improvement in the interest margin causing a $6,532,000 increase in net interest income and a $927,000 increase in non-interest income; this was partly offset by an increase in non-interest expense of $2,709,000. The contribution from QNB Corp., which included three months of post-merger activity, for the quarter ended September 30, 2026, declined compared with the same period in 2025, primarily due to a decrease in net interest income of $369,000, related to the subordinated debt acquired in the acquisition, a decrease in merger-related costs of $355,000 and an increase in other non-interest expense of $123,000.
Previous wording
Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.50% and 6.65%, respectively, for the quarter ended June 30, 2026, compared with 0.83% and 14.25%, respectively, for the quarter ended June 30, 2025. Return on average assets and return on average shareholders’ equity, excluding the impact of the merger-related cost, for the three-month period of 2026 was 0.88% and 11.56%, respectively. Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.54% and 7.38%, respectively, for the six months ended June 30, 2026, compared with 0.69% and 12.02%, respectively, for the six months ended June 30, 2025. Return on average assets and return on average shareholders’ equity, excluding the impact of the merger-related cost, for the six-month period of 2026 was 0.85% and 11.54%, respectively.
Current wording
Net loss expressed as an annualized rate of return on average assets and average shareholders’ equity was a negative 2.44% and a negative 29.70%, respectively, for the quarter ended September 30, 2026, compared with net income as an annualized rate of return on average assets and average equity of 0.76% and 12.49%, respectively, for the quarter ended September 30, 2025. Return on average assets and return on average shareholders’ equity, excluding the impact of the balance sheet restructuring and the merger-related costs, for the three-month period of 2026 was 1.19% and 14.49%, respectively, compared to the three-month period of 2025 of 0.85% and 13.89%, respectively. Net loss expressed as an annualized rate of return on average assets and average shareholders’ equity was a negative 0.54% and a negative 7.03%, respectively, for the nine months ended September 30, 2026, compared with net income as an annualized rate of return on average assets and average equity of 0.72% and 12.18%, respectively, for the nine months ended September 30, 2025. Return on average assets and return on average shareholders’ equity, excluding the impact of the balance sheet restructuring and the merger-related costs, for the nine-month period of 2026 was 0.97% and 12.68%, respectively, compared to the nine-month period ended September 30, 2025 of 0.74% and 12.68%, respectively.
Previous wording
Total assets as of June 30, 2026 were $2,398,970,000, compared with $1,906,005,000 at December 31, 2025. Loans receivable at June 30, 2026 were $1,716,599,000; excluding the $408,379,000 in acquired loans, QNB recognized a $46,146,000, or 3.7%, increase from $1,262,074,000 at December 31, 2025. Total deposits of $2,067,151,000 at June 30, 2026 increased $15,475,000, excluding the $409,165,000 in deposits acquired, compared with total deposits of $1,642,511,000 at December 31, 2025.
Current wording
Total assets as of September 30, 2026 were $2,361,620,000, compared with $1,906,005,000 at December 31, 2025. Loans receivable at September 30, 2026 were $1,772,174,000; excluding the $408,379,000 in acquired loans, QNB recognized a $101,721,000, or 8.1% increase from $1,262,074,000 at December 31, 2025. Total deposits of $2,056,299,000 at September 30, 2026 increased $4,623,000, excluding the $409,165,000 in deposits acquired, compared with total deposits of $1,642,511,000 at December 31, 2025.
Previous wording
Results for the three and six months ended June 30, 2026 include the following significant components:
Current wording
Results for the three and nine months ended September 30, 2026 include the following significant components:
Previous wording
Net interest income increased $5,699,000 to $18,351,000 and increased $7,271,000 to $31,460,000 for the three and six months ended June 30, 2026, respectively, and includes three months of post-merger activity related to the acquisition of Victory.
Current wording
Net interest income increased $6,163,000 to $19,161,000 and increased $13,434,000 to $50,621,000 for the three and nine months ended September 30, 2026, respectively, and includes three and six months, respectively, of post-merger activity related to the acquisition of Victory.
Previous wording
Net interest margin on a tax-equivalent basis increased 47 basis points for the quarter to 3.16% compared to 2.69% for the same period in 2025. Net interest margin on a tax-equivalent basis increased 40 basis points for the six months ended June 30, 2026 to 3.00% compared to 2.60% for the same period in 2025.
Current wording
Net interest margin on a tax-equivalent basis increased 53 basis points for the quarter to 3.25% compared to 2.72% for the same period in 2025. Net interest margin on a tax-equivalent basis increased 45 basis points for the nine months ended September 30, 2026 to 3.09% compared from 2.64% for the same period in 2025.
Previous wording
QNB recorded a $218,000 provision for credit losses on loans for the second quarter of 2026, compared with a $145,000 reversal of its provision for credit losses on loans for the second quarter of 2025. QNB recorded $521,000 in its provision for credit losses on loans for the six months ended June 30, 2026, compared with $406,000 for the same period in 2025.
Current wording
QNB recorded a $379,000 provision for credit losses on loans for the third quarter of 2026, compared with a provision of $98,000 for the third quarter of 2025. QNB recorded $900,000 in its provision for credit losses on loans for the nine months ended September 30, 2026, compared with $504,000 for the same period in 2025.
Previous wording
Non-interest income increased $487,000, to $2,139,000 for the second quarter and $704,000, to $3,940,000 for the six months ended June 30, 2026 compared with the same periods in 2025. Excluding realized and unrealized gains on securities and swap termination loss, non-interest income increased $426,000 to $2,078,000 for the second quarter of 2026 compared to $1,652,000 for the same period in 2025; and increased $643,000, to $3,879,000 for the six months ended June 30, 2026 compared with $3,236,000 the same period in 2025.
Current wording
Non-interest income for the three and nine months ended September 30, 2026 includes three and six months, respectively, of post-merger activity related to the acquisition of Victory. Non-interest income decreased $26,798,000, to a negative $24,951,000 for the third quarter and decreased $26,094,000, to a negative $21,011,000 for the nine months ended September 30, 2026 compared with the same periods in 2025. Excluding realized and unrealized gains on securities and swap termination loss, non-interest income increased $303,000 to $2,150,000 for the third quarter of 2026 compared to
Previous wording
Total non-performing loans, comprised of loans on non-accrual status, were $10,418,000, or 0.61% of loans receivable at June 30, 2026, compared to $8,793,000, or 0.70% of loans receivable at December 31, 2025. Net loan recoveries for the six months ended June 30, 2026 were $14,000, compared with net recoveries of $19,000 for the same period in 2025.
Current wording
Total non-performing loans, comprised of loans on non-accrual status, were $11,688,000, or 0.66% of loans receivable at September 30, 2026, compared to $8,793,000, or 0.70% of loans receivable at December 31, 2025. Net loan charge-offs for the nine months ended September 30, 2026 were $88,000, compared with net recoveries of $7,000 for the same period in 2025.
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- and six-month periods ended June 30, 2026 and 2025.
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 nine-month periods ended September 30, 2026 and 2025.
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 and six months ended June 30, 2026 and 2025.
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 nine months ended September 30, 2026 and 2025.
Previous wording
$3,000,0000 in subordinated notes owned by QNB and issued by Victory on the acquisition date. Additionally, total average assets, average liabilities and average equity for the three and six months ended June 30, 2026 include the three-month impact of the acquisition on non-earning assets of $37,735,000, non-interest bearing liabilities of $72,296,000 and equity of $47,103,000.
Current wording
Average earning assets and interest-bearing liabilities for the three and nine months ended September 30, 2026 include the three- and six-month, respectively, impact of acquiring $434,318,000 in interest-earnings assets and $352,654,000 in interest-bearing liabilities which include the cancellation of $3,000,0000 in subordinated notes owned by QNB and issued by Victory on the acquisition date. Additionally, total average assets, average liabilities and average equity for the three and nine months ended September 30, 2026 include the three- and six-month impact, respectively, of the acquisition on non-earning assets of $37,735,000, non-interest bearing liabilities of $72,296,000 and equity of $47,103,000.
Previous wording
Average earning assets for the second quarter of 2026 were $2,344,775,000, an increase of $445,967,000, or 23.5%, from the second quarter of 2025, with average loans increasing $493,981,000, or 40.6%, and average investment securities decreasing $33,261,000, or 5.4%, over the same period in 2025. Average loans as a percentage of average earning assets was 72.9% for the second quarter of 2026, compared to 64.1% for the second quarter of 2025. On the funding side, average deposits increased $426,776,000, or 25.9%, to $2,074,766,000 for the second quarter of 2026. Average short-term borrowed funds, which consisted primarily of average commercial repurchase agreements and FHLB borrowings, decreased $1,936,000 to $69,006,000 for the second quarter of 2026 compared to $70,942,000 for the same period in 2025. Subordinated debt increased $14,850,000, as a result of the Victory Merger, to $53,991,000.
Current wording
Average earning assets for the third quarter of 2026 were $2,350,462,000, an increase of $439,374,000, or 23.0%, from the third quarter of 2025, with average loans increasing $509,380,000, or 41.6%, and average investment securities decreasing $87,398,000, or 14.3%, over the same period in 2025. Average loans as a percentage of average earning assets was 73.8% for the third quarter of 2026, compared to 64.1% for the third quarter of 2025. On the funding side, average deposits increased $397,272,000, or 23.7%, to $2,075,390,000 for the third quarter of 2026. Average short-term borrowed funds, which consisted primarily of average commercial repurchase agreements and FHLB borrowings, decreased $3,937,000 to $53,126,000 for the third quarter of 2026 compared to $57,063,000 for the same period in 2025. Subordinated debt increased $14,708,000, as a result of the Victory Merger, to $53,899,000.
Previous wording
The net interest margin for the second quarter of 2026 increased 47 basis points to 3.16% from 2.69% for the same period in 2025. 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 have had a positive impact on the net interest margin.
Current wording
The net interest margin for the third quarter of 2026 increased 53 basis points to 3.25% from 2.72% for the same period in 2025. 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 have had a positive impact on the net interest margin.
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 $7,504,000, or 32.3%, to $30,714,000 for the second quarter of 2026; and total interest expense increased $1,822,000, or 17.4%, to $12,280,000.
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 $7,808,000, or 33.0%, to $31,435,000 for the third quarter of 2026; and total interest expense increased $1,639,000, or 15.6%, to $12,159,000.
Previous wording
The yield on earning assets on a tax-equivalent basis increased 36 basis points to 5.26% from 4.90% for the same period in 2025. The cost of interest-bearing liabilities declined 14 basis points to 2.54% for the second quarter of 2026, compared with 2.68% for the same period in 2025.
Current wording
The yield on earning assets on a tax-equivalent basis increased 40 basis points to 5.31% from 4.91% for the same period in 2025. The cost of interest-bearing liabilities declined 12 basis points to 2.52% for the third quarter of 2026, compared with 2.64% for the same period in 2025. QNB sold $250,712,000 in low-yielding securities and purchased $138,605,000 in high-yielding securities as part of the balance sheet restructuring during the third quarter of 2026.
Previous wording
Interest income on investment securities decreased $835,000 when comparing the second quarters of 2026 and 2025. The average yield on the investment portfolio was 2.44% for the second quarter of 2026 compared with 2.84% for the same period in 2025, a decrease of 40 basis points. Average securities for the three and six months ended June 30, 2026 include the three-month impact of acquiring $15,605,000 in securities from the acquisition and the cancellation of $3,000,000 subordinated note owned by QNB and issued by Victory.
Current wording
Interest income on investment securities decreased $971,000 when comparing the third quarters of 2026 and 2025. The average yield on the investment portfolio was 2.59% for the third quarter of 2026 compared with 2.85% for the same period in 2025, a decrease of 26 basis points. Average securities for the three and nine months ended September 30, 2026 include the three- and six-months, respectively, impact of acquiring $15,605,000 in securities from the acquisition and the cancellation of $3,000,000 subordinated note owned by QNB and issued by Victory.
Previous wording
The yield on U.S. Treasury securities was 3.68% for the second quarter of 2026 compared to 4.24% for the same period in 2025. The 56 basis-point decline in rate and the average balances decrease of $220,000 caused the decrease in interest income of $32,000. The average balances of U.S. Government agency securities increased $9,000 as the average rate remained unchanged at 1.18%.
Current wording
The yield on U.S. Treasury securities was 3.97% for the third quarter of 2026 compared to 4.18% for the same period in 2025. The 21 basis-point decline in rate was more than offset by the average balances increase of $12,586,000 and caused the increase in interest income of $115,000. QNB purchased $39,300,000 in U.S. Treasury securities as part of the balance sheet restructuring. The average balances of U.S. Government agency securities decreased $23,402,000 as the average rate remained fairly flat at 1.19%. QNB sold $73,975,000 and purchased $1,016,000 in U.S. Government agency securities as part of the balance sheet restructuring.
Previous wording
Interest income on municipal securities, which are primarily tax-exempt, decreased $139,000 due to a 53 basis-point decrease in rate, and a $163,000 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 $158,000 due to a 31 basis-point decrease in rate and a $11,670,000 decrease in average balances. Typically, QNB purchases municipal bonds with 10- to 20-year maturities and may have call dates between 2-10 years. QNB sold $53,484,000 and purchased $23,122,000 in municipal securities as part of the balance sheet restructuring.
Previous wording
Interest income on mortgage-backed securities and CMOs decreased $633,000 and average balances decreased $36,094,000 and the yield decreased 51 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 $765,000 and average balances decreased $62,910,000 and the yield decreased 53 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. QNB sold $123,254,000 and purchased $52,876,000 in mortgage-backed securities and CMOs as part of the balance sheet restructuring.
Previous wording
Interest income on corporate debt and mutual funds decreased $31,000 as average balances increased $3,104,000 and the average yield decreased 48 basis points.
Current wording
Interest income on corporate debt and mutual funds decreased $95,000 as average balances decreased $2,549,000 and the average yield decreased 35 basis points. QNB purchased $22,291,000 in corporate debt securities as part of the balance sheet restructuring.
Previous wording
Average loans the three and six months ended June 30, 2026 include the three-month impact of acquiring $408,379,000 in loans from the acquisition of Victory. Income on loans increased $8,579,000 to $26,691,000 when comparing the second quarters of 2026 and 2025, with a $493,981,000 increase in average balances contributing to an increase in interest income of $7,449,000 and a 29-basis point increase in yield contributing to a $1,130,000 increase in interest income.
Current wording
Average loans the three and nine months ended September 30, 2026 include the three- and six-month, respectively, impact of acquiring $408,379,000 in loans from the acquisition of Victory. Income on loans increased $8,735,000 to $27,164,000 when comparing the third quarters of 2026 and 2025, with a $509,380,000 increase in average balances contributing to an increase in interest income of $7,757,000 and a 24-basis point increase in yield contributing to a $978,000 increase in interest income.
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 $7,322,000 when comparing the second quarters of 2026 and
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 $7,445,000 when comparing the third quarters of 2026 and 2025, primarily due to a $431,276,000 increase in average balances contributing to an increase in interest income of $6,470,000 and a 30-basis point increase in rate from 5.95% in 2025 to 6.25% contributing to an increase of $975,000 to interest income.
Previous wording
Income on commercial and industrial loans increased $531,000 when comparing the second quarters of 2026 and 2025. The average yield on these loans decreased 29 basis points to 7.12% resulting in a decrease in income of $132,000; this was offset by an average balances increased $35,906,000, to $181,167,000 for the second quarter of 2026 resulting in a $663,000 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 increased $454,000 when comparing the third quarters of 2026 and 2025. The average yield on these loans decreased 32 basis points to 7.13% resulting in a decrease in income of $127,000; this was offset by an average balances increase of $30,937,000, to $159,681,000 for the third quarter of 2026 resulting in a $581,000 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 $76,000 for the second quarter of 2026 compared to the same period in 2025. Average balances increased $1,895,000 to $21,242,000 for the second quarter of 2026. The yield on municipal loans increased 108 basis points, to 5.31% for the second quarter of 2026, compared with the same period in 2025.
Current wording
Tax-exempt loan income increased $102,000 for the third quarter of 2026 compared to the same period in 2025. Average balances increased $3,772,000 to $23,351,000 for the third quarter of 2026. The yield on municipal loans increased 104 basis points, to 5.32% for the third quarter of 2026, compared with the same period in 2025.
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 $169,000 when comparing the second quarter of 2026 to the same period in 2025. Average residential mortgage loan balances increased by $8,350,000, or 7.3%, to $122,950,000 for the second quarter of 2026 compared to the same period in 2025, which contributed a $92,000 increase in interest income. The average yield on the portfolio increased 25 basis points and contributed an increase of $77,000 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 2026 period by $32,331,000 to $102,997,000, contributing to a $516,000 increase in interest income; this was partly offset by an average yield decrease of 28 basis points causing a $71,000 decrease in interest income. The yield on the consumer portfolio decreased 11 basis points to 7.59% for the second quarter of 2026 and there was a $1,973,000 increase in average balances resulting in a net $36,000 increase in interest income.
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 $200,000 when comparing the third quarter of 2026 to the same period in 2025. Average residential mortgage loan balances increased by $7,558,000, or 6.5%, to $124,108,000 for the third quarter of 2026 compared to the same period in 2025, which contributed a $85,000 increase in interest income. The average yield on the portfolio increased 37 basis points and contributed an increase of $115,000 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 2026 period by $34,459,000 to $105,549,000, contributing to a $551,000 increase in interest income; this was partly offset by an average yield decrease of 20 basis points causing a $53,000 decrease in interest income. The yield on the consumer portfolio increased 58 basis points to 8.64% for the third quarter of 2026 and there was a $1,428,000 increase in average balances resulting in a net $36,000 increase in interest income.
Previous wording
Earning assets are funded by deposits and borrowed funds. Average interest-bearing deposits for the three and six months ended June 30, 2026 include the three-month impact of acquiring $338,004,000 from the acquisition of Victory. Average borrowings for the three and six months ended June 30, 2026 include the three-month impact of acquiring $14,650,000 in subordinated debt from the acquisition of Victory. Interest expense increased $1,822,000, when comparing the second quarter of 2026 to the same period in 2025. Interest expense on interest-bearing deposits increased $1,640,000 to $10,404,000 when comparing the second quarters of 2026 and 2025, with a net $364,916,000 increase in average balances contributing to a net increase in interest expense of $1,977,000 and a 12-basis point decrease in yield contributing to a $337,000 decrease in interest expense.
Current wording
Earning assets are funded by deposits and borrowed funds. Average interest-bearing deposits for the three and nine months ended September 30, 2026 include the three- and six-month, respectively, impact of acquiring $338,004,000 from the acquisition of Victory. Average borrowings for the three and nine months ended September 30, 2026 include the three- and six-month impact of acquiring $14,650,000 in subordinated debt from the acquisition of Victory. Interest expense increased $1,639,000, when comparing the third quarter of 2026 to the same period in 2025. Interest expense on interest-bearing deposits increased $1,383,000 to $10,452,000 when comparing the third quarters of 2026 and 2025, with a net $322,394,000 increase in average balances contributing to a net increase in interest expense of $1,824,000 and a 13-basis point decrease in yield contributing to a $441,000 decrease in interest expense.
Previous wording
Average interest-bearing demand accounts increased $107,063,000 to $483,798,000 for the second quarter of 2026 and the average rate paid on these deposits increased 25 basis points; interest expense on interest-bearing demand accounts increased $550,000 to $1,438,000 for the same period. Average non-interest-bearing demand accounts increased $61,860,000 to $259,935,000 for the second quarter of 2026. Average money market accounts increased $127,331,000 to $386,952,000 for the second quarter of 2026 compared with the same period in 2025. Interest expense on money market accounts increased $829,000 to $2,691,000, and the average interest rate paid on money market accounts decreased nine basis points to 2.79% for the second quarter of 2026. Most of the balances in this category are in products that pay tiered rates based on account balances.
Current wording
Average interest-bearing demand accounts increased $75,074,000 to $452,547,000 for the third quarter of 2026 and the average rate paid on these deposits increased 11 basis points; interest expense on interest-bearing demand accounts increased $315,000 to $1,248,000 for the same period. Average non-interest-bearing demand accounts increased $74,878,000 to $270,227,000 for the third quarter of 2026. Average money market accounts increased $125,820,000 to $382,109,000 for the third quarter of 2026 compared with the same period in 2025. Interest expense on money market accounts increased $846,000 to $2,698,000, and the average interest rate paid on money market accounts decreased seven basis points to 2.80% for the third quarter of 2026. 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 $205,000 to $1,222,000 for the second quarter of 2026. The average interest rate paid on municipal interest-bearing demand accounts decreased 66 basis points to 3.26% for the second quarter of 2026 over the same quarter of 2025, and average balances increased $3,986,000 to $150,200,000. 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 $174,000 to $1,523,000 for the third quarter of 2026. The average interest rate paid on municipal interest-bearing demand accounts decreased 58 basis points to 3.18% for the third quarter of 2026 over the same quarter of 2025, and average balances increased $10,786,000 to $189,947,000. 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 increased $460,000 when comparing the second quarter of 2026 to the same quarter of 2025. The average interest rate paid on savings accounts increased 26 basis points to 1.55% for the second quarter of 2026 compared to 1.29% for the same period in 2025. Average savings balances increased $71,011,000 to $352,087,000 for the second quarter of 2026. QNB’s online e-Savings product is the largest category of savings deposits, with average balances for the second quarter of 2026 of $216,625,000 compared to $208,239,000 in the same period of 2025. The average yield paid on these accounts was 1.70% for the both second quarters of 2026 and 2025. Other savings account average balances, increased $62,625,000 when comparing the second quarter of 2026 compared to the same period in 2025 and interest expense increased $423,000.
Current wording
Interest expense on savings accounts increased $438,000 when comparing the third quarter of 2026 to the same quarter of 2025. The average interest rate paid on savings accounts increased 25 basis points to 1.53% for the third quarter of 2026 compared to 1.28% for the same period in 2025. Average savings balances increased $68,976,000 to $346,784,000 for the third quarter of 2026. QNB’s online e-Savings product is the largest category of savings deposits, with average balances for the third quarter of 2026 of $217,205,000 compared to $206,099,000 in the same period of 2025. The average yield paid on these accounts was 1.70% for both third quarters of 2026 and 2025. Other savings account average balances, increased $57,870,000 when comparing the third quarter of 2026 compared to the same period in 2025 and interest expense increased $385,000.
Previous wording
Interest expense on time deposits totaled $3,692,000 for the second quarter of 2026 compared to $3,686,000 in 2025. Average total time deposits increased $55,525,000 to $441,794,000 for the second quarter of 2026. 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 $3,646,000 for the third quarter of 2026 compared to $3,688,000 in 2025. Average total time deposits increased $41,738,000 to $433,776,000 for the third quarter of 2026. 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 $416,806,000, or 96%, of time deposits at June 30, 2026 will mature over the next 12 months. The average rate paid on these time deposits is approximately 3.34%. 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 $373,130,000, or 87%, of time deposits at September 30, 2026 will mature over the next 12 months. The average rate paid on these time deposits is approximately 3.32%. 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 and short-term FHLB borrowing. Interest expense on short-term borrowings decreased $93,000 for the second quarter of 2026 to $596,000 when compared to the same period in 2025. When comparing these same periods, average balances decreased $1,936,000 to $69,006,000 and average rate decreased 46 basis points to 3.45%.
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 decreased $91,000 for the third quarter of 2026 to $423,000 when compared to the same period in 2025. When comparing these same periods, average balances decreased $3,937,000 to $53,126,000 and average rate decreased 41 basis points to 3.16%.
Previous wording
QNB Corp. issued $40,000,000 of subordinated debt in 2024 and acquired $17,650,000 of subordinated debt from Victory in the Victory Merger; $3,000,0000 of subordinated debt issued by Victory was owned by QNB and cancelled as of the merger date. The average carrying value net of deferred costs was $53,991,000 for the second quarter of 2026 compared to $39,141,000 for same period in 2025. The average yield decreased ten basis points from 9.58% to 9.48%.
Current wording
QNB Corp. issued $40,000,000 of subordinated debt in 2024 and acquired $17,650,000 of subordinated debt from Victory in the Victory Merger; $3,000,0000 of subordinated debt issued by Victory was owned by QNB and cancelled as of the merger date. The average carrying value net of deferred costs was $53,899,000 for the third quarter of 2026 compared to $39,191,000 for same period in 2025. The average yield decreased four basis points from 9.57% to 9.53%. QNB called and paid off $13,000,000 in subordinated debt during the third quarter of 2026.
Previous wording
Net Interest Income and Net Interest Margin – Six-Month Comparison
Current wording
Net Interest Income and Net Interest Margin – Nine-Month Comparison
Previous wording
For the six-month period ended June 30, 2026 average earnings assets increased $235,469,000, or 12.4%, to $2,127,393,000, with average loans increasing 23.0%, average investment securities decreasing 5.0%, and average total deposits increasing $217,373,000, or 13.2%, to $1,858,007,000, compared to the same period in 2025. The net interest margin on a tax-equivalent basis was 3.00% for the six-month period ended June 30, 2026, a 40-basis point increase from the same period in 2025.
Current wording
For the nine-month period ended September 30, 2026 average earnings assets increased $304,184,000, or 16.0%, to $2,202,567,000, with average loans increasing 29.3%, average investment securities decreasing 8.1%, and average total deposits increasing $277,998,000, or 16.8%, to $1,931,264,000, compared to the same period in 2025. The net interest margin on a tax-equivalent basis was 3.09% for the nine-month period ended September 30, 2026, a 45-basis point increase from the same period in 2025.
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Previous report — wording carried elsewhere
Average earning assets and interest-bearing liabilities for the three and six months ended June 30, 2026 include the three-month impact of acquiring $434,318,000 in interest-earnings assets and $352,654,000 in interest-bearing liabilities which include the cancellation of
Previous report — wording carried elsewhere
QNB acquired $3,000,0000 in federal funds from Victory; these funds matured in the second quarter of 2026.