The amortized cost and estimated fair values of investment securities available-for-sale at June 30, 2025 and December 31, 2024 were as follows:


	Fair		Gross unrealized holding		Gross unrealized holding			Gross unrealized fair value hedge			Amortized
June 30, 2025	value		gains		losses			gains (1)			cost
U.S. Treasury	$	19,468	$	—	$	(2	)	$	—		$	19,470
U.S. Government agency		69,407		—		(6,557	)		—			75,964
State and municipal		83,927		—		(20,478	)		(618	)		105,023
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		190,057		—		(30,518	)		(1,188	)		221,763
Collateralized mortgage obligations (CMOs)		158,631		9		(13,442	)		—			172,064
Corporate debt and money market funds		22,772		70		(181	)		—			22,883
Total investment debt securities available-for-sale	$	544,262	$	79	$	(71,178	)	$	(1,806	)	$	617,167


			Gross		Gross			Gross
			unrealized		unrealized			unrealized
	Fair		holding		holding			fair value hedge		Amortized
December 31, 2024	value		gains		losses			losses (1)		cost
U.S. Treasury	$	18,010	$	6	$	—		$	—	$	18,004
U.S. Government agency		66,908		—		(9,051	)		—		75,959
State and municipal		86,352		—		(20,631	)		1,566		105,417
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		198,510		—		(38,902	)		3,264		234,148
Collateralized mortgage obligations (CMOs)		161,646		31		(15,821	)		—		177,436
Corporate debt and money market funds		15,133		10		(304	)		—		15,427
Total investment debt securities available-for-sale	$	546,559	$	47	$	(84,709	)	$	4,830	$	626,391

(1) See Note 12

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at June 30, 2025 is shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Maturities for mortgage-backed securities and collateralized mortgage obligations are dependent upon the interest rate environment and prepayments of the underlying loans.

Proceeds from sales of investment securities available-for-sale were approximately $0 and $13,139,000 for the six months ended June 30, 2025 and 2024, respectively.

At June 30, 2025 and December 31, 2024, investment securities available-for-sale totaling approximately $236,699,000 and $241,586,000, respectively, were pledged as collateral for repurchase agreements and deposits of public funds.

The following table presents information related to the Company’s gains and losses on the sales and calls of securities available-for-sale, and losses recognized for the impairment of these investments. Gains and losses on available-for-sale securities are computed on the specific identification method and included in non-interest income. Gross realized losses on debt securities are net of impairment charges:

The tax applicable to the net realized losses for the three-month periods ended June 30, 2025 and 2024 was $0 and $230,000, respectively. The tax applicable to the net realized losses for the six-month periods ended June 30, 2025 and 2024 was $0 and $230,000, respectively.

QNB follows the accounting guidance in FASB ASC 326-10 as it relates to the recognition and presentation of impairment. This accounting guidance specifies that (a) if a company does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered impaired unless there

is a credit loss. When an entity does not intend to sell the security, and it is more likely than not that the entity will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an impairment of a debt security in earnings and the remaining portion in other comprehensive loss. No credit impairments were recognized on debt securities during the six months ended June 30, 2025 and 2024, respectively.

The following table indicates the length of time individual debt securities have been in a continuous unrealized loss position as of June 30, 2025 and December 31, 2024:



			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
June 30, 2025	securities		value		losses			value		losses			value		losses
U.S. Treasury		6	$	13,990	$	(2	)	$	—	$	—		$	13,990	$	(2	)
U.S. Government agency		35		—		—			69,407		(6,557	)		69,407		(6,557	)
State and municipal		187		—		—			84,278		(20,478	)		84,278		(20,478	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		152		—		—			191,140		(30,518	)		191,140		(30,518	)
Collateralized mortgage obligations (CMOs)		154		77,572		(681	)		75,571		(12,761	)		153,143		(13,442	)
Corporate debt and money market funds		3		1,982		(18	)		4,338		(163	)		6,320		(181	)
Total		537	$	93,544	$	(701	)	$	424,734	$	(70,477	)	$	518,278	$	(71,178	)



			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2024	securities		value		losses			value		losses			value		losses
U.S. Treasury		—	$	—	$	—		$	—	$	—		$	—	$	—
U.S. Government agency		35		—		—			75,959		(9,051	)		75,959		(9,051	)
State and municipal		188		288		(2	)		84,471		(20,629	)		84,759		(20,631	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		153		1		—			234,073		(38,902	)		234,074		(38,902	)
Collateralized mortgage obligations (CMOs)		154		83,026		(262	)		78,569		(15,559	)		161,595		(15,821	)
Corporate debt and money markets		7		10,672		(28	)		4,275		(276	)		14,947		(304	)
Total		537	$	93,987	$	(292	)	$	477,347	$	(84,417	)	$	571,334	$	(84,709	)

Management evaluates debt securities, which are comprised of U.S. Treasury, U.S. Government agencies, state and municipalities, mortgage-backed securities, CMOs and corporate debt securities, for impairment and considers the current economic conditions, interest rates and the bond rating of each security. The unrealized losses at June 30, 2025 in U.S. Government agency securities, state and municipal securities, mortgage-backed securities, CMOs and corporate debt securities are primarily the result of interest rate fluctuations. If held to maturity, these bonds will mature at par, and QNB will not realize a loss. QNB has the intent to hold the securities and does not believe it will be required to sell the securities before recovery occurs.

QNB holds one pooled trust preferred security as of June 30, 2025. This security has a total amortized cost of approximately $57,000 and a fair value of $51,000. The pooled trust preferred security is available-for-sale and is carried at fair value.

The Company’s investment in marketable equity securities primarily consisted of investments with readily determinable fair values in large cap stock companies. Changes in fair value are recorded in unrealized gain/(losses) in non-interest income. The Company sold its equity portfolio during 2024; at both June 30, 2025 and December 31, 2024, QNB had no remaining equity securities.

There were no taxes applicable to the net gains (losses) recognized for the three and six months ended June 30, 2025 compared to an expense of $191,000 and $287,000 for the three and six months ended June 30, 2024, respectively. Proceeds from sales of investment equity securities were $0 and $1,210,000 for the six months ended June 30, 2025 and 2024, respectively.