QNB Corp. Reports Earnings for Second Quarter 2025
QUAKERTOWN, Pa., July 22, 2025 (GLOBE NEWSWIRE) -- QNB Corp. (the "Company" or "QNB") (OTCQX:QNBC), the parent company of QNB Bank (the "Bank"), reported net income for the second quarter of 2025 of $3,883,000 or $1.04 per share on a diluted basis. This compares 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 months ended June 30, 2025, QNB reported net income of $6,461,000, or $1.74 per share on a diluted basis. This compares to net income of $5,059,000, or $1.38 per share on a diluted basis, reported for the same period in 2024.
For the second quarter ended June 30, 2025, the annualized rate of return on average assets and average shareholders' equity was 0.83% and 14.25%, respectively, compared with 0.57% and 10.73%, respectively, for the second quarter 2024.
The operating performance of the Bank, a wholly-owned subsidiary of QNB Corp., improved for the quarter ended June 30, 2025, in comparison with the same period in 2024, due primarily to improvement in the interest margin causing a $2,915,000 increase in net interest income and a reduction in the provision for credit losses on loans and unfunded commitments of $260,000; this was partly offset by a decrease in non-interest income of $146,000 and an increase in non-interest expense of $539,000. The change in contribution from QNB Corp. for the quarter ended June 30, 2025, compared with the same period in 2024, is primarily due to a decrease in net interest income of $855,000, related to the subordinated debt issuance in 2024.
The following table presents disaggregated net income (loss):
Three months ended,
Six months ended,
6/30/2025
6/30/2024
Variance
6/30/2025
6/30/2024
Variance
QNB Bank
$
4,679,000
$
2,741,000
$
1,938,000
$
7,971,000
$
5,072,000
$
2,899,000
QNB Corp
(796,000
)
(276,000
)
(520,000
)
(1,510,000
)
(13,000
)
(1,497,000
)
Consolidated net income
$
3,883,000
$
2,465,000
$
1,418,000
$
6,461,000
$
5,059,000
$
1,402,000
Total assets as of June 30, 2025 were $1,884,828,000 compared with $1,870,894,000 at December 31, 2024. Total cash and cash equivalents increased $15,758,000, or 31.1%, to $66,471,000, primarily due to increases in customer deposits. Loans receivable increased $2,491,000 to $1,218,539,000. Total deposits increased $23,126,000, or 1.4%, to $1,651,667,000. Long-term borrowing declined $30,000,000 and short-term borrowing increased $13,620,000.
"Consistent with the first quarter, the Bank's operating performance continued to improve in the second quarter, primarily driven by an expanding net interest margin that positively impacted net interest income," said David W. Freeman, President and Chief Executive Officer. He added, "Loan and deposit balances remained stable, with modest increases. This tempered growth reflects our customers' continued cautious borrowing and spending amid ongoing economic uncertainty. Looking ahead, we remain cautiously optimistic about the second half of the year, supported by a strengthening pipeline and signs of businesses adapting to a new economic environment."
Net Interest Income and Net Interest Margin
Net interest income for the quarter ended June 30, 2025 totaled $12,652,000, an increase of $2,060,000, from the same period in 2024. Net interest margin was 2.69% for the second quarter of 2025 and 2.46% for the same period in 2024. Net interest margin was 2.60% for the six months ended June 30, 2025, compared with 2.43% for the same period in 2024.
The yield on earning assets was 4.90% for the second quarter of 2025, compared with 4.70% in the second quarter of 2024; an increase of 20 basis points. For the six-month period ended June 30, 2025, the yield on earning assets was 4.85%, compared with 4.64% for the same period in 2024. The cost of interest-bearing liabilities was 2.68% for the second quarter ended June 30, 2025, compared with 2.73% for the same period in 2024, a decrease of five basis points. For the six-month period ended June 30, 2025, the cost of interest-bearing liabilities was 2.72% compared with 2.70% for 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, higher-yielding securities and used to pay down short-term borrowings. Loan growth was primarily in commercial real estate, which comprised 45.5% of average earning assets in the six months of 2025 compared with 45.2% for the same period in 2024, and the increases in both rates and volume in commercial real estate loans majorly contributed to the 29 basis-point increase in the yield on loans. The increase in the available-for-sale investments portfolio was primarily in corporate debt securities. The 18-basis point increase in rate on investments was primarily due to the 96-basis point increase in the yield on corporate debt securities. The average rate paid on interest-bearing deposits decreased 22 basis points; this was more than offset by the issuance of subordinated debt, which was the primary contributor to the increase in the cost of funds of two basis points.
Asset Quality, Provision for Credit Losses on Loans and Allowance for Credit Losses
QNB recorded a reversal of $145,000 in the provision for credit losses on loans in the second quarter of 2025 compared to a $132,000 provision in the second quarter of 2024. QNB recorded a provision of $406,000 in the provision for credit losses on loans for the six-month ended June 30, 2025 compared to a $39,000 provision for the same period of 2024. QNB's allowance for credit losses on loans of $9,169,000 represents 0.75% of loans receivable at June 30, 2025, compared to $8,744,000, or 0.72% of loans receivable at December 31, 2024. The three-basis point increase in the allowance for credit losses on loans was primarily due to an increase in loans and reserves for collateral dependent loans partly offset by an improvement in the economic outlook. Net loan recoveries were $16,000 for the quarter ended June 30, 2025, compared with charge-offs of $12,000 for the same period in 2024. Annualized net loan recoveries for the quarter ended June 30, 2025 were 0.01% and annualized net loan charge-offs were 0.00% for the quarter ended June 30, 2024, of average loans receivable, respectively. Net loan recoveries were $19,000 for the six months ended June 30, 2025, compared with charge-offs of $33,000 for the same period in 2024. Annualized net loan recoveries for the six months ended June 30, 2025 were 0.00% compared to annualized net charge-offs of 0.01% for the same period in 2024, of average loans receivable, respectively.
Total non-performing loans, which represent loans on non-accrual status and loans past due 90 days or more and still accruing interest, were $8,947,000, or 0.73% of loans receivable at June 30, 2025, compared with $1,975,000, or 0.16% of loans receivable at December 31, 2024. The increase was primarily due to one commercial customer relationship. In cases where there is a collateral shortfall on non-accrual loans, specific reserves have been established based on updated collateral values even if the borrower continues to pay in accordance with the terms of the agreement. At June 30, 2025, $7,841,000, or approximately 88% of the loans classified as non-accrual, are current or past due less than 30 days. Commercial loans classified as substandard or doubtful loans totaled $34,275,000 at June 30, 2025, compared with $34,301,000 at December 31, 2024; these were comprised primarily of commercial real estate loans.
Non-Interest Income
Total non-interest income was $1,652,000 for the second quarter of 2025 compared with $1,465,000 for the same period in 2024. There were no realized and unrealized gain/loss on securities for the quarter ended June 30, 2025 compared to a net loss of $80,000 in the same period in 2024. Excluding the net realized and unrealized gains on securities, non-interest income increased $107,000, or 6.9%. During the second quarter of 2024 the Bank sold lower-yielding securities to better position its net interest margin; the total loss on security sales was $1,096,000. The Bank also completed the exchange offer to convert its Visa B-1 shares to B-2 and C shares; the Bank recorded a $1,354,000 unrealized gain on the Visa C shares in the second quarter of 2024.
Fees for service to customers increased $58,000 for the quarter ended June 30, 2025, as overdraft fees increased $45,000 and other deposit-related fees increased $13,000. ATM and debit card increased $19,000 due to volume. Retail brokerage and advisory income increased $14,000 to $140,000 for the same period. Other non-interest income increased $10,000 for the same period due to an increase in letter of credit fees of $7,000 and referral income of $6,000.
For the six months ended June 30, 2025, non-interest income was $3,236,000 a decrease of $65,000 compared to the same period in 2024, primarily due to the change in fair value of the equities portfolio of $986,000 in 2024; primarily related to the Visa stock conversion discussed above. Realized loss on sale of securities in 2024 was $719,000. Net gain on sale of loans increased $9,000 when comparing the six months ended June 30, 2025 with the same period in 2024. Increases in non-interest income for the six months ended June 30, 2025 compared to the same period in 2024 comprise: fees for services to customers, ATM and debit card fees and retail brokerage and advisory, which increased $85,000, $39,000 and $62,000, respectively. Other non-interest income increased $7,000 due primarily to increases in letter of credit fees and title insurance company income partly offset by a decrease in merchant servicing income.
Non-Interest Expense
Total non-interest expense was $9,562,000 for the second quarter of 2025 compared with $8,934,000 for the same period in 2024. Salaries and benefits expense increased $213,000, or 4.2%, to $5,251,000 when comparing the two quarters. Salary expense and related payroll taxes increased $350,000, or 8.5%, to $4,447,000 during the second quarter of 2025 compared to the same period in 2024, primarily due to pay increases. Benefits expense decreased $177,000, or 31.3%, when comparing the two periods primarily due to a reduction in medical costs.
Net occupancy and furniture and equipment expense increased $200,000, or 13.5%, to $1,681,000 for the second quarter of 2025 primarily due to software maintenance costs and depreciation. Other non-interest expense increased $215,000, or 8.9%, when comparing second quarter of 2025 with the same period in 2024 due to an increase in third-party services of $127,000 related to information technology services and consultant expense and an increase in write-offs relating to fraud on customer accounts of $150,000. These increases were partly offset by the recording of a potential expense of $85,000 related to the Visa stock exchange make-whole agreement in the 2024 period.
For the six months ended June 30, 2025, non-interest expense was $18,931,000, an increase of $1,164,000, or 6.6%, compared to the same period in 2024.
Income Taxes
Provision for income taxes increased $461,000 to $1,005,000 in the second quarter of 2025 due increased pre-tax income, compared with the same period in 2024. The effective tax rate for the quarter ended June 30, 2025 was 20.6% compared with 18.1% for the same period in 2024. The effective tax rate for the six months ended June 30, 2025 was 20.1% compared with 19.3% for the same period in 2024.
About the Company
QNB Corp. is the holding company for QNB Bank, which is headquartered in Quakertown, Pennsylvania. QNB Bank currently operates twelve branches in Bucks, Lehigh and Montgomery Counties and offers commercial and retail banking services in the communities it serves. In addition, the Company provides securities and advisory services under the name of QNB Financial Services through a registered Broker/Dealer and Registered Investment Advisor, and title insurance as a member of Laurel Abstract Company LLC. More information about QNB Corp. and QNB Bank is available at QNBBank.com.
Forward Looking Statement
This press release may contain forward-looking statements as defined in the Private Securities Litigation Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. Such factors include the possibility that increased demand or prices for the Company's financial services and products may not occur, changing economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission, including "Item lA. Risk Factors," set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.
Contacts:
David W. Freeman
Jeffrey Lehocky
President & Chief Executive Officer
Chief Financial Officer
215-538-5600 x-5619
215-538-5600 x-5716
QNB Corp.
Consolidated Selected Financial Data (unaudited)
(Dollars in thousands)
Balance Sheet (Period End)
6/30/25
3/31/25
12/31/24
9/30/24
6/30/24
Assets
$
1,884,828
$
1,896,189
$
1,870,894
$
1,841,563
$
1,761,487
Cash and cash equivalents
66,471
81,557
50,713
104,232
76,909
Investment securities
Debt securities, AFS
544,262
547,138
546,559
510,036
460,418
Equity securities
—
—
—
2,760
7,233
Loans held-for-sale
1,166
248
664
294
786
Loans receivable
1,218,539
1,212,162
1,216,048
1,171,361
1,162,310
Allowance for credit losses on loans
(9,169
)
(9,298
)
(8,744
)
(8,987
)
(8,858
)
Net loans
1,209,370
1,202,864
1,207,304
1,162,374
1,153,452
Deposits
1,651,667
1,664,555
1,628,541
1,626,284
1,572,839
Demand, non-interest bearing
201,460
203,666
183,499
190,240
190,333
Interest-bearing demand, money market and savings
1,060,688
1,083,011
1,063,584
1,055,409
1,003,813
Time
389,519
377,878
381,458
380,635
378,693
Short-term borrowings
67,464
43,299
53,844
22,918
49,066
Long-term debt
—
30,000
30,000
30,000
30,000
Subordinated debt
39,168
39,118
39,068
39,030
—
Shareholders' equity
113,269
108,223
103,349
105,340
96,885
Asset Quality Data (Period End)
Non-accrual loans
$
8,947
$
8,651
$
1,975
$
1,696
$
2,078
Loans past due 90 days or more and still accruing
—
—
—
—
—
Non-performing loans
8,947
8,651
1,975
1,696
2,078
Other real estate owned and repossessed assets
—
—
—
—
—
Non-performing assets
$
8,947
$
8,651
$
1,975
$
1,696
$
2,078
Allowance for credit losses on loans
$
9,169
$
9,298
$
8,744
$
8,987
$
8,858
Non-performing loans / Loans excluding held-for-sale
0.73
%
0.71
%
0.16
%
0.14
%
0.18
%
Non-performing assets / Assets
0.47
%
0.46
%
0.11
%
0.09
%
0.12
%
Allowance for credit losses on loans / Loans excluding held-for-sale
0.75
%
0.77
%
0.72
%
0.77
%
0.76
%
QNB Corp.
Consolidated Selected Financial Data (unaudited)
(Dollars in thousands, except per share data)
Three months ended,
Six months ended,
For the period:
6/30/25
3/31/25
12/31/24
9/30/24
6/30/24
6/30/25
6/30/24
Interest income
$
23,110
$
22,198
$
22,209
$
21,945
$
20,345
$
45,308
$
39,914
Interest expense
10,458
10,661
11,234
10,818
9,753
21,119
19,154
Net interest income
12,652
11,537
10,975
11,127
10,592
24,189
20,760
(Reversal of) provision for credit losses
(146
)
550
(255
)
159
114
404
28
Net interest income after provision for credit losses
12,798
10,987
11,230
10,968
10,478
23,785
20,732
Non-interest income:
Fees for services to customers
485
447
454
469
427
932
847
ATM and debit card
724
656
708
691
705
1,380
1,341
Retail brokerage and advisory income
140
141
118
139
126
281
219
Net realized gain (loss) on investment securities
-
-
1,414
224
(1,096
)
-
(719
)
Unrealized (loss) gain on equity securities
-
