QUAKERTOWN, PA — QNB Corp. (NASDAQ: QNBC) repositioned nearly half of its securities portfolio and unwound $162 million of interest-rate swaps, taking an estimated $26.2 million pre-tax third-quarter loss as it shifts capital toward higher-yielding securities and loan growth.
The parent of QNB Bank sold $254.4 million in book value of available-for-sale securities with a weighted-average yield of 1.59%. The securities represented about 46.8% of the company’s total securities portfolio.
QNB also unwound $162 million in notional pay-fixed swaps. The combined securities sales and swap unwind are expected to generate the approximately $26.2 million pre-tax loss in the third quarter of 2026.
The company is redeploying the net proceeds into higher-yielding, low-risk available-for-sale securities and loan growth, with an expected blended weighted-average yield of about 5.45%.
QNB expects the repositioning to increase earnings, net interest margin and return on average assets in future periods. The company also expects the transaction to improve its tangible common equity-to-tangible assets ratio.
Management expects to recover the estimated pre-tax loss in less than four years through the higher expected returns generated by the redeployed assets.
The securities sales did not affect shareholders’ equity or book value per share at the time of the transaction because unrealized losses on the available-for-sale securities were already reflected as a deduction to shareholders’ equity.
QNB and QNB Bank remained above the company’s internal capital minimums and regulatory thresholds required to be classified as well-capitalized following the repositioning.
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