QUAKERTOWN, PA — QNB Corp. (OTCQX: QNBC) recently reported first-quarter 2026 net income of $2,765,000, or $0.73 per diluted share, driven by higher net interest income and loan growth, while merger-related costs tied to its acquisition of Victory Bancorp weighed on results.
That compares with net income of $2,578,000, or $0.69 per diluted share, in the same period a year earlier. The company said results included $754,000 in after-tax merger-related costs, with adjusted diluted earnings per share of $0.93 excluding those expenses.
The acquisition of Victory Bancorp, based in Limerick, Pennsylvania, closed April 1 and expanded QNB’s footprint in Montgomery County, bringing total assets of the combined franchise to about $2.4 billion.
Return on average assets was 0.59% for the quarter, up from 0.56% a year earlier, while return on average equity declined to 8.40% from 9.73%. Excluding merger-related costs, return on average assets was 0.75% and return on average equity was 10.69%.
Net interest income rose to $13,109,000, an increase of $1,572,000 from the prior-year period, as the net interest margin expanded to 2.82% from 2.51%.
The yield on earning assets remained at 4.81%, while the cost of interest-bearing liabilities fell to 2.42% from 2.76%. Lower borrowing costs and growth in commercial real estate lending contributed to the margin expansion.
Total assets increased to $1,923,123,000 as of March 31, from $1,906,005,000 at year-end. Loans grew $20,699,000, or 1.6%, to $1,282,773,000, while deposits rose $10,920,000, or 0.7%, to $1,653,431,000.
The provision for credit losses declined to $303,000 from $550,000 a year earlier. The allowance for credit losses stood at $9,531,000, or 0.74% of loans, compared with 0.73% at the end of 2025.
Nonperforming loans increased to $9,614,000, or 0.75% of loans, from $8,793,000, or 0.70%, primarily due to one retail borrower. The company reported net loan recoveries of $13,000, compared with charge-offs of $3,000 a year earlier.
Noninterest income rose to $1,801,000 from $1,584,000, driven by higher overdraft fees, debit card income, and brokerage and advisory revenue.
Noninterest expense increased to $11,138,000 from $9,369,000, including $888,000 in pre-tax merger-related costs. Excluding those expenses, costs rose due to higher salaries, benefits, software maintenance, and third-party service expenses.
The provision for income taxes increased to $707,000 from $624,000, reflecting higher taxable income. The effective tax rate rose to 20.4% from 19.5%.
President and Chief Executive Officer Dave Freeman said, “We reported solid first-quarter earnings growth driven by improved margins, higher net interest income, and continued loan growth.”
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