QNB Corp. Reports Earnings For First Quarter 2025
QUAKERTOWN, Pa., April 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 first quarter of 2025 of $2,578,000, or $0.69 per share on a diluted basis. This compares to net income of $2,594,000, or $0.71 per share on a diluted basis, for the same period in 2024.
For the first quarter of 2025, the annualized rate of return on average assets and average shareholders’ equity was 0.54% and 6.24%, respectively, compared with 0.59% and 6.53%, respectively, for the first quarter 2024.
The operating performance of the Bank, a wholly-owned subsidiary of QNB Corp., improved for the quarter ended March 31, 2025, in comparison with the same period in 2024, due primarily to improvement in the interest margin causing a $2,229,000 increase in net interest income and an increase in non-interest income of $99,000; this was partly offset by an increase in the provision for credit losses on loans and unfunded commitments of $644,000 and an increase in non-interest expense of $483,000. The change in contribution from QNB Corp. for the quarter ended March 31, 2025, compared with the same period in 2024, is primarily due to a decrease in net interest income of $937,000, related to the subordinated debt issuance in 2024.
The following table presents disaggregated net income (loss):
| Three months ended, | |||||||||||
| 3/31/2025 | 3/31/2024 | Variance | |||||||||
| QNB Bank | $ | 3,292,000 | $ | 2,331,000 | $ | 961,000 | |||||
| QNB Corp | (714,000 | ) | 263,000 | (977,000 | ) | ||||||
| Consolidated net income | $ | 2,578,000 | $ | 2,594,000 | $ | (16,000 | ) | ||||
Total assets as of March 31, 2025 were $1,896,189,000 compared with $1,870,894,000 at December 31, 2024. Total cash and cash equivalents increased $30,844,000, or 60.8%, to $81,557,000, primarily due to increases in customer deposits. Loans receivable decreased $3,886,000, or 0.3%, to $1,212,162,000. Total deposits increased $36,014,000, or 2.2%, to $1,664,555,000. Short-term borrowing declined $10,545,000, or 19.6%.
“The Bank continued to navigate evolving fiscal policy decisions, unprecedented economic uncertainty, and market impacts, which resulted in relatively flat deposit and loan growth for the quarter,” said David W. Freeman, President and Chief Executive Officer. Freeman continued, “We are pleased with the growth in net interest income at an all-time high in the first quarter, driven by an increase in average interest rates received on our loan portfolio, combined with a decrease in average interest rates paid on deposit balances. Furthermore, we believed it prudent to modestly increase our loan loss reserves in the first quarter and will continue to closely watch asset quality as the economic environment develops while looking for responsible growth opportunities for the success of our company.”
Net Interest Income and Net Interest Margin
Net interest income for the quarter ended March 31, 2025 totaled $22,198,000, an increase of $2,629,000, from the same period in 2024. Net interest margin was 2.51% for the first quarter of 2025 and 2.39% for the same period in 2024.
The yield on earning assets was 4.81% for the first quarter of 2025, compared with 4.57% in the first quarter of 2024; an increase of 24 basis points. The cost of interest-bearing liabilities was 2.76% for the quarter ended March 31, 2025, compared with 2.66% for the same period in 2024, an increase of 10 basis points.
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. Loan growth was primarily in commercial real estate, which comprised 45.5% of average earning assets in the three months of 2025 compared with 44.7% for the same period in 2024, and the increases in both rates and volume in commercial real estate loans majorly contributed to the 37 basis-point increase in the yield on loans. The increase in the available-for-sale investments portfolio was primarily in corporate debt securities. The 23-basis point increase in rate on investments was primarily due to the 129-basis point increase in the yield on corporate debt securities. The average rate paid on interest-bearing deposits decreased 12 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 ten basis points.
Asset Quality, Provision for Credit Losses on Loans and Allowance for Credit Losses
QNB recorded $551,000 in the provision for credit losses on loans in the first quarter of 2025 compared to a $93,000 reversal in the provision in the first quarter of 2024. QNB's allowance for credit losses on loans of $9,298,000 represents 0.77% of loans receivable at March 31, 2025, compared to $8,744,000, or 0.72% of loans receivable at December 31, 2024. The five basis point increase in the allowance for credit losses on loans was primarily due to an increase in reserves for collateral dependent loans and deterioration in the economic outlook. Net loan recoveries were $3,000 for the quarter ended March 31, 2025, compared with charge-offs of $21,000 for the same period in 2024. Annualized net loan recoveries for the quarter ended March 31, 2025 were 0.00% and annualized net loan charge-offs were 0.01% for the quarter ended March 31, 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 $8,407,000, or 0.69% of loans receivable at March 31, 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. Commercial loans classified as substandard or doubtful loans totaled $34,448,000 at March 31, 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 $1,584,000 for the first quarter of 2025 compared with $1,836,000 for the same period in 2024. There were no realized and unrealized gain/loss on securities for the quarter ended March 31, 2025 compared to a net gain of $347,000 in the same period in 2024. Excluding the net realized and unrealized gains on securities, non-interest income increased $95,000, or 6.4%.
Fees for service to customers increased $27,000 for the quarter ended March 31, 2025, as overdraft fees increased $12,000 and other deposit-related fees increased $15,000. ATM and debit card increased $20,000 due to volume. Retail brokerage and advisory income increased $48,000 to $141,000 for the same period. Other non-interest income decreased $3,000 for the same period due to a decline in merchant fee income of $24,000, partly offset by an increase in letter of credit fees of $11,000 and title company income of $8,000.
Non-Interest Expense
Total non-interest expense was $9,369,000 for the first quarter of 2025 compared with $8,833,000 for the same period in 2024. Salaries and benefits expense increased $58,000, or 1.2%, to $5,032,000 when comparing the two quarters. Salary expense and related payroll taxes increased $199,000, or 4.8%, to $4,344,000 during the first quarter of 2025 compared to the same period in 2024, primarily due to pay increases. Benefits expense decreased $141,000, or 17.0%, when comparing the two periods primarily due to a reduction in medical costs.
Net occupancy and furniture and equipment expense increased $221,000, or 14.6%, to $1,736,000 for the first quarter of 2025 primarily due to software maintenance costs and depreciation. Other non-interest expense increased $257,000, or 11.0%, when comparing first quarter of 2025 with the same period in 2024 due to an increase in bank shares tax of $167,000, due to timing of tax credits and increased capital, an increase in write-offs relating to fraud on customer accounts of $77,000, and an increase in director fees of $79,000, as fees were bought in line with peer groups. These increases were partly offset by decreases in marketing expense of $77,000, due to timing of events and promotions.
Income Taxes
Provision for income taxes decreased $39,000 to $624,000 in the first quarter of 2025 due to decreased pre-tax income, compared with the same period in 2024. The effective tax rate for the quarter ended March 31, 2025 was 19.5% compared with 20.4% 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) | 3/31/25 | 12/31/24 | 9/30/24 | 6/30/24 | 3/31/24 | ||||||||||||||
| Assets | $ | 1,896,189 | $ | 1,870,894 | $ | 1,841,563 | $ | 1,761,487 | $ | 1,716,081 | |||||||||
| Cash and cash equivalents | 81,557 | 50,713 | 104,232 | 76,909 | 50,963 | ||||||||||||||
| Investment securities | |||||||||||||||||||
| Debt securities, AFS | 547,138 | 546,559 | 510,036 | 460,418 | 481,596 | ||||||||||||||
| Equity securities | — | — | 2,760 | 7,233 | 6,217 | ||||||||||||||
| Loans held-for-sale | 248 | 664 | 294 | 786 | — | ||||||||||||||
| Loans receivable | 1,212,162 | 1,216,048 | 1,171,361 | 1,162,310 | 1,122,616 | ||||||||||||||
| Allowance for credit losses on loans | (9,298 | ) | (8,744 | ) | (8,987 | ) | (8,858 | ) | (8,738 | ) | |||||||||
| Net loans | 1,202,864 | 1,207,304 | 1,162,374 | 1,153,452 | 1,113,878 | ||||||||||||||
| Deposits | 1,664,555 | 1,628,541 | 1,626,284 | 1,572,839 | 1,536,188 | ||||||||||||||
| Demand, non-interest bearing | 203,666 | 183,499 | 190,240 | 190,333 | 188,260 | ||||||||||||||
| Interest-bearing demand, money market and savings | 1,083,011 | 1,063,584 | 1,055,409 | 1,003,813 | 990,451 | ||||||||||||||
| Time | 377,878 | 381,458 | 380,635 | 378,693 | 357,477 | ||||||||||||||
| Short-term borrowings | 43,299 | 53,844 | 22,918 | 49,066 | 55,088 | ||||||||||||||
| Long-term debt | 30,000 | 30,000 | 30,000 | 30,000 | 20,000 | ||||||||||||||
| Subordinated debt | 39,118 | 39,068 | 39,030 | — | — | ||||||||||||||
| Shareholders' equity | 108,223 | 103,349 | 105,340 | 96,885 | 93,686 | ||||||||||||||
| Asset Quality Data (Period End) | |||||||||||||||||||
| Non-accrual loans | $ | 8,651 | $ | 1,975 | $ | 1,696 | $ | 2,078 | $ | 2,001 | |||||||||
| Loans past due 90 days or more and still accruing | — | — | — | — | — | ||||||||||||||
| Non-performing loans | 8,651 | 1,975 | 1,696 | 2,078 | 2,001 | ||||||||||||||
| Other real estate owned and repossessed assets | — | — | — | — | — | ||||||||||||||
| Non-performing assets | $ | 8,651 | $ | 1,975 | $ | 1,696 | $ | 2,078 | $ | 2,001 | |||||||||
| Allowance for credit losses on loans | $ | 9,298 | $ | 8,744 | $ | 8,987 | $ | 8,858 | $ | 8,738 | |||||||||
| Non-performing loans / Loans excluding held-for-sale | 0.71 | % | 0.16 | % | 0.14 | % | 0.18 | % | 0.18 | % | |||||||||
| Non-performing assets / Assets | 0.46 | % | 0.11 | % | 0.09 | % | 0.12 | % | 0.12 | % | |||||||||
| Allowance for credit losses on loans / Loans excluding held-for-sale | 0.77 | % | 0.72 | % | 0.77 | % | 0.76 | % | 0.78 | % | |||||||||
| QNB Corp. | |||||||||||||||
| Consolidated Selected Financial Data (unaudited) | |||||||||||||||
| (Dollars in thousands, except per share data) | Three months ended, | ||||||||||||||
| For the period: | 3/31/25 | 12/31/24 | 9/30/24 | 6/30/24 | 3/31/24 | ||||||||||
| Interest income | $ | 22,198 | $ | 22,209 | $ | 21,945 | $ | 20,345 | $ | 19,569 | |||||
| Interest expense | 10,661 | 11,234 | 10,818 | 9,753 | 9,401 | ||||||||||
| Net interest income | 11,537 | 10,975 | 11,127 | 10,592 | 10,168 | ||||||||||
| (Reversal in provision) provision for credit losses | 550 | (255 | ) | 159 | 114 | (86 | ) | ||||||||
| Net interest income after provision for credit losses | 10,987 | 11,230 | 10,968 | 10,478 | 10,254 | ||||||||||
| Non-interest income: | |||||||||||||||
| Fees for services to customers | 447 | 454 | 469 | 427 | 420 | ||||||||||
| ATM and debit card | 656 | 708 | 691 | 705 | 636 | ||||||||||
| Retail brokerage and advisory income | 141 | 118 | 139 | 126 | 93 | ||||||||||
| Net realized gain (loss) on investment securities | - | 1,414 | 224 | (1,096 | ) | 377 | |||||||||
| Unrealized (loss) gain on equity securities | - | (1,344 | ) | 143 | 1,016 | (30 | ) | ||||||||
| Net (loss) gain on sale of loans | 18 | (3 | ) | 19 | (2 | ) | 15 | ||||||||
| Other | 322 | 298 | 282 | 289 | 325 | ||||||||||
| Total non-interest income | 1,584 | 1,645 | 1,967 | 1,465 | 1,836 | ||||||||||
| Non-interest expense: | |||||||||||||||
| Salaries and employee benefits | 5,032 | 5,079 | 4,650 | 5,038 | 4,974 | ||||||||||
| Net occupancy and furniture and equipment | 1,736 | 1,653 | 1,531 | 1,481 | 1,515 | ||||||||||
| Other | 2,601 | 2,349 | 2,455 | 2,415 | 2,344 | ||||||||||
| Total non-interest expense | 9,369 | 9,081 | 8,636 | 8,934 | 8,833 | ||||||||||
| Income before income taxes | 3,202 | 3,794 | 4,299 | 3,009 | 3,257 | ||||||||||
| Provision for income taxes | 624 | 743 | 961 | 544 | 663 | ||||||||||
| Net income | $ | 2,578 | $ | 3,051 | $ | 3,338 | $ | 2,465 | $ | 2,594 | |||||
| Share and Per Share Data: | |||||||||||||||
| Net income - basic | $ | 0.70 | $ | 0.83 | $ | 0.91 | $ | 0.67 | $ | 0.71 | |||||
| Net income - diluted | $ | 0.69 | $ | 0.83 | $ | 0.91 | $ | 0.67 | $ | 0.71 | |||||
| Book value | $ | 29.17 | $ | 27.96 | $ | 28.57 | $ | 26.34 | $ | 25.57 | |||||
| Cash dividends | $ | 0.38 | $ | 0.37 | $ | 0.37 | $ | 0.37 | $ | 0.37 | |||||
| Average common shares outstanding -basic | 3,699,854 | 3,688,078 | 3,679,799 | 3,665,695 | 3,655,176 | ||||||||||
| Average common shares outstanding -diluted | 3,713,141 | 3,695,518 | 3,682,773 | 3,665,695 | 3,655,176 | ||||||||||
| Selected Ratios: | |||||||||||||||
| Return on average assets | 0.54 | % | 0.64 | % | 0.72 | % | 0.55 | % | 0.59 | % | |||||
| Return on average shareholders' equity | 6.24 | % | 7.36 | % | 8.13 | % | 6.14 | % | 6.53 | % | |||||
| Net interest margin (tax equivalent) | 2.51 | % | 2.38 | % | 2.48 | % | 2.46 | % | 2.39 | % | |||||
| Efficiency ratio (tax equivalent) | 70.65 | % | 71.16 | % | 65.27 | % | 73.26 | % | 72.73 | % | |||||
| Average shareholders' equity to total average assets | 8.67 | % | 8.63 | % | 8.80 | % | 8.97 | % | 8.98 | % | |||||
| Net loan charge-offs (recoveries) | $ | (3 | ) | $ | 1 | $ | 25 | $ | 12 | $ | 21 | ||||
| Net loan charge-offs (recoveries) - annualized / Average loans excluding held-for-sale | 0.00 | % | 0.00 | % | 0.01 | % | 0.00 | % | 0.01 | % | |||||
| Balance Sheet (Average) | |||||||||||||||
| Assets | $ | 1,932,938 | $ | 1,908,914 | $ | 1,856,034 | $ | 1,798,040 | $ | 1,778,585 | |||||
| Investment securities (AFS & Equities) | 626,557 | 614,329 | 552,323 | 569,135 | 578,615 | ||||||||||
| Loans receivable | 1,210,303 | 1,193,949 | 1,158,731 | 1,139,874 | 1,108,836 | ||||||||||
| Deposits | 1,633,196 | 1,635,629 | 1,600,925 | 1,542,661 | 1,497,692 | ||||||||||
| Shareholders' equity | 167,491 | 164,823 | 163,274 | 161,340 | 159,739 | ||||||||||
| QNB Corp. (Consolidated) | |||||||||||||||||||||||
| Average Balances, Rate, and Interest Income and Expense Summary (Tax-Equivalent Basis) | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| March 31, 2025 | March 31, 2024 | ||||||||||||||||||||||
| Average | Average | Average | Average | ||||||||||||||||||||
| Balance | Rate | Interest | Balance | Rate | Interest | ||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Investment securities: | |||||||||||||||||||||||
| U.S. Treasury | $ | 20,155 | 4.38 | % | $ | 217 | $ | 6,782 | 5.33 | % | $ | 90 | |||||||||||
| U.S. Government agencies | 75,960 | 1.18 | 224 | 84,951 | 1.17 | 248 | |||||||||||||||||
| State and municipal | 105,256 | 2.86 | 754 | 108,173 | 3.42 | 924 | |||||||||||||||||
| Mortgage-backed and CMOs | 363,641 | 2.43 | 2,208 | 365,983 | 2.59 | 2,373 | |||||||||||||||||
| Corporate debt securities and mutual funds | 61,545 | 6.88 | 1,058 | 6,707 | 5.59 | 94 | |||||||||||||||||
| Equities | - | - | - | 6,019 | 3.71 | 56 | |||||||||||||||||
| Total investment securities | 626,557 | 2.85 | 4,461 | 578,615 | 2.62 | 3,785 | |||||||||||||||||
| Loans: | |||||||||||||||||||||||
| Commercial real estate | 857,600 | 5.71 | 12,069 | 775,135 | 5.34 | 10,300 | |||||||||||||||||
| Residential real estate | 114,271 | 4.33 | 1,238 | 108,922 | 3.92 | 1,066 | |||||||||||||||||
| Home equity loans | 67,973 | 6.41 | 1,074 | 62,269 | 6.81 | 1,055 | |||||||||||||||||
| Commercial and industrial | 148,680 | 7.41 | 2,717 | 140,293 | 7.50 | 2,615 | |||||||||||||||||
| Consumer loans | 3,446 | 7.68 | 65 | 3,644 | 8.10 | 73 | |||||||||||||||||
| Tax-exempt loans | 18,795 | 4.15 | 192 | 18,641 | 3.82 | 177 | |||||||||||||||||
| Total loans, net of unearned income* | 1,210,765 | 5.81 | 17,355 | 1,108,904 | 5.54 | 15,286 | |||||||||||||||||
| Other earning assets | 47,641 | 4.44 | 522 | 46,645 | 5.51 | 639 | |||||||||||||||||
| Total earning assets | 1,884,963 | 4.81 | 22,338 | 1,734,164 | 4.57 | 19,710 | |||||||||||||||||
| Cash and due from banks | 13,226 | 12,769 | |||||||||||||||||||||
| Allowance for credit losses on loans | (8,739 | ) | (8,946 | ) | |||||||||||||||||||
| Other assets | 43,488 | 40,598 | |||||||||||||||||||||
| Total assets | $ | 1,932,938 | $ | 1,778,585 | |||||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||
| Interest-bearing deposits: | |||||||||||||||||||||||
| Interest-bearing demand | $ | 380,293 | 1.01 | % | 944 | $ | 321,904 | 0.80 | % | 643 | |||||||||||||
| Municipals | 149,579 | 3.95 | 1,456 | 131,887 | 4.81 | 1,577 | |||||||||||||||||
| Money market | 256,265 | 2.88 | 1,818 | 227,872 | 3.56 | 2,015 | |||||||||||||||||
| Savings | 279,657 | 1.30 | 893 | 298,353 | 1.28 | 949 | |||||||||||||||||
| Time < $100 | 178,500 | 3.79 | 1,670 | 157,712 | 3.76 | 1,473 | |||||||||||||||||
| Time $100 through $250 | 154,125 | 4.25 | 1,613 | 127,613 | 4.34 | 1,377 | |||||||||||||||||
| Time > $250 | 48,785 | 4.31 | 518 | 49,756 | 4.22 | 522 | |||||||||||||||||
| Total interest-bearing deposits | 1,447,204 | 2.50 | 8,912 | 1,315,097 | 2.62 | 8,556 | |||||||||||||||||
| Short-term borrowings | 47,529 | 3.89 | 456 | 87,441 | 2.88 | 625 | |||||||||||||||||
| Long-term debt | 30,111 | 4.73 | 356 | 20,000 | 4.36 | 220 | |||||||||||||||||
| Subordinated debt | 39,092 | 9.59 | 937 | — | — | — | |||||||||||||||||
| Total borrowings | 116,732 | 6.08 | 1,749 | 107,441 | 3.16 | 845 | |||||||||||||||||
| Total interest-bearing liabilities | 1,563,936 | 2.76 | 10,661 | 1,422,538 | 2.66 | 9,401 | |||||||||||||||||
| Non-interest-bearing deposits | 185,992 | 182,595 | |||||||||||||||||||||
| Other liabilities | 15,519 | 13,713 | |||||||||||||||||||||
| Shareholders' equity | 167,491 | 159,739 | |||||||||||||||||||||
| Total liabilities and | |||||||||||||||||||||||
| shareholders' equity | $ | 1,932,938 | $ | 1,778,585 | |||||||||||||||||||
| Net interest rate spread | 2.05 | % | 1.91 | % | |||||||||||||||||||
| Margin/net interest income | 2.51 | % | $ | 11,677 | 2.39 | % | $ | 10,309 | |||||||||||||||
| Tax-exempt securities and loans were adjusted to a tax-equivalent basis and are based on the Federal corporate tax rate of 21% | |||||||||||||||||||||||
| Non-accrual loans and investment securities are included in earning assets. | |||||||||||||||||||||||
| * Includes loans held-for-sale | |||||||||||||||||||||||
